CONFIDENTIAL

AFRICAN DEVELOPMENT FUND ADF/BD/IF/2006/41 3 March 2006 Prepared by : ONIN Original: English

Probable Date of Board Presentation :

Not Applicable

FOR INFORMATION

MEMORANDUM TO : THE BOARD OF DIRECTORS FROM : Vasantt JOGOO Acting Secretary General SUBJECT : MALAWI : ROAD MAINTENANCE AND CONSTRUCTION

(ROMAC II ) PROJECT PROJECT COMPLETION REPORT * Please find attached hereto, a copy of the above-mentioned document. Attach: cc.: The President

* Questions on this document, should be referred to: Mr. R. RAKOTOBE Director ONIN Extension 2040 Mr. J. RWAMABUGA Division Manager ONIN.3 Extension 2181 Mrs. L. KIGGUNDU Transport Engineer ONIN.3 Extension 3488 SCCD:N.A.

AFRICAN DEVELOPMENT BANK GROUP

PROJECT COMPLETION REPORT

ROAD MAINTENANCE AND CONSTRUCTION (ROMAC II) PROJECT

REPUBLIC OF MALAWI

TRANSPORT DIVISION INFRASTRUCTURE DEPARTMENT-NORTH, EAST & SOUTH REGION

OCTOBER 2005

EQUIVALENTS AND ABBREVIATIONS CURRENCY EQUIVALENTS

PCR Appraisal 1 UA = MK 166.90 3.56621

WEIGHTS AND MEASURES

1.00 meter (m) = 3.281 ft. 1.00 kilometre (km) = 0.621 mile 1.00 square kilometre (km2) = 0.386 square mile (mi2) 1.00 hectare (ha) = 2.471 acres 1.00 kilogram (kg) = 2.205 lbs.

FISCAL YEAR : 1st July – 3oth June ABBREVIATIONS

AADT = Average Annual Daily Traffic

ADB = African Development Bank ADF = African Development Fund CRD = Central Road Division EA = Executing Agency EIRR = Economic Internal Rate of Return EU = European Union FE = Foreign Exchange GOM = Government of Malawi HDM = Highway Development and Management ICB = International Competitive Bidding IDA = International Development Association LC = Local Costs MIS = Management Information Systems MOW = Ministry of Works MOTW = Ministry of Transport and Works NPV = Net Present Value NRA = National Roads Authority ROMAC = Roads Maintenance and Construction TA = Technical Assistance UDRD = Urban and District Roads Division VOC = Vehicle Operating Costs WB = World Bank

TABLE OF CONTENTS No. of Pages Project Matrix Basic Project Data i-iv Executive Summary v-viii 1. INTRODUCTION 1 2. PROJECT OBJECTIVE AND FORMULATION 1 2.1 Project Objective 1 2.2 Description of the Project 1 2.3 Formulation, Evaluation and Approval 2 3. PROJECT EXECUTION 2 3.1 Effectiveness and Start-up 2 3.2 Modifications 3 3.3 Implementation Schedule 3 3.4 Reporting 4

3.5 Procurement 4 3.6 Financing Sources and Disbursement 5 4. PROJECT PERFORMANCE AND RESULTS 7 4.1 Overall Assessment 7 4.2 Operating Results 7 4.3 Institutional Performance 8 4.4 Management and Organizational Effectiveness 9

4.5 Staff Recruitment, Training and Development 9 4.6 Performance of Consultants, Contractors and Borrower 10 4.7 Conditions/Covenants 10

4.8 Economic Performance 10 5. SOCIAL AND ENVIRONMENTAL IMPACT 11 5.1 Social Impact 11 5.2 Environmental Impact 12 6. PROJECT SUSTAINABILITY 12 7. PERFORMANCE OF THE BANK 12 8. OVERALL PERFORMANCE AND RATING 13 9. CONCLUSIONS, LESSONS LEARNED AND RECOMMENDATIONS 13

9.1 Conclusions 13 9.2 Lessons Learned 14 9.3 Recommendations 14 This Report was prepared by Messrs. D.R.RAO, Consultant -Transport Engineer and D. GEBREMEDHIN, Consultant - Transport Economist ONIN.3, following their mission to Malawi from 10th to 29th August 2005 with the Task Manager Mr L. KIGGUNDU, Transport Engineer. Any inquiries relating to this report may be referred to either the authors or to Mr. J. RWAMABUGA, Division Manager, ONIN.3, Ext. 2181.

LIST OF ANNEXES

Annex No. of No. Titles Pages

1. Project Location Map 1

2 Implementation Schedule (Appraisal Vs Actual) 1

3. Actual Project Costs (Component & Source wise) and Categories of Expenditure 2 4. Yearly Disbursements by Source of Funds

and Annual Disbursements 2

5. Economic Benefit-Cost Analysis 3

6. Performance Evaluation and Rating 4

7. Recommendations and Follow-up Matrix 1

8. Sources of Information 1

MALAWI ROAD MAINTENANCE AND CONSTRUCTION (ROMAC II) PROJECT PROJECT COMPLETION REPORT: PROJECT MATRIX

Design Team: D.R Rao & D.Gebremedhin

Verifiable Indicators Narrative Summary

Appraisal (1989) PCR (2005)

Means of Verification Assumptions/ Risks

Sector Goal 1.1 Rehabilitation and maintenance of essential road network in north, central and southern regions of Malawi.

1.1 Increase in the rehabilitation and maintenance activities of sections of roads in three regions of the country. 1.2 Overall growth in traffic.

1.1 During 1993-2005, total length of paved/rehabilitated road network increased from 11751 km to 15451 km 1.2 Traffic on the road network is increasing by 3 % per year.

1.1 Annual road construction and maintenance and rehabilitation data from MOW. 1.2 Traffic Statistics 1.3 Annual Road Condition Survey.

(Goal to Super goal) Adequate Government commitment

Project Objective 2.1 To increase transport service levels and road safety by improving road surface conditions to reduce vehicle operating costs, to improve Roads Department staff capabilities and to develop Malawian Consultancy and contracting sector

2.1Improved operations in Road Dept. 2.2 Increase in vehicle traffic by 4-6% per year

2.1. The AADT on the project road is increasing 3 to 5% per year. 2.2. VOC of the rehabilitation, resealing and gravel roads reduced by 31%, 8% and 24% respectively when the roads are opened to traffic.

2.1. Annual performance audit reports of NRA 2.2 Calculate VOC using Highway Development and Management Model. 2.3 Measure roughness 2.4 NRA traffic survey.

(Project Objective to Goal) 1. Maintenance effectively carried out. 2. Measures are instituted by Malawi Govt to minimize non-transport barriers and harmonize axle loads.

Outputs 3.1 Rehabilitation/ upgrading of 2 roads, resealing of 4 road sections, improvement of 10 earth roads to gravel standard and construction of 12 bridges completed 3.2 Local Construction and consultancy industry developed

3.1 Rehabilitation/ upgrading of 2 roads, resealing of 4 paved road sections, improvement of 10 earth roads to gravel standard and construction of 12 bridges completed by the end of 1994. 3.2 Road Safety Programme and the Local Construction and consultancy Industry completed by July 1993

3.1 Rehabilitation of one road; resealing of 2 paved roads sections; improvement of 6 earth roads to gravel standards; and construction of 3 bridges completed by October 1998. 3.2 Road Safety Programme and the Local Construction and consultancy Industry completed by July 1995

3.1 Progress Reports from the Borrower and Bank supervision missions 3.2 Borrower’s PCR 3.3 Final Completion

Report

(Output to Project Objective) 1. Availability of counterpart funds

Activities 4.1 Civil Works a) Procurement of supervision consultants and civil works contractor b) Actual rehabilitation, upgrading, resealing, improvements of road sections and construction of bridges in three regions of the country and supervision 4.2 Tech. Assistance a) Procurement of consultants for T.A. services and carrying out the studies. b) Actual conduct of the T.A. services and studies.

Inputs/Resources Inputs (UA million) Civil works 15.23 Supervision 1.92 Tech. Asst. 2.23 Contingencies. Physical & Price 5.14 Total 24.52 Resources (UA million) ADF 18.42 TAF 2.40 GOM 3.70 Total 24.52 EIRR(%) = 8to 56.9

Inputs/Resources (1) Inputs (UA million) Civil Works 11.71 Supervision 1.19 Tech. Asst. 2.01 Total 14.91 Resources (UA million) ADF 12.00 TAF 1.97 GOM 0.94 Total 14.91 EIRR(%) =12.08 to 32.2

4.1 Appraisal Estimates. 4.2 Quarterly Progress Reports 4.3 Supervision Reports 4.4 Final Completion Report 4.6 Borrower’s PCR 4.5 Disbursement Records

4.1 All procurement actions are on schedule. 4.2 Payments for invoices are not delayed and there are no cost overruns. 4.3 GOM to ensure timely payment of counterpart funds. 4.4 Effective supervision by the Bank, Consultant and MOW / NRA.

• Project Matrix was not presented in the Appraisal Report. The above is a retrospective Matrix.

BASIC PROJECT DATA

1. Country : Malawi 2. Project : Road Maintenance and Construction (ROMAC II) Project 3. Loan Number : 2100150000684 (Loan) : 2100155000214 (Grant) 4. Borrower : Government of Malawi 5. Beneficiary : Government of Malawi 6. Executing Agency : Ministry of Works ( MOW) A. LOAN DETAILS

Description At Appraisal

Actual

1. (a) Loan (UA million) (b) TAF Grant (UA million)

ADF : 18.42 TAF : 2.40

ADF : 12.00 TAF : 1.97

2. Service Charge 0.75% per annum on amounts disbursed and outstanding (for Loan).

3. Repayment Period 40 years

4. Grace Period 10 years

5. Repayment 1% of the principal each year from the eleventh to twentieth year inclusive and 3% each year thereafter.

6. Loan Negotiation Date N/A N/A 7. ADF & TAF Approval Date 15-2-1990 8. Loan Signature Date

30-11-1990 (For loan) 29-5-1990 ( For Grant)

9.Date of Entry into Force 01-12-1990 (For loan) 23-5-1991 ( For Grant)

B. PROJECT DATA 1. Project Cost

Project Cost (in UA million) Item of Cost

At Appraisal Actual Foreign Exchange Component

• For Loan • For Grant

Sub-Total

13.54 2.10 15.64

10.78 1. 82 12.60

Local Cost Component • For Loan • For Grant

Sub-Total

8.46 0.42 8.88

2.12 0.19 2.31

Total Cost 24.52 14. 91 2. Source of Finance

In UA Million At Appraisal Actual Source of

Finance F.E. L.C. Total % F.E. L.C. Total %

ADF ( Loan) TAF( Grant)

13.54 2.10

4.88 0.30

18.42 2.40

83.7 94.9

10.78 1.82

1.22 0.15

12.00 1.97

93 98

GOM( Loan) GOM (Grant)

- -

3..58 0.12

3. 58 0.12

16.3 5.1

- -

0.90 0.04

0.90 0.04

7 2

Total 15.64 8.88 24.52 100.0 12.60 2.31 14.91 100

(ii)

Appraisal Actual 3. Effective Date of First Disbursement: - 29 Sept 1992 (For Loan) 06 July 1992 (For Grant) 4. Effective Date of Last Disbursement: 31 Dec 1996 17 July 2000 (For Loan) 03 Sept 1998 (For Grant) 5. Commencement of Project: July 1990 April 1991 6. Completion of Project: Aug 1995 Sept 1999 C. PERFORMANCE INDICATORS 1. Cost Under-run ADF : 34.85 % TAF : 17.92 % 2. Time Overrun : 30 months * Slippage on Effectiveness (%) ADF : 0 % TAF : 100%

* Slippage on Completion Date : 150% * Slippage on Last Disbursement : 300% * Number of Extensions of Loan Validity Period : 3 3. Project Implementation Status : Completed 4. List of Verifiable Indicators and Levels of Achievement

Score Evaluation Criterion Maximum Actual

1. Time Overruns 2. Cost under runs 3. Adherence to Contractual Conditions 4. Adequacy of Supervision and Reports 5. Operational Performance Total Score

4 4 4 4 4 20

2 2 3 3 2

12 5. Implementation Performance

* Institutional Performance : Satisfactory * Consultant’s Performance : Satisfactory * Contractor’s Performance : Satisfactory

6. Economic Internal Rate of Return (EIRR) Appraisal : 8% to 56.9 %

Actual : 12.08% to 32.2%

D. MISSIONS Project Cycle M/Y Numbers of Persons Composition Man Days

1. Identification - - - - 2. Preparation 09/1988 2 T.Engr, T.E 28 3. Appraisal 08/1990 2 T.E, T.Enr 28 4. Follow up 11/1992 2 HARO Officers(2) 12 5. Supervision 11/1992 1 T.Enr 14

05/1993 02/1995 10/1995

1 2 2

T.Enr T.E, T.Enr T.E, T.Enr

11 34 14

06/1996 06/1997

2 2

T.E, T.Enr T.E T.Enr

28 10

01/1998 09/1998 02/1999 09/2001

2 2 2 2

T.E, T.Enr T.E, T.Enr T.E, T.Enr T.E, T.Enr

24 26 24 24

02/2002 2 T.E, T.Enr 12

11/2002 2 T.E, T.Enr 12 6. PCR 08/2005 3 T.E, T.Enr ( 2) 52

T.E: Transport Economist, T. Enr: Transport Engineer, HARO: Harare Regional Office

(iii)

E. BANK LOAN/GRANT –DISBURSEMENTS (UA million)

At Appraisal Actual

ADF TAF ADF TAF

Year Amount Cum(%) Amount Cum(%) Amount Cum(%) Amount Cum(%)

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

0.25 4.60 8.98 2.85 1.74

- - - - - -

1.35 26.33 75.08 90.56 100.0

- - - - - -

0.43 0.83 0.41 0.44 0.14 0.15

- - - - -

17.91 52.50 69.58 87.91 93.75 100.0

- - - - -

-- --

0.36 0.77 1.95 1.49 0.63 3.42 1.79 1.31 0.28

- -

3.00 9.41 25.67 38.08 43.33 71.83 86.75 97.67 100.0

- -

0.88 0.38 0.24 0.13 0.15 0.18 0.01

- -

- -

44.67 63.95 76.14 82.74 90.36 99.49 100.0

- -

Total 18.42 100.00 2.40 100.00 12.00 100.00 1.97 100.00 Balances under Loan / Grant 6.42 0.43

Loan/ Grant balances cancelled 6.42 0.43

F. CONTRACTORS (a) Name : Group Five International Ltd (South Africa)

Contract Description : Rehabilitation of Chikwawa –Bangula Road ( 26.3 km) Date Contract Signed : March 1997

Date Contract Completed : October 1998 Contract Duration : 20 months Amount : MK 131.41 million (b) Name : Kier International Ltd (UK)

Contract Description : Resealing of two roads (Benga-Nkhotakota-Dwangwa) Date Contract Signed : November 1993

Date Contract Completed : August 1995 Contract Duration : 22 months Amount : MK 5.01 million + GBP 1.99 million ( c) Names : (i) J& Lee Contractors, South Korea (2 roads) : (ii) CNL Engineers (1 Road) : (iii) Cilcon Limited (1 Road) : (iv) Fargo Ltd (1 Road) : (v) WG & RL Gulliver Ltd (1 Road) Contract Description : Improvement of six earth roads to gravel standard

Date Contracts Signed : Contracts commenced from August 1992 to October 1996 Date Contracts Completed : Works completed from February 1994 to July 1998 Contract Durations : Varied from contract to contract Amount : Varied from Contract to Contract (d) Name : Cilcon Limited

Contract Description : 3 Bridges ( Mtedza, Lingadzia and Likangala) Date Contracts Signed : Between April 1994 to June 1996

Date Contracts Completed : Between March 1995 to September 1997 Contract Duration : Varied from Contract to contract Amount : Varied from MK 1.42 – 6.29 million

(iv) G. CONSULTANTS ( Supervision Works) (a) Name : Burrow Binnie Int (South Africa) Contract Description : Supervision of Rehabilitation works Date Contract Signed : September 1991 Date Contract Completed : April 1998 Contract Duration : 80 months Amount : GBP 254, 000 + MK 1.961 million (b) Name : TAMS of USA and BNM Consortium JV Contract Description : Supervision of 2 Resealing Road Projects and 3 bridges Date Contract Signed : September 1991 Date Contract Completed : September 1997 Contract Duration : 72 months Amount : US $ 2.78 million + MK 4.05 million ( c ) Name : BNM Consortium (Malawi) Contract Description : Supervision of six earth roads to gravel standards Date Contract Signed : October 1991 Date Contract Completed : September 1997 Contract Duration : 72 months Amount : MK 9.90 million

CONSULTANT (Technical Assistance) Name : De Leuw Cather International (USA)

Contract Description : Technical Assistance Date Contract Signed : January 1992 Date Contract Completed : July 1994 Contract Duration : 30 months Amount : US $ 843,966 + MK 1,084626

(v) EXECUTIVE SUMMARY

1. INTRODUCTION 1.1 The Republic of Malawi is a small agricultural and landlocked country with 119,140 km2

land area of which 20% is water. Being a landlocked country, the Government’s Development policies (1987- 1996), reflected a change with emphasis to maintenance and upgrading of the road network. The Bank Group’s involvement in Malawi’s integrated Road Maintenance and Construction (ROMAC) programme began in 1984. The Bank financed ROMAC I project in 1984 and was successfully completed in 1988. The subject project was a discrete component of an overall infrastructure programme prepared by the World Bank with participation of several donors and includes roads and bridges to be rehabilitated/constructed in all the three regions of Malawi, viz. Northern, Central and Southern. 1.2 A Bank’s mission visited Malawi in September 1988 to prepare the project and the project was appraised in July/ August 1989. An ADF loan and a TAF grant was approved by the Board in February 1990; the ADF loan was signed in November 1990 for an amount of FUA 20 million (UA 18.42 million), while the TAF grant was signed in May 1990 for an amount of FUA 2.60 million (UA 2.40 million). 1.3 This Project Completion Report (PCR) is based on the appraisal report, project files in the Bank, Borrower’s quarterly progress reports and PCR, interviews and site inspection conducted during an ADB mission to Malawi in August 2005.

Project Objectives and Description 1.4 The objectives of the project were: i) to increase transport service levels and road safety by improving road surface conditions so as to reduce vehicle operating costs; (ii) to protect the investments in road infrastructure already made; (iii) to improve the organisation, staff capabilities and equipment for undertaking road safety work thereby reducing deaths, injuries and property damage caused by road accidents; and (iv) to develop a stronger Malawian consultancy and contracting sector which is economically independent and capable of competing with international firms. 1.5 The project at appraisal comprised the following components: ADF Components

(a) Rehabilitation of Chikwawa- Bangula Road (50 km) to 2- lane bitumen surfaced road 6.7m in width with two 1.5m shoulders;

(b) Resealing of the following paved roads (i) Nkhotakota- Dwangwa; (ii) Benga- Nkhotakota;(iii) Mzuzu- Nkhata Bay;(iv) Mzuzu- John Mzumara of total length of approximately 200km.

( c) Upgrading of Mzimba – Mtangatanga, an existing gravel road of length 24 km to bitumen standard of 6.7m width with two 1.5m shoulders.

(d) Improvement to gravel standard of 10 earth roads: (i) Junction M1- Nkhoma; (ii) Mponela- Ntchisi;(iii) S73 Loop ( Zomba); (iv) Mchinji- Mkanda;(v) Balaka Junction-M3;(vi) Msokela-Lifupa Lodge;(vii) Nsande- Cape Maclear;(viii) Kamuju Banda- Euthini- Mpherembe;(ix) Junction M3- Malinde;(x) Embangweni Mission- Luwawa.

(e) Construction of 12 new bridges of total length of 340m. (f) Consultancy services for supervision of construction works for items (a) to (e). TAF Components

(g) Technical Assistance for the Implementation of a Road Safety Programme. (h) A Technical Assistance for developing the local construction and consulting industry.

(vi)

1.6 The scope of works was reduced during implementation in order to be within the available funds. The reduced scope of works is given in the main report. 1.7 There was no change in the scope of the Consultancy services. Project Execution and Implementation Schedule

1.8 The project was executed by the Ministry of Works through its Roads Department. A qualified and experienced engineer from the Roads Department was designated to act full time as Project Coordinator. During the project implementation, inflation and some other factors increased the cost significantly. These factors coupled with funding constraints resulted in reduction in the scope of works with respect to construction of roads and bridges.

1.9 The implementation period for the overall project envisaged at the time of appraisal was 61 months commencing from July 1990 and was to be completed by July 1995. The Project however commenced in April 1991 and was finally completed in October 1998, with an overall delay of 30 months in its completion. Civil works for different components of the project actually commenced between August 1992 and October 1996, and were finally completed in October 1998, i.e. a delay of 50 months at appraisal. During execution of works, several factors contributed for delays which significantly retarded the progress, some of them are given in section 3.3.3.

1.10 Three consulting firms, viz. (i) Burrows Binnie (S. Africa), (ii) TAMS of USA and (iii) BNM Consortium of Malawi supervised the resealing, rehabilitation and construction works of roads and bridges that were executed through different contracts by seven contracting firms. Consulting services for supervision of rehabilitation works commenced in September 1991 and continued until the completion of project works, i.e. April 1998. Consultancy services for the Technical Assistance component of the project commenced in February 1992 and was completed in July 1994. The implementation schedule is presented in Annex 2.

1.11 Even though the completion of the project was delayed, the final output was well executed. Project Costs and Financial Resources 1.12 The total project cost (net of taxes) including Technical Assistance was estimated at FUA 26.63 million (UA 24.52 million including contingencies). The actual total cost of the completed project was UA 14.91 million. A summary of the project costs at appraisal and actual is shown in Table 3.1 and details in Annex 3. Overall, there was a cost under run of about UA 9.61 million 1.13 The project was jointly financed by ADF and GOM. Actual ADF financing of the project costs at completion amounted to UA 13.97 million. A savings of UA 6.85 million ( UA 6.42 million under ADF and UA 0.43 million under TAF grant) was realized after completion and the Bank cancelled these balances in October 2000. A summary of project financing as appraised and actual is given in Annex 4. Overall Assessment 1.14 In spite of delays in project implementation, the overall project was well executed resulting in easy improved access for all the three regions of the country. The Technical Assistance provided under the project benefited most of the Malawian Contractors and Consultants to work independently on their own. Economic Performance 1.15 The traffic projection at appraisal for the projects in ROMAC II (rehabilitation of Chikwawa -

Bangula, resealing of Benga - Nkhotakota - Dwangwa, six gravel roads and three bridges) has been revised taking into account the 1998 and 2001 national traffic counts. The traffic growth projection at appraisal for the bridges was 5 % per annum while 9.3 % has been taken for the other projects. The 2001 traffic counts of Chikwawa – Bangula is 9% higher than the appraisal estimate. The weighted traffic count of Benga –

(vii) Nkhotakota – Dwangwa shows an increase of 27 % and 19% for 1998 and 2001 when compared with the appraisal estimates respectively. In the PCR, traffic growth projection of 3 % to 5 % has been used for the evaluation period, which is consistent with what NRA uses for main and gravel road project studies at the moment. Thus the PCR traffic projection based on the actual traffic of the 1998 and 2001 has increased only in three projects (the resealing of Benga – Nkhotakota - Dwangwa, one bridge and one gravel road) out of the eleven projects when compared with the appraisal estimates. The recalculated EIRR of the Chikwawa - Bangula and the Benga - Nkhotakota - Dwangwa projects are 12.9% and 13.4 % respectively, which are lower than the 15.1 % and 14.9 % at appraisal. The PCR EIRR result of the gravel roads and bridges ranges from 12.08 % to 32.2 % (where as 8.5 % to 56.9 % at appraisal) (Annex 5). The recalculated EIRRs are lower due mainly to the above mentioned decline in the traffic and increase in the construction cost. But the EIRRs are above 12 %, the opportunity cost of capital in Malawi. 2. CONCLUSIONS, LESSONS AND RECOMMENDATIONS

Conclusions 2.1 The overall objective of the project has been substantially achieved even though the scope of works was reduced. The project has facilitated easy transportation within the three regions of the country and has reduced road transport costs and passenger travel time. The constructed sections of roads have been found to be safe in driving and are environmentally protected. Lessons Learned 2.2 Lessons from the project are:

• Inadequate institutional capacity to undertake detailed review and analysis, resulted in improper planning and utilization of approved funds to maximum ( para 3.2.1);

• A proper assessment by the Executing Agency and the Bank during implementation on

the reduction in the scope of works, could have minimised the large savings noted at the completion of the project ( para 3.2.1);

• Mid –Term reviews are very necessary for “Ageing Projects” such as ROMAC II. This

would help in assessment of physical and financial status of the project and would be the guiding factor to determine the increase or decrease in the scope of works;

• Conducting a technical and financial audit ( which was not included in this project)

would have been useful to identify and resolving issues for smooth implementation (para 3.4.2);

• Obtaining information/data from the Borrower/Executing Agency for the projects that

were completed long ago from the archives, was noted to be source of problem, since project records were not available;

• The extent of deterioration in case of gravel and earth roads is almost the same.

However upgrading of the existing earth roads to gravel standards would be more expensive than improving the existing earth roads (para 4.2.1).

Recommendations 2.3 It is recommended that: (i) For the Borrower

• Institutional capacity be strengthened to undertake detailed review / assessment of projects before appraisal and during implementation;

(viii) • Make efforts to undertake and rectify the defects observed during the field inspection of

the completed project to preserve the investment.;

• Undertake intensive regular maintenance activities (routine and periodic) for the gravel roads to minimize the deterioration;

• To commit and conduct on regular basis annual national traffic counts for efficient

road planning and project evaluation;

• Should comply with the requirements of the General Conditions of Loan Agreements in respect of conducting and submission of annual Audit Reports of the projects;

• Make efforts to maintain proper records/ documentation for the completed projects (irrespective of their time of completion), for easy reference to the visiting Bank Missions.

(ii) For the Bank:

• It is necessary to undertake in – depth reviews during implementation, before agreeing to the changes proposed by the Borrower for reduction in the scope of works;

• Bank missions to follow up with the Borrowers’ on the submission of annual project

audit reports on regular basis, in accordance with the Bank’s General Conditions of Loan Agreements;

• Bank to undertake PCRs for the completed projects as early as possible, so that

necessary documentation/data on the project would be available for reference and inclusion in the report.

• Bank to consider the possibility of financing the existing earth roads to a better standard (with out upgrading to gravel standard), which would be less costly.

1. INTRODUCTION 1.1 The Republic of Malawi is a small agricultural and landlocked country with 119,140 km2

land area of which 20% is water. It is situated in the east- central part of Africa and has common borders with Mozambique in the east and south-west, the United Republic of Tanzania in the north and north-west (Annex 1). The total population of the country as per 2005 estimates was 12.5 million and growing at an average annual rate of 2.14 %. 1.2 Malawi possesses four modes of transport for both external and internal communications, of which roads play a dominant role. The four modes are: (i) a road network of about 15,451km, (ii) 678 km of railways, (iii) four lake harbours and (iv) four commercial airports. At the time of the project appraisal, Malawi had about 11,751 km of classified roads, of which 2,410 km ( 20 %) paved, 603 are engineered gravel standard and about 8737 km unclassified feeder roads. Most of them had deteriorated due to lack of maintenance. 1.3 Being a landlocked country, the Government’s Development policies (1987- 1996), reflected a change with emphasis to maintenance and upgrading of the road network. As a follow up, GOM embarked upon a systematic programme to upgrade and improve the country’s transport network and thereby encourage the continued development of the nation’s economy. The Bank Group’s intervention in the transport sector in Malawi dates back to December 1974. The Bank has to date, approved a total of 15 loans in the transport sector, viz. 9 projects ( including one Supplementary loan) in road sub-sector and 3 in the airport sub-sector, apart from three studies (two in Road and the other in air transport). Fourteen out of fifteen projects (8 in the road sector and 3 in air sub-sector and 3 studies) have been successfully completed and one project in the road sector is under implementation. This project includes roads and bridges to be rehabilitated in all the three regions of Malawi, viz. Northern, Central and Southern 1.4 The Bank Group’s involvement in Malawi’s integrated Road Maintenance and Construction (ROMAC) programme began in 1984. The Bank financed ROMAC I project in 1984 and was successfully completed in 1988. The subject project was a discrete component of an overall infrastructure programme prepared by the World Bank with participation of several donors. In 1987, GOM submitted preliminary proposals with a request for financing the ROMAC II project. A Bank’s preparation mission visited Malawi in September 1988 and the project was appraised in July/ August 1989. An ADF loan and a TAF grant was approved by the Board in February 1990; the ADF loan was signed in November 1990 for an amount of FUA 20 million (UA 18.42 million), while the TAF Grant was signed in May 1990 for an amount of FUA 2.60 million (UA 2.40 million). 1.5 This Project Completion Report (PCR) is based on the appraisal report, project files in the Bank, Borrower’s quarterly progress reports and PCR, interviews and site inspection conducted during an ADB mission to Malawi in August 2005. 2. PROJECT OBJECTIVE AND FORMULATION 2.1 Project Objectives 2.1.1 The objectives of the project were: i) to increase transport service levels and road safety by improving road surface conditions so as to reduce vehicle operating costs; (ii) to protect the investments in road infrastructure already made; (iii) to improve the organisation, staff capabilities and equipment for undertaking road safety work thereby reducing deaths, injuries and property damage caused by road accidents; and (iv) to develop a stronger Malawian consultancy and contracting sector which is economically independent and capable of competing with international firms.

2.2 Description

2.2.1 The project consisted of the following components:

2 ADF Components (a) Rehabilitation of Chikwawa- Bangula Road (50 km) to 2- lane Bitumen surfaced road 6.7m in width with two 1.5m shoulders; (b) Resealing of the following paved roads (i) Nkhotakota- Dwangwa; (ii) Benga- Nkhotakota; (iii) Mzuzu- Nkhata bay;(iv) Mzuzu- John Mzumara of total length of approximately 200 km. ( c) Upgrading of Mzimba – Mtangatanga and existing gravel road of length 24km to bitumen standard of 6.7m width and with two 1.5m shoulders (d) Improvement to gravel standard of 10 earth roads: (i) Junction M1- Nkhoma; (ii)Mponela-

Ntchisi;(iii) S73 Loop ( Zomba); (iv) Mchinji- Mkanda;(v) Balaka Junction-M3;(vi) Msokela-Lifupa Lodge;(vii) Nsande- Cape Maclear;(viii) Kamuju Banda- Euthini- Mpherembe;(ix) Junction M3- Malinde;(x) Embangweni Mission- Luwawa.

(e) Construction of 12 new bridges of total length of 340m. (f) Consultancy services for supervision of construction works for items (a) to (e). TAF Components (g) Technical Assistance for the Implementation of a Road Safety Programme. (h) Technical Assistance for developing the local construction and consulting industry. 2.3 Formulation, Evaluation and Approval 2.3.1 The project was formulated (being a discrete component for restoration and improvement of road sections) from the Roads Infrastructure Programme prepared by the World Bank in 1987. The Bank financed a similar project in 1984 (ROMAC 1) and the project was successfully completed in 1988. As a continuation of the first Road maintenance Project, the Bank at the request of the GOM considered the proposal for financing the second project, ROMAC II. 2.3.2 The feasibility and detailed engineering designs prepared with financing under World Bank (IDA) funds were submitted to the Bank; a Bank mission visited Malawi to prepare the project in September 1988. 2.3.3 In July/ August 1990, a Bank’s mission comprising a Transport Engineer and a Transport Economist visited Malawi to appraise the project. The loan conditions were negotiated and there were no issues of disagreement raised by the Bank or the Borrower concerning the project. An ADF loan amount of FUA 20 million (UA 18.42 million) and a TAF amount of FUA 2.60 million (UA 2.4 million) was approved on 15 February 1990. 3. PROJECT EXECUTION 3.1 Effectiveness and Start-up 3.1.1 The ADF loan and TAF grant were approved on 15 February 1990. The loan was signed on 30 November 1990 and declared effective on 1 December 1990, while the grant was signed on 29 May 1990 and declared effective on 23 May 1991. In accordance with Clauses 9.01 and 15.01 of the General Conditions Applicable to Loan Agreement and Guarantee Agreement of the ADF, a slippage of 105 days (3 ½ months) was noted from the maximum of 180 days after Board approval allowed for loan signature. However, there was no slippage noted for the loan effectiveness, since the loan was declared effective within 12 months from the date of approval of the Board. As regards the TAF Grant, there was no slippage for the signature, while a slippage of 3 months for its effectiveness was noted from the maximum of 12 months allowed after the approval of the Board. 3.1.2 The delay in loan signature was due to Government’s other commitments during the period,

while the reason for delay in the grant effectiveness was mainly due to non-fulfilment of stipulated condition prior to entry into force.

3 3.2 Modifications

3.2.1 In the course of the project implementation, inflation and deterioration of road condition before commencement of the project resulted in cost increases. As a result of the above and funding constraints, the GOM with the consent of the Bank reduced the scope of works with respect to construction of roads and bridges in order to be within the approved costs. The revised scope of components of the project that were executed and completed, were as follows: ADF Components (a) Rehabilitation of Chikwawa- Bangula Road(26.3 km) to 2- lane Bitumen surfaced road 6.7m in

width with two 1.5m shoulders; (b) Resealing of only two paved roads, viz. (i) Nkhotakota- Dwangwa Road section and (ii) Benga-

Nkhotakota road section, for a total length of 109 km. (d) Improvement to gravel standard of 10 earth roads: (i) Mponela- Ntchisi Road;(ii) S73 Loop Road

(Zomba); (iii) Mchinji- Mkanda Road ;(iv) Msokela-Lifupa Lodge Road; (v) Nsande- Cape Maclear Road;(vi) Junction M3- Malinde Road.

(e) Construction of 3 bridges, namely (i) Mtedza (ii) Lingadzi and (iii) Likangala. (f) Consultancy services for supervision of works for items (a), (b), (d) and (e). TAF Components (g) Technical Assistance for the Implementation of a Road Safety Programme. (h) A Technical Assistance for developing the local construction and consulting industry. 3.3 Implementation Schedule

3.3.1 The Project was executed by the Ministry of Works (MOW) through its Roads Department. A qualified and experienced engineer from the Roads Department was designated to act full time as Project Coordinator. Three consulting firms, viz. (i) Burrows Binnie (S. Africa), (ii) TAMS of USA and (iii) BNM Consortium of Malawi supervised the different components, viz. resealing, rehabilitation and construction works of roads and bridges that were executed through different contracts by seven contracting firms. 3.3.2 The implementation period for the overall project as envisaged at the time of appraisal was 61 months commencing from July 1990 and was to be completed by July 1995. The Project however commenced in April 1991 and finally completed in October 1998. An initial delay of 9 months was noted in the start up of the project with an overall delay of 30 months for its completion. The last disbursement was effected in September 1999. 3.3.3 Civil works construction was to commence in March 1991 with a contract period of 24 months (ending in March 1993). However, works for different components of the project actually commenced between August 1992 and October 1996, and were finally completed in October 1998, making thus a total of 74 months for completion, i.e. a delay of 50 months to that estimated at appraisal. During execution of works, several factors contributed to delays with disruption which significantly retarded the progress, some of them are given hereunder:

• National strikes in 1994 and 1995 with no warnings; • Inclement weather conditions with exceptional rainfall which resulted in flooding of the sub-

grade of some roads; • Increase of water table during heavy rains and consequent delay in the formation of sub -

grade; • Increase in the fill material to depths of 0.7- 1 m, due to underlying soft material. Also

addition of new base material due to contamination of the existing base material; • Frequent breakdowns of contractors plant and equipment; • Delays in clearance by the forest reserve department to execute the road works that lay in the

forest reserve area;

4

• Delays in the supply of ARMCO steel pipe culverts and obtaining a magazine for storing the explosives for rock blasting;

• Piling works delays for bridges due to heavy rains; and • Payment delays coupled with cash flow problems.

All the above major factors led to substantial delay in the completion of the project. 3.3.4 Consultancy services for supervision of rehabilitation works commenced in September 1991 and continued until the completion of project works, i.e. October 1998, while the services for supervision of gravel roads commenced in October 1991 and were completed in September 1997. The supervision for resealing road works and construction works for bridges commenced in September 1991 and continued until September 1997. 3.3.5 Consultancy services for the Technical Assistance component of the project (Road Safety and the Development of Local Construction and Consulting Industry) which was to commence originally in July 1990 (with a completion period of 36 months, July 1993) however commenced in February 1992, i.e. 20 months later and was completed after 12 months, i.e. July 1994, registering thus a delay of 12 months from the original. 3.3.6 Even though the completion was delayed, the project components with reduced scope of works were executed satisfactorily. Annex 2 shows the implementation schedule at Appraisal vs Actual. 3.4 Reporting 3.4.1 The implementation of the project was monitored through monthly progress reports prepared by the consultants and quarterly progress reports prepared by the Government in the Bank’s format. In addition, the project was monitored through regular Bank’s supervision missions. 3.4.2 Pursuant to the provisions of the General Conditions of the Loan Agreement, the GOM submitted quarterly progress reports, the final Consultant's construction report and the Borrower's PCR. The contents of the progress reports in terms of keeping the Bank informed continuously of the project status, was satisfactory. It was noted that annual Audit Reports were not submitted to the Bank by the borrower as required under the loan agreement. However, a summary of the findings of the final audit report for the project was forwarded to the Bank in December 2002 after the completion of the project. 3.5 Procurement

Consultancy Services

3.5.1 The supervision consulting firms, viz. M/s Burrow Binnie Intl, South Africa (Previously known as John Burrow & Partners) for supervision of rehabilitation works, M/s TAMS of USA and M/s BNM Consortium ( JV) for supervision of resealing of roads and bridge construction works, M/s BNM Consortium ( Malawi) for supervision of earth roads to gravel standards and the consulting firm M/s De Leuw Cather of USA for the Technical Assistance component, were selected through a shortlist of qualified firms in accordance with the Bank's procurement guidelines for the use of consultants. The Bank approved the recruitment process and the award of contracts to the above firms. Civil Construction Works 3.5.2 The Executing Agency followed the Bank’s Rules of Procedure for procurement of Goods and Works, under the project and there were no disputes or complaints related to the procurement of the project components. Brief details on the procurements that took place for different components are given hereunder:

5

(a) Rehabilitation Works for Route M1 Chikwawa- Bangula Road Section

International Competitive Bidding (ICB) mode was adopted for procurement of this component. There was some delay in the award of contract to the eligible bidder, due to complaints received from two non-responsive bidders. After protracted correspondence between the GOM and the Bank, the contract was finally awarded to the lowest evaluated bidder M/s Group Five International of S. Africa in February 1997. (b) Resealing of Paved Roads( Nkhotakota- Dwangwa Road and Benga- Nkhotakota Road) International Competitive Bidding (ICB) mode was adopted for procurement of this component. There was no delay in the procurement of these works. Contracts for both road sections were awarded to the lowest evaluated bidder (M/s Kier Intl Ltd of UK). (c) Improvement to Gravel Standards of six Earth Roads Local civil engineering contractors based in Malawi were invited to tender for the improvement of the six earth roads to gravel standard. Invitations to tender were published in local newspapers. Contracts for road sections, namely (i) S-73 Loop Road (Zomba), (ii) Msokela-Lifupa Road, (iii) Junction M3- Malindi Road, (iv) Mponela- Ntchisi Road, (v) Mchinji- Makanda Road, and (vi) Nsanda- Cape Maclear Road were awarded to the responsive lowest evaluated bidders. There was no delay in the award of contracts for these works. (d) Construction of Bridges Local civil engineering contractors based in Malawi were invited to tender for the construction of three bridges, namely Mtedza, Lingadzi and Likangala. Invitation to tender for the construction was published in local newspapers. Contracts for all three bridges were awarded to the lowest bidder, M/s Cilcon Limited. Technical Assistance 3.5.3 Consultancy services for the Technical Assistance were procured through limited competition on the basis of short lists of qualified consultants in accordance with Bank’s guidelines. M/s De Leuw Cather International Limited of USA in association with M/s Nzeru Nkupangwa ( Malawi) was awarded the contract. 3.6 Financial Sources and Disbursements Project Costs 3.6.1 In 1989 at appraisal, the total project cost ( net of taxes) including Technical Assistance was estimated at UA 24.52 million (including contingencies) of which the foreign exchange component was UA 15.64 million and the balance of UA 8.88 million was the local cost. The actual total cost of the completed project was UA 14.91 million of which the foreign exchange component was UA 12.60 million and the remaining UA 2.31 million was the local cost. A summary of the project costs at appraisal and actual is shown in Table 3.1 below and details in Annex 3. 3.6.2 Overall, there was a cost under run of about UA 9.61 million. This reduction in the cost was mainly due to two reasons, viz. (i) reduction in scope of works, and (ii) competitive tender rates of the bids received. Based on the rates quoted by the bidders for the contracts already awarded, GOM felt that it would difficult to implement all components of the project within the approved amount. As such, the Borrower decided to reduce the scope of works, in order to accommodate within the available budget. At this juncture, the Bank could have undertaken a detailed analysis of the project status (through mid term review, both physical and financial) on the decision taken by GOM for the reduction of scope of works, before agreeing to the proposal of the Government for reduction. Later, after receipt of bids for different

6

components, it was noted that the bidding rates were found to be much less than the estimated, and this ultimately resulted in substantial savings at the completion of the project.

Table 3.1: Summary of Project Costs at Appraisal and Actual

(UA Million, net of Taxes)

At Appraisal Actual Difference Component F.E. L.C. TOTAL F.E. L.C. TOTAL F.E. L.C. TOTAL

A. Const & Supn • Civil Works • Supervision

12.04 1.50

7.84 0.62

19.88 2.12

9.82 0.96

1.89 0.23

11.71 1.19

-2.22 -0.54

-5.95 -0.39

-8.17 -0.93

Sub-Total ( A) 13.54 8.46 22.00 10.78 2.12 12.90 -2.76 -6.34 -9.10B. Tech.Assistance 2.10 0.42 2.52 1.82 0.19 2.01 -0.28 -0.23 -0.51 Grand Total (A+B) 15.64 8.88 24.52 12.60 2.31 14.91 -3.04 -6.57 -9.61

Financial Resources 3.6.3 The project was jointly financed by ADF and GOM. The estimated cost at appraisal and actual expenditures (in UA terms) by source of finance using historical exchange rates in the computation of local costs is presented in Table 3.2. As can be seen from the table there is a change in the overall financing plan as ADF’s contribution increased from 83.7% to 93%, but GOM’s contribution decreased from 21.4% to 9%. The final completion cost of the project indicated a cost under run of UA 9.61 million relative to the appraisal estimate. The savings realized under ADF loan (UA 6.42 million) and TAF grant (UA 0.43 million) have been cancelled. It is pertinent to note from the records that the increase in the ADF’s share was mainly due to foreign currency payments to all the three supervision consultants for their extended contract services (3 to 4 extensions) until the completion of the project. Since sufficient funds were available under the approved loan, this increase in foreign exchange costs was totally met by the Bank.

Table 3.2: Financing Plan – Appraisal vs Actual

(UA million) Appraisal Actual Difference Source of

Finance F.E. L.C. Total % F.E. L.C. Total % F.E. L.C. Total ADF Ln 13.54 4.88 18.42 83.7 10.78 1.22 12.00 93 -2.76 -3.66 -6.42 TAF Gr 2.10 0.30 2.40 94.9 1.82 0.15 1.97 98 -0.28 -0.15 -0.43 GOM -For Loan -For Grnt

--- 3. 58 0.12

3.58 0.12

16.3 5.1

--- 0.90 0.04

0.90 0.04

7 2

-- -2.68 -0.08

-2.68 -0.08

Total 15.64 8.88 24.52 12.60 2.31 14.91 -3.04 -6.57 -9.61

Disbursements

3.6.4 The loan funds were disbursed by direct method to the contractor and consultants. However, the slippage in the implementation schedule significantly affected the disbursement schedules. The disbursements which were to commence in 1990 at appraisal, did not actually start until 1992. The loan amount, as per the original appraisal schedule, was to be fully disbursed during 1990-1995, but due to start up delays in the project implementation, the first disbursement on ADF loan was effected in September 1992 and the last disbursement took place in July 2000. It was noted that some payments to the contractors/ consultants were delayed during implementation, giving the contractors/ consultants an opportunity to lodge claims related to interrupted cash flows. Annex 4 presents the disbursement profile at appraisal vs actual.

7

4. PROJECT PERFORMANCE AND RESULTS

4.1 Overall Assessment 4.1.1 The loan covenants/conditions were appropriate and valuable to the execution of the project. The loan conditions were sensible and no more additional conditions were necessary. The Government had no difficulty in fulfilling the stipulated loan conditions for the ADF loan to be effective. However, in respect of TAF, fulfilment of the condition precedent to Grant effectiveness was delayed for the reasons stated in para 4.6.4 below 4.2 Operating Results Civil Works 4.2.1 The rehabilitated / constructed roads followed the standard geometrics and specifications and were able to meet the requirements of providing a safe and smooth riding surface. However, during an overall inspection of the completed road sections (both rehabilitation and resealing works and bridges) after seven years of their completion, following defects were noted: • Most of the gravel road sections are deeply corrugated caused by heavy vehicular traffic and rains. • Carriageway widened and headwall clearance at the culverts was noted to be too narrow. • Absence of headwalls for the large steel pipe culverts. • No road signs were found on most of the sections of the roads due to vandalism. • Dilapidated conditions of side and mitre drains along the road sections due to poor maintenance. These were however brought to the attention of the GOM for immediate remedial actions in order to protect the investment. It is felt that improving the existing earth roads to a passable condition would be less costly instead of upgrading them to gravel standards. Technical Assistance 4.2.2 Under this grant, Technical Assistance was provided in two areas, namely (i) Road Safety Programme and (ii) Development of local contracting and consulting industry. In respect of the Road Safety, the selected Consultant ( M/s De Leuw Cather ) initiated in the first phase of the programme the road safety project with qualified staff, reorganized the Road Safety Board and introduced the Road Safety Agency. New procedures were developed with an handbook for accident recordings and transfer of accident data and analysis and training was provided for the personal to develop strategies on long and short term plans for National Road Safety work and measures. As a part of the services, the consultant prepared a draft amendment to the existing legislation for Parliament approval in respect of problems of drunk driving, excessive speeds, driver training systems, vehicle testing and control systems and control procedures for violations. In the subsequent two phases of the programme, activities concerning the road safety work and evaluation of road safety measures were follow up by the Government. Through out the period, consultant’s expatriate staff assisted the Government in the above activities.

4.2.3 In respect of the Development of local contracting and consultant industry, the consultant accomplished 13 activities as envisaged at appraisal. Following are some of the main activities carried out under the assistance:

• The Malawian Consultants and Contractors Registration Board (CCRB) was

strengthened. • Organised workshops and prepared handbooks for contractors and consultants on plant,

equipment and procurement. • Prepared simplified road rehabilitation and maintenance contract documents. • Developed requirements for implementation of preference mechanisms on future

projects with an handbook for use of industry, donors and Ministry.

8 • Surveyed about 174 contractors and 7 consultants on capabilities and constraints. • Developed profile of contractors by type and size. • Developed training programme on the identified needs of the industry. • Formulated criteria for selection of firms. • Developed detailed lessons , outlines, instructor notebooks and training catalogue. • Organised 16 beginning builders workshops, 6 month programme of assistance to civil

contractors and one workshop for consultants. Traffic 4.2.4 The Road Planning Unit of the Ministry of Works used to conduct nation wide annual traffic counts until the establishment of the NRA in 1999 and the restructuring of the road sector. No historical traffic data of the project roads is available, since no nationwide traffic counts were undertaken ( except in 2001 using a consultant). NRA, being aware of the importance of a time series traffic data for road planning and project evaluations, has planned to conduct continuous annual traffic counts twice (dry and wet season) a year starting from 2005 – 2006 budget year. 4.2.5 At appraisal, the traffic projection indicated 5 % and 9.3 % annual growth for the bridges and the remaining projects (rehabilitation, resealing and gravel roads) respectively. The 2001 traffic counts of Chikwawa – Bangula shows an AADT of 625, which is 9% higher than the appraisal estimate. The weighted traffic count of Benga – Nkhotakota – Dwangwa shows an AADT of 323 and 395 for 1998 and 2001, which show an increase of 27 % and 19 % when compared with the appraisal estimates respectively. Annex 5 shows the traffic of the gravel roads and bridges based on the appraisal estimates, the 1998 traffic counts, and PCR estimates based on the 1998 traffic, since the 2001 traffic count does not include gravel roads. 4.2.6 In the PCR, the traffic on the project roads have been forecasted using the two nationwide traffic counts of 1998 and 2001 and the review of feasibility studies conducted by consultants for the NRA. The consultants have used growth of the vehicle fleet, agricultural production, fuel consumption and population to get an indication of the traffic forecast in their project roads complemented by ad hoc traffic counts. A traffic growth rate of 3% to 5 % is being adopted by NRA on the main and gravel roads of the country and the same percentage growth has been considered for the traffic projections in the PCR. The 2005 PCR traffic estimate of Chikwawa - Bangula based on the 2001 nationwide traffic counts shows a decrease by 14 % while that of Benga –Nkhotakota - Dwangwa an increase of 8 % when compared with the appraisal estimate, due to the high projected growth rate at appraisal. The PCR traffic projection based on the actual traffic of the 1998 and 2001 have increased only in three projects (the resealing of Benga – Nkhotakota - Dwangwa, one bridge and one gravel road) out of the eleven projects when compared with the appraisal estimates.

4.3 Institutional Performance

4.3.1 The Ministry of Works (MOW) through its Roads Department was responsible for implementation of the project. No changes occurred in the organisational structure of the Roads wing since the appraisal until the completion of the project. A qualified and experienced engineer from the Roads Wing of the MOW was designated as Project Coordinator for the implementation of the project. The designated Project Coordinator with the assistance of the appointed supervision consultants was given the overall responsibility for the implementation of the project including all procurements, apart from the day to day supervision of the rehabilitation/ construction and resealing works.

4.3.2 In 1997, Government was in the process of adopting reforms in the road sector including new Institutional arrangements. A new institution the “National Roads Authority (NRA)” was established under these reforms and the operational functions of the Roads Department of the MOW was transferred to the newly created NRA with the Ministry retaining regulatory, strategic planning and policy issues. At the same time, the existing MOW was merged with Ministry of Transport and has been re- designated as Ministry of Transport and Works (MOTW).

4.3.3 The performance of the Executing Agency in the execution of the project works was noted to

be just satisfactory. The Executing Agency could have done a more proper and detailed assessment on the

9 works executed vis-à-vis project expenditures, before taking a decision to reduce the original scope of works, since large savings were realized at the end of completion. The financial management of the projects was found to be un- satisfactory due to delayed payments to the contractors and consultants. This situation led the contractors to slow down their progress. 4.3.4 The Project coordinator had performed his functions to the satisfaction of the Bank and the Executing Agency. Effective contact was established between the Bank, Ministry, Consultants as well as the Contractor. 4.4 Management and Organisational Effectiveness 4.4.1 The Executing Agency at appraisal and during the project implementation period was the Roads Department of the MOW. The MOW had a Commissioner for Works, with four departments, headed by Controllers; one of them was the Controller of Roads. The Controller was assisted by two deputies, for construction / maintenance and design /planning. The deputy controller of Roads for Construction / Maintenance administered the contracts and supervision of the project roads. The Road Department of MOW had sufficient experience and capacity to execute the road construction works. The technical units of the Controller of Roads were staffed by qualified Malawian and expatriates during the project implementation 4.4.2. At appraisal, MOW has been responsible for both planning and implementation functions of the projects in road sub-sector. With the objective of strengthening the road sub sector management capacity, the responsibilities of implementation and policy / strategy have been separated since the establishment of NRA in 1999. The Ministry became responsible for overall policy formulation and strategic planning of the transport infrastructure, while NRA has been made responsible for the road network operations, i.e. construction, maintenance, rehabilitation and development of the designated public (central, district and urban) roads. NRA, being a performance oriented semi-autonomous organization, is managed by qualified staff, and has the required skilled personnel to implement and monitor the road projects. 4.4.3. Currently, NRA is functioning with two major departments: Operations for road management and Finance for mobilization of finances and accounting. As part of the drive for efficiency in the road sector, WB and EU are supporting GOM to restructure NRA. A study conducted on the functional review of the road sector institutions recommended that NRA functions should be separated in order to enhance transparency, openness, accountability so that the procurer and provider of services should be separate and operate under different management. The restructuring will set up an independent Road Fund ( which is currently under the financial management of NRA) and allow the Roads Authority to focus on the delivery of maintenance and development programs. 4.4.4 The execution of the road project was however not affected by the institutional reforms that took place in 1999, since the project was completed in 1998. 4.5 Staff Recruitment, Training and Development 4.5.1 MOW’s performance at appraisal was satisfactory in terms of skilled technical staff to monitor the project. The Roads Department was staffed by qualified Malawians and expatriates. Of the total 122 professional posts, 18% was filled by expatriates. Four engineers and a transport economist were trained from the proceeds of this loan, as it was a condition precedent to first disbursement of the loan. Due to the restructuring, only one engineer is presently working in the NRA. However, information on the staff recruitment and training of the Road Department during the project implementation period was not available, since the functions have been transferred to the NRA. So far 140 posts out of 148 established posts were filled by NRA. Out of the vacant posts, 4 are professional posts. In addition, due to the separation of the responsibilities of implementation and policy / strategy, some of the Ministry’s qualified staffs have moved to NRA.

10 4.6 Performance of Consultants, Contractors and Borrower

Consultants 4.6.1 The overall performance of all the three consultants, viz. Messrs Burrow Binnie Intl (S. Africa), TAMS (USA) and BNM Consortium (Malawi) was found to be satisfactory and to the satisfaction of the Government and the Bank. The Consultants as part of their services reviewed and suggested improvements necessary in the field during execution. The Resident Engineers of the consultants conducted regular field tests to confirm to the specified requirements before incorporation in the works. Constant supervision of project works by the consultants was undertaken at every stage to maintain quality of works. Adding to this, all consultants were regular in submitting progress reports to the EA for review and onward transmission to the Bank. Good coordination existed through out the execution between the Consultants and the Contractors. Even though there was an initial delay in the commencement of services for the Technical Assistance component, the consultant delivered the outputs to the satisfaction of the Borrower. 4.6.2 The Executing Agency maintained close working relationship with all the supervising consultants during the course of the project implementation. Contractors 4.6.3 Seven contractors were selected for execution of different components of the project. The international contractors selected were noted to be active in Africa with several years of experience and executed many similar road projects in many countries. The overall performance of all (both international and local) contractors in the execution of works of different components under the project on the quality and workmanship was found to be satisfactory. The Borrower 4.6.4 The Loan Agreement was signed by the Borrower on 30 November 1990 for ADF loan and 29 May 1990 for the Grant. i.e. after 9 ½ months of the approval for the loan and 3 ½ months for the Grant. Since there was no pre-condition for the ADF loan, the loan was declared effective from 1 December 1990. However, it took 15 months for the GOM to fulfil the only one condition precedent to entry into force for the grant effectiveness; the reason being that there was a substantial delay by the GOM in making available the documents and other information necessary to the selected consultant pertaining to the Road Safety Programme and the Technical Assistance for developing local construction and consulting industry. 4.6.5 The Borrower submitted quarterly progress reports regularly to the Bank. The requirement of submission of annual audit reports for the project in accordance with the General conditions of Loans was however not met by the Borrower. At the end of project completion, a final audit report containing the summary of findings was submitted to the Bank. In conclusion, the performance of the Borrower can be rated as satisfactory. 4.7 Conditions/Covenants 4.7.1 There was no condition precedent to entry into force for the ADF loan to be effective. As such the loan was declared effective on the following day (1 December 1990) after the signature on 30 November 1990. However, there was one condition precedent to entry into force for the grant to be effective was fulfilled by GOM one year after the loan signature (i.e. 29 May 1990) and the grant was declared effective on 23 May 1991. All “other conditions” for the Grant were however fulfilled during the period of implementation. 4.8 Economic Performance 4.8.1 At appraisal, the rehabilitation of Chikwawa - Bangula, resealing of Benga –Nkhotakota – Dwangwa, rehabilitation of the six earth roads to gravel and the three bridges economic justification were carried out based on an assessment of net incremental benefits by comparing with and without the

11 project scenarios, discounted over 20 years economic life of the projects. The economic costs include construction and supervision costs while the benefits are savings in the vehicle operating costs (VOC) and reduced maintenance costs. At appraisal, the construction works were expected to commence in March 1991 and completed in March 1993. Based on the economic costs and road user benefits, the resulting economic internal rate of return of the rehabilitation of Chikwawa - Bangula and the resealing of Benga - Nkhotakota - Dwangwa were 15.1% and 14.9% (the weighted average for the two sections of the project road) respectively, while the gravel roads and bridges ranged from 8% to 56.9% (Annex 5). 4.8.2. The estimates of project benefits were based on VOC and road maintenance cost savings with projected fixed rate of traffic growth of 3 % to 5 % per annum. This percentage of traffic growth is consistent with the traffic growth used for main and gravel roads by the NRA. Thus, the above traffic growth rate of the project road is assumed to be reasonable. The economic analysis for the rehabilitation, the resealing, gravel roads and bridges were conducted by converting the financial costs into economic terms applying relevant conversion factors applicable in Malawi. The actual construction and supervision economic costs as well as the benefits emanating from the revised traffic forecasts, using the 1998 and 2001 traffic counts, formed the basis for re-evaluation of the EIRR. Benefits include savings in VOC and maintenance costs and a 20% residual value considered for the rehabilitation and resealing projects. 4.8.3. For the rehabilitation and resealing projects, the Highway Development & Management (HDM – 4) Model was used to calculate the maintenance costs and VOC and shows an EIRR of 12.9% and 13.4 % and Net Present Value (NPV) of US$ 0.206 million and US$1.353 million respectively at 12 % discount rate (Annex 5). The rehabilitation EIRR of 12.9 % compared with 15.1 % at appraisal is low due to the decrease in traffic and increase in the construction costs. The resealing project’s EIRR of 13.4% is also lower than the appraisal, 14.9 % due to the 12 % increase in the construction cost, even though the traffic has increased by 8 %. Conventional Excel spread sheet used by the NRA for evaluating the rehabilitation of earth to gravel roads and bridges have been used for the recalculation of the EIRR. The spreadsheet compares the VOC of different vehicle types with and without the project. The recalculated EIRR of the gravel roads and bridges range from 12.08 % to 32.2 % and the detail is attached as Annex 5. Almost all of the recalculated EIRR are well above the opportunity cost of capital of 12%.

5. SOCIAL AND ENVIRONMENTAL SUSTAINABILITY 5.1 Social Impact 5.1.1. The project roads have supported the social and economic recovery program and poverty alleviation in the three regions of the country where the roads and bridges traverses by quick access to social facilities and markets. Principal agricultural products that grow in the zone of influence area of the districts of the project roads include maize, cassava, millet, rice, groundnuts, beans, sorghum, tobacco and cotton. Even though actual information on the production of these agricultural products was not available, overall agricultural product and their prices have increased due to increased access to urban markets. 5.1.2. The rehabilitation, resealing and improvements have facilitated easy access and development of social services necessary to assure the well-being and development of people living in the project influence area, which were previously either insufficient or non-existent ( like domestic water supplies, access to rural health centers and education etc). 5.1.3 The gender benefit from the projects could not be assessed due to the lack of information. It is learnt that women were not employed as labourers during road construction due to cultural influence. But now employment of women in some trading canters, such as, hotel administration, retail trades, health services and education has been noted. The project roads have also provided access for women to markets, social, health and educational centres. 5.1.4. The settlement pattern followed linear development along the road and the value of land along the project road trading centers has increased. Many trading centers have developed and the previously settled areas have further developed, providing the local people with manufacturing outputs in their

12 neighbourhood. In the major trading centers, more shops, schools, health facilities, and hotels have been constructed or upgraded.

5.2 Environmental Impact 5.2.1 No environmental studies were carried out for the projects since it was not mandatory. Besides, the upgrading and resealing works were confined solely to the existing alignment, and had no major physical intervention on the human and natural environment. The Michinji – Mkanda gravel road fringes in Michinji Hill Forest Reserve area and adequate measures were taken to protect the forest area. All borrow pits and quarry sites in almost all places have been properly restored and no problems reported. All the potential negative environmental impacts of the road projects in terms of soil erosion and drainage system disturbances were mitigated during the project implementation by standard environmental engineering practice. 6. PROJECT SUSTAINABILITY 6.1 For the sustainability of the investment in the road sub-sector, NRA conducts proper maintenance and additional preventive measure like axle load control. The sustainability of the project hinges on continued availability of funding for routine and periodic maintenance. In order to expedite administration and management of maintenance activities, NRA has two main divisions for implementation of routine maintenance programs, i.e., the Central Road Division (CRD) for Main, Secondary and Tertiary Roads; and the Urban & District Roads Division (UDRD), responsible for Urban and District Roads. Routine maintenance programs are carried out with funding from a fuel levy and other road user charges by contracting out to the private sector firms through either open tendering or short listing.

6.2 The project road routine maintenance is being handled and maintained in accordance with the

GOM maintenance program by the CRD and UDRD. GOM has introduced the fuel levy fund to ensure adequate provisions for the maintenance of the road network. The fuel levy has increased by 10 % per annum (from Mk 1.24 billion in 2002 to MK1.51 billion in 2004). To further augment the maintenance fund the fuel levy has been raised to Mk8.70 per liter for petrol and Mk6.70 per liter of diesel from 6.75 and 4.75 diesel, an increase of 29% and 41% respectively as of November 2004. In terms of USD, the maintenance expenditure has decreased by 21% between 2002-2004. But the November 2004 fuel levy shows an increase of 5 % and 15% on petrol and diesel respectively, which will augment the maintenance expenditure. In order to get good return of the value of money on the investment, NRA has planned ahead for the periodic maintenance of the section of Nkhotakota – Dwangwa part of the road by 2008 – 2010 as shown in the Five Year Strategic and Business Plan of NRA. On the other hand, it was noted that the maintenance activities carried out on the gravel roads appear to be minimum. Undertaking intensive regular maintenance activities (routine and periodic) for the gravel toads is very essential to minimize the deterioration. 6.3. On preventive level, axle load control plays a significant role in reducing repair and maintenance work on the road network, if effectively introduced. Thus NRA took over axle load control from the Road Traffic Department of the Ministry of Transport and Public Works in October 2003 in order to vigorously enforce vehicle weight limits and vehicle dimensions to protect the road infrastructure. The Authority is operating four fixed weighbridges at Songwe, Michinji, Balka and Mwanza and has a plan to conduct axle load survey study in 2005 – 2006 that would help to chart out future plans. Thus with the NRA’s effort on maintenance and preventive measures, the sustainability of the project is ensured.

7.0 PERFORMANCE OF THE BANK 7.1 The project was in line with the Borrower’s policies and priorities. The timely intervention of the Bank for improvement and maintenance of the selected roads facilitated the GOM to improve the transport services in Northern, Central and Southern regions of the Country. The Bank’s performance at appraisal was satisfactory.

13 7.2 The Bank carried out regular desk monitoring and several ( 12 ) field supervisions during implementation. In addition follow up missions including participation from other departments also took place. However, it was felt that during implementation, the Bank could have reviewed in detail the progress of works vis-à-vis expenditures, before agreeing to the proposals of the Government for reduction in the original scope of works, which led to large savings at completion and ultimate cancellation. 7.3 The Bank adhered to the agreed procurement schedule at appraisal. However, the slippages during implementation were caused mainly due to several other factors stated in the earlier sections. 7.4 The processing of loan documents and disbursement applications were handled within the guidelines of the Disbursement manual. However, some applications were delayed due improper submissions by the borrower. From the perspective of the Borrower, there were some payment delays from the Bank. Upon verification, it was noted that such cases were the minimum. 7.5 Overall, the performance of the Bank is judged just satisfactory. 8. OVERALL PERFORMANCE AND RATING 8.1 In accordance with the implementation performance indicators (Annex 6), the overall assessment of implementation performance is satisfactory with a rating of 2.4 out of 4 maximum. The rating for the Bank's performance is 2.25 out of 4 maximum indicating just satisfactory, while the project outcome has been rated to be 2.45 out of 4 maximum. In general, the overall performance of the project is satisfactory except delays in the implementation due to unforeseen circumstances. 9 CONCLUSIONS, LESSONS LEARNED AND RECOMMENDATIONS 9.1 Conclusions 9.1.1 The overall objectives of the project have been partially achieved. The timely intervention of the Bank for improvement and maintenance of the selected roads facilitated the GOM to improve the transport services in Northern, Central and Southern regions of the Country, thus reducing the road transport costs and passenger travel time. 9.1.2 During implementation, GOM felt (without carrying out detailed analysis of progress of works vis-à-vis expenditures), inflation and deterioration of road conditions may lead to cost overruns. With this in view, coupled with funding constraints, Government proposed a reduction in the original scope of works ( in order to be within the approved funds), and these reductions were agreed by the Bank. 9.1.3 The long delays in the project implementation could be attributed mainly due to several other factors as indicated in section 3.3.3 9.1.4 The performance of the Contractors, Consultants and Borrower were satisfactory. As a result, the overall implementation rating of the project was found to be satisfactory with a rating of 2.40 out of 4 (maximum). 9.1.5 The periodic and routine maintenance works on the completed gravel roads components of the project were noted to be unsatisfactory. 9.1.6 No annual traffic counts were undertaken by the Borrower since 1998 (except in 2001). As such historical traffic data was not available for the evaluation of the project roads. 9.1.7 The recalculated EIRRs at PCR for different components of the project varies between12.08% to 32.2 %. The gravel roads sections and constructed bridges that were inspected 7 years after completion were deteriorated at some places with deep corrugations due to heavy traffic and incessant rains.

14 9.1.8 In terms of financial performance, substantial savings were realized on ADF loan, while the GOM contributed the local costs amounting to UA 2.76 million. It was noted that the decision taken by the Government for reduction (approved by the Bank) in the original scope of works during implementation has no justification in view of the large savings realized at the completion of the project.

9.1.9 The ADF loan balances of UA 6.42 million and TAF Grant balance of UA 0.43 million, after the completion of the project were cancelled by the Bank in October 2000. 9.1.10 There was no separate component included under project cost estimates for audit of the project. No annual audits were undertaken by the GOM in accordance with the General Conditions of Loans. It was noted that a final audit of the project was undertaken in December 2002, and a summary of the findings was made available to the Bank. 9.2 Lessons Learned 9.2.1 The lessons learned from the project are given hereunder:

• Inadequate institutional capacity to undertake detailed review and analysis, resulted in improper planning and utilization of approved funds to maximum ( para 3.2.1);

• A proper assessment by the Executing Agency and the Bank during implementation for

the reduction in the scope of works, could have minimised the large savings noted at the completion of the project ( para 3.2.1);

• Mid –Term reviews are very necessary for “Ageing Projects” such as ROMAC II. This

would help in assessment of physical and financial status of the project and would be the guiding factor to determine the increase or decrease in the scope of works;

• Conducting a technical and financial audit ( which was not included in this project)

would have been useful to identify and resolving issues for smooth implementation (para 3.4.2);

• Obtaining information/data from the Borrower/Executing Agency for the projects that

were completed long ago from the archives, was noted to be source of problem, since project records were not available;

• The extent of deterioration in case of gravel and earth roads is almost the same.

However upgrading of the existing earth roads to gravel standards would be more expensive than improving the existing earth roads ( para 4.2.1).

9.3 Recommendations 9.3.1 In view of the above, it has been recommended that: (i) For the Borrower

• Institutional capacity be strengthened to undertake detailed review / assessment of projects before appraisal and during implementation;

• Make efforts to undertake and rectify the defects observed during the field inspection of

the completed project to preserve the investment.;

• Undertake intensive regular maintenance activities (routine and periodic) for the gravel roads to minimize the deterioration;

15

• To commit and conduct on regular basis annual national traffic counts for efficient road planning and project evaluation;

• Should comply with the requirements of the General Conditions of Loan Agreements in

respect of conducting and submission of annual Audit Reports of the projects;

• Make efforts to maintain proper records/ documentation for the completed projects (irrespective of their time of completion), for easy reference to the visiting Bank

missions. (ii) For the Bank

• It is necessary to undertake in–depth reviews during implementation, before agreeing to the changes proposed by the Borrower for reduction in the scope of works;

• Bank missions to follow up with the Borrowers’ on the submission of annual project

audit reports on regular basis, in accordance with the Bank’s General Conditions of Loan Agreements;

• Bank to undertake PCRs for the completed projects as early as possible, so that

necessary documentation/data on the project would be available for reference and inclusion in the report.

• Bank to consider the possibility of financing the existing earth roads to a better standard (with out upgrading to gravel standard), which would be less costly.

A matrix of recommendations is presented in Annex 7.

This map was provided by the African Development Bank exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its members any judgement concerning the legal status of a territory nor any approval or acceptance of these borders.

Annex 3 Page 1 of 2

MALAWI

Road Maintenace and Construction Project II ( ROMAC II) Project Completion Report (PCR)

Actual Project Costs (Component and Source)

(UA million)

ADF GOM Total Foreign

Exchange Local Cost

Total

%

Foreign Exchange

Local Cost

Total

%

Foreign Exchange

Local Cost

Total

%

A. Civil Works

9.82 1.09 10.91 90.7 - 0.80 0.80 95.3 9.82 1.89 11..71 91.7

B. Supervision (Supervision of Construction)

0.96 0.14 1.10 6.4 - 0.09 0.09 4.7 0.96 0.23 1.19 6.0

C. Tech. Assistance 1.82 0.14 1.96 2.9 - 0.05 0.05 1.82 0.19

2.01 2.3

Total 12.60 1.37 13.97 100 - 0.94 0.94 100 12.60(84.5%)

2.31 (15.5%)

14.91 100

Source: MOWS and ADB Mission, August 2005.

Annex 3 Page 2 of 2

MALAWI

Road Maintenace and Construction Project II ( ROMAC II) Project Completion Report (PCR)

Categories of Expenditure (UA million)

At Appraisal Actual Foreign

Exchange Local Cost

Total

%

Foreign Exchange

Local Cost

Total

%

ADF LOAN A. CONSTRUCTION &

CONSULTANCY SERVICES • Civil Works • Supervision

12.04 1.50

7.84 0.62

19.88 2.12

90.4 9.6

9.82 0.96

1.89 0.23

11.71 1.19

91.0 9.0

Sub Total (A) 13.54 8.46 22.00 100.0

10.78

2.12

12.90

100.0

TAF GRANT B. TECH. ASSISTANCE

2.10

0.42

2.52

100.0

1.82

0.19

2.01

100.0

Sub-Total (B) 2.10 0.42 2.52 100.0 1.82 0.19 2.01 100.0 Grand Total(A& B) 15.64 8.88 24.52 12.60 2.31 14.91

Source: MOWS and ADB mission, August 2005

ANNEX 4 Page 1 of 2

MALAWI

Road Maintenace and Construction Project II ( ROMAC II) PROJECT COMPLETION REPORT

YEARLY DISBURSEMENT BY SOURCE OF FUNDS

(In UA MILLION)

ADF TAF GOM Year As at Appraisal Actual As at Appraisal Actual As at Appraisal Actual Amount Cum.(%) Amount Cum.(%) Amount Cum.(%) Amount Com.(%) Amount Cum.(%) Amount Cum.(%) 1990 0.25 1.35 - - 0.43 17.91 - - 0.01 0.27 - - 1991 4.60 26.33 - - 0.83 52.50 - - 0.95 25.95 - - 1992 8.98 75.08 0.36 3.00 0.41 69.58 0.88 44.67 1.80 74.59 0.09 9.95 1993 2.85 90.56 0.77 9.41 0.44 87.91 0.38 63.95 0.58 90.27 0.05 14.89 1994 1.74 100.00 1.95 25.67 0.14 93.75 0.24 76.14 0.35 99.72 0.20 36.17 1995 - - 1.49 38.08 0.15 100.00 0.13 82.74 0.01 100.00 0.05 41.48 1996 - - 0.63 43.33 - - 0.15 90.36 - - 0.09 51.06 1997 - - 3.42 71.83 - - 0.18 99.49 - - 0.29 81.91 1998 - - 1.79 86.75 - - 0.01 100.0 - - 0.16 98.93 1999 - - 1.31 97.67 - - - - - 0.01 100.00 2000 0.28 100.00 Total 18.42 12.00 2.40 1.97 3.70 0.94 Sources: FFCO & MOWS and ADB Mission August 2005

Annex 4 Page 2 of 2

MALAWI Road Maintenace and Construction Project II ( ROMAC II) Project Completion Report (PCR) ADF Disbursement Schedule (Appraisal Vs Actual) (UA Million)

At Appraisal Actual

ADF TAF ADF TAF

Year Amount Cum(%) Amount Cum(%) Amount Cum(%) Amount Cum(%)

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

0.25 4.60 8.98 2.85 1.74

- - - - - -

1.35 26.33 75.08 90.56 100.0

- - - - - -

0.43 0.83 0.41 0.44 0.14 0.15

- - - - -

17.91 52.50 69.58 87.91 93.75 100.0

- - - - -

-- --

0.36 0.77 1.95 1.49 0.63 3.42 1.79 1.31 0.28

- -

3.00 9.41 25.67 38.08 43.33 71.83 86.75 97.67 100.0

- -

0.88 0.38 0.24 0.13 0.15 0.18 0.01

- -

- -

44.67 63.95 76.14 82.74 90.36 99.49 100.0

- -

Total 18.42 100.00 2.40 100.00 12.00 100.00 1.97 100.00 Balances under Loan / Grant 6.42 0.43

Loan/ Grant balances cancelled 6.42 0.43

Source: FFCO and ADB Mission August 2005

ANNEX 5 MALAWI Page 1 of 3

ROAD MAINTENANCE AND CONSTRUCTION II (ROMAC II) PROJECT - REHABILITATION OF CHIKWAWA BANGULA ROAD

PROJECT COMPLETION REPORT Comparison with VS without CHIKWAWA - BANGULA ROAD REHABILITATION

ECONOMIC BENEFIT-COST ANALYSIS Costs ( US$ in million) Normal (+ Diverted) Traffic Generated Traffic Accident Net Total

Capital Recurrent NMT Time NMT Time Cost Exogenous Net

Year Works Works MT VOC

MT Time & Operation

MT VOC

MT Time

& Operation Reduction Benefits Benefits

1998 -0.002 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 -0.0021999 -4.882 0.000 0.026 0.000 0.000 0.001 0.000 0.000 0.000 0.000 -4.8552000 0.000 0.000 0.156 0.001 0.002 0.002 0.000 0.000 0.000 0.000 0.1612001 0.000 -0.010 0.172 0.001 0.002 0.005 0.000 0.000 0.000 0.000 0.1702002 0.000 -0.010 0.189 0.001 0.002 0.008 0.000 0.000 0.000 0.000 0.1902003 0.000 -0.020 0.209 0.001 0.002 0.018 0.000 0.000 0.000 0.000 0.2102004 -0.362 -0.020 0.230 0.001 0.003 0.021 0.000 0.000 0.000 0.000 -0.1272005 0.000 -0.022 0.254 0.001 0.003 0.023 0.000 0.000 0.000 0.000 0.2592006 0.000 -0.022 0.280 0.001 0.004 0.026 0.000 0.000 0.000 0.000 0.2892007 0.000 -0.025 0.305 0.001 0.004 0.028 0.000 0.000 0.000 0.000 0.3132008 0.000 -0.028 0.325 0.001 0.004 0.030 0.000 0.000 0.000 0.000 0.3322009 0.000 -0.032 0.341 0.001 0.004 0.031 0.000 0.000 0.000 0.000 0.3452010 0.000 -0.036 0.361 0.001 0.004 0.033 0.000 0.000 0.000 0.000 0.3632011 0.000 -0.041 0.383 0.002 0.005 0.034 0.000 0.000 0.000 0.000 0.3832012 0.000 -0.046 0.434 0.002 0.005 0.039 0.000 0.001 0.000 0.000 0.4352013 0.000 -0.051 0.484 0.002 0.005 0.043 0.000 0.001 0.000 0.000 0.4842014 0.000 -0.057 0.511 0.002 0.005 0.048 0.000 0.001 0.000 0.000 0.5102015 0.000 -0.062 0.571 0.002 0.005 0.053 0.001 0.001 0.000 0.000 0.5712016 0.000 -0.068 0.596 0.002 0.006 0.055 0.001 0.001 0.000 0.000 0.5932017 -0.127 -0.068 0.602 0.002 0.006 0.058 0.001 0.001 0.000 0.000 0.729

Total: -5.115 -0.618 6.429 0.025 0.071 0.556 0.003 0.006 0.000 0.000 1.353NPV @ 12 % = US$1.353 million, EIRR = 12.9%

ANNEX 5

Page 2 of 3

MALAWI ROAD MAINTENANCE AND CONSTRUCTION II (ROMAC II) PROJECT - RESEALING OF THE BENGA - NKHOTAKOTA - DWANGWA ROAD

PROJECT COMPLETION REPORT Comparison with VS without RESEALING OF BENGA - NKHOTAKOTA - DWANGWA ROAD

ECONOMIC BENEFIT-COST ANALYSIS

Costs ( US$ in million)

Normal (+ Diverted) Traffic Generated Traffic Accident Net Total

Capital Recurrent NMT Time NMT Time Cost Exogenous Net

Year Works Works MT VOC MT Time

& Operation MT VOC

MT Time

& Operation Reduction Benefits Benefits

1998 -4.440 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 -4.4401999 0.000 0.000 0.123 0.001 0.000 0.003 0.000 0.000 0.000 0.000 0.1272000 0.000 -0.001 0.132 0.001 0.000 0.003 0.000 0.000 0.000 0.000 0.1352001 0.000 -0.001 0.137 0.001 0.000 0.004 0.000 0.000 0.000 0.000 0.1412002 0.000 -0.003 0.142 0.001 0.000 0.004 0.000 0.000 0.000 0.000 0.1442003 0.000 -0.003 0.149 0.001 0.001 0.005 0.000 0.000 0.000 0.000 0.1532004 0.000 -0.005 0.167 0.002 0.001 0.007 0.000 0.000 0.000 0.000 0.1722005 -0.421 -0.007 0.174 0.002 0.001 0.009 0.000 0.000 0.000 0.000 -0.2422006 0.000 -0.009 0.187 0.002 0.001 0.012 0.000 0.000 0.000 0.000 0.1932007 0.000 -0.013 0.189 0.002 0.001 0.018 0.000 0.000 0.000 0.000 0.1972008 0.000 -0.015 0.234 0.002 0.001 0.027 0.000 0.000 0.000 0.000 0.2492009 0.000 -0.021 0.245 0.003 0.001 0.039 0.000 0.000 0.000 0.000 0.2672010 0.000 -0.028 0.259 0.003 0.001 0.048 0.000 0.000 0.000 0.000 0.2832011 0.000 -0.035 0.273 0.003 0.001 0.062 0.000 0.000 0.000 0.000 0.3042012 0.000 -0.047 0.285 0.003 0.001 0.074 0.000 0.000 0.000 0.000 0.3162013 0.000 -0.059 0.317 0.003 0.001 0.083 0.001 0.000 0.000 0.000 0.3462014 0.000 -0.064 0.371 0.004 0.001 0.092 0.001 0.000 0.000 0.000 0.4052015 0.000 -0.081 0.396 0.004 0.001 0.123 0.001 0.000 0.000 0.000 0.4442016 0.000 -0.095 0.437 0.004 0.001 0.134 0.001 0.000 0.000 0.000 0.4822017 0.000 -0.120 0.488 0.004 0.001 0.156 0.001 0.000 0.000 0.000 0.530

Total: -4.861 -0.607 4.705 0.046 0.015 0.903 0.005 0.000 0.000 0.000 0.206NPV @ 12 % = US$ 0.206 million, EIRR = 13.4%

ANNEX 5 Page 3 of 3

MALAWI ROAD MAINTENANCE AND CONSTRUCTION II (ROMAC II) PROJECT

PROJECT COMPLETION REPORT (PCR) SUMMARY OF ECONOMIC INTERNAL RATE OF RETURNS AND NET PRESENT VALUES OF GRAVEL ROADS AND BRIDGES

ADT ADT growth rates (%)

EIRR growth rates NPV at 12%

Based on 1998 As per (%) (USD in million)

Appraisal traffic counts As per

1998 traffic Appraisal PCR Appraisal PCR

No Name of Road Section or Bridge

Length 1989 1998 2005 1998 2005 Appraisal counts 1989 2005 1989 2005

Gravel Roads (km) 1 Mponela - Ntchisi 25.0 67 150 282 134 191 9.3 5.2 39.2 29.5 0.946 2 Junction M3 - Malindi 12.0 84 187 348 71 101 9.3 5.2 15.0 12.7 0.011 3 Mchinji - Mkanda 35.6 95 211 394 141 200 9.3 5.2 13.0 22.7 0.403 4 Msokela - Lifupa Lodge 52.6 46 102 191 200 286 9.3 5.2 17.0 12.1 0.006 5 Nsanade - Cape Maclear 18.4 62 138 257 117 167 9.3 5.2 22.2 32.3 0.599 6 Zombal Loop S73 14.0 47 105 195 77 110 9.3 5.2 8.5 21.3 0.096

Bridges

(Mts) 1 Mtedza 28.0 57 88 123 124 174 5.0 5.0 56.9 28.0 1.009 2 Likalangala 36.0 105 163 229 84 118 5.0 5.0 29.3 18.0 0.465 3 Lingadzi 28.0 57 88 124 82 116 5.0 5.0 56.9 24.0 0.640

ANNEX 6

Page 1 of 4

MALAWI

ROAD MAINTENANCE and CONSTRUCTION PROJECT II ( ROMAC II)

PROJECT COMPLETION REPORT

Performance Rating Scale and Evaluation Criteria 1. Rating Scale

X > 3 Highly satisfactory

2 < X < 3 Satisfactory

1 < X < 2 Unsatisfactory

X < 1 Highly unsatisfactory

Where X is the value assigned to a performance variable. Classification: Implementation performance is considered satisfactory if the average value of X is > 2. 2. Evaluation Results

Component Indicators Score (1-4)

Remarks

1. Adherence to time schedule 2 Initial delay of 9 months and the project was completed with a time over-run of 30 months.

2. Adherence to cost schedule 2 Project was completed within the budget with reduced scope of works.

3. Compliance with covenants 3 No delay in ADF loan effectiveness, but delay in TAF grants effectiveness.

4. Adequacy of monitoring & evaluation and Reporting

2 Complied with submission of all the relevant reports, though there were delays at times

5. Satisfactory Operations (if applicable)

3 VOC, travel time and accidents decreased, traffic flow higher than the projection.

TOTAL 12 Overall Assessment of Implementation Performance

2.4

Satisfactory

ANNEX 6 Page 2 of 4

MALAWI

ROAD MAINTENANCE and CONSTRUCTION PROJECT II ( ROMAC II)

PROJECT COMPLETION REPORT

FORM BP 1

BANK PERFORMANCE

Component Indicators

Score

(1 to 4)

Remarks

1. At Identification 3 The project was a discrete component of the Infrastructure Programme of the World Bank.

2. At preparation of project

2 The preparation met the project requirements

3. At appraisal 2 The project was of high importance to GOM.

4. At supervision 2 Problems encountered were resolved in time and adequate measures taken. However, an in-depth review of the project status during implementation would have guided in the reduction of the original scope of works, that led to large savings at the completion

Overall assessment of Bank Performance

2.25

Satisfactory

ANNEX 6 Page 3 of 4

MALAWI

ROAD MAINTENANCE and CONSTRUCTION PROJECT II ( ROMAC II)

PROJECT COMPLETION REPORT

FORM PO 1

PROJECT OUTCOME

No.

Component Indicators

Score (1 to 4)

Remarks

1 Relevance and Achievement of Objectives*

i)

Macro-economic policy

3

ii)

Sector Policy

3

iii)

Physical (incl. Production)

3

Well prepared programme for Rehabilitation and maintenance

iv)

Financial

-

v)

Poverty alleviation, social & gender

2

vi)

Environment

3

Provisions of the Environmental Guidelines were implemented.

vii)

Private sector development

-

viii)

Other (Specify)

2

Institutional Development (ID)

i) Institutional framework incl. Restructuring

2

ii) Financial and Management Information Systems including Audit Systems

2

There is no computerized Financial and MIS at MOW. Annual auditing of the project was done.

iii) Transfer of Technology 2 iv)

Staffing by qualified persons (incl. Turnover), training & counter-part staff

2

Annex 6

Page 4 of 4 MALAWI

ROAD MAINTENANCE and CONSTRUCTION PROJECT II ( ROMAC II)

PROJECT COMPLETION REPORT

FORM PO 1

PROJECT OUTCOME

3

Sustainability

Score

Remarks

i)

Continued Borrower Commitment

3

Borrower has shown commitment to road maintenance by increasing its annual budgets and establishing a dedicated Road Fund

ii)

Environmental Policy

3

The National Directorate for Environment Impact Assessment is staffed with qualified and experienced environmentalists. The Policy is appropriately followed.

iii)

Institutional Framework 2

iv)

Technical Viability and Staffing 2

v)

Financial viability including cost recovery systems

-

vi)

Economic Viability 3 The investment for rehabilitation, resealing, improvements and construction, is economically viable

vii)

Environmental Viability 3 Project works are well monitored to ensure compliance with environmental policies and requirements.

viii) O&M facilitation (availability of recurrent funding, foreign exchange, spare parts, workshop facilities etc.)

-

4

Economic Internal Rate of Return 4 EIRR 12.08 % to 32.2.%.

TOTAL 42

Overall Assessment of Outcome 2.45 Satisfactory

ANNEX 7 MALAWI

ROAD MAINTENANCE and CONSTRUCTION PROJECT II ( ROMAC II)

PROJECT COMPLETION REPORT

RECOMMENDATIONS AND FOLLOW-UP MATRIX

Main Findings & Conclusions Lessons Learned/ Recommendations Follow-up Actions Responsibility Formulation & Project Rational: The project was a discrete component of the Infrastructure programme prepared by the World Bank.

Assessment of the costs for each component of the project is very important before effecting changes to the scope.

The GOM should ensure proper assessment of costs for project components, before taking decision to reduce the scope.

GOM

Project Implementation: 1. Time overrun mainly due to delays such as National strike, devaluation, delayed payments, bad weather coupled with flooding of road sections.

ADF/ GOM should try to adhere to the payment schedules agreed, in order to avoid implementation delays.

Minimise delays in project implementation to avoid additional claims by the contractors/ consultants.

GOM / ADB

Compliance with Loan Conditions & Covenants: 1. All reports submitted.

--------

-------------

----------

Performance Evaluation & Project Outcome: The overall project performance rating was satisfactory and the project objective was substantially achieved.

Though the project outcome is benefiting the regions after delayed completion, this could have further enhanced (in terms of time) if this had been completed as per appraisal schedule.

The GOM should endeavour to adhere to implementation schedules.

GOM

Sustainability: There is a risk that the routine and periodic maintenance budget allocation may not be adequate.

GOM has already established a Road Fund and instituted measures to generate adequate resources for road maintenance.

GOM should adequately maintain the gravel roads with available funds.

GOM

ANNEX 8

MALAWI

ROAD MAINTENANCE and CONSTRUCTION PROJECT II ( ROMAC II)

PROJECT COMPLETION REPORT

SOURCES OF INFORMATION

1. Borrower's Project Completion Report, April, 2001. 2. Appraisal Report on Road Maintenance and Rehabilitation Project (ROMAC II),

January 1990. 3. Borrower’s Project Completion Report on Technical Assistance Component, May 1995. 4. Project Files. 5. Bank’s Final Internal Audit Report, November 1998.

6. Summary findings of Government’s Audit Report.

7. National Roads Authority, Annual Report, 1st July 2002 to 30th June 2003.

8. National Roads Authority, Annual Report, 1st July 2003 to 30th June 2004. 9. National Roads Authority, Five – Year Strategic & Business Plan, June 2005.