CIRCULATING COPY

TO BE RETURNED TO REPORTS DESK

DOCUMENT OF INTERNATIONAL DEVELOPMENT ASSOCIATION

Not For Public Use

;5 i- keiMJ\ci | t t;- Report No. P-1284-BD

REPORT AND RECOMMENDATION

OF THE

PRESIDENT

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

TO

THE PEOPLE'S REPUBLIC OF BANGLADESH

FOR A

HIGHWAYS PROJECT

June 11, 1973

This report was prepared for official use only by the Bank Group. It may not be published,quoted or cited without Bank Group authorization. The Bank Group does not acceptresponsibility for the accuracy or completeness of the report.

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CURRENCY EOUIVALEIiT:;

Currency Unit: Taka (Tk)

As of May 8, 1973

IJS$1.00 Tks 7.55Tk 1 = US$.132Tks 1,000 US $132Tks 1,000,000 = US$132,000

Note: The Taka is officially valued at: 18.9677to the Pound Sterling. The Pound is nowfloating relative to the U. S. dollar andconsequently the Tak.^-U.S. dollar exchangerate is subject to chanige.

FISCAL YEAR

July 1 - June 30

INTERNATIONAL DEVELOPMENT ASSOCIATION

REPORT AND RECOMHENDATION OF THE PRESIDENT

TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDITTO THE PEOPLE'S REPUBLIC OF BANGLADESH FOR A

HIGHWAY PROJECT

1. I submit the following report and recomnendation on a proposed

development credit to the People's Republic of Bangladesh for the equivalent

of US$25.0 million on standard IDA terms to help finance a Highway Project.

This credit would replace a US$22.5 million credit to the Islamic Republic

of Pakistan of June 11, 1964 for the East Pakistan Highway Project (Credit

No. 53-PAK) on the basis set out in paragraph 2 of my Report and Recommendation

to the Executive Directors dated September 15, 1972, on the Chandpur II

Irrigation Project (IDA R/72-77).

PART I - THE ECONOMY

2. A report entitled "Reconstructing the Economy of Bangladesh"

(R72-230) was distributed to the Executive Directors on October 13, 1972.

A Country Data Sheet is attached as Annex I. Annex I also contains a brief

description of the economy as presented in paragraphs 3-22 of my Report and

Recommendation to the Executive Directors on an Education Project (IDA/R 73-60)

dated May 29, 1973, with minor updating modifications.

PART II - BANK GROUP OPERATIONS IN BANGLADESH

3. Paragraphs 3-9 of the President's Report of the same date on a

proposed technical assistance credit to Bangladesh (Report No. P-1281-BD)contain a description of Bank Group Operations in Bangladesh. Annex II

contains a summary statement of (i) IDA credits made to Bangladesh since1972, (ii) the loan and credits to Pakistan for projects located wholly

in Bangladesh which have not been reactivated, and (iii) notes on the

status of execution of ongoing projects.

PART III - THE TRANSPORT SECTOR

4. The geography of Bangladesh has given rise to a varied and complex

transport system. Numerous watercourses have traditionally provided the

main avenues of commerce but have also been the principal obstacles to the

development of other and faster means of surface transportation in the

country. These watercourses and the annual monsoon floods require railways

and roads to be built on high embankments. Few building materials are

available locally and in particular rock for road construction is not found

in the alluvial delta terrain. Consequently road and bridge construction

- 2 -

is expensive and the road network is developing only slowly. The movement

of persons and goods very often involves interchanges between two or moremodes of transport withl consequent high travel-time between paints and

resLraint on commerce between different parts of the country.

5. While no estimate is available on the total movement of people

and goods in Bangladesh, in terms of passenger and tonr miles, it is

generally assumed that most traffic moves by water, primarily in the more

than 300,000 privately owned non-motorized vessels. Over short distances

bullock carts also are important carriers. Traffic carried by motor vehicles,mechanized vessels and the railway is concentrated along two north-south

corridors based on the ports of Chalna and Chittagong, respectively, and

consists primarily of foreign trade items (mostly exports of jute and

imports of fuel, foodgrains, some raw materials and industrial products).

6. Due to previous Government policy, which had relegated the then

privately owned water transport sector to a role secondary to the Government-

owned railway, investments necessary to realize the full potential of water

transport have been neglected to some degree while the railway has been called

upon to provide services which could best be operated by water or roadtransport. At the same time, very considerable sums have been spent on an

eubryo arterial road system andl connecting feeder roads. The potential forthe further expansion of road transport, with small investments in adequate

ferry services to connect the road network, coupled with improved utilization

of the water transport arteries, indicates that the railroad should be

expected to carry a decreasing percentsge of traffic in the future. In

recent years, the financial situation of the railway has become more difficultdue to problems of management, operational complications arising from the

fragmented nature of the system and increasing competition from road transport.

7. This complex situation is now further complicated by war damage,

whicn has effectively crippled the railway and impeded some road movements

(while, at the same time, demonstrating the full potential of inland water

transport), and by the uncertainties arising from changed relationships with

India. The latter may result irn an l-ncreased flow of traffic to and from

the port of Calcuctt, the traditional outlet for Bangladesh, and important

Indian cross-traffic to and from, Assam and other northeastern Indian states.Both could have significant effects on the pattern of transport development

in Bangladesh, principally affecting the roles of the railway and of inland

water transport.

8. Tnese facts suggest a cautious approach to major investments in

the transport sector until such time as an overall evaluation of currentand forthcoming transport needs has been completed. A study designed to

provide this evaluation is now underway with assistance from the United

Kingdom and is expected to be substantially completed in about 10 months.

It should produce a comprehensive plan for transport development in

Bangladesh, incorporating a detailed investment program for the period

to 1978/79 and a perspective program for the following ten years. Meanwhile,

-3-

however, there are a number of clear and urgent needs to be met in reconstruct-ing and rehabilitating the transportation system. It is in this contextthat the Association proposes to reactivate the Highways Project, whichwill improve road transportation along the crucial Dacca-Chittagong corridor.

PART IV - THE PROJECT

9. The proposed credit would help finance: (i) the construction ofa bridge over the Sitalakhya River about five miles east of Dacca on theDacca-Chittagong Road, twenty miles of new highway southeast of Feni toshorten the Dacca-Chittagong Road by about seven miles and improvements tothe war-damaged Surma River Bridge in Sylhet; (ii) a feasibility study of asecond bridge over the Surma River at Sylhet and pre-feasibility studiesof other high priority river crossings; (iii) the strengthening of the Roadsand Highways Department (RHD) by providing it with a headquarters buildingto replace currently scattered and unsuitable facilities, spares and toolsfor improving equipment maintenance, consulting services on ferry operations,technical assistance and training. The credit would replace Credit No.53-PAK which was signed on June 11, 1964, and provided US$22.5 million toassist the financing of a project for the construction of 134 miles ofall-weather highway to complete the 150-mile link between the capital atDacca and the main port of Chittagong. Due to the various difficultiesdescribed below, the project was modified twice, once in February 1968(IDA/R68-8) and again in April 1970 (IDA/R70-18). Little construction wascompleted prior to the 1971 disturbances that culminated in the emergenceof an independent Bangladesh. The Government has now requested a new creditof US$25.0 million to reactivate this project. In June 1972 a missionvisited Bangladesh to reappraise the project, with follow-up missions inOctober 1972, January-February 1973, and April 1973 to discuss and furtherrefine the project. A project summary and a technical note describing thefindings of these missions are attached as Annexes III and IV, respectively.

Project History

10. The preparation of designs for the highway section to be financedunder the original credit was delayed by the Indo-Pakistan conflict of 1965,problems in land acquisition, and various other difficulties. When revisedcost estimates were made in 1966 and 1967, the costs were found to have goneup by 65 percent because of the need to allow for additional bridge, culvertand road construction, increased quantities of materials, and price increasessince the original appraisal. Meanwhile RHD had improved certain sectionsof the existing road to meet urgent traffic demands. Therefore, constructionto be financed under the Credit was reduced in February 1968 (IDA/R68-8) tothose sub-sections of the road where improvements would yield the highesteconomic returns. The revised project covered some 70 miles of the Dacca-Chittagong highway, instead of the original 134 miles, plus a five-mile exten-sion from the highway to Narayanganj (a river port about seven miles southeastof Dacca). The amount of the Credit remain unchanged.

11 The first round of bids for the modified road construction project

produced only three bids (all from foreign contractors) and these offers were

all substantially higher than the consultant engineers' revised estimates.

After consultation with the Association, the Goverrment rejected tIhem and

called for new bids. Although several modifications were made to the bid

packages in an effort to reduce contractor risks and increase their interest,

the second bid inritation produced only two bids for the Sitalakhya and

the Feni bypass bridges and rLo bids for the road work. Since the earthworks

required under the project exceeded the capacity of the local industry to

complete the job within an acceptable period of time, the scope of the

road construction was again reduced in April 1970 (IDA/R70-18) from 75

miles to 35 miles with the roads excluded from the project to be improved

by RHD force account. The purpose and amount of the credit continued

basically unchanged. Special emphasis was given in the revised project to

improving the capability of 'ocal contractors by providing technical advisory

services and puttinig at the contractors' disposal Government construction

equipment on a hire or hire-purchase basis. With this assistance, it was

possible in September 1971 to award five contracts for the construction of

embarmkments and small structures to four local contractors and one foreign

contractor. The contracts for the bridges had been atwarded in 1970.

12. When work stopped at the end of 1971, three out of seven piers

on the Sitalakhya Bridge had been partially completed, and progress on the

Feni Road was minimal. Only US$3.6 million had been disbursed. In retrospect

it is clear that the Association had seriously underestimated the difficulties

of building roads in Bangladesh, due to lack of suitable materials and the

need to design roads able to withstand annual monsoon floods, as well as

the reluctance of contractors to bid for work in Bangladesh.

The Reactivated Project

13. The project to be financed with the proposed react4vated credit

is fundamentally the same as the 1970 revised project except that (i) the new

road to be construc.ed at Feni would be reduced from 24 to 20 miles;

(ii) the 11 mile Dacca-Demra-Narayanganj extension has been eliminated, due

to the need to review the design in the light of urban developments over

the last few years; (iii) the Surma River bridge at Sylhet which was

damaged during the recent hostilities would be repaired and improved and

a feasibility study and design of a second crossing over the Surma River

at Sylhet would be undertaken; (iv) assistance to improve the operations of

RHD would be expanded by including construction of a new, fully equipped

headquarters building, procurement of spares and tools for better maintenance

of RHD's existing equipment, and provision of expatriate experts and training;

and (v) provision of equipment and facilities to improve the ferry crossings

on the Dacca-Chittagong road. Although the modifications reduce the actual

length of new road to be constructed, the total cost of the project has

increased to US$40.4 million, due to price increases, the recent currency

changes and inclusion of new components in the project. The proposed credit

would finance (i) notional repayment of amounts previously disbursed under

Credit No. 53-PAK (about US$3.6 million), thus debiting Bangladesh with this

-5-

amount; (ii) project expenditures incurred prior to December 29, 1971 forwhich IDA has not made disbursements (about US$80,000); and (iii) thetotal foreign exchange cost and about 54 percent of the local cost of com-pleting the project. The last item includes the reimbursement to Sweden forsuch disbursements as may have been made under an interim credit which isfinancing some project expenditures prior to effectiveness of the proposednew credit (estimated to be about US$80,000 equivalent).

Organization and Management

14. As part of the program to strengthen RHD, the Government hasestablished a Reorganization Committee to examine methods of improving RHD'sorganization and administration. The proposed reorganization is intendedto place special emphasis on improvements in budgeting and accounting,procurement procedures, maintenance and control of equipment, planning,and personnel management and training. The reorganization requires for itseffectiveness the provision of a new headquarters building, which will allowfor consolidation of offices now scattered at several different locations inDacca. The Government has given assurance of its intention to proceedwith the reorganization at the earliest possible time and would keep theAssociation informed of its progress.

Benefits and justification

15. In 1969, prior to the 1970 revision of the project, an assessmentof the economic return on the Feni Road and the Sitalakhya Bridge indicateda rate of 18 percent and 10 percent respectively. The Feni Road was justifiedon expected savings in vehicle operating costs as a result of shorter journeydistance, faster transit time, improvement in the quality of the road, anda reduction in speed changes by avoiding the busy town of Feni. The expectedbenefits of the Sitalakhya Bridge were from savings in the vehicle andpassenger time costs absorbed in crossing the river by ferry and the avoidanceof higher cost ferry services needed to handle growing traffic volumes. Sincethen, the decline in traffic due to the economic disruption caused by the 1970cyclone and the 1971 hostilities with the resultant loss and damage to the

vehicle fleet and the increases in costs appear to have reduced the previouslyestimated returns to 9 percent and 4 percent respectively. However, giventhe uncertainties attached to any re-evaluation estimates made at a time whenthe economy is disrupted and the vehicle fleet substantially reduced, theamount of work already performed on these facilities, the Government's publiccommitment to complete them and the importance of IDA's continued associationto help ensure the effective strengthening of RHD, the project should becompleted.

16. While construction at the Sitalakhya Bridge and the Feni Road wouldbenefit some of the same flow of traffic, the two improvements are essen-tially independent of each other. For that reason a delay in the executionof the Sitalakhya Bridge which might result from pending negotiations withcontractors (see paragraph 17 below) would not affect the appropriateness of

proceeding to complete the Feni Road works. The repair of the Surma RiverBridge would eliminate long delays now caused by queues waiting to cross itsnarrow bailey bridge section, and would remove the safety hazard of mixingpedestrians, bicycles and motor vehicles. The investments for the strengthen-ing of RHD are intended to make the design and construction of the new roadsmore efficient, and would improve the maintenance of the road network.

Procurement and Disbursement

17. Contracts for the construction of the Feni Road have been re-nego-tiated with firms which had won contracts for the work before suspensionof disbursement of the original credit. The contract for the constructionof the Sitalakhya Bridge is now in process of renegotiation with the originalJapanese contractor. Negotiations have also taken place with an Americanfirm which has equipment and staff in Bangladesh because it is carrying outsimilar projects there; and discussions of a possible joint operation havetaken place between the Japanese and the American firns. It is still un-certain whether a contract will be negotiated with the Japanese firm, theAmerican firm or a combination of the two. If the Government is not ableto negotiate a satisfactory contract with a firm with appropriate equipmentalready in Bangladesh, the cost of building the bridge would increasesubstantially and a new appraisal would be required. If, therefore, itproves impossible to negotiate a satisfactory contract by December 31, 1973,the US$4.7 million of the credit allocated to the bridge would be cancelled.

18. The Indian firm which originally constructed the Surma River Bridgewould carry out the necessary repairs and modifications of the bridge subjectto review by the Association of the design and cost estimates. Contractsfor the construction of the RHD headquarters building would be awarded onthe basis of competitive bidding among local firms. The remaining procurement,including paving contracts for the Feni Road and Sitalakhya Bridge andprocurement of equipment and spare parts for the RHD will be by internationalcompetitive bidding.

19. The credit would finance about 62% of total project cost since itsinception in 1964, which would represent the equivalent of the foreignexchange cost plus about US$5.8 million equivalent of local costs. Localcurrency financing, which had been included in the previous credit forthis project, continues to be justified in the case of Bangladesh due to theinsufficiency of local resources to meet the pressing needs for both reconstruc-tion and development. Disbursement for future expenditure would be madeagainst 100 percent of foreign currency expenditures for civil works,consultant services, technical assistance, training and equipment for theRHD building and repair and maintenance facilities and Dacca-ChittagongRoad ferry facilities, 50 percent of local currency expenditures for highwaycivil works, 70 percent of local currency expenditures for Dacca-ChittagongRoad ferry facilities and 67 percent of total expenditures for constructingthe RMD building. It is expected that all project works would be completedby the end of 1976 and that the proposed credit will be fully disbursed bythe end of 1977.

- 7 -

PART V - LEGAL INSTRUMENTS AND AUTHORITY

20. The draft Development Credit Agreements between the People'sRepublic of Bangladesh and the Association, the Report of the Committeeprovided for in Article V, Section 1(d) of the Articles of Agreement andthe text of a resolution approving the proposed credit are being distributedto the Executive Directors separately. The provisions of the draft Develop-ment Credit Agreements conform substantially to the provisions of the priorDevelopment Credit Agreement with the Islamic Republic of Pakistan andincorporate the relevant provisions of the Project Agreement with the thenProvince of East Pakistan. There would not be a separate Project Agreement.

21. I am satisfied that the proposed development credit would complywith the Articles of Agreement of the Association.

PART VI - RECOMMENDATION

22. I recommend that the Executive Directors approve the proposeddevelopment credit.

Robert S. McNamaraPresident

Attachments

June 11, 1973

A. COLNTD!IY_I)A'j - Bartgladv:-ih

AP.A POPULATIt'51l131 krL2 75 amillionr (nmid-1972)h. 'rna

hate of Growtlt 2.7 - 3.0% (fron 1965 tc )2i70) krm2r . Llad

POPUi,ATIO'l C}WLAC3'g1TSTTCS 1971 KiZALTH 196Crm'io ?ii-th Rate (per 1,C;X)0) 50 pupulation r ::so:Crude Death Rata (poir 1,000)1 20 Po?xlation X; X ' ?1c: 9 ,X)InWant Mo;rtalit'y (per 1,000 live birth5)s 11

INCOM£ DISTRIBUTION 1970 Dl2STRppUrTICt' :-Y^.Trf Natfonai. Incom,, Lowest Quinti3a: 7 Owned by : , (ncrn, 35highest Quintllrt L46 %1 0-Tocd by S3. ii 10CTh of I,

nl YtI'r'lIal 1972 i.DU.lTL02 19S?Ca]cIrie Intake as S of Requirementst 90 Adu't Lier:.: U'tS: 8

C2JP PER CAPITA 2i' 1972: U,;:.50-7

GJ'SS ,IATIhrAL MaDVJCT 1iN 1970 ANUAL U.I.E Or . Prire;)

US $ IFin. )56G-S l5f-7 I% Kl1

GNP at )A-rket rr-ices l 100.0 h.4Fxpcr:ts of 0oods 513 114, .'-ZImp)rts of Goods 639 2L.2 .. .. -1f

OUTPIT. LMB0R FOZIE LND PRODM'TIVITY IN 1970

Value Ad'.cd Lalon- Force V... .er Workerus $ ?ln. ;){i lion 4 -

Azri eulti-re 2,673 59.lIndustry 2,°7 6.6 .3 990Serv-ices 1,530 34.0Unrallocated I

TotaL/Average4 50 lS. 1

GO" *:; T FU114ANSC

C',rnrr::l 0l)verriernt[It-iv l. w b i ot cD?___70 1Q7?u

Cu.4 :'2i' .ir}ue 1 .'12 C:r1- i t- l .- :v.neud i.t.uirea 2,93915 .-*: . r -. 1 {A 5st3nce (net) 1,2i

).965 . 1969 1970 .c7 E"'. 1;, 1D;71 J ';ThiI 13ion Tks. CtztaLz Ervi !

Y'on y andi vlai Xoev . .. '.. ... .. ,-' 7 ,

(Poicentases or ITdex Numbh2vs)

Hot-'y and ".QJsi Foney as Z of GDP .. .. .. .. 16 210.i-r.ral ?rico Indei (1963 100) 1 II 12? 133 143An::fi:k Pre- -:l"e Chang'- in

!: l:at rire Inc*x I} 9 9 54

UrAm- CS OF PFAYI4IltS MMVW,}137 r XBOITS

1969 1970 1971 OS6',(milionos US s)

1taw J,J . 1:' .4 28. 9EI .rt s o> GH,Oc3 43 513 ho9 Jute 1!ar4,fat:Lure3 1L 33:7lin-ri s of Goods kyo 63 9 9lu Tea III ooItc- u: C- tp (Lwricit - -) -L0 -_ -1g All 0 hc-r o t'.r,oodit{-r I ' 7.

:;, 1 .13 I'2, T a -,, , 22 >. l.' <.V-7.7 raks-T I us U. 1L T 1.02 .S $.'/

., 4*lOt .E'1 u1.ble* rlot r b-l, e

Sorl.y i a ro ar .Irrent!og1nde -7U ciy 81973

ANNEX IPage 2

B. TtiE ECONOMY---

Backgnround

1. On December 16, 1971 the Government of Bangladesh assumed controlof ithe territory comprising the former East Wing of Pakistan. Even in thebest of circumstances Bangladesh would constitute a complex developmentproilem. rhe people are poor (per capita income of US$50 to US$70 per annum,a figure which has not risen over the past 20 years), overcrowded (populationdensity is nearly 1,400 per square mile) and becoming more so (populationIg growing at 3 percent per annum), short-lived (life expectancy at birth iswell under 50 years), in many cases unemployed (perhaps 25-30 percent), andlargely illiterate (under 20 percent literacy rate).

2. 'The physical problems of Bangladesh -- its precarious environment,lack of natural resources, and alluvial terrain with resultant high cost ofinfrastructure -- have been compounded by poorly chosen and implementedinvestment programs in the past. Perhaps the most striking failure liesin the increasing gap between foodgrain production and requirements.Bangladesth, a predominantly agricultural country, must import about 15 per-cent of its food requirements even in years of "normal" production such as1969/70 when 1.5 million tons of foodgrains were imported. Bangladesh todayis one of the most extreme examples of rural poverty in the world.

3. '"he year and a half in which the Government of Bangladesh has beenIn control of the country has been dominated by the need to tackle tileurgent rehabilitation tasks arising out of the cyclone of November 1970 andCtc political struggles and war of 1971. First, law and order had to be re-establlsised, political stability achieved and the administrative frameworkreconstituted. Second, refugees had to be resettled, relief provided andthe transport system reconstructed to permit the distribution of food. Third,the economy had to be restored to pre-war levels of output and employment.

4. 'fwo of the principal achievements of the Government since irndepen-uienlce have been the progress towards restoration of law and order to thecountryside and the formulation of a new constitution. The constitutionwhii hi cntme into effect on December 16, 1972, provides for the establishmento' :a parliamentary democracy in which the President is the constitutionalhtead of State and executive authority is exercised by the Cabinet underLthe lrime Minister. Ihe Cabinet collectively is responsible to Parliament,

wi icli consists of 300 members elected by the people from single territorialconstituencies by direct election. The first parliamentary elections wereheld iri March 1973.

5. MosL of thc refugees have been resettled, relief has been providedand Che widely feared famine has not materialized, thanks in part to massiveans istance initially from India and subsequently from a number of othercounitries, mostly under the auspices of UNROD (United Nations ReiiefOperation In Dacca). Tlhe port of Clittagong was restored to 90 percent ofIts prowar capacity by the end of last June. 'rlhe roads were quickly repaired1/ Taken, with slight modification, from paragraphs 3-22 of the Report and

Recommendation to the Executive Directors on an Education Project(IDA/R73-60) diated May 29, 1973.

ANNEX IPage 3

:1ais 1 4'i r I ('!I br, taph L II to miub s t I Lute for dain.aged bridges . Ihe vital Bliairabhirtlpge wlhicl h I idks Chi Lt:yiong to D)acca by rall will not, however, bc usablel I i I ta t rsbc r 19) I. The reconstruction process is now well in hand and aidcoonil Lmvnt" Ii',Vv IbCeii received for meeting the most urgent needs.

Food andiu Othler Productioni

6. Ilhe gravest problem confronting the Government since independenceIlis been the food situation. The 1970/71 crops were poor and the aman cropof December 1971 was disrupted by the war. Record levels of food imports ofabout 2.5 million tons in 1972 have prevented famine from occurring. Never-thelens, per capita foodgrain availabilities in 1972 were well below 1969/70levels and this, combined witlh the internal transport difficulties, wide-spread hoarding, and smuggling of foodgrains to India, led to a 50 percentrise in prtces over tlhe year. By October 1972 it was apparent that themonNooli had been exceptionally poor and that a critical situation was likelyto deveiop once again. According to preliminary assessments the main ricecrop was 20 ;ercent lower than the original estimates. Even assuming thatthe winter rice crop is satisfactory, there will still be a total foodgrainImport requirement of at least 2.5 million tons in 1973.

7. Non-a$ricultural sectors have also been slow to recover. Indus-trial aetivity came to a virtual standstill from November 1971 to January1972. Since then, production in general seems to have returned to about70 percent of pre-war levels, though there is considerable variation amongIndustries. Many industries have experienced serious shortages of rawmaterials (such as cotton, yarn, chemicals and cement), spare parts andcapital gootds. In large part this is due to the disruption of trade bothduring the war and subsequently, with new Government licensing and importingInstitutions not operating effectively. In addition industrial productiontias been Affected by a variety of problems ranging from lack of demand(especially for those industries formerly exporting to West Pakistan) to laborproblems. Low output, combined with the Government's inability to get asuhstantial amount of imported consumer goods flowing into the country, hasbeen a major factor contributing to the rapid price increases.

'Trade

H. )One of the first acts of the Government was to devalue the takaby 53 percent at official rates, to establish it at par with the Indianrupee. The bonus voucher system for exports was removed and this, combinedwitlh thie devaluation, had the important effect of offering a highereffective exchange rate for raw jute and a somewhat lower rate for locallymanufactured jute goods. Exports increased fairly rapidly after theresumption of trade in February 1972. The recovery was made possible by theexistence of large inventories of jute and jute products at a time when theprices fetched. on world markets still reflected the severe shortages of1971. As 1972 wore on, there were reminders of the difficult world marketposition of jute, with clear evidence of European raw jute importers switchingto synthetics and of declining demand. As a result, jute exports areprolected at US$325 million in 1972/73 as against US$350 million in 1969/70.

ANNEX IPage 4

Total exports of the country over the year are prolected at about US$375

millon, which compares with about US$500 million exported to West Pakistan

anni tltrd counLtries in the pre-war period. Most of this decline is onaccount of itLems such as tea, matches, fish and paper products which were

formerly exported to West Pakistan.

Ilhc First Annual Plan

9. In July 1972 the first budget and Annual Plan were presented.

lhe Plan proposed some US$430 million of public development expenditureand a furtlher US$160 million for reconstruction. About half of the develop-ment expenditure was for agriculture, rural institutions, and water andflood control. The Plan is a pragmatic document whlich aims at restoring

econiomic activity to the pre-war level. Even so, the projected amounts ofdevelopment expendliture represent a sizeable increase from the past andthere is likely to be a considerable shortfall. The level of imports (andthe consequent foreign aid disbursements) whichi is assumed in the Plan,

may niot he nchlieved in 1972/73, leading to shortfalls in revenues fromcustoms duties and counterpart funds. The budgetary situation is veryclosely tied to indirect taxation and this in turn is dependent on foreign

Lrade levels. Pressing budgetary needs have had to be met through an

expanslon In the money supply of 82 percent between January and December1972. Ihis has combined with commodity shortages to cause the serious priceproblemis, whlich because of their political implications loom largest in

short-term economic concerns of the Government at present.

I'riorities for Growth

1o. The elections of March 1973 and the publication of the Five-Year

plan expected for June signal the end of the "reconstruction" phase and

thie beginn[ng of the Government's attempt to come to grips with the long-term development problems. The authorities will be faced with a host offundamental decisions concerning policies and programs. The Plan willprovide the basis for analysing the quantitative dimensions of the develop-ment problem. The following is an attempt to delineate the issues ingeneral terms, drawn mainly from the Economic Report on Bangladesh.

11. P'erlhaps the hlighest priority attaches to gearing up the economic

administration to prepare and implement development projects in a manner

quite different from the past. Wlile the Planning Commission is now

techinically well prepared to devise economic plans, the need for effectivecoordination and improved project preparation and implementation has not

yet been met. Thie operating ministries and autonomous institutions, which

were already weak, were in many cases weakened still further as a result

of changes in key personnel during 1971 and the unsettled period in early

1972. it will be necessary to face these problems squarely, identify the

Jg,aps in personnel and prepare for the combination of training and technical

assistance which wili be necesaary to close these gaps.

12. The urgent need to engineer a rapid and visible improvement in

rurail living standards points to a rapid expansion of programs related to

ANIEX IPage 5

rurnl development. 'Fhese programs are central to future development, anddevelopment activities in all sectors should be designed to reflect thecrucial imporLance of rural development. The programs evolved at theComilla Academy for Rural Development are especially promising and deservingof support.

13. In view of the great technical difficulties arising in theconstruct ion of large-scale water control projects, Bangladesh's urgent needto Increase food production requires emphasis to be placed initially onlens ambitious projects with greater immediate impact in increasing yields.1:mphinias should be placed upon: improved distribution of inputs; appropriatepricitng policies for both inputs and agricultural products; much moreresc:irch thnn hiltherto on developing new varieties, improved methods ofcultivation, input requirements and alternative cropping possibilities;attenition to sucIh currently neglected areas as livestock production andfisheries; encouragement to private investment in agriculture; and extensionof credit fncilities to smallholders.

14. Products suchl as leather goods, fish and paper products areminior export items at present, but represent possible growth opportunitiesfor the economy. A proper system of incentives for these and new exportLtems needs to be considered. Marketing and promotion activities need tobe undertaken both to relirect the products formerly exported to WestIPnkintani and to increase and diversify exports.

15. 'I'here is no easy way to increase public savings in the short-run.A pro)rnm of taxation needs to be drawn up which will be elastic to growthin income. An essential element in any such program will be the efficientoperaLtlon :and economic pricing of public utilities and enterprises. ThereShoul(d be flexibility and experimentation to provide financial incentivesto management and labor, and improved financial reporting to enableaiuuLhori ties Lo make necessary changes.

16. Progranms with a high employnent content should be emipliasized.Tule rural, works program has thie potential for creating productive infra-structure In clc rural areas, through hiring seasonally unemployed workers;smnll-sc.ale nidustries can have an impact on both output and employment ifpromotion, financing and incentives are adequate; and the high laborcontent of Jute production increases the importance of efforts to keep juteprice competitive.

17. I'lhe education system, based on traditional models, has over-oniphasized theoretical formal education and has been excessively concentratedIn urhan areas. 1.ducation must be reoriented towards a better-educatedrural population and skilled manpower in the modern sector. Proposals fornins4s education have been put forward which, while far from being fullyworked ouit, represent a step in the right direction. 'the deterioration of(liiilIlty In hligher education and the divorce of the universities from therenil developmenit situation are problems requiring urgent attention.

ANNEX IPage 6

18. Tht popuiation will double by the year 2000 if present growth ratesPre mnintained. The population control program needs a completely newapproach witht proper political backing and a sense of real urgency. It mustb, not merely the particular program of one department, but a concernpermeating the entire administration.

External Aid and Growth

19. Bangladesh will require large and continuing external assistanceto achieve an acceptable growth rate. Long-term projections suggest that,even to maintain the existing per capita income level in the face ofcontinued population growth, net aid disbursements of between US$100 millionand US$200 million per annum would be required. Aid disbursement levels ofAbout US$300 million would permit imports of only about US$700 million,wiichl, given the higher foodgrain component, would allow for no more invest-ment goods andl raw materials than were imported in 1969/70 into the areathnt became Bangladesh. Average aid disbursements of US$500 million peryenr over the five-year plan period would be required to permit imports tobe mnintained at a level of US$900 million and the rate of investment atthe 12-15 percent of GDP figure which is needed for a 5 percent per annumgrowth of GDP. There is little prospect for substantial domestic financingof investment in the short-term given the depressed levels of income. Intime, of course, the substitution of domestically grown foodgrains forimports would release foreign exchange for expanded capital and raw materialsImports .

20. Aid disbursements this year and next are likely to be limitedby the capactty to import efficiently rather than by lnadequate commitmentlevels. Commitments, which were at about US$1.3 billion as of the end of1972, have been extremely high, reflecting the sympathetic response fromdonors to the needs of the critical food situation and reconstructionprogram. While levels of aid commitments during the next few years willcertainly be lower, it is essential for disbursements to be maintained wellabove pre-war levels if Bangladesh is to make any significant progress inraising living standards.

21. With an adequate aid flow and better economic management,BnngladeshI should certainly improve on past growth rates. A sustainedgrowth rate of close to 5 percent should be possible, although it wouldneed good fortune as well as exceptionally good management to get abovethnt level given the unfavorable ratio of population to resources. Thekeys to growth will probably be increased agriculture production on theone hand, and good export performance on the other. A sustained rate ofgr(olth of 5 percent would mean that by the end of the century the majorityof the popul;ition could be adequately, if simply, fed, housed, clothed andedtucnted. Given the difficult circumstances of Bangladesh, even this wouldbe n major nchlievement.

ANNEX IPage i

STATUS OF BANK GROUP OPERATIONS IN BANGLADESHAs of May 31, 1973

A. IDA CREDITS TO BANGLADESH

Credit US$ MillionNumber Year Purpose Amount Undisbursed

339 1972 Cyclone Area Reconstruction (replacesCredit No. 228 of 1971) 25.0 25.0

340 1972 Chandpur Irrigation II (replacesCredit No. 184 of 1970) 13.0 12.2

341 1972 Tubewells (replaces Credit No. 208of 1970) 14.0 13.7

343 1972 Telecomnmunications (replaces part ofCredit No. 145 of 1969) 7.3 5.2

345 1972 Recotnstruction Imports 50.0 50.0353 1973 Small-Scale industry (replaces Credit

No. 192 of 1970) 3.0 2.8367 1973 Chittagong Water Supply (replaces

Credit No. 42 of 1963) 7.0 3.7368 1973 Dacca Water and Sewerage (replaces

Credit No. 41 of 1963) 13.2 7.2S-14 /t 1973 Irrigation Engineering (replaces

Credits S-8 and S-10 of 1969 and 1970) 3.15 1.1 /2381 /1 1973 Foodgrain Storage (replaces Credit

No. 83 of 1966) 19.7 1.3 /2Total 155.35 15 122.2

R. BANK LOAN AND IDA CREDITS TO PAKISTAN FOR PROJECTS WHOLLY IN THETERRITORY OF BANGLADESH (EXCLUDING CREDITS BEING REPLACED BY

CRFDITS TO BANGLADESH SHOWN IN (A) ABOVE)

US$ MillionAmount (Less Cancellations)

Bank IDA

11 1961 Dacca Irrigation 1.016 1961 Inland Ports 2.0

321 1962 Railways 4.739 1963 Brahmaputra Flood Control 5.040 1963 Chandpur Irrigation I 5.349 /4 1964 Education 3.753 1964 Highways 3.656 1964 Eastern Railway 10.065 1965 Inland Water Transport 5.287 /4 1966 Education 4.0136 1969 Technical Assistance (EPWAPDA) 2.0

Total 4.7 41.8Of which has been repaid 1.4 0.1

Total outstanding /5 3.3 41.7 /3

/1 Not yet effective.L2 Amount which will remain following notional repayment of amounts disbursed

under previous credit to Pakistan.v3 All undisbursed balances under these credits as of September 29, 1972

have been cancellned.-vCredts to be replaced by Education credit to I3angladesh, approved

June 7, 1973./5 Prior to exchange adjustments.

ANNEX IIPage 2

C. Projects in Execution I/

Gr. No. 339 Cyclone Area Reconstruction Project; $25.0 MillionCredit of October 18, 1972; Closing Date: June 30, 1976

This Credit became effective on January 17, 1973. Implementationof the original project, financed under Credit No. 228-PAK of 1971, didnot commence prior to the suspension of disbursements.. The Government hasnow set up the central organization for the project, and task forces forthe execution of the stib-projects are being assembled. Sites for cycloneshelters are being selected, tenders for construction have been invited'nod tele Project Coordinator is hopeful of completing sixty shelters beforethe onset of the monsoon season. On the primary roads sub-project, surveyorsnre in the fieldl determining alignments and making detailed assessmentsof work quanttties. On the Cyclone Warning sub-project, the sub-projectmanager Is finalizing specifications of equipment whichi must be importedto strviigthen the meteorological stations serving the coastal area. Othernub-projects (inland wnter transport, telecormunications, feeder roads, andcoantnl fisheries;) are less advanced. A supervision mission in Marchl 1973has revfewed with Covernment the actions required to expedite implementationof these sub-projects.

Cr. No. 340 Chiandpur Irrigation II11 Project; $13.0 Million Credit ofOctober 18 1972- Closing Date: December 31, 1977

TI'Ids Credit became effective on Januarv 17, 1973. When work onthe pro.)ect, previously financed under Credit No. 184--PAK of 1970, wasnuspended In 1971, the major project civil works were about half completed.TIie contractor manufacturing equipment for the regulators had also madesubhstartinl progress. Tnterim financing by Sweden allowed reappointmentof project consul tants, resumption of construction and renegotiation of thecontract for minufactuire snd installation of the equipment for the regulators.

Cr. No. 341 'Lubewells Project; $14.0 Million Credit of November 6,1972 Closing Date: December 31, 1976

The project is also being assisted by a $6 mlillion credit fromSweden an-td n $6 rmillion grant from Canada. The IDA and Swedish creditsbecame effective on January 17, 1973. The project was originally financedby iDA Credit No. 108-PAK of 1970 and credits from Sweden and Canada. Bidsfor the drilling of project wells had been received in. 1971 but no contractswere awarded dtue to the disturbed conditions. Interim financing from Sweden

1/ These notes are designed to inform the Executive Directors regardingthe progress of projects in execution, and in particular to reportany problems which are being encountered, and the action being takento remedy them. They should be read in this sense, and with theunderstarnding that they do not purport to present a balanced evaluationof strengths and weaknesses in project execution.

ANNEX IIPage 3

permitted reappointment of project consultants and retendering. Bidshnv#' been received for well drilling and supply of pumps and engines for thewells, and contracts are expected to be awarded in the next few weeks.ContractR have been awarded for required vehicles and miscellaneous equip-ment.

Cr. No. 343 Telecommunications Project; $7.3 Million Credit ofNovember 15, 1972; Closing Date: December 31, 1975

Credit became effective January 17, 1973. The project wasoriginally financed as part of Credit No. 145-PAK of 1969, and goods andservices valued at about US$2.2 million were received in Dacca prior tosuspension of disbursements. Orders had also been placed for the remainingequipment now to be financed under Credit No. 343, and the suppliers areunderstood to be prepared to resume work at the original contract prices.

Cr. No. 345 Reconstruction Imports Project; $50.0 Million Creditof November 30, 1972; Closing Date: August 31. 1974

Credit became effective January 30, 1973. The Government hasprepared a statement allocating the proceeds of the Credit among the variousellgible categories of expenditure, taking into account funds expected tobe available from other sources of assistance. Letters of credit guaranteedby IDA have been opened for US$6.2 million and disbursements are expectedto commence shortly.

Cr. No. 353 Small-Scale Industry Project; $3.0 Million Credit ofJanuary 19, 1973; Closing Date: June 30, 1976

Credit became effective May 14, 1973. The project was originallyfinanced by IDA Credit No. 192-PAK of 1970. By December 1971, whendisburaements were suspended, 28 sub-projects had been approved and $2.19million had been allocated to these projects. Work has now begun onreactivation of the interrupted sub-projects and canvassing for new sub-projects.

Cr. No. 367 Chittagong Water Supply Project; $7.0 Million Creditof April 9, 1973; Closing Date: June 30, 1975

Credit became effective June 7, 1973. The project was originallyftnanced by IDA Credit No. 42-PAK( of 1963. By December 1971, when disbursementswere suspended, US$3.3 million had been disbursed. The project is now about60 percent completed. The former project consultants have been reappointedand tender documents are expected to be issued shortly.

Cr. No. 368 Dacca Water and Sewerage Project; $13.2 Million Creditof April 9, 1973; Closing Date: June 30, 1975

Credit became effective June 7, 1973. The project was originallyfinanced by IDA Credit No. 41-PAK of 1963. By December 1971, when disbursementswere suspended, US$6.0 million had been disbursed. The water supply portionof the project is now about 75 percent completed and the sewerage portion

ANNEX IIPage 4

about 45 percent completed. The former project consultants have beenreappointed and tender documents are expected to be issued shortly.

Cr. No. S-14 Irrigation Engineering Project; $3.15 Million Creditof April 9, 1973; Closing Date: July 31, 1975

Not yet effective. The project was originally financed by IDACredits No. S-8 and S-10 of 1969 and 1970. The studies financed underCredit S-8 have been completed, except for some final payments to theconsultants. The studies financed under Credit S-10 are expected to becompleted by December 31, 1974.

Cr. No. 381 Foodgrain Storage Project; $19.7 Million Creditof May 18, 1973; Closing Date: December 31, 1974

Not yet effective. The project was originally financed by a$19.2 million IDA Credit No. 83 of 1966 and a 25 million Kronor credit fromthe Kingdom of Sweden. The Kingdom of Sweden is again providing a 25million Kronor Credit. The project is almost completed and 95 percent ofthe new IDA and Swedish credits will go toward repaying the previous credits.The remaining funds ($1.25 million from IDA and about $0.25 million equivalentfrom Sweden) will be used to pay outstanding bills for work completed priorto the war, completion of some supporting facilities for the grain storagesilos, replacement of spares and equipment damaged during the war, strengtheningof the infestation control system, and a feasibility study for a second grainstorage project.

ANNEX IIIPage 1

BANGLADESH

HIGHWAY PROJECT

PROJECT SUMMARY

Borrower: The People's Republic of Bangladesh

Amount: US$25.0 million equivalent

Terms: Standard

Project: The Project consists of:

(i) the construction of the Sitalakhya Bridge and FeniRoad sections of the Dacca-Chittagong highway andimprovements to the war-damaged Surma River Bridge inSylhet;

(ii) study of a second bridge over the Surma River atSylhet and pre-feasibility studies of other highpriority river crossings; and

(iii) the strengthening of the Roads and Highways Department(RHD) by providing it with a headquarters building toreplace currently scattered and unsuitable facilities,spares and tools for improving equipment maintenance,consulting services on. ferry operations, technicalassistance and training.

ANNEX IIIPage 2

Estimated Cost:

US$ millionComponent Local Foreign Total

Bridges and Highway construction,repair and improvement

a) Sitalakhya Bridge 2.0 3.6 5.6

b) Feni Road 5.5 2.6 8.1

c) Surma Bridge repair .1 .4 .5

Subtotal 7.6 6.6 14.2

Consulting services, technicalassistance and training 1.3 2.8 4.1

Construction of new RHD headquartersbuilding .8 .4 1.2

Spare parts, tools and workshopequipment for RHD construction andmaintenance facilities and for RHD

maintenance depots and equipmentfor new RHD headquarters building .1 1.2 1.3

Equipment and related expenses for ferry

crossing on Dacca-Chittagong highway .1 .3 .4

Contingencies 2.4 3.1 5.5

Subtotal 12.3 14.4 26.7

Costs before June 30, 1973 8.9 4.8 13.7

Total 21.2 19.2 40.4

Disbursements:Disbursedprior to IDA Fiscal Year

12/29/71 1973/74 1974/75 1975/76 1976/77 1977/78 Total

…----------------------(US$ million equivalent)--------------

IDA Credit 3.62/b 6.04/ 5.11 3.36 5.87 1.00 25.00

Government 9.87- 1.64 1.39 .88 1.35 .30 15.43

Total 13.49 11.28 6.50 4.24 7.22 1.30 40.43

/a Includes disbursements for refinancing of the inerim Swedish credit

and unpaid obligations to foreign suppliers to the project.

/b Includes a small amount of Government expenditure on the project from

January 1972 through June 1973.

ANNEX IIIPage 3

Procurement: Negotiated contracts for highway construction, repair andimprovement, except for paving which would be by internationaltendering; construction of RMD building by local competitivetendering; equipment for RHD building and spare parts, toolsand equipment for RHD construction and maintenance facilitiesand for RHD maintenance depots by international tenderingexcept for proprietary spares.

Consultants: Consultants satisfactory to the Association would be employedfor:

(a) engineering and supervision of highway construction;

(b) advice and assistance on highway organization andoperations;

(c) feasibility study and detailed engineering for newbridge over Surma River at Sylhet;

(d) prefeasibility studies for improvement of highpriority river crossings on main road network;

(e) preparation of standard designs for ferries andterminals and improvement of ferry operations; and

(f) design and supervision of construction of new headquartersbuilding for RHD.

Rate ofReturn: For Feni Road: 9%

For Sitalakhya Bridge: 4%

AppraisalReport : A Technical Note is attached as Annex IV.

ANNEX IV

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

BANDLADESH

TECHNICAL NOTE ON A

HIGHWAY PROJECT

June 11, 1973

Projects DepartmentAsia Regional Office

CURRENCY EQUIVALENTS

US$1.00 = Tks 7.55Tks 1.00 = US$.132Tks 1 million US$132,450

WEIGHTS AND MEASURES

(British/U.S.)

1 foot (ft) - 0.3048 meter (m)1 mile (mi) = 1.609 kilometer (km) 21 square mile (sq m)= 2.59 square kilometers (km )1 British ton (ton) = 1.016 metric ton (m ton)

ABBREVIATIONS AND ACRONYMS

RED - Roads and Hlighways Directorate

FISCAL YEAR

July 1 to June 30

BANGLADESH

TECHNICAL NOTE ON A HIGHWAY PROJECT

A. INTRODU CTION

1. This technical note is based on findings of a mission 1/ whichvisited Bangladesh from June 8 to 28, 1972, to reappraise the Dacca-Chittagong highway project in the light of the emergency requirements inthe Dacca-Chittagong transport corridor and the transport sector generally,and of the changed transport needs after the events of the past two years.During 1971, execution of the project, underway with the assistance of anIDA Credit to Pakistan (Credit 53-PAK), was disrupted by the outbreak ofhostilities. On December 29, 1971, the Association suspended disbursementson the project. By June 1972, with conditions in the country returning tonormal, the Government of Bangladesh included this project among those on-going development projects for which Sweden is providing interim financialassistance. The Government has requested a new Credit from IDA for theproject. Some changes in the project, improving the Dacca-Chittagong Roadand strengthening the highway authority, are proposed in view of presentlychanged conditions, particularly the damages caused by hostilities. However,the basic objective of the project, improving the Dacca-Chittagong Road andstrengthening the highway authority, remains unchanged and an IDA Credit ofup to US$25 million equivalent to Bangladesh is proposed to replace theUS$22.5 million development credit (Credit 53-PAK) to Pakistan. The increasein the amount of the Credit is to compensate for exchange rate changes.

B. BACKGROUND

2. The present situation in the transport sector including roads androad transport is discussed in detail in the last Economic Report onBangladesh (IDA/R72-230); summary statistics on the main road network andthe vehicle fleet of Bangladesh are shown in Tables 1 and 2. The mainconclusion is that despite the severe disruptions which were caused totransport during the recent disturbances, most severed links have now beenreestablished at least on a temporary basis and transport services restoredto most points in the country. The reconstruction program is givinggreatest emphasis to projects with a short term investment impact and toresumption of interrupted schemes which were underway in 1971.

1/ Mission headed by H. Kaden (engineer) and including T. Neuner (economist)of IDA and A. Boros and C. Daniels, consultants. There were follow-upmissions by Mr. Neuner in November 1972, January-February 1973; andMessrs Young, Neuner and Nathan in April 1973.

3. The present proposal is essentially for the same project presentedto the Board in June 1964 (P-374, East Pakistan Highway Project, Credit 53-PAK)and as modified twice since then, once in February 1968 (IDA/R68-8) andagain in April 1970 (IDA/R70-18). The project was based on a 1963 feasibilitystudy prepared by Anmann & Whitney (US) for improving the main road betweenDacca, the capital of what was then the province of East Pakistan, andChittagong, its second largest city and main port. The project originallyconsisted of (a) the design and the construction of the Dacca-Chittagonghighway and (b) the strengthening of the Roads and Highways Directorate (RHD)by providing advisory services and some testing and control equipment.

4. Execution of the original project has been interrupted by two warsand has been plagued by many problems, the most important of which was theinadequate response by international contractors when the work was put totender. Since there was also a scarcity of competent local contractors whocould undertake the work unaided, when revised in 1970 the project includedtechnical assistance to the local construction industry and other aids inorder to ena'ole it to participate in the work. 1Thile the two main objectivesof the original project (linking Dacca to Chittagong by an all-weather roadand increasing the effectiveness of the RHD) have remained throughout, thelength of the highway to be built from the Credit has been progressivelyreduced as construction costs escalated and sections of the existing roadwere improved by the Government to somewhat lower design standards which arenevertheless adequate for traffic needs over the shorter economic life ofthese improvements. As the remaining works to be financed under the Creditwill be new road works, they are built to higher standards appropriate totheir longer expected life. The 1970 revision also added feasibility studiesfor improved ferry services or bridges at about 20 river crossings on themain network in recognition of the preeminent importance of resolving thisproblem and improving road transport in the country.

5. At the outbreak of hostilities in 1971, contracts had been letand works were underway on the two major construction items then remainingin the project: the Sitalakhya River Bridge near Dacca and a realignedsectiorn of the highway near Feni (Feni Road) t/ which will shorten thedistance between Dacca and Chittagong by seven mi. A contract for theconstruction of the Sitalakhya Bridge was signed with Mitsui-Ohbayashi J.V.A.(Japan) in April 1970 and only some construction, mainly caissons for pierfoundations, was finished when work stopped at the end of 1971. Tne workon the Feni Road was being carried out in two major groups: one contractfor the three major bridges including approach roads awarded to a localcontractor in May 1970, and five small contracts for construction of about20 miles of embankments and small structures. The latter work was beingcarried out by one Korean and four local contractors. The contracts werelet in September 1971. Very little construction had been completed on the

1/ As the first part of this improvement will also create a bypass aroundthe town of Feni, this section is sometimes called the Feni Bypass.

Feni Road at the end of 1971 when all work stopped, and nothing has beendone since then.

6. The original project included provision for general advisoryconsultants to RHD (De Leuw, Cather International (US)) who had only limitedsuccess in reorganizing and strengthening the RHD. The consultants alsoadvised the RHD in the operations of its construction programs and assistedin the preparation of manuals and other operational documents. Althoughthe Government recognizes the need for further improvement in the operationof its MHD (particularly in such areas as soils and materials testing, inbridge engineering and in cost control), it wishes to rely primarily onbilateral aid for additional technical assistance and thus the contract withDe Leuw, Cather will not be renewed. However, the Government is stillplanning to implement, in consultation with the Association, a reorganizationof the PHD which was formulated with the help of a management consultant madeavailable by the Association in late 1972 and which will utilize a number ofbilateral offers for technical assistance. The procurement of equipment forthe RHD laboratory has been completed. With the increased emphasis ontraining and the provision of technical assistance, construction of aheadquarters building for RHD has now become the most important physicalprerequisite for improved functioning of the RHD (see para 21) and accordinglyis included in the project. The training component under the previous projecthad not yet been implemented and is again included on the basis of thecurrent reorganization plan.

7. Credit 53-PAK provided for construction of certain connectingroads at the Dacca end of the Dacca-Chittagong road (the Dacca-Demra-Narayanganj extension) and for studies of the access from the Dacca-Chittagongtrunk road into the main cities at each end and, after the 1970 revision, ofsome 20 major river crossings. Work on the Dacca-Demra-Narayanganj extensionhas been deferred to study the effect of rapid urban changes which havetaken place since its design. The design of access roads is virtuallycomplete and accordingly no future provision is made for it under the Credit.

The main river crossings study had not yet started when hostilities brokeout and will now be renewed on a broader basis. High priority crossings areto be selected by a transport survey which is currently underway wih UKfinancing and will first be reviewed with individual prefeasibility studies.Ferry design and operations will be studied systematically in order toformulate optimal designs and procedures based as much as possible on theuse of domestically produced ferries.

8. At the present time about US$3.6 million equivalent of the totallending of US$22.5 million has been disbursed under Credit 53-PAK. Thebulk of these disbursements was for consulting services. The Government ofBangladesh has also drawn about Swedish Kroner 348,000 equivalent under its

interim credit from Sweden, primarily for consulting services and emergencyprotection works for the Sitalakhya Bridge; this amount is to be refinancedunder the proposed Credit once it becomes effective.

- 4 -

C. THE PROJECT

9. The project would remain fundamentally the same as provided forunder the revised Credit 53-PAK (IDA/R70-18 of April 1970). The principalworks include the continuation of bridge and road construction started prior

to the outbreak of hostilities. Provisions are also included for strengthen-ing the RHD, training of highway personnel and for studying the river crossingbottlenecks of the road network.

10. The following modifications have been agreed with the Government:

(a) reduction of new road to be constructed at Feni fromabout 24 to about 20 mi (para 11);

(b) elimination of about 11 mi of roadwork consisting ofthe Dacca-Demra-Narayanganj extension of the Dacca-Chittagong road (para 7);

(c) elimination of detailed engineering of access roads fromDacca-Chittagong road to Dacca and to Chittagong (para 7);

(d) provision for repair and improvement of the Surma Riverbridge at Sylhet which was damaged during hostilities andfor feasibility study and design of a new permanent crossingover the Surma River in that vicinity (paras 16 and 17);

(e) concentrating the river crossing study on high prioritypoints to be identified at the beginning of 1974 by thetransport survey which is currently being carried out underU.K. auspices (para 18); and

(f) further assistance to improved operations of the RHD,including construction of a new, fully equipped head-quarters building, and of tools for maintenance depotsfor RHD equipment, provision of expatriate experts (tothe extent not provided bilaterally) and of training ofhighway personnel and procurement of equipment to improvethe ferry crossings on the Dacca-Chittagong road (paras 20,21 and 22).

The components of the project as now constituted may be summarized as follows:

(a) construction, of Feni. Road, Sitalakhya Bridge, andSurma River Bridge at Sylhet;

(b) consulting services for the supervision of the worksunder (a) above; highway organization and operation;

-5-

feasibility study and design of new crossing over RiverSurma at Sylhet; prefeasibility studies of high priorityroad river crossings; and the design of standard ferriesand related matters.

(c) facilities and services to improve RHD operations asindicated under (f) above.

Construction of the Feni Road

11. The Feni Road will avoid several communities and narrow bridges,and shorten the existing road by about 7 mi. Building of the new roadsection would also avoid the reconstruction of a large bridge which islocated on the old road at unstable river banks requiring high maintenancecost. The Feni Road originally consisted of the construction of approximately24 mi of new road but under the revised project the road works will be reducedto approximately 20 mi by shortening the new construction at one end andusing more of the existing road which has since been improved. The shortenednew road will be built to a geometric design appropriate to the trafficlevel which is projected during the economic life of the road; relevantdesign standards are summarized in Table 3.

12. Work on the Feni Road was to be broken into seven contracts,one for the three major bridges, five for construction of embankments andsmall structures, and one for the pavement works to start after the enbank-ment was in place. Progress ma de when hostilities halted the works inDecember 1971 on the six contracts awarded up until that time was minimal.The original six contracts have now been combined into three units 1/ andtentative unit price contracts negotiated with local firms originally selectedby tender under the old project. The contractors are expected to rely onlabor intensive methods as they had done previously thereby giving seasonalemployment to about 1,600 laborers. Some equipment will be needed, however,which will be furnished partly by the contractors and partly by the RHD.In the Credit Documents, the Association has received assurances thatappropriate and sufficient RHD equipment in sound condition will beavailable for this work.

Construction of the Sitalakhya River Bridge

13. The major river crossing on the Dacca-Chittagong Highway includedin the project is the 1,300 ft long bridge over the Sitalakhya River andits approach embankments. The bridge will replace two ferry operationsacross the Sitalakhya River: one at the bridge site and the other approxi-mately two miles upstream at Demra.

1/ Of the original six contracts, two were with the same firm. Of theother four firms, one dropped out because of the death of the ownerand the other due to lack of interest by the contractor. The workwas thus reallocated among three of the original firms, in three con-tracts.

14. When work stopped at the end of 1971, out of seven piers, three

caissons for pier foundations were partially completed and coffer-dams

for two more caissons were also constructed. The contractor, who had

been selected after international competitive bidding, has a large quantity

of equipment and material on the site and in the port of Chittagong.

Construction therefore could be resumed promptly and the contractor has

stated his interest in continuing the work. The Government has indicated

that it regards completion of this work to be of high priority.

15. Protracted negotiations have taken place between the Government and

the contractor to establish a new agreement. While a tentative price has been

determined which is the basis of the cost estimates in this technical note

the two parties have not come to terms completely. Alternatively, the

Government is investigating the possibility of having the work performed by

a joint venture of U.S. contractors who are building a group of bridges under

USAID financing to the West of Dacca or by an association between the

Japanese and U.S. firms. Any of the three alternatives would provide an

acceptable basis for executing the work and the cost of completing the work

would be about the same. It is expected that a contract with one or the

other contractor will be concluded shortly. However, if it is not possible

to negotiate a contract with a firm with appropriate equipment already in

Bangladesh, the cost of building the bridge would increase substantially

and a new appraisal would be required. Therefore the Credit Agreement

provides that if no contract has been concluded for completion of the bridge

by December 31, 1973, this element of the project will be dropped and the

credit reduced by US$4.7 million.

Repair and Improvement of War-Damaged Bridge over River Surma at Sylhet

16. This bridge is on the main road from Bangladesh to Assam and also

links the commercial area of Sylhet with its neighboring villages. The total

length of the 20 span steel structure is 1,150 ft with a 240 ft truss span

over the main channel to provide for navigation. During hostilities one 100

ft span and three adjoining 40 ft spans were destroyed and one pier was

partly demolished. Traffic was resumed by the construction of a 220 ft

long Bailey bridge to replace the damaged spans. The bridge carries a large

volume of traffic. The existing structure is only 18 ft wide and this is

further restricted to 12 ft by the Bailey bridge; thus the bridge is very

congested. Estimated daily traffic at present is 500 motor vehicles and 5,000

other vehicles plus pedestrians and is expected to grow by about 3% per annum.

As the structure was already inadequate for traffic before it was damaged,

the addition of two footways is contemplated to separate pedestrians and

possibly bicycle rickshaws from motorized traffic.

Consulting Services

17. The largest item under this category is the supervision of

construction of the works described above. The feasibility study and detailed

engineering for a new crossing over the River Surma at Sylhet is intended to

examine a more permanent solution to the congestion problems of the

existing bridge. While repairs and improvements to the existing structure

- 7 -

are justified as an interim measure, the traffic potential is sufficientlylarge to contemplate a second crossing.

18. The other consultancy items are concerned primarily with theproblem of road/river crossings. Similar work had been included in theprevious project but consultants had not yet been selected before theoutbreak of hostilities. The numerous water channels of Bangladesh putfrequent obstacles in the paths of its road system. The variable heightof the rivers between flood and low water, the navigation requirements forthe large inland water fleet, the scarcity of timber, rock and steel inthe country and the difficult soil conditions raise the cost for constructingbridges substantially. Therefore, a study of a number of important road/river crossings is vital to determine the most economic solution for therelatively low volume of traffic. It will be coupled with a study of ferrydesign and operations. Together, the two studies should lead to the formula-tion of parameters to be used in future bridge and/or ferry design.

Facilities and Services to Improve RHD Operations

19. When Credit 53-PAK was first made, the road system of Bangladeshwas growing rapidly, but at about 1,800 mi it still was relatively small andhighway administration had been vested in a separate organization only twoyears earlier. Since then, the advisory consultants under the previousproject had made studies of the administration, have recommended changesand assisted in their implementation. As a result, the RID has been somewhatstrengthened. However, further improvements are still needed.

20. The Ministry of Communications of which the RIID is a part,proposes to reorganize the RHD taking into account suggestions made bythe previous advisory consultants. The Association provided the servicesof a management expert for about 8 weeks last year to assist theMinistry in planning the reorganization; he may be recalled for a shortperiod to advise on implementation of the reorganization, and the projectincludes a small amount for this purpose. The organizational patternenvisages greater emphasis than previous organization studies on functionalspecialization in planning and design, construction and maintenance, givesspecial recognition to importance of ferries in the highway system, andestablishes the basis for improved cost accounting. While the reorganizationhas not been put into effect, the Government plans to implement it in thenear future and the Government will keep the Association advised currentlyon progress in implementation. The Credit Agreement provides that expandedmaintenance facilities will be established by October 31, 1973. Thereorganization will be facilitated by the provision of a new headquartersbuilding, which will allow for consolidation of offices now scattered atseveral different locations in Dacca. The existing office arrangements areparticularly inadequate in view of the poor telephone connections and urbantransport facilities available in Dacca.

21. Under the project, the RHD will be improved through the followingmeasures:

(a) construction of a fully equipped headquarters buildingfor the RHD;

(b) acquisition of spare parts, tools and workshops equipmentto restore the present stock of RHD equipment to fulloperability;

(c) acquisition of tools for maintenance depots for RFD equipment;

(d) training of RHD staff under a comprehensive program to beprepared by the RID in collaboration with the Association; and

(e) attachment of several foreign experts to the RHD for two ormore years in such specialties as soils and materials testing,bridge engineering and cost accounting.

The Government expects to rely primarily on bilateral grants for item (e),but in other respects these project elements are to be assisted withfinancing under the proposed Credit. With the improvement included underthe project, the RHD should be in a position to maintain the expanded roadnetwork now under its jurisdiction and to sustain a considerably enlargedvolume of road construction or improvement. In order to plan for a rationalimplementation of these elements of the project, the Credit Agreement includesan undertaking that the Borrower will furnish the Association for its approvalat the earliest practicable date and in any event not later than October31, 1973: (a) requirements for the design of the new headquarters building;(b) a list of repairable equipment owned by KHD together with a time phasedschedule for the restoration of equipment to operating condition, withdetailed lists of manpower, parts and tools, together with the estimatedcosts of this restoration progra m and for keeping such equipment in operatingcondition; (c) a list of tools, with estimated costs, required in maintenancedepots for RED equipment; (d) a detailed training program keyed to therequirements of the reorganized RHD, with estimated costs; (e) the arrangementsRHD has made for technical assistance from bilateral sources and any addi-tional technical assistance RHD desires to have financed under the proposedcredit, with estimated costs.

22. A small amount has been included in the project to cover any necessaryexpenses incident to adapting the existing ferry crossings on the Dacca-Chittagong road (including the one at the Sitalakhya Bridge site) to loadedtruck traffic. At present, these ferry crossings are not open to loadedtrucks thereby creating a serious obstacle to the development of this trafficwhich is required to use an inadequate, infrequently operated, circuitousferry service between Daudkandi and Narayanganj. The required alterationscan be made quickly and would yield great benefits to he economy, as theyonly involve minor modifications of the ferries and installation of largerpontoons. The Credit Agreement includes an undertaking by the Governmentthat it will make the alternations promptly and that all ferries will beopened to loaded trucks not later than March 31, 1974. An undertaking toprovide adequate ferry services on the two largest of the river crossingshad already been included in Section 2.09 of the Project Agreement underCredit 53-PAK.

-9-

Project Execution

23. In accordance with previous requirements, execution of the majorconstruction included in the project will be supervised by consultantsacceptable to the Association; if the work is to resume promptly the Governmentshould appoint consultants as soon as possible. Supervision so far has beensatisfactorily carried out by Amman & Whitney (US) who are likely to continuein this capacity. The Credit Agreement also includes a provision thatconsultants, acceptable to the Association, will be employed promptly underterms and conditions approved by the Association, for feasibility and designstudy of a new crossing over the River Surma at Sylhet, for prefeasibilitystudies of river crossings, for advisory services on ferries includingpreparation of standard ferry designs and for design and construction atthe new RHD headquarters building.

24. It is estimated that construction works under the project andother project elements will be completed by the last quarter of 1976.The schedule is based on the assumption that the shortened Feni Road andthe Sitalakhya Bridge are to be built basically in accordance with theexisting designs, and construction will begin at the start of the next dryseason in October 1973. Construction of the Feni Road will help todevelop the local construction industry as all the work is now to be carriedout by domestic firms. Pavement work on the Feni Road and the SitalakhyaBridge will be subject to international tender. The repair and improvementof the Surma River bridge at Sylhet will be carried out by the Indian firmwhich originally built that bridge but if satisfactory arrangements cannot bemade with that firm, a contractor will be selected by international tender.The new RHD headquarters building will be constructed in accordance with theGovernment's usual procedures for works of this type, relying primarily on localresources for design and construction. Procurement of equipment and spareswill be by international tender except in the case of proprietary items which iwill be ordered from the respective manufacturer. Disbursement will be forthe full foreign exchange component of directly imported items and in the caseof construction contracts for a percentage of payments made under thesecontracts, covering 100% of the foreign expenditures and, in most cases, 50%of the local expenditures.

D. PROJECT COST AND FINANCING

Prolect Cost

25. The estimated cost of the project, shown in detail in Table 4,are summarized below:

- 10 -

Tks Million US$ MillionLocal Foreign Total Local Foreign Total

Construction* 65.25 54.37 119.62 9.25 7.52 16.77Right-of-Way* 23.00 - 23.00 4.83 - 4.83Consulting Services* 18.81 31.34 50.15 3.36 5.52 8.88Procurement of Facilities,

Equipment and Spares* 7.70 15.04 22.74 1.02 2.05 3.07Expatriates for RHD 0.76 3.78 4.54 0.10 0.50 0.60Training 1.51 4.53 6.04 0.20 0.60 0.80Contingencies 18.21 23.09 41.30 2.41 3.06 5.47

Total 135.24 132.15 267.39 21.17 19.25 40.42

*Includes costs accrued prior to June 30, 1973.

The contingency item is based on a 10% physical contingency for the roadworks remaining to be performed which appears adequate in view of the factthat the works are in the process of construction. A 15% contingency forprice escalation (based on 5% per annum increase on the value of theunbuilt works over the construction period) was deemed necessary in viewof the fact that the contracts will most likely include clauses whichrelieve the contractors of certain risks regarding prices. A contingencyof 30% for other elements of the project was deemed necessary because thecontent of these elements remains to be defined in detail.

26. Revised cost estimates for the Feni Road and the Sitalakhya Bridgeare based on the prices tentatively agreed in the negotiations between theGovernment and the contractors. The cost of work on the existing bridgeover the River Surma at Sylhet is based on an estimate prepared by Ammannand Whitney. Other items to be financed under the project, primarilyconsultancy services, are costed on the basis of prevailing rates in theworld market.

Project Financing

27. The total cost of the project excluding taxes and duties isestimated at US$40.4 million equivalent, with a foreign component ofabout US$19.3 million. It is proposed to finance about US$5.7 millionequivalent of local costs under the proposed credit. About US$8.8 millionequivalent of local costs has already been financed primarily by theGovernment and the remaining amount of local costs of about US$6.7 millionequivalent will also be financed by the Government.

28. The disbursement schedule is indicated in the following table andis based on a project implementation as outlined above:

- 11 -

Fiscal Year

US$ Million Equivalent

1973/74 1974/75 1975/76 1976/77 1977/78 Total

IDA Credit 9.65 5.11 3.36 5.87 1.00 24.99

Government 1.64 1.39 .88 1.35 .30 5.56

Total 11.29 6.50 4.24 7.22 1.30 30.55

The amount to be disbursed represents the estimated future costs of the project,US$26.69 million, plus US$3.86 million of costs incurred prior to June 30,1973,including US$3.62 million of disbursements under the previous credit plus re-financing of the interim Swedish credit and unpaid obligations of foreignsuppliers to the project. The disbursement schedule reflects the pace ofconstruction expenditures as forecast by the consultant; the heavy outlaysin FY 1976/77 are due to the large paving costs which will be incurred at thattime.

E. BENEFITS AND JUSTIFICATION

The Feni Road and the qit:b8khva Bridge

29. Considerable expenditures had already been incurred both in thedesign and construction of these project elements prior to the suspensionof disbursements by IDA on December 29, 1971. The benefits anticipated fromcompleting the project include: (a) cost savings in the operation of existingmotor traffic (due to shorter jour rey distance, faster transit time, improve-ment in the quality of the road and the elimination of speed changes);(b) reduced expenditures for ferry operations (at the Sitalakhya bridge);(c) secondary developmental effects achieved by bringing the nation's twomost important urban centers closer together in time and distance, therebyfacilitating the movement of essential goods and stimulating the tradebetween them; (d) bringing the rural areas served by the road into closercontact with urban markets, thereby facilitating the shift from subsistenceto market-oriented agriculture; and (e) enabling new urban and industrialdevelopment near the outskirts of Dacca in the area served by the SitalakhyaBridge, taking advantage of the good river and rail transport facilitiesthere.

30. In 1969, prior to the 1970 revision of the project, an assessmentof the economic return on the Feni Road and the Sitalakhya Bridge indicateda rate of 18 percent and 10 percent respectively. The Feni Road wasjustified on expected savings in vehicle operating costs as a result ofshorter journey distance, faster transit time, improvement in the qualityof the road, and a reduction in speed changes by avoiding the busy town

- 12 -

of Feni. The expected benefits of the Sitalakhya Bridge were from savingsin the vehicle and passenger time costs absorbed in crossing the river byferry and the avoidance of higher cost ferry services needed to handlegrowing traffic volumes. Since then, the decline in traffic due to theeconomic disruption caused by the 1970 cyclone and the 1971 hostilitieswith the resultant loss and damage to the vehicle fleet and the increasesin costs appear to have reduced the previously estimated returns considerably- to 9 percent and 4 percent respectively; however, given the increaseduncertainties attached to these re-evaluation estimates, the Government'spublic commitment to complete these conspicuously unfinished works which hadbeen initiated with IDA finance, and the merit of IDA's continued associationto help ensure the effective strengthening of RHD, the project is recommendedfor completion. While construction at the Sitalakhya Bridge and the FeniRoad would benefit some of the same flow of traffic, the two improvementsare essentially independent of each other. For that reason a delay in theexecution of the Sitalakhya Bridge which might result from problems withcontractors (see paragraph 15 above) would not affect the appropriatenessof proceeding to complete the Feni Road works.

Repair and Improvement of Bridge over Surma River at Sylhet

31. Work on this bridge will not only eliminate long delays now causedby queues waiting to cross its narrow Bailey bridge section, but, with theaddition of footways, will separate the slower moving from the faster trafficwith benefits to both. While in the present circumstances for the reasonsgiven above, a reliable quantification of costs and benefits is not possible,the proposed reconstruction will improve the capacity of the structure.

Other Project Elements

32. The other project elements, aimed at improving the organization andmanagement of the highway sector through provison of f-acilities andequipment, training, technical assistance and selected sudies, would alsoyield significant yet unquantifiable returns. The anticipated increase inthe efficiency of ferry operations will yield very high returns by makingpossible both better utilization of the country's motor vehicle fleet andalso postponement of costly bridge construction. The improvements of RHDare intended both to make the design and construcion of new roads less costlyand less dependent on imported expertise and also to improve the upkeep ofroads.

F. RECONMENDATIONS

33. During credit negotiations, agreement was reached on the followingprincipal points:

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(a) equipment required by the contractors on the Feni Road, tothe extent not furnished by them directly, will be availablefrom the RHD (para 12);

(b) the Government will keep the Association currently informedon implementation of reorganization of RIID (para 20);

(c) the Government will furnish to the Association by October 31, 1973:

(i) requirements for the design of the new RHD headquartersbuilding;

(ii) a list of repairable equipment owned by RHD, togetherwith a time phased schedule for its restoration tooperating condition and with detailed lists of manpower,parts and tools, togeher with esimated costs, requiredfor this purpose and for keeping such equipment inoperating condition;

(iii) a list of tools, with estimated costs, required inmaintenance depots for RHD equipment;

(iv) a detailed training program keyed to the requirements ofof the reorganized RHD, with estimated costs;

(v) the arrangements RHD has made for technical assistancefrom bilateral sources and any additional technicalassistance RHD desires to have financed under theproposed credit, with estimated costs (para 21);

(d) The Government will open the ferry crossings on the Dacca-Chittagong road to loaded truck traffic not later thanMarch 31, 1974 (para 22);

(e) The Government will employ consultants satisfactory to theAssociation:

(i) for supervision of construction of the Feni Road and theSitalakhya Bridge;

(ii) for feasibility and design study of a new crossing overthe River Surma at Sylhet and the engineering orsupervision of construction required for repair of theexisting bridge;

(iii) for prefeasibility studies of certain river crossingsselected by the transport survey currently underway;

(iv) for advisory services on ferries includingpreparation of standard ferry designs;

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(v) for design and construction of the new RHDheadquarters building (para 23).

(f) Unless a contract for completion of the SitalakhyaBridge has been executed by December 31, 1973 thiselement of the project is to be deleted and the creditreduced by US$4.7 million.

Items (d) and (e) are similar to assurances provided in Sections 2.09 and2.01 (b) of the Project Agreement under Credit 53-PAK.

34. The proposed project is suitable for an IDA credit of US$25.0million to Bangladesh.

TABE3 1

BANGLADESH

HIGHWAY PRO1JECT

Length of Paved Roads

1947-48 27h

1958-59 843

1959-60 995

1960-61 1, 145

1Q61-62 1a298

1962-63 1,499

1963-64 1,751

1964-65 1,96L4

1965-66 2,093

1966-67 2, 212

1967-68 2,288

1968-69 2,0348

1969-70 2, 398

1°70-71 About 2 ,500

Source: Ninistry of Planning and Roads and Highways Directorate, June 1972

July 18, 1972

1AbL

Page 1

BANGLADESH

HIGHWAY PRCJECT

Motor Vehicle Statistics

A. Growth of Number of Motor Vehicles an the Road(i.e. wi.th current licencea)

/1 /2Passenger Cars Buses Trucks Subtotal Other Total

1961 8,059 2,171 4,563 14,793 4,688 19,481

1962 10,232 2,678 6,325 19,235 8,657 27,892

1963 11,408 2,593 6,721 20,722 11,505 32,227

1964 13,198 2,984 7,189 23,371 16,012 39,383

1965 15,402 2,969 6,965 25,336 20,402 45,738

1966 16,076 3,792 7,168 27,036 21,557 48,593

1967 19,1o6 4,339 7,901 31,346 23183]. 55,.77

1968 21,330 4,881 8,507 34,718 25,819 60,S37

1969 22,581 5,054 (9,300) 36,935 27,985 64,920

1970 23,074 5,676 9,355 38,105 29,952 68,057

Annual average growthrate 1961-70 12% 11% 3% 11% 23% 15%

/1 Includes taxis, jeeps and staticn wagons.

/2 Principally motor cycles and autorickshaws.

a2 Estimate only since available figure apparently includes tractor units.

A Bus figure .or 19,'0 includes soGie vehicles previously classified asstation wagons and as such included with private cars.

TABLE 2Page 2

B. Motor Vehicles on the Road, June 1970, in detai1

Total Of Which Diesel

Taxis 867 4

Private Cars 16,268 6

Jeeps 5,939 8

Buses by sea'ing capacity

up to 15 seats 1,311 250

15 - 25 seats 935 62

25 - 35 seats 2.054 406

35 - }45 seats 764 542

Over 45 seats 612 563

Trucks by load capacity

UJr to 2½z tons 1,364 493

2½ to 5 tons 6,932 2,920

5 - 8 tons 795 615

Over 8 tons 264 143

Truck tractor units 948 562

Autorickshaws 7,875

Motor cycles 19,412

Other 1,717

Source: Ministry of Planning, Bangladesh Tsansport Survey, Transport Statistics,January 1972

TABLE 3

BANGLADESH

HIGHWAY PROJECT

Design Standards for Dacca-Chittagong Highway

Design speed: 60 mph

Right of way; 160 ft

Minimum radius: 1,000 ft

Maximum gradiant: desirable 3%special case 6%

Maximum super-elevation: 8%

Shoulder width: desirable 9 ftminimum 6 ft

Pavement width: 22 ft

Pavement wearing course: Bituminous doublesurface treatment

Equivalent standard load for pavement design: 18,000 lbs

Bridge design load: HS20-44 AASHO

Width between curbs for bridges:

( up to 30 feet /1 Full formation widthTotal Length ( over 30 to 250 feet /1 26 ft

( over 250 feet /1 30 ft

/1 Adjusted to traffic conditions at location of bridge.

TABLE 4

SANGLADC

HIGKHU BRJSC T

Project Cost i.tist 5 5 Y

Project lement uSS '000 ForeignLro eca Totl l-o Foreign Total Conconent

r. COSTS AFT Jan 30, 1973

A. Costruction

1. Feal Road including bridges 41,395 2D,073 61,1468 5,483 2,659 8,11-2 33%

2. SitalakIwa Bridge and apprcaches 14,995 26,969 4W1,964 1,986 3,572 5,558 64%

3. Repair and improvement of RiverSurma Bridge at Sylhet 755 3.020 f7j 100 40° 500 80%

Sub-total 57,145 50,062 107,207 7,569 6,631 14,200

B. Consulting Services

1. Supervision of canstructim andpreparation of designs uaider AL, 2 and3 above 4s958 9,558 14,516 657 1,266 1,923 66%

2. Highway organization and operatCons 16 60 76 2 8 10 80%

3. Feasibility study and detailedengineering for a new bridge overRiver Surma at Sylhet 376 1,133 1,509 50 150 200 75%

4. Prefeasibility stuLies for improve-mnt of bigh priority river crossings 680 1,586 2,266 90 210 300 70%

5. Preparation of standard design forferries, terminas isprcving ferryoperations sod related msatters 227 529 756 30 70 10D 7?%

6. Design and supervision of constructionof RHu building 1.283 - 1,283 170 - 0 -

Sub-total 7,540 12,866 20,406 599 1,704 2,703

C. Procuremunt of Facilities, Equipment and Spares

1. Headquarter building for the BUD 6,417 2,643 9,0o0 850 350 1,200 35%

2. Equipasut for PHM heodquartarbuilding snd opares, tools and work-shop equipmsnt to service RHDconstruction and maintenancefacilities 755 9,060 9,815 iOO 1,200 1,300 92%

3. Zquiprmt and related expesee toimprove terz7 crossings ac DLnca-Chittagong road 42Y 2,4 2 7U 26 a3.4

Sub-total 7,701 L1,346 22,31.2 1,020 1,9(9 2,920

D. Rroatriates WorkinA with RHD 755 3,775 4,530 100 500 600 83%

E. Tzaining for RHD Staff 1.510 4.$30 6.040 2; 600 80 75%

Sub-total 2,265 8,305 10,570 30C 1,100 1,400

F. Contingecies 18,215 23.0636 41,304 ?11 3.058 .471

Total 92,869 108,665 201,534 12,:301 1Is,393 26,694

I1. COSTS BEFORE JUNE 30, 1973OF WHICR

A. Prlor to December 29, 19Z1 ,927 22,555 64,462 8,Sce 4,739 -3,547

B. December 29, 197_ or afterW 444 926 1,370 6_ 127 le1

135,240 132,146 267,386 21,1L7C 19,259 40,429

y xcIludMi taxes sod duties.Including 10% for physical contingencies and about 15% for price escalatioc over threeyears for items IAI, 2 and 3 and abazt 30% for al' other items.

3 Considering "Es 1 - 1s 1 ifor 1cc-ai oost.#/ 'Inaluding cash reinursed uncer the Swedish caret.

June 5, 1973

I BRD 10206R2if ~~~~~~~~~~~~~~~~~~~ ~~~~JUNE 1973

90o30 */ J f9100'fl 9r30'

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