World Bank Document · Document of The World Bank FOR ... Daily Traffic Volumeso n Project Roads,...

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 1632

PROJECT PERFORMANCE AUDIT REPORT

YUGOSLAVIA FOURTH HIGHWAY PROJECT (LOAN 678-YU)

June 15, 1977

Operations Evaluation Department

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

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TABLE OF CONTENTS

Page No.

PREFACE

PROJECT PERFORMANCE AUDIT BASIC DATA SHEET

HIGHLIGHTS

PROJECT PERFORMANCE AUDIT MEMORANDUM

I. Background .................................... t

II. Project Results ................................ IIII Main Issues ................................... 3IV. Conclusions ................................... 5

ATTACHMENT: PROJECT COMPLETION REPORT

I. INTRODUCTION ................... . . A.1II. SECTOR BACKGROUND . ... .... A. 1

III. PROJECT PREPARATION AND APPRAISAL ............ . A.2IV. PROJECT IMPLEMENTATION AND COST .............. . A.3

A. General .................................. A.3B. Project Execution ............... ........ A.3C. Time Schedule .. .......................... A.6D. Costs .................................... A.6E. Quality of Completed Work ......... ....... A.6F. Loan Covenants ....................... A.7

V. INSTITUTIONAL DEVELOPMENT ..................... A.8VI. ECONOMIC JUSTIFICATION ........................ A.9

A. General ...... ............................ A.9

B. Traffic .......................... A.9

C. Economic Benefits/Costs ......... ......... A.10D. Economic Return ........... .. ............. A.10

VII. THE ROLE OF IBRD .............................. A.VTII. CONCLUSIONS ................................... A.12

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

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TABLE OF CONTENTS (Cont'd)

ANNEXES

1. Actual and Expected Project Execution2. Comparison of Actual and Appraisal Estimates of Project Costs3. Average Annual Daily Traffic Volumeso n Project Roads, 1969-19914. Vehicle Operating Costs5. Ex-Post and Appraisal Estimates of Economic Rates of Return

MAPS

Map I Yugoslavia - Highway SystemMap 2 Belgrade-Novisad Road SectionsMap 3 Pec-Pristina-Nis Road Sections



Preface

This is a Project Performance Audit Report on the Yugoslavia FourthHighway Project for which Loan 678-YU in the amount of US$40 million wasclosed in January 1976. The report consists of a Project Performance AuditMemorandum prepared by Operations Evaluation Department (OED) and a ProjectCompletion Report (PCR) prepared by the Bank's Europe, Middle East and NorthAfrica Regional Office. The memorandum is based primarily on the PCR, inwhich certain revisions have been incorporated after discussions with OED.Also discussions have been held with Bank staff, the Minutes of the Board ofExecutive Directors meeting which considered the project has been read andother documents briefly reviewed.

On that basis, under OED's abbreviated review process, the auditaccepts most of the conclusions of the PCR. However, it also expands uponthe impact of international competitive bidding, the difficulties encounteredin securing right-of-way and in locating roads in densely-populated areas,and the importance for decision making of adequate origin-destination trafficforecasts.

No mission by OED staff was made in connection with this performanceaudit report.

PROJECT PERFORMANCE AUDIT BASIC DATA SHEET


KEY DATA

Item Original Plan Actual

Total Project Cost (US$ Million) 97.5 106.8Overrun % _ 10Loan Amount (US$ Million) 30.0 40.0Amount Disbursed - 40.0Amount Cancelled - -Amount Repaid as of 03/31/77 0.505 2,0Amount Outstanding as of 03/31/77 - 38.0Date Physical Components completed 12/31/73 9/30/76Proportion completed by above Date (%) about 75 100Economic Rate of Return (% range) 14X-29% 12%-22%/a

OTHER PROJECT DATA

Original Plan Actual

First Mention in Files - 06/30/69Negotiations - 04/02-15/70Board Approval - 05/19/70Loan Agreement - 05/28/70Effectiveness 08/31/70 02/08/71Closing Date 06/30/74 01/08/76Borrower Socialist Federal Republic of YugoslaviaExecuting Agency Road Councils of the Republics and Autonomous ProvincesFiscal Year of Borrower January 1 - December 31Follow-on Project Name Fifth Highway ProjectLoan Number 751-YUAmount (US$ Million) 35Loan Agreement 06/18/71

Mission Data

Month No. of No. of Date ofItem Year Weeks Persons Manweeks Report

IdentificationPreparation ) Not separately identifiablePreappraisal )Appraisal 09/69 4.5 3 13.5 10/30/69

Subtotal 4.5 13.5

Supervision I 05/70 1.5 1 1.5 08/31/70Supervision II 05/71 1.0 1 1.0 07/27/71Supervision III 06/72 2.0 2 4.0 07/20/72Supervision IV 11/72 2.0 2 4.0 01/11/73Supervision V 05/74 1.0 2 2.0 -Supervision VI 07/75 1.0 1 1.0 09/05/75

Subtotal 6.5 9.5

Completion 03/76 0.5 2 1.0 11/76

Country Exchange Rates

Name of Currency DinarAppraisal Year (1969) US$1 = D12.5

19701971 = D15.0-D17.01972 = D17.0-D16.651973 = D16.62-D15.221974 = D15.17-D17.151975 = D16.97-D17.87

Completion Year 1976 = D18.00

/a Re-estimate at audit.



Highlights

Loan 678-YU was intended to help finance the construction of 6two-lane highway sections (218 km) on four main trunk roads. The projectwas completed about three years later than expected with a cost overrunin local currency of 39% attributable largely to rapid inflation. Themajor sources of delay were disagreement over access road alignments, dif-ficulties in securing the right-of-way, unfavorable geological conditionsand postponement of the asphalt wearing course to allow a smoother ridingsurface on one road. The rates of return at audit on the highway sectionsof between 12% and 22% compare favorably with the appraisal expectations.Most of the loan covenants of the project were successfully fulfilled.

The following might be of special interest:

Efforts of the Bank to improve international competitive biddingprocedures, which helped ensure more effective competitionbetween local and foreign contractors (paras. 8-9, 16 and PCR,paras. 4.04-4.05, 4.07 and 4.15)

Difficulties in securing right-of-way and of locating roads par-ticularly in densely-populated areas (paras. 10-11, 17 andPCR, paras. 4.20, 4.26-4.27)

Importance of reliable traffic data in selecting road alignment(paras. 12-14, 17 and PCR, paras. 6.04, 6.10 and 8.03).

PROJECT PERFORMANCE AUDIT MEMORANDUM


I. Background

1. The project supported by Loan 678-YU of May 19, 1970, for US$40 mil-lion was the Bank's fourth investment in Yugoslavia's highway sector. Thefirst three projects, Loan 344-YU of 1963 for US$35 million, Loan 485-YU of1967 for US$10 million, and Loan 608-YU of 1969 for US$30 million assistedthe construction of various highway sections (PCR, paras. 1.01-1.02). Prog-ress under the First and Third Highway Projects has been assessed in OED's"Comparative Evaluation of Selected Highway Projects" (Report No. 349) and"Project Performance Audit Report on Yugoslavia Third Highway Project, Loan608&YU" (Report No. 1385).

2. The Fourth Highway Project financed construction of 6 two-lanehighway sections on the following principal trunk roads:

(a) Bar-Ulcinj (25 km);

(b) Belgrade-Novisad (59 km);

(c) Pec-Pristina-Nis (69 km); and

(d) 'Sarajevo-Zenica (65 km) (see PCR, Map 1).

These sections formed part of a larger program of major highway improvementssubmitted to the Bank in September 1968 during the appraisal of the ThirdHighway Project. Because final engineering at that time was not sufficientlyadvanced, their inclusion was postponed to the Fourth Highway Project (PCR,paras. 3.01-3.04). The remaining sections of the program of highway improve-ments were financed by the subsequent Fifth Highway Project supported by Loan751-YU of 1971 for US$35 million.

II. Project Results

3. The project was completed in September 1976, about three years afterthe appraisal forecast of December 1973. The completion of all four roadswas delayed. The Bar-Ulcinj Road was completed about six months later thanexpected because of inclement weather and unfavorable geological conditions(PCR, para. 4.05). The Belgrade-Novisad Road and the Sarajevo-Zenica Roadwere completed about two years after the appraisal forecast because of dis-agreement over access road alignments and difficulties in securing the right-of-way. Finally, although the Pec-Pristina-Nis Road was opened to traffic,completion of works was delayed by nearly three years because laying thewearing course was postponed to allow for a smoother riding surface.

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4. The total project cost of Din 1,696.3 million US$106.8 million)represents an overrun in local currency of 39% above the appraisal forecastof Din 1,217.9 million (US$97.5 million). The overrun expressed in foreigncurrency of 10% is smaller because of exchange rate fluctuations occurringsince the time of appraisal. Final costs of the Bar-Ulcinj, Belgrade-Novisad,Pec-Pristina-Nis and Zenica-Sarajevo roads were overrun by 18%, 58%, 31%and 32%, respectively. Most of the overrun is explained by the rapid rateof inflation in Yugoslavia since 1970. In addition, extra work was requiredon the Belgrade-Novisad Road, particularly with respect to the bridge cross-ing the Danube, and technical difficulties made some redesign necessary onthe Pec-Pristina-Nis Road.

5. The economic justification of the roads at appraisal was based onexpected vehicle operating cost savings. A reassessment of the justificationis made in the attached PCR based on actual construction costs and trafficdata and on new estimates of vehicle operating cost savings. The auditrates of return are equal to or higher than expected for three of the roads,while the rate of return for the fourth road is lower than expected but stillabove 10%.

Rates of Return

Road Section Audit Appraisal…------------(%)…___----------

Bar-Ulcinj 22 14

Belgrade-Novisad 14 14

Sarajevo-Zenica 15 14

Pec-Pristina-Nis

Section I 12 18

Section II 18 29

6. All of the roads have benefitted from higher than expected vehicleoperating cost savings resulting from the increase in oil prices. In addi-tion, traffic has been greater than expected on two of the roads, Bar-Ulcinjand Sarajevo-Zenica, explaining the higher than expected rates of return of22% and 15%. In the case of the other two roads, there have been substantialtraffic shortfalls. This overestimation of traffic was particularly impor-tant in the northern section of the Belgrade-Novisad Road (PCR, paras. 6.02-6.06) and is analyzed in Section III below.

7. For the most part, the loan covenants of the project vere compliedwith. The Government's undertaking to complete and maintain roads whichprovided access to the project roads however was delayed in the case of theBelgrade-Novisad Road. The new access from the Belgrade-Zagreb Road in factwill not be completed until mid-1977. Performance with respect to the loancovenants is discussed fully in the PCR (paras. 4.24-4.29).

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III. Main Issues

International Competitive Bidding

8. From the First through the Seventh Highway Projects, the Bank hasrequired international competitive bidding and has tried to remove any dif-ficulties presented by Yugoslavia's own practices. For instance, under theThird Hligiway Project the Bank noted that foreign firms which had prequali-fied had not submitted bids. It discussed this situation with the foreignfirms involved and found that they considered the bidding period too short(60 days) and that the bidding documents were prepared in a language not com-monly spoken abroad, Serbo-Croatian. Under the Fourth Highway Project, theBank recommended that the bidding period be extended and that documents beprepared in English as well. Furthermore, the Bank suggested that an annexbe affixed to the bidding documents with information on foreign currencytransfers, exchange risk and price escalation to give prospective biddersmore infor-ation in areas which might be of concern to them. In spite ofthese efforts, however, awards have consistently been made to local con-tractors; an exception is the award of a subcontract to an Italian firmunder the Fifth Highway Project, Loan 751-YU of 1971 for US$35 million.

9. The award of practically all contracts to local firms in the Bank-financed projects reflects the competitiveness of the contracting industryin Yugoslavia. Nonetheless, the Bank's efforts have served to clarify aspectsof competitive bidding in Yugoslavia which might have inhibited foreign con-tractors and these efforts continue to ensure competitiveness among local andforeign contractors.

Securing Right-of-Way and Road Location

10. Difficulty in acquirinc the right-of-way and in reaching agreementon the location of portions of the Sarajevo-Zenica and Belgrade-Novisad roads,particularly those portions in densely populated areas, delayed construction.In the case of the former, obtaining the right-of-way delayed the beginning ofconstruction by about a year and even after the necessary land was obtained,relocation of people whose homes were in the path of the road continued tocause-delays. In the case of the Novisad-Belgrade Road, although the locationof an access road (into Novisad) and an interchange (near Belgrade) had beenapproved by authorities, the decision was overturned after the loan/creditwas signed, substantially delaying work. Bank experience in other countriessuch as JiJaica and Finland, also illustrates the difficulties and delayswhich can occur when roads pass through densely populated areas. In the caseof the Kingston-Spanish Town Road in Jamaica,, right-of-way and relocationdifficulties in the urban portion of the road were underestimated at appraisal,while in the instance of the Tattariharju-Jarvenpaa Expressway in Finland, thealignment near an urban area was modified when local communities lobbied to

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alter it after appraisal. 1/ These experiences indicate the need for bettercommunication between the parties involved and the desirability of reachingdecisions on alignment and right-of-way acquisition before the loan is made.

11. The Yugoslav case however is somewhat different in that assuranceswere made to the Bank that right-of-way and location had been settled beforenegotiations. Similar situations have also occurred in the Fifth, Sixth andSeventh Highway Projects and stem from the decentralization of authorityin Yugoslavia which enables bodies such as communities and interest groupsto appeal and overturn decisions on location and right-of-way after theyhave been taken. There seems to be no easy solution to this problem butmore communication between all groups concerned earlier might be beneficial.

Importance of Traffic Studies in Selecting Alignments

12. The experience on the Belgrade-Novisad Road illustrates the impor-Lance of adequate traffic data when determining road alignment. At appraisal,the alignment of the Belgrade-Novisad Road was the subject of contention bygroups which wanted the route to pass through Novisad. Three possible align-ments were studied:

(a) a route located to the east of Novisad which crossed arelatively sparsely populated region with flat, rollingterrain;

(b) a route to the west of Novisad which crossed a mountainousregion entailing high costs; and

(c) a route through Novisad along an existing road which passedthe densely populated regions around the city where right-of-way acquisition would have proven difficult (see Map 2).

The first alternative (a) was selected because its cost was lower and con-struction would be easier.

13. During project implementation, the Bank discovered that the cityof Novisad was proceeding with plans to construct a route which would branchoff and parallel the Belgrade-Novisad Road between Indija and Novisad, adistance of about 30 km. This new route, now about 25% completed, will passthrough Novisad and serve the populated region south of the city. Actualtraffic on the Belgrade-Novisad Road in 1975 was only 78% of the appraisalforecast and traffic on the northern half between Indija and Novisad islikely to decrease even more when the parallel route is completed. By 1980,traffic on the northern section of the Bank-financed route will decline to

1/ Project Performance Audit Reports on the: Jamaica First Highway Proj-ect, Loan 408-aN (Report No. 807, para. 6.01) and Finland Third HighwayProject, Loan 723-FI (Report No. 1197, para. 4).

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3,035 vehicles per day whereas traffic on the parallel route is expected toreach 8,416 according to a 1975 feasibility study of the transport corridorbetween Belgrade, Novisad. and Feketic. The PCR expects that the rate ofreturn on the northern half of the Bank-financed road, comprising over halfof the cost of the Belgrade-Novisad Road of US$40 million, will be 6%. Inview of this, construction of the second carriageway of the Belgrade-NovisadRoad, which was planned at appraisal, is no longer justified.

14. Based on the information available at appraisal, the decision toconstruct the Bank-financed route appears to have been the correct one. How-ever, in retrospect the information upon which this decision was based wasapparently insufficient. The present level of traffic on the Bank-financedroad between Indija and Novisad and the expectation that much of this trafficwill divert to the new route when it is completed, suggests that the origin-destination studies undertaken at appraisal did not consider the needs ofthe communities around Novisad. Another instance where origin-destinationstudies may not have given adequate attention to local traffic needs is theZagreb-Karlovac Road reviewed by the Project Performance Audit Report of theThird Highway Project (Report No. 1385, para. 12). Traffic on the Zagreb-Karlovac Road was 64% less than the appraisal forecast mainly because in-vestments to expand the Port of Rijeka did not materialize. However, asReport No. 1385 points out, a substantial amount of traffic continues touse an old, unimproved route which passes through many communities. Sincethe Zagreb-Karlovac Road is a limited-access highway, this seems to indi-cate that the needs of the communities between Zagreb and Karlovac werenot thoroughly explored.

IV. Conclusions

15. Construction of the project roads was successfully completed inspite of delays caused by postponement of paving and dispute over right-of-wayand location. The quality of construction which was undertaken by localcontractors is generally good. Cost overruns for the roads are largelyattributable to rapid inflation since the time of appraisal. The economicrates of return for the project roads range between 12%-22% and comparefavorably with the appraisal estimates. The loan covenants were substan-tially complied with although an undertaking to construct access roads wasconsiderably delayed in execution.

16. The audit notes that construction awards under virtually all ofthe seven Bank-financed highway projects have gone to local contractors. TheBank took an active role in promoting effective international competitivebidding. The fact that awards continue to be made to local contractorsreflects the competitiveness of the local construction industry.

17. The difficulty in securing right-of-way and agreeing on road loca-tion, as in the case of Sarajevo-Zenica and Belgrade-Novisad roads, is aproblem affecting a number of Bank-financed highway projects in Yugoslavia.

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The Bank has tried to ensure that location and right-of-way are agreed uponbefore negotiations; however, the appelate procedure is such that apparently,firm decisions can be overturned. While there is no ready panacea for theproblem, more communication between the communes and republics involved at anearlier stage might be beneficial. In the case of the Belgrade-Novisad Road,information suggests that reliable origin-destination traffic studies beforeappraisal might have resulted in a different decision on the road's alignment.

ATTACHMENT

PROJECT COMPLETION REPORT

YUGOSLAVIA: FOURTH HIGHWAY PROJECT (LOAN 678-YU)

I. INTRODUCTION

1.01 In 1968 to meet the urgent need for better facilities, the FederalGovernment of Yugoslavia drew up an extensive program for highway improve-ments and submitted it to the Bank for consideration. In June 1969 the Bankapproved a loan for $30 million under the Third Highway Project, Loan 608-YU,to help finance three high priority sections included in the program. TheFourth Highway Project, involving construction of six sections of fourmajor highways, was also a part of the same program, for which Loan 678-YUof May 28, 1970, in the amount of $40.0 million, closed in January 1976.

1.02 The Bank had earlier financed two other highway projects inYugoslavia - Loan Nos. 344-YU in 1963 and 485-YU in 1967. The First HighwayProject (US$35 million) was financed for the completion of the coastal sec-tion of the Adriatic highway and parts of the Belgrade-Nis road. TheSecond Highway Project (US$10 million) was for the improvement of 367 kmof roads connecting the Zagreb-Belgrade highway via Sarajevo and Tuzla withthe Adriatic highway. All these projects were satisfactorily completed.

1.03 The Project Completion Report is based on information containedin the Project Appraisal Report (No. PTR-41a, May 5, 1970) and a reviewof Bank files, including supervision and progress reports of the project.

II. SECTOR BACKGROUND

2.01 Transport is a dynamic sector of the Yugoslav economy. Govern-ment's broad aim is to ensure that all modes of transport are developed tomeet the needs of a market-oriented economy. The railways are importantcarriers of goods and passengers, but since the mid'60s road transport hasgained in relative importance and has replaced railways as the dominantcarrier. River transport has retained an important' and competitive place,and pipelines have come into increasing use in recent years.

2.02 Yugoslavia aims to improve its integration with the world economy.The trunk routes and international connections are therefore of specialconcern because Yugoslavia has borders with seven countries. Several inter-national land connections, particularly in the northwest, have also acquiredspecial significance for tourism.

2.03 The attainment of regional balance in economic developmev hlasalways been an explicit objective of Yugoslavia. Increasing emph is isnow laid on the development of transport between developed and lessdeveloped Republics and Provinces and within less developed areas.

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2.04 Development of the highway network has, however, not kept pacewith the growth of road traffic. On many of the main routes the combina-tion of substandard geometric and pavement conditions with high trafficvolumes has resulted in heavy traffic congestion, while on many otherroutes driving conditions are poor and deteriorating. In general, mostof the roads are inadequate for the traffic they are now carrying.

III. PROJECT PREPARATION AND APPRAISAL

3.01 In October 1968 Government submitted to a Bank mission, appraisinga Third Highway Project, a list of 13 major roads totalling about 630 km,then estimated to cost about US$275 million. Planning for most of them waswell advanced and it was anticipated that final designs for all would beready early in 1970. All proposals appeared of high priority. The ThirdHighway Project (US$30 million) financed construction of only three of the13 road sections. At the Bank's request, therefore, Government selectedfrom the program a number of highway sections which might be consideredfor the Fourth Project. The basis of selection was to be high economicpriority and an advanced status of project preparation. Government, how-ever, deferred consideration of projects in Macedonia and Slovenia as thoseRepublics were receiving assistance under the Third Loan and would be suf-ficiently occupied with the administration and execution of that project.

3.02 Preparation of the project road studies was undertaken by the high-way organizations of the Republic and Provinces assisted by the Design Insti-tutes of Belgrade and Sarajevo and the Materials Testing Institute of Belgrade.Ad hoc assistance and advice in the execution of this work was also given byBank missions.

3.03 The project identified was the project appraised and built; therewere no changes in composition.

3.04 The project was processed efficiently and without unnecessary delay.The decision within the Bank to increase the loan amount from US$30 millionto US$40 million was taken speedily, when prior to project appraisal it wasseen that the original allocation would be inadequate to finance a balancedproject. In less than two years from the July 1968 initial request byGovernment, two loans had been signed supporting its road constructionprogram: the Third Road Loan for US$30 million on June 5, 1969 and theFourth for US$40 million on May 28, 1970. From completion of the project'sappraisal to its presentation to the Board, less than seven months elapsed.Given that loan negotiations were not completed until mid-April, it wouldhave been difficult to advance the date of Board presentation of the project.

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IV. PROJECT IMPLEMENTATION AND COST

A. General

4.01 The project consisted of the construction of six two-lane sections(218 km) of four principal highways in five of the Republics and AutonomousProvinces of Yugoslavia (Map IBRD-2770R). They are:

Project Highway Republic/Province Executing Agency

Bar-Ulcinj 25 km Montenegro Road Maintenance Enterpriseof Montenegro

Belgrade-Novisad 59 km Serbia/Vojvodina Road Council of the Provinceof Vojvodina

Pec-Pristina-Nis 69 km Serbia/Kosovo Road Maintenance Enterprise ofthe Province of Kosovo

Sarajevo-Zenica 65 km Bosnia-Herzegovina Road Fund of Bosnia-Herzegovina

4.02 All six sections are part of important trunk highways. The sectionsBelgrade-Novisad and Sarajevo-Zenica constitute the first stages (two lanes)of subsequent four-lane divided highways and were designed to relieve conges-tion on the original roads whose geometric standards were inadequate to theneeds of modern traffic. The section Bar-Ulcinj extends the Adriatic highwayalong the coast and opens up an area important for tourism, replacing a low-standard gravel/earth road which suffers severe congestion during the summermonths.

4;.03 The three sections of the Pec-Pristina-Nis highway would completethe improvement of this important route, construction of which has been inprogress for the past several years.

B. Project Execution

4.04 The loan became effective on February 8, 1971, more than five monthslater than the August 31 anticipated date. Delays in obtaining valid legalopinion concerning the Subsidiary Loan Agreement as well as the Decision onFinancing was the cause of repeated postponements of the loan effectivenessdeadline. In the meantime, prequalification of contractors who would wishto bid for the project contracts was in hand, the deadline for which wasset at August 25, 1970. Twenty-five firms responded; four were foreign (twoGerman, two Italian) and the remainder was Yugoslav. None of the four pre-qualified foreign contractors participated in bidding for any of the projectcontracts. Annex 1 gives details of project execution.

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Bar-Ulcinj Section

4.05 Bids closed for the two contracts of the Bar-Ulcinj road on

January 5, 1971. Seven Yugoslav firms participated and the contracts were

awarded to the lowest evaluated bidders. The Bank cabled its concurrencewith the awards on March 4, 1971.

4.06 The first road to be finished, Bar-Ulcinj, over-ran the 23 month

contract period by 4 1/2 months. The main causes of delay were:

(a) unfavorable and unanticipated geological conditions resultingin unstable side-slopes in cuttings. To prevent slides,

side-slopes had to be flattened and in some cases retaining

walls built; and

(b) extended periods of abnormally wet weather which slowed thepace of construction and aggravated the slide problems.

Belgrade-Novisad Section

4.07 Five Yugoslav contractors participated in the bidding for the

three contracts of the Novisad-Batajnica section of the Novisad-Belgradehighway. In a May 20, 1971 letter, the Bank agreed contract awards to thelowest evaluated bidders. Because of delays in finalizing the Belgrade

intersection design, award of the contract for the section of this highway

within Serbia (Batajnica-Belgrade), was not made until December 1971. Local

contractors only participated in the bidding although bidding was open to

all prequalified contractors.

4.08 The Novi Sad-Belgrade road was completed in November 1975. This

road was originally proposed for inclusion in the earlier Third Highway

Project but could not be appraised at that time because a decision on its

northern alignment, and in particular the location of the access from it

to Novi Sad--issues which had been hotly debated in Vojvodina for several

years--could not be reached in time. The road was included in Government's

proposals for the Fourth Highway Project on the understanding that these

problems would be resolved before the appraisal mission's visit. The

mission reviewed the proposals and reached an understanding with the Road

Fund and the Executive Council on the best economic alternative for the

access road. However, during loan negotiations the Vojvodina delegation

informed the Bank that the city of Novi Sad had rejected this alternative,

but that the Road Fund had prepared a slightly different alternative, which

would lie outside the city's jurisdiction. This alternative was acceptable,

and was included in the subsidiary loan agreement.

4.09 A condition precedent to loan effectivenebs was the submission to

the Bank of an acceptable Financing Decision by the Autonoi_ous Province of

Vojvodina. This Decision is the Act passed by the AssemL;ly appi pri- ng

funds for construction of the project. During the Bank's scrutin- L tihis

Act, it was found that not only had the agreed access to the city b2on

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provided for, but the city had also obtained about US$10.0 million forthe construction of an additional access route. Subsequent discussionsand correspondence with Vojvodina clarifying these matters delayed theBank's agreement to contract awards until May 20, 1971.

4.10 There were also considerable delays in the contract award forthe approximately 6 km section of this road in Serbia. These delayswere mainly due to problems of designing the Belgrade intersection;construction did not start, therefore, until June 1972.

4.11 The road throughout had been designed and built as the firststage of a limited access four-lane highway. Only the first two-lanecarriageway has been built but on some sections earthworks have beenpartially completed for the future second two-lane carriageway. Becauseof difficulties of extending them at a later date, all crossing structureshave been btiilt spanning both carriageways.

4.12 Vojvodina, in a July 9, 1973 letter, informed the Bank that itsExecutive Council had decided to build another highway to Novi Sad fromthe project road. The result of this construction, now in progress, willbe to provide an alternative route to Novi Sad and reduce benefits on thenorthern 30 km of the project road. Construction of the second carriagewayfor this section of the project road, therefore, is not presently foreseeable.

4.13 In view of.the investment already made to provide for a futuresecond carriageway, the question of an entirely new alignment to providefor second-stage traffic is one that should have been discussed very muchearlier with the Bank-so that the optimal least total cost solution couldhave been mutually agreed.

4.14 It is-of interest to record that the bridge spanning the Danuberiver, built as part of this project road, is 2,475 m long with a main spanof 450 m, and is reportedly.the longest in Europe.

Pec-Pristina-Nis Section

4.15 Bids for the five contracts of the Pec-Pristina-Nis road wereopened on March 10, 1971. Six<Yugoslav firms participated, and the contractswere awarded to the lowest evaluated bidders, the Bank concurring in a letterof April 26, 1971.

4.16 The first contract of the Pec-Pristina-Pepeljevac road to be com-pleted was that for the Komorane-Velika Slatina section. Work finishedabout three months late, the delay being mainly due to lost time throughwet weather.

4.17 Wet weather and design changes because of unfavorable soil condi-tions found after construction had started, delayed completion of thePec-Zaimovo section.

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4.18 The Podujevo-Merdare section was opened to traffic one month afterthe original contract period expired-. The final contract for the road, thatfor Merdare-Pepeljevac, was incomplete at'the loan closing date, although theroad was open to traffic on the asphalt binder course. The laying of theasphalt wearing course was postponed beyond the loan closing date to allow areasonable period for settlements to occur.. It was completed by September1976. However, on'the'basis of work actually completed, the full provision offunds under Category III of the loan was disbursed and the Bank's financialcommitment to the project completed.

Sarajevo-Zenica Section

4.19 The principal cause of delay in completing the Sarajevo-Zenicaroad in Bosnia-Hlerzegovina was the problem-of land expropriation and therelocation of people and utilities from the right-of-way. Although workwas about to start in June 1972, a year af'ter contract award, relocationproblems persisted and slowed progress so that the project was not completeduntil lat-e December 1975.

C. Time Schedule

4.20 AllP'construction contracts took longer than anticipated to complete.Building the project roads consumed about 560 contract months compared withthe 365 contract months allocated for the work, a total time over-run ofmore than 50%. While the causes of some delays were unforeseeable--prolongedperiods of abnormally wet weather, pockets of unsuitable material encounteredon the alignment--others could have been anticipated and dealt with inadvance. In particular the progress of the Sarajevo-Zenica road could havebeen held to schedule had land expropriation action been taken earlier.Simiarly, the Batajnica-Belgrade section of the Novisad road could havebeen completed at the same time as the rest of the road if urban planningproblems in Belgrade had been taken into account in the initial intersectiondesign. Nevertheless, it is clear that more generouis contract constructionperiods would have been appropriate.

D. Costs

4.21 Despite the effects of the devaluation of the dinar and the highrate of inflation rate after 1970, the project costs increased only marginallyfrom the US$97.5 million estimated to US$106.8 million (Annex 2).

E. Quality of Completed Work

4.22 Generally, quality of workmanship throughout was good. However,supervision missions reported that the standard of finish of structures waslower in Kosovo than elsewhere, but was still acceptable. No obvious defectshave developed since project completion.

4.23 Supervision by the highway authorities concerned assisted by thedesign institutes was satisfactory.

- A.7 -

F. Loan Covenants

4.24 One major loan covenant (5.01) obliged the Borrower to enter

into subsidiary loan agreements with the Subsidiary Borrower for thepurpose of relending loan funds.

4.25 Because highway administration had been decentralized in 1967

and the responsibility for public roads transferred from the Federal Govern-ment to the Republics and Autonomous Provinces, there was no central highwaysagency to exercise supervising and coordinating functions for the project.Rather than have the Bank enter into four separate loan agreements with

the individual Republics and Autonomous Provinces concerned, which wouldhave entailed a detailed appraisal of each, the Yugoslav Investment Bank

again agreed to act as the Borrower's representative and as coordinator inmatters relating to project execution. Government then entered into sub-

sidiary loan agreements with each concerned Republic and Autonomous Province.This procedure, used successfully in the execution of the Third Project, waseffective for the Fourth Project.

4.26 In order that the optimum use be made by the roads to be built

under the project as soon as possible after their completion, Governmentagreed to include in each subsidiary agreement the requirement that otherroads providing access to the project roads should be constructed and/orimproved and maintained as reasonably required.

4.27 The requirements of this covenant were met satisfactorily although

in the case of Serbia, construction of the 6 km section of the Belgrade-Novi

sad highway was delayed because of problems in the intersection design at

the Belgrade terminus and difficulties in acquiring the right-of-way andthere were also delays in constructing a new access from the Belgrade-Zagrebroad. Although not completed by the loan closing date, work on the 6 kmhighway section was then well advanced, but the new access from the Belgrade-

Zagreb Road will not be opened until mid-1977. The operation therefore of themain highway has been adversely affected because of this access difficulty,and full benefits of the construction will be not be realized until thisjunction has been completed, diverting more traffic from the old road.

4.28 The subsidiary loan agreement with the Autonomous Province ofVojvodina contained an obligation concerning the level of tolls which thePLovince might wish to levy on traffic using the project road. It wasagreed that if they were to be imposed, tolls would be applied flexiblyand at such levels as not to divert an unduly large portion of throughtraffic to the alternative toll free facilities or means of transportation.To date no tolls have been levied and there are no indications that the

authorities intend levying tolls.

4.29 The subsidiary agreement with the Autonomous Province of Kosovoobliged the Province to build a two-lane highway between Zaimovo and Komoranon the project road to agreed design standards and to be completed - 'Laterthan the project road. This requirement was satisfactorily met.

- A.8 -

V. INSTITUTIONAL DEVELOPMENT

5.01 The Bank has been heavily involved in institutional develop-ment in Government agencies dealing with transport. A principal issue wasthe fundamental change in highway administration which occurred in 1967.As part of a larger national effort to decentralize economic decisionmaking, most of the responsibilities of the Federal Government in thehighway subsector (and in the transport sector generally) devolved to theRepublics and Autonomous Provinces whose authority was thereby increased.Unfortunately, having a larger number of decision makers, as a result ofthis decentralization, has increased the problems of coordination. However,the Bank has attempted to address this problem by promoting the establish-ment of:

(i) the Council of Republican and Provincial Roads Organization(CRO);

(ii) Lhe Federal Committee for Transport and Communications; and

(iii) the Secretariats or Committees for Transport in the Republicsand Provinces.

5.02 The CRO, established by the Road Funds, Councils and Enterprisesin 1971, has been active in the standardization of engineering designcriteria, data collection and other technical matters between the Republicsand Autonomous Provinces. It has also been instrumental in the preparationof uniform guidelines for feasibility studies.

5.03 The Bank also played a useful role in promoting coordination inhighway planning, project preparation, research and administration. Underthe Third and Fourth Highway Loans, the Federal Government and the Republicsahd Provinces agreed to:

(i) revise existing laws and regulations, in particular toensure that earmarked funds will be used for highwaymaintenance;

(ii) improve coordination in the highway sector; and

(iii) collect and analyze data for highway planning purposes.

5.04 The authorities have made considerable progress in implementingthese undertakings. For example, all laws and decrees related to the highwaysector have been reviewed as part of a national review of all existinglegislation; the standard and organization of highway maintenance improvedconsiderably; traffic counting, which had been rudimentary in the past,is now being carried out on a more systematic and planned basis: the FederalGovernment has issued the first uniform guidelines for estimating vehicleoperating costs; and notable progress has also been made in improving projectpreparation. Much of the progress in these fields has becn due mainly to theBank's efforts and active involvement.

- A.9 -

5.05 Further improvements are still needed, and the Government hasyet to define its transport policies more precisely and delineate clearlythe responsibilities of the Federal, Republican and Provincial Governmentsin the transport sector. At present, the CRO does not have the legal statusor authority to play a fully effective role in overall highway planning andcoordination between the Republics and Provinces. Further, to promotetransport coordination, the need is becoming increasingly urgent for studieson road user charges and on railway costs, with a view to eliminating theovert, hidden and cross-subsidies in and between these modes. The studiesof road user charges and rail costs have been included as an importantcomponent of the proposed Eighth Highway Project. Both these studies areexpected to assist in the optimum utilization of the existing assets, andlay a sound foundation for formulating transport policies relating torail/road coordination. The Bank has maintained a close dialogue with theYugoslav authorities concerning the institutional problems and the goal ofachieving improved transport coordination continues to guide Bank lendingfor future highway projects.

VI. ECONOMIC JUSTIFICATION

A. General

6.01 The main objective of the project was to reduce the cost of trans-port and relieve congestion on four main highway sections: Bar-Ulcinj,Belgrade-Novisad, Nis-Pristina-Pec and Sarajevo-Zenica by replacing orimproving the existing inadequate road sections. The first two lanes (firststage) of four-lane divided highways in Sarajevo-Zenica and Belgrade-Novisadare the two principal components of the project and together they account forabout 75% of the total construction costs.

B. Traffic

6.02 The average daily traffic volumes on the project road sections asestimated at appraisal and from actual counts and latest estimates are shownin Annex 3.

Saralevo-Zenica Section

6.03 Average actual traffic (1975) on the Sarajevo-Zenica section inS.R. Bosnia-Herzegovina compared favorably with the appraisal estimate.

Belgrade-Novisad Section

6.04 In the case of Belgrade-Novisad route the average daily trafficon the northern half and southern half of the sections varied significantly.This was mainly because of the rapid development of commerce anl ind-strybetween Indjija and Belgrade. This traffic trend is likely to con inue and

- A.10 -

may become more pronounced with the completion of the new additional accessroad to Novisad from the project road near Indjija. At present only aportion of this new access road is ready. But it appears that in due coursethis new access road will be the main connection between the project express-way and Novisad and will form part of the European network roads (E5). Thisis likely to result in substantial shortfall of anticipated traffic in thefuture on the project section between Indjija and Novisad in S.A.P. Vojvodina.

Bar-Ulcinj Section

6.05 On the Bar-Ulcinj section in Montenegro, the average actual trafficis about 20% higher than the anticipated volume mainly due to the favorabledevelopment of tourist traffic on the Adriatic highway along the coast.

Nis-Pristina-Pec Sections

6.06 The actual traffic on Nis-Pristina and Pristina-Pec sections islower than "he estimated volumes by about 63% and 70% respectively. Apparently,the apprai6al assessment of the prospect for growth of traffic on Nis-Pristinasection int Kosovo was somewhat optimistic. Reduction of traffic on Pristina-Pec section (from 650 in 1969 to 524 in 1975) indicates the margin of uncer-tainity of the origin-destination data provided during appraisal.

C. Economic Benefits/Costs

6.07 The principal benefits derived from the project are savings invehicle operating costs. Vehicle operating costs by road section are shownin Annex 4, as estimated at appraisal and as revised on the basis of updatedoperating cost, information available for the year 1974-75. The figures showthat average vehicle operating costs, and therefore savings, have increasedby about 105% from 1970 to 1974 and by another 15% from 1974 to 1975. Thisipcrease is partly due to inflation and pErtly to the marked producer priceincreases in petroleum products. The economic costs of construction of theproject roads have generally increased by about 15% to 35% as compared toappraisal estimates. In the ex-post economic justification, actual projectcosts and estimated benefits in current prices of each year have been adjustedto eliminate the likely effect of inflation.

D. Economic Return

6.08 The rates of return of the project road sections are shown inAnnex 5, as estimated at appraisal and as revised on the basis of updatedtraffic and vehicle operating cost information. The Annex shows that therevised economic return (ER), excluding benefits due to savings of passengertime, is varying between 12% and 22% for different road sections. If thebenefits due to savings of passenger time are included, the ER increases byabout 2% in all cases, confirming that on the whole, the different sub-projects are economically justified.

- A.11 -

6.09 In spite of considerable reduction in traffic level on thePristina-Pec and Pristina-Nis sections, the sub-projects remain economicallyviable mainly on account of increased operational cost savings at currentprices (1974-75) and substantial distance reduction (about 78 km) for throughtraffic in the case of Pristina-Pec section. The revised ERs for thesesections are, however, lower and stand at about 2/3 of the appraisal estimates.

6.10 A careful scrutiny further reveals that due to likely diversion oftraffic from the Novisad-Indjija section discussed earlier, the economicreturn for the northern half (from Novisad to Indjija) of the Novisad-Belgrade highway section is as low as 6%. The extra large benefits (about24%) of the southern half from Indjija-Belgrade is really hiding the insuf-ficient benefits of the northern stretch. In retrospect, a simple two-laneconstruction of Novisad-Indjija section (including the major bridge overthe Danube) instead of a staged two-lane construction might have been abetter proposition.

VII. THE ROLE OF IBRD

7.01 In preparation and appraisal of the project the Bank was instru-mental in ensuring the participation of the Yugoslav Investment Bank asproject coordinator and the channel of funds to the four Republics andProvinces participating in the project. Further, to ensure that therealization of full project benefits would not be frustrated or needlesslydeferred, the Bank insisted the Borrowers should also build or improvethe additional roads needed to give access to the project roads.

7.02 The project did encounter unforeseen difficulties such as un-expectedly adverse soil conditions on some sections of the Bar-Ulcinj road,unexpected land expropriation and relocation problems through a highlyindustrialized region in Bosnia-Herzegovina, and complex urban intersectiondesigns at Belgrade. In these situations, the Bank staff maintained a frankand close relationship with the staff of the Borrower and provided technicalassistance and advice to minimize the adverse effect on the project.

7.03 The Bank played a particularly useful role in stressing theneed to revise the price escalation clause in highway construction contracts.The clause then in force did not cater adequately for all the main types ofcost increases, and as prices rose sharply from about 1970, compensationunder the ,clause was less than adequate, and created a financial squeeze onthe construction industry. At Bank's suggestion the authorities agreed toinclude a revised clause in all the Bank-financed contracts.

7.04 The Bank's insistence on coordination has been the most importantfactor in the establishment of a consultative mechanism for the variousRepublican and Provincial Road Funds in the form of tha Council of RoadOrganizations. Noticeable attention was given by this body to i7)rovingthe collection and analysis of country-wide traffic statistics and betterproject preparation.

- A.12 -

VIII. CONCLUSIONS

8.01 The project has been successfully completed and with one minor

exception all within the loan closing date. Most of the overruns in projectcosts can be explained by the devaluation of the Dinar in January 1971 by

20% and by price escalation.

8.027 The main benefits from the newly constructed roads are savings

in transport costs. The E.R.s of the project roads, excluding benefits due

to savings of passenger time, range between 12% and 22%. If the benefits

due to passenger time savings are included, the E.R.s increase by about

2% in all cases, confirming that on the whole, the different sub-projects

are economically justified.

8.03 However, when the new access road to Novisad from Indjija is

finished (there is no firm date yet) there will be a substantial diversionto it of anticipated traffic from the northern half of the project Novisad-

Belgrade ection. The E.R. for the northern half might fall to as low as

6%. This project road has been designed and built as the first stage (two-

lane carriageway) of a limited access four-lane highway. There is nowlittle prospect and justification of the construction of the second carriage-

way. in view of the investment already made to provide for a future second

carriageway, the question of an entirely new alignment to Novisad from theproject road is one that should have been discussed very much earlier with the

Bank so that the optimal least total cost solution could have been mutually

agreed.

PRCaCT C0M1?LETION REPQORT

YUGOSLAVIA: FO'JF2TH VIGS! AY PROJECT (LoAN 678-YL)

Actual ane Exp_ec Proleet Execution

X CompletionContract Work Contract Actual Contract ComPletion by Expected

Project Component Contractor Bid Receipt Award Started Period Period Expected Actual 1/ Dare

Montenegrc

A. Bar-4Ulcinj

I. Bar*-Belvedere G.B. Put (Sarajevo) 01/C5/71 03/16/71 04/16/71 23 26 01/16/73 06/01/73 92II. Belvedere-Ulcinj Mavrovo CSkopje) 01/05/71 03/16/71 04/16/71 23 26 01/16/73 06/C1/73 77

B. Vojvodina and Serbia

I. Kac-D<nube Put (Sarajevo) 03/29/71 06/10/71 07/09/71 33 47 04/09/74 O0/75 75II. ranuFe-Bridge Mostogradnja (Belgrade) 03/29/71 06/10/71 07/09/71 33 47 04/09/74 05/75 747-I. Danrtbe-Batagnica Mlavrovo (Skopje) 03/29/71 06/10/71 07/09/71 33 47 04/09/74 05/75 68IV. Batagnica-Belgrade Mavrovo (SkopJe) - - 06/20/72 39 42 - 11/28/75 -

C, Serbia and Kcsovo

I. *Fec-ZaJmovo Granit (Skopje) 03/10/71 07/02/71 07/15/71 20 35 12/31/72 12/26f73 65II. Yo-.orar.e-Velika Slatina Partizanski Put (Beograd) 03/10/71 06/23/71 07/05/71 20 30 08/31/72 11/29/72 98iTl. Poddaevo-Merdare Ramiz Sadik/Vijadukt 03/10/71 05/11/71 07/01/71 20 42 10/30/73 11/29/173 98IV, Merdare-Pepeljevac Partizanski Put (Beograd) 03/10/71 06/25/71 09/01/71 32 54 11/25/73 9/76 -

D. Bcsnia and Hercegovina

T. Zenica-Lasva Bosnaputevi (Saraj evo) 03/12/71 06/16/71 06/02/72 33 54 03/16/74 12/21/75 37II. Lasva-Visoko Partizanski Put/Plamum 03/12/71 06/16/71 06/02/72 33 54 03/16/74 12/21175 34II. Visoko-Josanica Autoput/Granit 03/12/71 06/16/71 06/02/72 33 54 03/16/74 12/21/75 57

1/ Dates given aTc for "practical completion", i.e. when roads have been opened to traffic andthe contractua] maintenance period begins. Some minor works such as signalization, clearingof right-of-way, may remain to be ccmpleted.

YUGOSLMVIA: FOLl'RTH *FtCTWAY P'OJEECT (LOAtI 6-&-YV')

Cotarison of Actual end tnpraisal EsBtIrears of jecVCost

Apo-srAca2 rstIcte

Finad l (tt1

Cest _cn-~racf- -~i.~n ~ Lcc3.. Fc~r±SnfTot-1 Price l-ocal ForIegn 2/ ot2

Estite(k) .in. L'S Do4 V'$ Dn .. ~ S iS $

_ sLmt 3/d- ---- (in Million) --i

-------- -llion)- -

A. Vontenegro:

rat-BelvedEre 15.0 81,41Be-vadcro-Ulcinj 9.4 49,5a

3

24.4 111.00 2.10 137.32 11.02 130.99 92.23 4.32 162.50 10.72 108.b 124.06 139.94B. Vosvcdena a.-nd SerbSa:

FaZ-!DanLbC '19.2 94.53Dcnur,e Zrr-,La 2.5

160.5631.2 146.725.7 44.375S.6 33-155 6.41 409,9 32.86 4-46.18 429.54 13.60 649,90 40-'4 123.60 145.46 158.44C. Ze:bfc grd-Yoovo:

Pec-Ztr.j:_vo 22.8 34.18Komcran0Velika S'atina 10.4 20.47Pc6u 4; evo-YOerdrct 7.2 19.98rtrde c-7c,.014evac 29.2 86.4669.6 134.05 2.56 165.86 13.26 161.09 132.08 5.40 218.20 14.49 110.36 1;5.45 131.56

z :-Lsisv 9.5 86.7238.2

2S4.99_s - sic 17.7 177.45

1-.211965./' 406.60 7.93 504.53 40.39 549.16 394.70 16.68 665.70 41.45 123.63 lZl.22 l31.94

TOTALS 983.20 19.00 1,217.90 97.50 1,287.42 1,C48.55 40.00 1,696.30 106.80 120.12 1J1.76 139.25 1-

S t :ih coaltir.gencles'/ r.jt ,co erl 4S loan proceedr, about SO% cf which is estimaated to cover forcisn cxchan£e component.; U'~t I contingencies


YUGOSLAVIA: FOLRTH HIG9WAY PROJECT (LOAN 678-YU)

Average Annual Daily Traffic (AADT) Volumes !/ on Project Roads 1969-1991

Highway Sections Appraisal Estimate Rcvised Estimate

1969Z 1922 1977 1982 1991 1969Y/ 1972 1975 _/ 1977 19S2 1991

Bar-Ulcini l4 1,200 1,600 2,800 4,000 7,000 1,200 1,800 3,012 3,500 5,000 8,000

Belgrade-'~cVisad 4/ 5,500 7.700 21 13.500 22,200 45,000 5.500 7,OnO 5/ 8,500 8,90o 1,n5nn 51 17,500 5

Nis-Pristina 4/ 890 2,300 4,300 5,900 8,500 890 1,300 1,40h 1,600 2,200 4.500

Fec-Pristinp 4/ 650 1! 1,300 2,200 3,000 4,800 650 400 524 600 900 1,500

SaraJevo-Zenica 4/ 1,900 3/ 2,900 .1 5,700 9,000 18,500 1,900 3,000 5,324 6,000 8,000 15,000

1/ Cars. trucks and buses21 Actuals3! Thro'gh traffic only4/ Percentage of commercial vehicles (trucks and buses) on Bar-Uleinj, Belgrade-Novisad, Nis-Pristina, Pec-Pr4stina and Saravevo-

Zenica worked out as 30, 25, 25, 25 and 30 percent, respectively.5/ Estimated AADT on the northern half and southern half of the road varies significantly as shown below:

1972 1977 1982 1991(AADT)

Novisad-Indjija (30 km) 5,000 4,800 5,500 11,000Indjija-Belgrade (30 km) 5,000 12.800 15,500 24,000

Source: Appraisal ReportFeasibility Study of Subotica-Beograd Highway Section, 1975Feasibility Study of Sarajevo-Konjic H4ghwny Section - Book No. 3, 1975FeasibilIty Study of Pristina-Leskovac Rightway Section, 1976 wTatest traffic survey data

ANNEX 4


Y1GOSLA .IA: _i11URTl_ 1Ci..AY F!:)_JCT (LOA', 678-Yli)

Vehicleyei..tir (ostsll

(Dillarsjp_r k <Net of Taxes

T of________ 9EPraiad1 Estlate -/ Revi.sed EstirRteBar- Belgrade- Nes- Pec- Zenics- Tar- _ 4 iP - 2cl.ica- _

Ilcini Novised Pristina PristIra Saralevo Ulcini NovisPd Fristina Pristini SrajevoPa5sscr.er C_r

ExistinS read 0.603 0.594 0.665 0.54S 0.624 1.236 1.402 1.363 1.123 1.473New road 0.524 0.501 0.496 0.496 0.510 1.074 1.182 1.017 1.017 1.204

Savings 0.079 0.093 0.169 0.052 0.114 0.162 0.220 0.346 0.106 0.269

S Savings 13 16 25 10 1S 13 16 25 10 18

Light Truck

Existing road 1.807 1.720 1.862 1.584 1.807 3.704 4.059 3.817 3.247 4.265New road 1.484 1.378 1.383 1.383 1.422 3.042 3.252 2.835 2.835 3.356Savings 0.323 0.342 0.479 0.201 0.385 0.662 0.807 0.982 0.412 0.909X Savings 18 20 26 13 21 18 20 26 13 21

Heav.O l'ruc,.

Existing road 2.934 2.794 3.194 2.495 2.934 6.015 6.594 6.548 5.115 6.924New road 2.355 2.236 2.196 2.196 2.295 4.826 5.277 4.502 4.502 5.416Savings 0.579 0.558 0.998 0.299 0.639 1.187 1.317 2.046 0.613 1.508

% Savings 20 20 31 12 22 20 20 31 12 22

Truck w/Tr iler

Existing road 3.701 3.525 4.054 3.148 3.701 7.587 8.319 8.311 6.453 8.734New road 2.971 2.820 2.770 2.770 2.896 6.091 6.655 5.679 5.679 6.835Savings 0.730 0.705 1.284 0.378 0.805 1.496 1.664 2.632 0.774 1.899X Savings 20 20 32 12 22 20 20 32 12 22

Autobus

Existing road 2.976 2.834 3.016 2.510 2.976 6.101 6.6e8 6.183 5.146 7.023New road 2.388 2.226 2.206 2.206 2.308 4.895 5.253 4.522 4.522 5.447Savings 0.5P8 0.608 0.810 0.304 0.668 1.206 1.435 1.661 0.624 1.576

2 Savings 20 21 27 12 22 20 21 27 12 22

Average Vehicle Operating Cost Increase 1970-74: 105%1970-75: 136%

Comparison of Selected Vehicle Operatinig Co&t Comnonents

New Information at Appraisal atltems 1975 rrice 1970 PrJ~e

(Econc,jic Cost in ND)

Gasoline - per liter 2.50 0.60Dlesal - per liter 2.23 0.45Tire (car) - per tire 271.01 146.62Tire (medlum truck) - per tire 2873.19 3330.00

I/ excludes passenger timei/ at 1970 price level3/ at 1974 price level4/ at 1975 price level

Source: (1) Statistical POCrct lock of Ytupor1;vfa(ij) Cuidelinies for ITigYuay YeaniAllty Studies Vol 1 0- 1'r!,c1/Brger

(iiJ) Annex II - Additiouial doctcmeutattion TraffJc end 1 -. .lc Studica - y..jsovopr,.c-rriPtfist Road 1970

ANNEX 5


YUGOSLAVIA

Fourth Highway Project (Loan 678-YU)Ex-Post and Appraisal Estimates of Economic Rates of Return

Proportion of Rate of Return 1/Road Section Total investment Ex-Post Estimate Appraisal Estimate

Bar-Ulcinj 10.2 22 14

Belgrade-Novisad 34.6 14 14

Nis-Pristina 7.7 12 18

Pec-Pristina 5.7 18 29

Sarajevo-Zenica 41.8 15 14

1/ Excluding passenger time savings; with passenger time savings theRates of Return would be about 2% higher

2/ Estimated Rates of Return for northern half (from Novisad to Indjija)and southern half (from Indjija to Belgrade) worked out as 6% and 24%respectively.

A U S T 2 R I A *. !

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YUGOSLAVIA u on_ ,. e' e ' -*...--.

H i G H WAY SY S T E M . R iT, r OGPAD ' > X j , c * . r < SORM>

OTHER CLASS I HIG1AS lAStS e -v o

- - - - HIG,50Y ClDER COIISTRJCO OIA

---- GOUSDA OIES OF REPUOLICOS t UOJFOIOUOS PPCJlPILCF NUc,;-vPG<b

AI-I4I-ID-E P9I L W O C Y N I A .

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Pec-PriAtina-Nis Road Sections

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