Report No. 1458b-BO FILE CopyBolivia: Appraisal of anAviation Development Project

April 28, 1977

Latin America and the Caribbean Projects Department

FOR OFFICIAL USE ONLY

Document of the World Bank

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

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Currency Equivalents

1 Bolivian Peso ($b) = US$0.05US$1.00 = 20.0 Bolivian Pesos ($b)1 million Bolivian Pesos ($b) = US$50,000

System of Weights and Measures

Metric US Units

1 kilometer (km) = 0.62 mile (mi)1 meter (m) 5 3.28 feet (ft)1 liter (1) = 0.26 US gallon1 kilogram (kg) = 2.20 pounds (lb)1 ton = 2,205 pounds

Fiscal Year

January 1 to December 31

Abbreviations and Acronyms

AASANA Airports and Air Navigation Services AdministrationAGA Aerodromes and Ground AidsATC Air Traffic ControlCOM CommunicationsCNA National Aviation CouncilDGAC Directorate General of Civil AviationDGTTA Directorate General of Air Transport and Aerial WorkDME Distance Measuring EquipmentECLA Economic Commission of Latin America

FAB Bolivian Air ForceHF High FrequencyICAO/OACI International Civil Aviation OrganizationILS Instrument Landing SystemISB Independent Side BandLAB Lloyd Aerea BolivianoLRB Locating Radio BeaconMTCCA Ministry of Transport, Communications, and Civil Aviation

NAVAID Navigational AidNDB Non-Directional Radio BeaconRX ReceiverSAC Under-Secretary for Civil AviationSSB Single Side BandTX TransmitterUNDP United Nations Development ProgrammeVASI Visual Approach Slope IndicatorVHF Very High FrequencyVOR Very High Frequency Omni-Directional Radio Range

Aircraft Nominal

B-727-100 Boeing three-engine jet 119 seats 2 tons belly loadB-727-200 140 seats 4.5 tons belly loadCV-580 Convair twin-engine turbo propeller 8 tons pay loadF-27 Fokker twin-engine turbo propeller 40 seats or 5 tons pay loadC-46 Curtiss twin-engine piston propeller 5.5 tons pay loadDC-3 Douglas twin-engine piston propeller 28 seats 3 tons pay load

FOR OFFICIAL USE ONLY

BOLIVIA

APPRAISAL OF AN AVIATION DEVELOPMENT PROJECT

TABLE OF CONTENTS

Page No.

SUMMARY AND CONCLUSIONS .......... ...... .. ....................... i-ii

1. INTRODUCTION ............................................. o............. 1

2. BACKGROUND ................................................ 1

A. General ............................................... 1B. The Transport Sector ..................................... 2C. Transport Planning and Coordination ................... 3D. Development Plan ...... ................................ 4

3. BOLIVIAN AVIATION ........................................................ 5

A. Existing Air Transport ..... ........................... 5B. Present Air Traffic ...... ...................... 6C. Traffic Forecasts (Project Airports) ............ ...... 7

Passenger Forecast ..... .......................... 7Cargo Forecast ............... ........... ........ 8Aircraft Movements .......... 8

D. Existing Organizations ................................. 8E. The Borrower - AASANA ...................................... 9

4. THE PROJECT . . ........... 10

A. Objectives ... ......................................... 10B. Description ................................ *............... 10

Airport Construction and Improvements ............ 11Design and Supervision of Construction ........... 11Design of Cochabamba Runway ...................... 12Provision of Equipment ........................... 12AASANA Technical Assistance and Staff Training ... 13

C. Special Components of the Project ..... ................ 13D. Ecology ............................................... 13E. Cost Estimate ......... ....... 14

This Appraisal Report has been prepared by Messrs. B. Bostrom (AviationEconomist), J. Bowlin (Financial Analyst) and W.B.R. Zetterstrom (AviationEngineer) and Ms. V. Foster (Editor).

This docuwmnt has a retnctod distribution and may be used by recipients only in the performanceof their official dutie. Its contents may not otherwise be disclosd without World Bank autmrlaaton.

TABLE OF CONTENTS (Cont'd)

Page No.

F. Execution ......................... 15G. Procurement ....... .................. 15H. Disbursements .................................... 16

5. ECONOMIC EVALUATION ........................ .. 16

A. General ................ 0.. *.*............ ..... 16B. Economic Analysis ... ............... . ................. 17C. Cost Savings ... ............................ 18D. Project Return .. ................................. 19

6. FINANCIAL EVALUATION .................. . ................. 19

A. Existing Situation ............................... 19B. Financial Objectives .......................... ....... 20

C. Financial Plan ... ................................. 21

D. Financial Projections ............................... 21

7. AGREEMENTS REACHED AND RECOMMENDATION ..................... 24

TABLES

1. Total Freight Movement in Bolivia2. Comparative Economy Air Fares, 19763. Names and Abbreviations of Airports4. Forecast Passenger and Freight at Project Airports5. Forecast Aircraft Traffic6. Cost Estimates7. Disbursement Schedule8. Estimated Aircraft Cost Savings in 19819. Quantified Project Benefits 1978-199810. Sensitivity Analysis of Economic Rate of Return11. Balance Sheets 1970-1974 - AASANA12. Statement of Revenues - AASANA13. Projected Operating Statements - AASANA14. Projected Project Airport Operating Statements - Riberalta Airport15. Projected Project Airport Operating Statements - Santa Ana Airport16. Projected Project Airport Operating Statements - San Borja Airport17. Projected Project Airport Operating Statements - Tarija Airport18. Project Cash Flow - AASANA19. Projected Balance Sheets - AASANA20. Schedule of Selected Financial Indicators

TABLE OF CONTENTS (Cont'd)

ANNEXES

1. Bank Group Projects in the Transport Sector2. Bolivia Aircraft and Airport Inventory3. Aircraft Accidents in Bolivia4. Traffic Forecast Methodology5. Existing Airport Conditions and Proposed Improvements6. Location List for Equipment Included in the Project7. Regional Maintenance Equipment8. Draft Technical Assistance Job Descriptions9. Special Components of the Project10. Project Progress Monitoring Indices11. Summary and Conclusions of Bolivia Transport Sector Report12. Details of the Economic Evaluation13. Financial Assumptions

CHART

1. Organization Chart

MAPS

IBRD 12654 - Project AirportsIBRD 12655 - Telecommunications Network

BOLIVIA

APPRAISAL OF AN AVIATION DEVELOPMENT PROJECT

SUMMARY AND CONCLUSIONS

i. This report appraises a project comprising:

(a) the construction of two new domestic airports (Riberalta andSan Borja) and major improvements at two others (Santa Anaand Tarija);

(b) the design and supervision of construction in (a);

(c) the provision of air navigational aids (Navaids) and communica-tions (Com) equipment at the project airports and new country-wide Navaid and Com systems;

(d) the provision of general maintenance equipment and runwaymaintenance equipment;

(e) the provision of technical assistance and staff training tothe Borrower; and

(f) the design of a new runway, aprons and related works at theCochabamba Airport.

ii. The difficulties for surface transport created by topography andpopulation distribution are reflected in high infrastructure costs. Given thescarcity of surface transport and the low population density in the lowlands,the Government is emphasizing the development of aviation for this and otherisolated parts of the country.

iii. The project, to be administered by Administracion de Aeropuertos yServicios Auxiliares a la Navegacion Aerea (AASANA), will enable the domesticairlines and, in particular, the almost wholly Government-owned Lloyd AereoBoliviano (LAB), to use larger, more productive aircraft, which already existin their fleets, at a higher daily utilization rate with correspondingly lowerunit costs. The project will also reduce the delays, cancellations and diver-sions for aircraft through improved aeronautical communications, navigationalaids and runway maintenance equipment. The technical assistance and trainingelement are intended to strengthen the planning, maintenance and constructionunits responsible for civil works and equipment of the borrower. The inade-quate length and poor orientation of the present runway at Cochabamba, themain base of LAB, make it advisable to construct a new runway. It is desir-able to support the project by providing funds for its detailed design. How-ever, it is not possible at this stage to include the construction of the newrunway in the present loan because of limited funds.

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iv. The proposed US$25.0 million Bank loan represents the 60% foreignexchange component plus 8.4% of the local cost component (expenditures forlocal consultants) of the US$39.5 million required for the project. Theremaining local costs will be financed by an equity investment from theGovernment, which will exempt project items from taxes and duties.

v. Contracts would be awarded through international competitive biddingin accordance with Bank Guidelines. Retroactive financing would be requiredfor design and supervision at three airports as well as paving and supervisionat one airport (Tarija). Such amounts should not exceed US$1.7 million.

vi. The main project benefits are cash savings to LAB from better uti-lized, more efficient and productive aircraft. The transport to or fromisolated communities by non-scheduled Bolivian cargo airlines would also beassisted by the provision of better communications, air navigational aids andrunway maintenance. In addition, unquantified benefits include time savingsto passengers and prevention of spoilage of air cargo, improved air safetyand better inter-regional integration of the country. The quantified economicreturn ranges from 12% to 24% for individual project items, with an averageof 19% for the project as a whole.

vii. The financial evaluation is based on the assumptions of tariffincreases to cover operating costs for AASANA's entire system by 1980 and togive a return on fixed assets of 4% from 1985 onward. Even with these tariffincreases, substantial benefits will still accrue to LAB, which, however, willbe required for its continued fleet modernization.

viii. This report is based on economic and engineering studies made by theproposed Borrower and its consultants. It would be the fourth Bank Grouptransportation project in Bolivia and the first in aviation development.

ix. The proposed project is suitable for a Bank loan of US$25.0 millionto AASANA, with a Government guarantee. The term would be 20 years, includinga grace period of four and one-half years.

BOLIVIA

APPRAISAL OF AN AVIATION DEVELOPMENT PROJECT

1. INTRODUCTION

1.01 The Government of Bolivia has requested Bank Group financial assis-tance in upgrading its air transport system to meet domestic transport needsmore adequately. The project selected as the most appropriate concentrateson construction or reconstruction of four airports in isolated parts of thecountry: Riberalta, Santa Ana de Yacuma and San Borja in the northern depart-ment of Beni and Tarija in the south. The project also includes design for anew runway, taxiways and apron at Cochabamba; aeronautical communications andair navigational equipment; and runway maintenance equipment and technicalassistance and training for the operating agency, Administracion de Aeropuertosy Servicios Auxiliares a la Navegacion Aerea (AASANA), the proposed borrower.

1.02 This would be the first Bank Group aviation project in Bolivia.Annex 1 gives details of previous Bank Group loans and credits for Boliviantransportation projects (railways and pipelines).

1.03 Project cost is estimated at US$39.5 million (net of taxes andduties) with a US$23.7 million, or 60%, foreign exchange component. The pro-posed loan of US$25.0 million would cover this foreign exchange requirementplus US$1.3 million equivalent to cover a part of the costs of consultantservices for detailed engineering design (paras. 4.08 and 4.10).

1.04 This report is based on the technical and economic studies preparedby AASANA and its various consultants and on the findings of a Bank appraisalmission comprising Messrs. B. Bostrom (Aviation Economist), W.B.R. Zetterstrom(Aviation Engineer) and J. Bowlin (Financial Analyst), which visited Boliviain November 1976. The report has been edited by Ms. V. Foster.

2. BACKGROUND

A. General

2.01 Bolivia has an area of 1.1 million km2, which can be roughly dividedinto the barren highlands "Altiplano" in the western part of the country, wheremost of the country's population lives; the central valleys in the midwest, andthe lowlands to the east and the north. The departments of Pando, Beni andSanta Cruz are in the latter area and represent more than half the territoryof the country, but contain only a small part (19%) of the population. Becauseof topographical barriers and long distances, transportation's role of encour-aging overall economic development through an interchange of production amongregions is unusually difficult. The provision of adequate transportationis further complicated by low traffic densities.

2.02 The difficulties caused by topography and population distributionare reflected in high transport infrastructure costs, necessitating a very

careful analysis of the most appropriate modes of transportation and potentialprojects for investment. After such an analysis, the Government is emphasizingthe development of aviation for isolated parts of the country. Of the totaltransport projects in the five-year plan 1976-1980, an allocation of 21% hasbeen made to investments in civil aviation.

B. The Transport Sector (See Table I for comparison of traffic by modes)

Railways

2.03 The railway is a very important transport mode as a resultof the focus on mining as the prime activity for the modern sector of the econ-omy. The system consists of about 3,400 km of meter-gauge Government-ownedsingle track line (Map IBRD 12654). The most important route is the line con-necting the mining areas and La Paz with the Chilean ports of Arica andAntofagasta. This western network is not directly connected to the easternlines linking Santa Cruz with the Argentine and Brazilian meter-gauge networks;the only connection between the two networks is through Argentine territory.Although less important in terms of traffic, the line between Brazil and SantaCruz is vital since it is the only surface mode of transport in this area andthe natural import route for this rapidly growing part of the country. As aresult of improvements in management and operation through two Bank-financedprojects and tariff increases in 1975 and 1977, the railway is presentlyoperating at a profit. A third railway project is being considered for Bankfinancing.

Highways

2.04 The present road system consists of about 38,000 km, of which 3%(1,166 km) are paved, 17% (6,559 km) are gravel surfaced and the remainder,80% (29,831 km), are unimproved earth roads. The most important part of thenetwork is located in the highlands and valleys, where 84% of the populationis concentrated in 34% of the territory. In contrast, the lowlands of thenorthern and eastern regions, which have twice the area of the other tworegions, are insufficiently serviced by a few low standard roads. The roadnetwork generally is laid out in the form of a "Y" with Oruro as center; themain stem pointing to the south toward Sucre, Potosi, Tarija and throughVillazon and Bermejo into Argentina; the left arm stretching through La Pazinto the Titicaca and Yungas regions; and the right arm leading throughCochabamba into the lowlands of Santa Cruz. In view of the road conditions,road transport is primarily important only on relatively short hauls.

Waterways

2.05 The river transport system is made up of an extensive network ofinland waterways located in the eastern and northern parts of Bolivia, mea-suring about 1,600 km. Minimum channel depths vary from 1.0 to 3.5 m, withseasonal variations of up to 9.0 m. The system consists of five main water-ways, as shown on Map IBRD 12654. These rivers represent the only availabletransport mode for commodities whose value is too low to justify movement byair. As such, they perform a vital function even though the quantities movedare small.

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2.06 Lake transport is limited to Lake Titicaca, the highest navigablelake in the world. Its primary function is that of an alternate transportcorridor to the Pacific Ocean through the Peruvian lake port of Puno, by railand road to the seaports of Matarani and Mollendo. In terms of ton-km offreight traffic, lake traffic is more important than river traffic.

Pipelines

2.07 The state oil company operates 2,462 km of oil pipelines and 754 kmof gas pipelines. The oil pipelines allow access from the major productionfields to the Pacific seaport of Arica and to the Argentine border. TheBank-financed natural gas pipeline (Loan 635-BO) conveys gas to Argentina.Depending on the success of intensive exploration efforts now under way andthe confirmation of identified reserves, significant new pipeline constructionmay be undertaken.

Aviation

2.08 The aviation sector is discussed in Chapter 3.

C. Transport Planning and Coordination

2.09 Important issues related to transport planning and coordination inBolivia need attention. As an example, during the next 20 years, there islittle doubt that Bolivia will have to construct and improve a substantialnumber of roads. This program, which could cost several hundred milliondollars, must be carefully defined and evaluated against the alternativesoffered by the other transport modes.

2.10 A National Transport Survey for Bolivia, financed by UNDP, wascompleted in 1969, with the Bank acting as Executing Agency; it proposed aprogram for integrated transport development over the following ten years.One of its main recommendations was that a Directorate of Planning and Coor-dination should be created. The Directorate was created and, for a time, wasattached to the Ministry of Coordination and Planning, but is now in theMinistry of Transportation, Communications and Civil Aviation (MTCCA).

2.11 For achieving better planning and coordination, the Bank, in 1972,assisted in the preparation of terms of reference for a UNDP-financed tech-nical assistance program to strengthen this Directorate. This program, withECLA acting as executing agency, was cancelled in 1976 due to lack of fundsafter only partial implementation (a consultant worked for a few weeks atMTCCA and assisted in the preparation of projects to be included in theNational Five-Year Investment Plan, 1976-1980).

2.12 The gap in knowledge regarding transport facilities and equipment,their condition, their age and their ability to meet expected demands isserious. Although individual project studies have been undertaken, there hasbeen no real coordination among them. The Government has decided to updateits National Transport Plan again under the direction of the Directorate ofPlanning and Coordination. The main objectives of the Plan would be to:

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(a) analyze and project the transport demand in relation toplanned development of the economy;

(b) review existing capacity and operations;

(c) determine the role of each mode in relation to the demand;

(d) recommend policies and operational improvements designed tomake best use of available capacity; and

(e) prepare a program of investments necessary to improve andexpand capacity to meet projected demand.

2.13 Due to the limited funds available, UNDP and the Government haverequested that financing of the program be taken over by the Bank. Fundsfor the needed updating of the National Transport Plan and for a technicalassistance contract for its implementation are being recommended in theThird Railway Project now under consideration (para. 2.03).

D. Development Plan

2.14 The Government's main transport strategy (except for pipelines,planned by the Ministries of Mines and Industry), for the five years 1976-1980 can be summarized as follows:

(a) extend and improve the road network to meet national andregional development related to high priority sectors inthe economy;

(b) continue the rehabilitation of the state railway;

(c) modernize air transport through improvement and reequipmentof infrastructure, ensuring permanent availability of smallerairports, particularly in the north and northeast;

(d) extend the river and lake fleet and improve port facilities andriver navigation; and

(e) achieve an efficient operation of each transport mode in sucha way that costs are low and services satisfy the demand.

2.15 The present MTCCA plan calls for investment, during 1976-1980, inprojects already under execution totalling US$475 million in transport,excluding pipelines; of this total, US$266 million is for highways, US$107million is for railways, and US$102 million is for aviation. In addition,projects of US$439 million are under study, with an aviation share ofUS$111 million and the rest for highways. This may be compared to totalpublic sector investment of US$2,436 million, or almost 20%. Productivesectors (industry, mining, hydrocarbons and agriculture) will use about 60%of the public sector investment, and energy and public services will use therest. About 62% of the transport investment is in foreign exchange and islikely to require external financing. Continued sector planning and coordi-

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nation are required to ensure that the projects under study are justified intheir overall context and are well-timed. Of the US$102 million 1976-1980investment for aviation, the major part is for airport improvement and air-craft purchases for the national airline, Lloyd Aereo Boliviano (LAB). Thisplanned investment is ambitious, but seems achievable.

2.16 In addition to the proposed project and other Government investmentsin the five-year plan above, it became apparent during appraisal that, becauseof a recent aircraft accident at Santa Cruz, a great deal of public pressurewas being exerted to relocate the existing airport to a site some 15 km northof the town. However, various Government officials (notably in finance andplanning) raised serious reservations to this proposed construction, primarilydue to the 1976 completion of a new terminal building at the existing airport,the high interest rates and short payback period for the money to be borrowed,and the probable necessity to have the airport designed, constructed andfinanced by a consortium of firms as a turnkey project with its inherent riskof over-design and high construction costs. Since the probability of construc-tion of this proposed airport is unknown, as well as its likely timing, costsof construction and financing, such costs have not been included in thefinancial projections for the project. It is assumed that, if such anairport were constructed, AASANA would be the operator of the airport only,not the owner. Assurances were obtained during negotiations that assetsfor a new Santa Cruz airport would not be transferred to, nor debt servicecost borne by, AASANA until it can be demonstrated that such a transfer willnot prevent AASANA from complying with the relevant financial covenants ofthe Loan Agreement (para. 6.08).

3. BOLIVIAN AVIATION

A. Existing Air Transport

3.01 Civil aviation in Bolivia is, to a considerable degree, a relic ofthe 1940's (Annex 2). The communications (Com) equipment and navigationalaids (Navaids) and some of the airfields date from that era, and the backboneof the domestic flying industry has basically consisted of aircraft of about1945 vintage, relatively low in capital cost and operated with a minimum ofmaintenance. Airports have been difficult and costly to build; the electronicequipment, although good in its day, is now old, unreliable, and difficult andcostly to maintain. Operating costs, as well as availability, of the olderaircraft and spare parts are becoming a matter of concern. Runways, buildings,roads, power plants, radios, beacons and other components have received verylimited maintenance and improvement. The Government, in view of other demandson its resources, did not, in the past, feel that expenditures in the field ofair transport were of high priority since the system, under the conditions andwith the aircraft types in use, presumably would continue to function to somedegree. The high (reported) accident rate (Annex 3) and other unreportedincidents, however, have led to a change of view. The Government is aware ofthe vital role of civil aviation in the country and is anxious to improve theexisting situation. Some progress has been made, and air transport withinBolivia is now in a state of transition. LAB is completing a change in aircraft

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which involves an upgrading of service so that certain airports previouslyserved by piston-engined Douglas DC-3 aircraft will change to turbo-propeller-driven Fokker F-27 and certain F-27 airports will be served by jet aircraft(Boeing 727). Comparative airline economy tariffs are shown in Table 2.

3.02 About 30 airports are managed by AASANA and served regularly by LABflights (Table 3). The four major cities--La Paz, Cochabamba, Santa Cruz andTrinidad--account for more than 80% of the regular passenger and 70% of thecargo traffic. All of these airports, with some weight restrictions, areused by jet aircraft such as the Boeing B-727-100. The other airports are inpoor condition and can accept only small propeller-driven aircraft. Duringthe wet season, several of these airports are closed for considerable periods.This can be a serious limitation since it coincides with the time when allother modes of transport, except limited river transport in certain areas, arealso out of service.

3.03 Air transport is a vital means of communication, despite its rela-tively high cost, and is likely to remain so due to the topography of thecountry. The areas where the greatest potential for development could beassisted by improved air transport are northeast of the mountain area andin the south. The departments of Beni and Pando are accessible only by river,and then for only part of the year. At present, air transport is the onlypractical mode for passengers and high-value or perishable goods. This maygradually change when penetration roads from La Paz are built. Nevertheless,the quality of the roads that can be built at reasonable cost in this areais likely to be such that air transport will remain dominant for many years.In addition, the sparse population would make air transport the most econ-omical mode. Trinidad, the capital of Beni, has the only airport of the twodepartments which is usable regardless of weather conditions.

B. Present Air Traffic

3.04 The traffic of LAB has developed substantially since 1965 with themost rapid growth occurring over the past five years. Domestic passengertraffic has increased at a yearly rate of 14.5%, as a result of improved airservices responding to the demands of a rapidly growing economy. Domestic aircargo, on the other hand, has been almost stable for the country as a wholebecause of airport and aircraft limitations.

3.05 Scheduled cargo and passenger traffic is monopolized by LAB, butunscheduled cargo service is split among several private operators. Theseprivate cargo operators are normally engaged in transporting meat fromthe Beni area and are owned by meat wholesalers, cattle owners' associations,and slaughterhouse companies. Conditions under which these flights areoperated present major problems. The availability and low capital cost of oldsecond-hand cargo aircraft have been attractive in the short run, particularlyin view of the airport limitations and the ability of these aircraft tooperate successfully from them. Of about 50 aircraft (Annex 2), only two areless than 20 years old. The most typical is the 30-year old C-46, which

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carries 5 to 6 tons fairly efficiently on short flights; however, its oper-ational capabilities are marginal for the high mountains which have to bepassed to and from Beni.

3.06 About 250 small aircraft are operated by air taxi companies andindividuals and, although the number of passengers and cargo transported issmall, these aircraft do provide vital services to the large areas of thecountry which lack all-weather roads. A comparison of traffic of the varioustypes of carriers follows:

Traffic by Carrier Type in 1975

Passengers Cargo (tons)

LAB 396,000 4,300Air Taxi Operators 30,000 1,600Transportes Aereos Militares 16,500 200Government Oil Company 11,700 -Non-Scheduled Cargo Airlines 9,000 32,000

The air passenger traffic of 463,200 may be compared to the railway traffic of832,000 passengers for the western system and 317,000 for the eastern systemin 1975; the highway traffic to the eastern sections was negligible.

C. Traffic Forecasts (Project Airports)

3.07 The passenger traffic forecasts for the project airports, preparedprimarily by AASANA, Oficina de Planificacion, and its consultants IngenieriaPolitecnica Americana (Bolivian), in consultation with the Bank, took twofactors into consideration: (a) the general traffic trend, based on suchmatters as future population and income growth; and (b) the additional growthas a result of service improvements at the individual project airports. Forthe latter purpose, an analysis was made of previous traffic development atother airports in Bolivia after the introduction of jet service.

Passenger Forecast

3.08 The AASANA passenger forecast growth rates, based on historicaltraffic adjusted by the Bank to reflect 1975-1976 actual traffic, generallyreflect the current traffic trend. This methodology was also used for transittraffic at all airports. At the time of completion of the project airports,the number of transits will reduce at Riberalta, Santa Ana de Yacuma andTarija. At the same time, in Riberalta, the origin and destination trafficwill be increased by a diversion of one-half the forecast traffic fromGuayaramerin. These two towns, which are only 95 km apart, are connected bya good all-weather gravel road. The actual average growth rate has been about15% per year. The forecast tapers this rate to about 6% between 1985 and 1990to reflect a more mature market. For details of passenger and cargo forecasts,see Table 4 and Annex 4.

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Cargo Forecast

3.09 Cargo traffic is of comparatively minor importance on a systembasis. However, it constitutes a significant and growing portion of trafficat three of the project airports (Riberalta, Santa Ana de Yacuma, and SanBorja). AASANA's cargo forecast growth rates were used, with an adjustment toconsider 1975 traffic. Until completion of the improvements at the projectairports, the growth is generally based on the current traffic trend. Theforecast cargo growth for the three project airports is 14% through 1980,reducing gradually to 8% between 1985 and 1990.

Aircraft Movements

3.10 Aircraft movement forecasts (Table 5) were developed primarily byAASANA and its consultants. These were adjusted by the Bank in line with thetraffic forecasts and with consideration of the impact of larger, more effi-cient aircraft types.

D. Existing Organizations

3.11 The present organization of civil aviation in Bolivia is relativelycomplex for the size of the country (Chart 1). Overall control is exercisedby MTCCA, in consultation with the National Aviation Council (CNA). Thelatter--which consists of the Commander of the Bolivian Air Force (FAB), theMinister of Foreign Relations and the Minister of MTCCA--is primarily con-cerned with the approval of new national airlines, operations, establishing ofthe level and structure of national passenger and freight tariffs, bilateralagreements for international carriers operating in and over the country andthe conditions under which airlines may operate in Bolivia. The Under-Secretary of Civil Aviation (SAC), the entity primarily concerned with ongoingoperations of aviation in Bolivia, is supported by the Directorate General ofCivil Aviation (DGAC), the Directorate General of Air Transportation and AerialWorks (DGTTA) and AASANA. The principal responsibility of DGAC is the settingof safety standards for the airports and those airlines which use them, inaddition to the licensing of pilots and certification of aircraft airworthiness.DGTTA deals with the applications for establishing new national airlines,setting the level and structure of national passenger and freight tariffs andarranging bilateral agreements. AASANA is the entity concerned with theplanning, construction and operation of the airport and navigation facilitiesto support the air transport system. LAB, the national airline, and othernon-scheduled airlines are the principal users of these facilities. A totalof about 2,000 people are employed in the aviation sector, not countingthose in associated activities such as customs, air cargo handling, andcatering. AASANA has about 550 employees, compared with 750 for the almosttotally Government-owned airline, LAB. The remaining personnel are spreadover several small charter airlines and the two directorates (DGAC and DGTTA).The Bolivian Air Force has long been engaged in civil air transport and,although its civil activities have been curtailed, it continues to provide aservice on some of the uneconomic, low-density routes.

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E. The Borrower - AASANA

3.12 AASANA was created by Law No. 08019 in 1967 and formally establishedon April 17, 1968 as a Government entity with operational autonomy for itsspecific administrative functions. The most important of these are to admin-ister, plan, maintain, operate and improve the network of national airportsfor regular public use as well as related services to aircraft flying betweenairports. To perform these functions, AASANA may enter into all typesof agreements and contracts in accordance with established legal requirements;AASANA is exempt from taxes and duties. The legal domicile is in La Paz, butAASANA may establish offices in other parts of the country as required. Inaccordance with the Law of Public Institutions, AASANA has a Board ofDirectors, but the direction and decisions regarding AASANA's daily operationsare the full responsibility of the Executive Director and the TechnicalDirector of AASANA.

3.13 As detailed in Chart 1, the main functions are carried out at theheadquarters, with regional airports divided into four groups. I4ore than halfof the staff is located in La Paz. The effect of an extensive reorganizationin 1975 has left AASANA with an essentially well structured organization.However, inherent in this reorganization is the reliance on a limited numberof qualified staff members, such as the Technical Director and DepartmentHeads of Administration, Operations, Civil Works and Electronics. These staffmembers--together with the Chiefs of Auditing, Planning, Legal and Personneloffices--comprise the Council of Executive Coordination, which is presidedover by the Executive Director. In view of the responsibilities of theTechnical Director (described in Annex 8), an advisor is being proposed toassist in daily operations. With these improvements, it is felt that AASANAwill be able to implement the proposed project.

3.14 Present assets of AASANA are very modest compared to the neededinvestment. They consist mainly of the old assets transferred from LAB aspart of the Bolivian Government equity at the time of the creation of AASANA,USAID capital assistance totalling US$7.3 million (the last part committed in1968), with Bolivian Government counterpart contributions and operating sub-sidies for several years thereafter (para. 6.04). These limited funds con-stitute one cause of the present constraints of the borrower, which have beenpartly remedied by substantial tariff increases in 1975.

3.15 Another factor is that of the limitations on staff and organization,which again were subject to internal changes and significant salary increasesin 1975 in order to retain qualified staff in an improved administration.Despite a more progressive management, much remains to be done in order toimprove the efficiency of the proposed borrower. Some essential technicaltraining has been provided by International Civil Aviation Organization (ICAO)experts, but management experience, particularly in implementing a large scaleinvestment program of civil works and electronics, is still very limited, andit has not been possible to recruit or retain certain individual technicalstaff members. It was agreed during negotiations that salaries for technical

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specialists will be continually adjusted by AASANA in order to be competitivewith alternate employment in Bolivia. It is still too early to evaluate theresults of the reorganization, but it is clear that more experienced staff atcertain levels are required.

3.16 The operations of, and maintenance by, AASANA are closely related tothe requirements of air transportation. In the general shortcomings explainedabove (para. 3.01), the lack of functioning aids and equipment for civilaviation plays a significant part. AASANA has been slow in catching upbecause of obsolete equipment. The provision of inadequate services, partic-ularly for domestic flights, is due to managerial problems, to the lack ofsufficient numbers of specialized technical staff, and to difficulties in-volving weather and topography. It is expected that the combination ofassistance by the Bank project and ICAO will continue to improve substantiallythe maintenance of both airports and equipment.

4. THE PROJECT

A. Oblectives

4.01 The Bolivian Government is attempting to integrate the widely dis-persed and sometimes isolated communities of the department of Beni into theeconomic and social life of the country by developing a dependable air trans-port system. To help meet this objective, the project aims at providing anucleus of airports in Beni which can handle larger and more efficient aircraftthan at present; developing rational countrywide systems of Navaids and air/ground and point-to-point Com equipment; and providing technical assistancefor the administration, maintenance and operation of the airport system. TheGovernment wishes to improve the inadequate airport runway at Tarija, toestablish a ground maintenance capability and also to realign the runway atCochabamba.

B. Description

4.02 The project would consist of:

(a) the construction of two new domestic airports (Riberalta andSan Borja) and major improvements at two others (Santa Anaand Tarija);

(b) the design and supervision of construction in (a);

(c) the provision of Navaids and Com equipment at the project air-ports and new countrywide Navaid and Com systems;

(d) the provision of general maintenance equipment for AASANA andrunway maintenance equipment for Santa Ana Airport;

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(e) the provision of technical assistance and staff training forAASANA; and

(f) the provision of final design for the construction of a newrunway, apron and taxiways for the Cochabamba Airport.

Airport Construction and Improvements

4.03 A detailed description of existing conditions at the four projectairports and Cochabamba as well as the proposed construction and improvementsare given in Annex 5. Improvements are summarized in paragraphs 4.04 through4.07 following.

4.04 Riberalta. The construction of a new medium range jet (B-727)airport at Riberalta would include earthworks; drainage; paved 2,000 x 45 mrunway; lead-in taxiway; apron; fuel farm; terminal building; control tower;a maintenance/crash fire, rescue vehicle shed; fencing, access and ancillaryroads and all necessary utility systems.

4.05 San Boria. The construction of a new turbo-prop (F-27) airport atSan Borja would be similar to that at Riberalta except that the paved runwaywould be 1,800 x 30 m.

4.06 Santa Ana. The construction of a new (F-27) runway at Santa Anawould include earthworks; drainage; a sealed 1,800 x 30 m runway; lead-intaxiway; apron; fuel farm; renovation of existing terminal building and tower;a maintenance/crash fire, rescue vehicle shed; fencing and necessary accessroad improvements.

4.07 Tarila. The construction of a new (B-727) runway at Tarija wouldinclude paving of the newly constructed 2,800 x 45 m runway, a lead-in taxiwayand apron, construction of a drainage canal around the southeast end of therunway, and fencing. Since the base course of the new runway would be com-pleted by February 1977, the paving and drainage should be done as soon aspossible to avoid weather damage to the new construction. Thus, the contractfor the paving is likely to be let prior to signing of the loan.

Design and Supervision of Construction

4.08 AASANA plans to engage local consultants to do the final engineeringand supervision of construction of the three Beni airports. The engineeringat Tarija has already been done, but AASANA will engage a local consultant forthe construction supervision. It is expected that the work of these consul-tants will be satisfactory. To assist in further developing this newlyemerging local industry, as a substitute for the estimated foreign componentcost if a foreign consultant were hired, the project will provide 70% of thetotal costs of design and the subsequent supervision of construction of thethree Beni airports and 70% of the cost of supervision of the construction atTarija Airport. Because these contracts are to be let before the proposedloan will be presented to the Board, costs incurred for consultant servicesafter December 31, 1976 (estimated at US$0.7 million) are proposed to beincluded in the loan.

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4.09 Supervision of construction would be required through the lastquarter of calendar year 1981. For the sake of continuity, it would bedesirable that the consultants selected for the design work be retained forthe supervision of construction.

Design of Cochabamba Runway

4.10 The runway at Cochabamba Airport, the home airport for LAB, is sooriented that obstructions impose weight restrictions on the larger aircraftnow being flown by LAB. Such restrictions have become an operational andfinancial burden for LAB, and they will become more serious as operationsincrease and larger aircraft are acquired. To alleviate this problem, a newrunway, oriented about 90 degrees from the existing one, was proposed by afeasibility study prepared last year. A preliminary analysis by Bank staffindicated that such a runway would be justified in the early 1980's. Con-struction at Cochabamba is included in AASANA's program for 1979-1980.Since it is difficult for AASANA to obtain other than operational funds fromeither its revenues or the Government, 70% of the estimated costs of thedetailed final engineering design for this high priority item have beenincluded in the project.

Provision of Equipment

4.11 Air Navigational Aids and Communications Equipment. At each of theproject airports except Santa Ana, Navaids (VOR/DME) 1/ would be installed asapproach and enroute aids. At all project airports, locator beacons (NDB) 2/would be installed. New VHF 3/ air/ground and HF-SSB 4/ point-to-point voiceand teletype communications would be installed between the project airportsand system hubs at La Paz, Cochabamba and Trinidad. Other Navaids and Comequipment would be installed at selected points to fill out complete systemsfor the country (Map IBRD 12655), except for those air traffic areas con-trolled from Santa Cruz, omitted because of lower priority and fund limita-tions. Lists of this equipment and its locations are given in Annex 6.Engineering for the systems would be performed by the ICAO technical assis-tance personnel now assigned to AASANA. Design and installation of certainteletypewriter systems would be done by the equipment manufacturer, selectedthrough international competitive bidding (para. 4.26).

1/ Very High Frequency Omni-Directional Radio Range/Distance MeasuringEquipment

2/ Non-Directional Radio Beacon

3/ Very High Frequency

4/ High Frequency Single Side Band

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4.12 Visual Aids. Runway, taxiway and apron lighting would be installedat all project airports. At San Borja, the runway lighting would be spacedfor a 45 m wide runway rather than a 30 m one in order to allow for theexpected early widening of the runway to B-727 standards. Rotating beaconsand obstruction lights would be provided at each project airport. VASI's 1/would be installed at project airports as well as certain other selectedairports in the country. Each of the project airports would be provided withbasic runway marking (Annex 6).

4.13 Maintenance Equipment. For AASANA to maintain the various airportsunder its control properly, equipment would be required which would have totravel on a planned basis around the system. Since most of the airports areunpaved, the greater portion would consist of earth moving, compaction andgrading equipment. Light asphalt spraying equipment would be stationed atSanta Ana to maintain the sealed surface which would be provided at thisairport. Lists of both sets of equipment are given in Annex 7.

AASANA Technical Assistance and Staff Training

4.14 To strengthen its airport administration and maintenance capabil-ities, AASANA would engage a team of five Spanish-speaking experts for thefollowing positions for a five-year period: Technical Director Advisor, ChiefBudget and Accounting Division, Chief Telecommunications Maintenance Division,Chief Navaids Maintenance Division and Chief Airport Construction and Mainte-nance Combined Divisions. Draft job descriptions for these various positionsare given in Annex 8. In addition, 30 man-years of training for AASANA per-sonnel outside Bolivia would be provided. The foreign exchange costs of theexperts and the training would be financed from the Bank loan.

C. Special Components of the Project

4.15 These special project items of a minor but essential support natureare to be financed by the proposed loan, except as indicated in Annex 9.

D. Ecology

4.16 The ecological and environmental effects of the development of theproject airports and the proposed reorientation of the main Cochabamba airportwere taken into account during the siting and preliminary design studies.Two of the airports (Riberalta and San Borja) are being relocated to removethem from the immediate vicinity that they serve, thus making more remote thenoise, fumes and safety problems associated with the approach and departurepaths of aircraft. Land being released at Riberalta and San Borja wouldbecome available for further expansion of the two towns; the land beingtaken in the one place is unused rain forest between river banks and, inthe other, is low lying grazing land. The Santa Ana and Tarija developmentsare on existing airport land. Drainage improvements at all four airportswould reduce the possibility of stagnant, insect breeding pools.

1/ Visual Approach Slope Indicators

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4.17 The reorientation of the main runway at Cochabamba would relocatethe heavy aircraft flight paths from over the city to over agricultural land.The obvious effect of this is the reduction of noise for the city population,but more important is the reduction of risk associated with the existingrequirement for aircraft to make low level turns above the city because ofhigh ground obstructions in the normal flight pattern. Zoning restrictionsfor the new runway would be developed by the Government. A copy of a suggestedregulation will be provided to the Government.

E. Cost Estimate

4.18 The total project cost, including contingencies, is US$39.46 million.The foreign exchange component is US$23.67 million, or 60% of the total projectcost. This project is exempt from taxes and duties (para. 3.12).

4.19 The cost estimate shown below (in prices expected at the end ofJune 1977) is categorized by type of work. A detailed itemization of theproject components is given in Table 6.

% of$b (million) US$ (million) Project

Local Foreign Total Local Foreign Total Content

Civil Works 175.9 225.2 401.1 8.80 11.26 20.06 50.8Engineering Design andSupervision 32.1 8.0 40.1 1.60 .40 2.00 5.1

Aviation Equipment 11.8 70.4 82.2 .59 3.52 4.11 10.4Maintenance Equipment 1.6 15.8 17.4 .08 .79 .87 2.2Technical Assistance 7.6 22.7 30.3 .38 1.14 1.52 3.9Training .2 4.6 4.8 .01 .23 .24 .6Cochabamba Design 16.0 4.0 20.0 .80 .20 1.00 2.5

Contingencies:Physical 10% 20.9 36.7 57.6 1.05 1.83 2.88 7.3Price 22.8% 49.7 86.0 135.7 2.48 4.30 6.78 17.2

Total 315.8 473.4 789.2 15.79 23.67 39.46 100.0

4.20 The cost estimates were developed originally by the engineering con-sultants responsible for the feasibility studies. They were updated during theappraisal by AASANA engineers using known costs in the various localities.These costs are considered reasonable. Construction at Tarija and Santa Anawould take place on the existing airport property. The land at Riberalta hasalready been transferred to AASANA by the town at no cost, and the land at SanBorja would be purchased by AASANA. This is not expected to delay the project.Land cost is included in the estimates of local costs.

4.21 Physical contingencies amounting to 10% have been included in thecost estimate. An additional item for price contingencies, of an average of

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7.70% on the local component and 7.75% on the foreign component, compoundedquarterly, has been included to allow for anticipated increases in labor andmaterial costs, which, in this case, are approximately equal. Foreign compo-nent contingencies are slightly lower than those in the Bank guidelinesbecause of expected lower equipment cost escalation.

F. Execution

4.22 The project would be executed by AASANA. The civil works contractsfor Tarija are expected to be awarded prior to signing of the loan. The

civil works contracts for Riberalta, San Borja and Santa Ana are expected tobe awarded by October 1978. The work is expected to take about one and one-half years at Tarija and to provide employment for about 150 men. The workat the other three airports would take about three years and would provideemployment for about 500 men each at Riberalta and San Borja and 250 at SantaAna. Tarija is expected to be completed by January 1979, followed by Riberalta,San Borja and Santa Ana by December 1981. The technical assistance portionof the project would run through September 1982.

4.23 AASANA would handle all Navaid and Com equipment procurement withoutassistance from consultants. Part of this equipment would be installed byAASANA and part by the equipment manufacturers.

4.24 AASANA would administer the 25 man-year technical assistance portionof the loan and also the 30 man-year training component. During negotiations,job descriptions for these positions were agreed upon (para. 4.14 and Annex 8).A training program should be prepared by AASANA and its technical experts,after their engagement, to begin no later than October 1978 and to lastfor a period of three years.

4.25 During negotiations, a project implementation schedule was agreed.The estimate of project execution is given in Annex 10.

G. Procurement

4.26 Contracts for civil works (earthworks, paving, drainage, water andelectrical supply and distribution, sewerage, buildings, etc.) at Riberalta,San Borja and Santa Ana airports, and visual aids, Navaid and Com equipmentand installation would be awarded after international competitive bidding byprequalified contractors. Since equipment is not produced locally, no localsuppliers are expected, but local bidders would be granted a margin of prefer-ence by adding 15% to the CIF value of foreign bids (or the applicable customsduties, whichever is lower).

4.27 Although the paving contract at Tarija would be awarded prior to thesigning of the loan documents (para. 4.07), it would be awarded in accordancewith the Bank "Guidelines for Procurement," but after only limited advertise-ment because of the urgency of the work and the remote character of the proj-ect location. Foreign contractors are not excluded. The drainage contractwas added to the existing civil works contract proper at unit costs establishedin April 1975. The original contract was awarded in accordance with Bank"Guidelines," but after only local advertisement. In view of the urgency ofthe work, the relative smallness of the contract and the favorable prices,

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Bank financing for this contract would be justified. Because these contractswere or will be let before the proposed loan will be presented to the Board,costs incurred after February 28, 1977 (estimated at US$1.0 million) areproposed to be included in the loan. The engineering contract (an estimated40 man-years at US$50,000 per year) for the design and supervision of theconstruction of the four project airports would also be awarded, prior tosigning of the loan, to local Bolivian engineers. The award of the estimated20 man-year contract (at US$50,000 per year) for the engineering for Cocha-bamba would be similar, except that it would not be awarded until aftersigning of the loan. Consultants' terms of reference and contracts should beacceptable to the Bank.

4.28 A negotiated contract for 25 man-years at an estimated US$50,000per man-year would be executed by AASANA for the provision of the five-mantechnical assistance team. Training would be arranged individually throughUNDP/ICAO or technical training schools at rates not exceeding approximatelyUS$6,000 per year per candidate.

H. Disbursements

4.29 Disbursement of funds from the loan would be on the following basis:

(a) 100% of foreign expenditures for equipment and its instal-lation;

(b) 100% of foreign expenditures for technical assistance andtraining;

(c) 56% of total expenditures for civil works; and

(d) 70% of total expenditures for engineering services.

A schedule showing the estimated rate of disbursement is given in Table 7.Retroactive financing of civil works undertaken after February 28, 1977 up toUS$1.0 million and of engineering services after December 31, 1976 up toUS$0.7 million, for a total of US$1.7 million, is proposed.

5. ECONOMIC EVALUATION

A. General

5.01 In Bolivia, the need for air transport is greatly reinforced by thetopography of the country. The summary and conclusions of the latest trans-port sector report for Bolivia are given in Annex 11. The presence of flatlowlands partly flooded and isolated for several months each year, separatedby high mountain ranges from the most populated part of Bolivia, createsformidable obstacles for any development of transport. These lowlands,particularly in the northeast, will have to be developed over an extensiveperiod in order to relieve the population pressure on the barren Altiplano.A main solution has been attempted in the development of the present road

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from La Paz to the Yungas (eastern valleys), crossing over one of the highestpasses in the Andean mountain range (4,600 meters). Despite heavy investment,it will be many years before this road can penetrate into more than a smallpart of the department of Beni, and, more important, be reliable under all-weather conditions.

5.02 To integrate this part of the country, the primary transport modeswould have to continue to be river transport for bulk goods and air transportfor passengers and for valuable and/or perishable goods. Air transport tothis area has not changed character in many years due to the infrastructurelimitations. Only one airport in the area, Trinidad (since 1975), is capableof receiving more cost-effective jet aircraft. The most important part of theproposed project, therefore, addresses the problem of improving air transportto the main centers by providing better airports. When making agriculturalloans, the Bank has recognized the lack of adequate airports as a limitationto the growth of the cattle industry.

5.03 A similar, but not quite so serious, situation exists in the south,where Tarija is the main town, 935 km from La Paz, with poor road connections.

5.04 Another main part of the proposed project is the improvement of thegeneral infrastructure for air navigation in Bolivia, where obsolete naviga-tional aids and aeronautical communications create not only hazardous safetyconditions but also high costs in the form of low aircraft utilization, manycancelled and delayed flights and other indirect effects of unreliable ser-vices.

5.05 The proposed project responds to the most urgent needs of a rela-tively large program of well justified aviation infrastructure improvements(para. 6.13).

5.06 The areas in Bolivia which will be served primarily are the townsof San Borja, Santa Ana de Yacuma and Riberalta - Guayaramerin in the northernpart with a total population of about 50,000 and Tarija in the south with aboutthe same population. These are both relatively poorly developed agriculturalareas which have suffered from isolation from the rest of Bolivia. The mainactivities are cattle raising in Beni (Santa Ana and San Borja), exploitationof rubber and nuts at Riberalta and grains, vegetables and vineyards aroundTarija. Of these four towns, only Tarija is connected by road to other partsof Bolivia. The road under construction from La Paz to San Borja and Trinidadwill probably be usable only part of the year until it can be upgraded to anall-weather road--an undertaking which may take a long time. Santa Ana andRiberalta are likely to be without road connection to the rest of Bolivia forat least another 15 years.

B. Economic Analysis

5.07 Details of the economic analysis are set forth in Annex 12 and aresummarized below. Since air transport is clearly essential for the developmentof these isolated areas of Bolivia, the economic case for the project dependson its ability to provide transport capacity more efficiently than do the exist-ing air services. The construction and equipment costs, as well as the physicalcontingencies, have been included as an economic cost of the project.

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5.08 The major source of quantifiable benefits for the project airportsis the much lower operating cost of more efficient aircraft, already in thefleet, which these airports would allow after the improvement. Other factorswhich have been considered are aircraft delay savings and values of releasedurban land where the airport has been moved to a new site. These are verysmall portions of the justification since the most important factor - increasedreliability of services - can be quantified only with respect to improvedutilization of aircraft. Without the project, higher aircraft operating costscould lead to airline tariff increases or service deterioration. No passengeror cargo time savings have been included.

C. Cost Savings

5.09 Transport cost savings over the routes from each airport were cal-culated per passenger or ton based on the unit cost differential between betteraircraft and presently used aircraft (Annex 12 and Table 8). This situationdiffers among the airports. In the cases of Riberalta and Tarija, the air-craft are now F-27, to be replaced by B-727-100 for passengers and 50% of theair cargo. For San Borja and Santa Ana, the situation is more complex.Presently, passenger traffic has been handled by F-27 and DC-3 aircraftand cargo by a variety of aircraft, with the predominant being DC-3 andCurtiss C-46 piston-engine aircraft carrying 3 to 6 tons per trip. The mostappropriate replacement aircraft for future cargo traffic, in particular,is difficult to establish in view of the fragmentation of the air cargotrade into 25 different companies with an attendant lack of long-term planning.It is expected, however, that the existing piston aircraft will be replacedby small jet or turbo-prop aircraft for passengers and a turbo-prop aircraft,such as the CONVAIR CV-580, for cargo. For the economic evaluation andtraffic forecasts, this aircraft has been used for providing cost character-istics and capacity.

5.10 A serious problem for Bolivian aviation is the lack of a reliableaeronautical communications network and air navigational aids. This lack,together with the runway conditions at the project airports, has caused verypoor regularity for both scheduled and non-scheduled air services. In 1975,as an example, more than 1,500 hours of aircraft time were lost for LAB DC-3and F-27 aircraft in delays and cancelled flights; this is almost equivalentto a requirement for one additional aircraft. Some of these delays would stillcontinue as a result of weather conditions, but a significant reduction ofhours lost to the level now achieved by B-727 aircraft at the four main air-ports should be possible.

5.11 A similar limitation exists, particularly for the airports in Beni,because of the lack of a properly-equipped unit for runway preventive mainte-nance. In the rainy season, a number of AASANA airports are out of servicebecause of the condition of their runways. Some closures during heavy rainsor inundation are unavoidable, but certain aircraft delays and cancellationswould be avoided by improved runway maintenance. This type of savings couldbe quantified only for LAB scheduled flights and, thus, underestimates thesebenefits considerably in view of the present large volume of non-scheduledflights in Beni.

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D. Project Return

5.12 Excluding any savings of passenger time or cargo spoilage, the totalreturn of the project is 19% (for project benefits, see Table 9); this approxi-mates the discounted cash flow financial return for the combined airport-airline system as far as these airports and airway facilities are concerned.For San Borja and Santa Ana, part of the savings accrue to private cargoairlines, but, for the major part of the project investment, the main bene-ficiary is the Bolivian Government, through its almost complete ownership ofLAB. Since, without the project, it would probably be necessary to makelarger fare increases, some of the benefits would be passed on to the Bolivianusers.

5.13 Based on quantified benefits, the best estimate of economic returnfor San Borja and Riberalta is 24% for each, for Tarija 15%, and for SantaAna de Yacuma 12%. There are substantial unquantified benefits, for Santa Anain particular. This community is, and for many years will remain, isolatedexcept by river. The present closures of the airport have serious effects onthe unscheduled flights, but, because of lack of adequate data, only delays toscheduled flights have been quantified. The return for the aeronauticalcommunications and electronic aids is 18%, and, for the runway maintenanceequipment, the return is 16%.

5.14 The results of the sensitivity analysis for all the project compo-nents are shown in Table 10. Cost increases are considered the most signif-icant risk. However, even if costs increase by 15%, the overall rate isstill 17%. The effect of road improvements to San Borja has been tested undervarious assumptions. The most serious, but unlikely, assumption of no aircargo at all after 1985 still gives an economic return of 14% at this airport.The first year return of the total project is almost 17% and is satisfactoryfor the individual project components.

6. FINANCIAL EVALUATION

A. Existing Situation

6.01 AASANA has essentially been a breakeven entity in recent years,covering only working expenses. It operates under a budgetary system wherebya general budget of anticipated revenues and working expenses is developed andsubmitted to the Ministry of Finance for approval. Any unusual expendituresoutside the budget must receive prior Government approval.

6.02 AASANA maintains control over revenues and operating expenses.Revenues collected are deposited in the AASANA account, and checks for pay-ment are drawn against this account. Any excess of revenues remains withAASANA.

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6.03 Accounting records of the revenue and expenditure items are kept atAASANA headquarters. The records are not maintained so that revenues andexpenses can be readily identified by airport and type of service but, rather,for the system in total. However, the Bank staff was able to obtain a reason-able breakdown of revenues and expenses for the project airports for 1975.

6.04 Capital items are supplied for the most part directly by theGovernment as equity inputs, with additional assistance by USAID. However,the receipt of assets from LAB, approximately eight years ago, and subsequentinvestment, as reflected in AASANA's books, may be understated to some extent.Due to this fact and to the inconsistent treatment of assets and liabilitiesfrom one year to the next in the balance sheets, it is currently difficult tomake a proper assessment of AASANA's financial posture. After analyzingavailable information, the Bank staff prepared balance sheets for 1970 through1974 (Table 11). A high percentage of the assets at small airports have beenin service beyond what is normally considered the economic life for such itemsand should be replaced in the immediate future.

6.05 The accounting system is inadequate and should be redesigned tosupply information by individual airports and by classifications necessary toformulate and review user charges. Following these improvements, the struc-ture and level of airport tariffs should be reviewed. The accounting systemshould also include provision for the proper valuation and disposal of assets.AASANA realizes these deficiencies and needs assistance for improvement inthis area. This assistance would be provided by a foreign expert to beengaged as Chief of the Budget and Accounting Division (para. 4.14). It wasagreed during negotiations that AASANA would consult periodically with theBank on structure and level of airport tariffs.

6.06 The accounts are currently subject to review by the Government atirregular intervals. During negotiations, an agreement was reached withAASANA that certified copies of the audited annual accounts beginning with theyear ending December 31, 1978 would be furnished to the Bank, not later thanfour months after the end of each calendar year, by independent auditorssatisfactory to the Bank.

B. Financial Objectives

6.07 Government policy has been to maintain AASANA's tariffs at a lowlevel in order to assist aviation development. However, in 1975, landing feeswere increased for LAB and foreign carriers by 60%; for non-scheduled carriersand general aviation, they remained at previous levels. At the same time,salaries of AASANA personnel were increased by an average of 60% to compensatefor the cumulative effect of inflation and in accordance with reorganizationefforts to maintain qualified personnel. These circumstances have made itbarely possible for AASANA to cover working expenses. As a result, the newinfrastructure requirements would have to continue to be met by the Governmentand outside sources. In the future, any surplus resulting from AASANA oper-ations could be applied to acquisition of capital assets. Agreement was

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reached with the Government and AASANA regarding more specific financialobjectives of a k-nd typical for a prudently managed independent publicagency, as further described below. The financial projections contained inthe following paragraphs reflect these objectives and assumptions.

6.08 AASANA revised its scheduled service landing fee tariffs in 1975,and the Bank has discussed with AASANA the need for a prompt increase in usercharges. However, the current level of tariffs will not be sufficient tocover the operating expenses for the project period (1977-1981). Therefore,it has been assumed in the projections in this report that future tariffincreases would result in total revenues being increased by 20% in 1977, 20%in 1979, 10% in 1980, 10% in 1982 and 10% in 1984. It was agreed duringnegotiations that, before November 1 of each fiscal year, a review of usercharges will be made on the basis of realistic traffic forecasts, and suchadjustments as are necessary will be applied in order to attain an overallworking ratio of no more than 75% in 1978, 60% in 1979-1982, and a return onrevalued net fixed assets no less than 2% in 1983-1984 and no less than 4% in1985. Due to the scale of investment in a few years, the project airportscannot meet the rate of return covenant, but it was agreed that the combinedworking ratio for the project airports would be no more than 85% in 1985.

C. Financial Plan

6.09 The total cost of the project is estimated to be US$39.46 million,of which approximately 64% of the financing would be in the form of a Bankloan to AASANA. The balance, including any cost overruns, would be equityprovided by the Government.

US$$b Million Million

a. Bank loan to AASANA 500.00 25.00b. Government Equity 289.20 14.46

789.20 39.46

6.10 It was agreed during negotiations that the Bank will be consultedbefore any investment in any of AASANA's facilities of over US$1.0 million, inany one year, is undertaken.

D. Financial Prolections

Operating Results

6.11 AASANA operating revenues by category for 1975, and projected through1990, are set out in Table 12, and the projected operating statements are given

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in Table 13. Financial assumptions are detailed in Annex 13. Summarizedforecast results for 1977, 1980, 1985 and 1990 are as follows:

1977 1980 1985 1990---------- $b Million ---------

Revenue 93.7 170.7 311.5 419.9Expenses 75.7 98.4 112.0 124.5Operating Surplus 18.0 72.3 199.5 295.4

Depreciation 32.9 69.3 94.5 101.3Operating Income/(Loss) (14.9) 3.0 105.0 194.1

Interest - 21.8 32.3 19.1Net Profit/(Loss) (14.9) (18.8) 72.7 175.0

Throughout the projection period, revenues cover all working expenses, includ-ing depreciation, with the exception of 1977 and 1978. The years of 1980 and1981 barely meet this goal. This occurs because three of the four projectairports and other Government investments are completed in these years, andthe increase in the depreciation provision is not immediately compensated bycomparable traffic and tariff increases. However, depreciation exceeds debtservice, and the financial objectives would be met in all years of the project(para 6.08).

6.12 The projected operating results of the four project airports are setout in Tables 14, 15, 16 and 17. All project airports develop sufficienttraffic to generate revenue greater than working expenses by 1984; however,none of the airports would be able to cover operating expenses after projectcompletion. Non-project airports would receive increased revenues in the formof increased landing and navigational fees, as a result of the project. Thefinancial objectives for the project airports would be met after 1984 (para.6.08).

Cash Flow

6.13 A projected cash flow for AASANA, based on the assumptions containedin paragraph 6.09, is shown in Table 18. Provision has been made for thereplacement of assets included in the project, when required, and for theaddition of other necessary items (para 6.04). A summary of the cash flow forthe construction period is set out below:

- 23 -

1977 1978 1979 1980 1981 1982…S_____-----$b Million------

Source of Funds

From Operations 13.5 22.7 47.0 67.9 82.3 112.4Loan - World Bank 26.8 73.0 88.3 248.7 52.7 9.2Government Equity - Project 50.0 42.0 103.0 67.6 25.2 1.3Government Equity - Non-Project /1 157.2 59.9 348.0 285.6 83.5 54.2Government Equity - For CashRequirements 48.2 - 33.5 - - -

Total 295.7 197.6 619.8 669.8 243.7 177.1

Application of Funds

Capital Investments A1 282.8 189.0 606.2 645.9 206.6 105.1Loans - Principal - - - - - 32.2

Interest - 7.8 12.7 21.8 36.4 39.5

Total 282.8 196.8 618.9 667.7 243.0 176.8

Cash Surplus 12.9 .8 .9 2.1 .7 .3Opening Balance - 12.9 13.7 14.6 16.7 17.4

Closing Balance 12.9 13.7 14.6 16.7 17.4 17.7

/1 Includes airport investments in addition to proposed project which areas follows for 1977-1980 ($b million): La Paz 303.2, Cochabamba273.5, Cobija 221.3, Sucre 155.0, and others 56.4. The difference fromthe total for Government Equity, Non-Project, is the result of equityinputs from AASANA due to its favorable cash position in 1978 and 1980-1982.

Since current receivables and liabilities are relatively high (Table 11),it was agreed, at the time of negotiations, that receivables from operatingrevenues will be collected, and payables for working expenses will be paid,within 90 days.

Balance Sheets

6.14 Projected balance sheets for 1977-1990 have been prepared and areincluded in Table 19. Financial indicators are shown in Table 20.

- 24 -

7. AGREEMENTS REACHED AND RECOMMENDATION

7.01 During negotiations, agreement was reached with the Governmentregarding the following:

(a) assets for a new Santa Cruz airport not to be transferredto, nor debt service cost borne by, AASANA until it can bedemonstrated that such a transfer will not prevent AASANAfrom complying with the relevant financial covenants of theLoan Agreement (para. 2.16);

(b) salaries for technical specialists to be continually adjustedby AASANA in order to be competitive with alternate employmentin Bolivia (para. 3.15);

(c) job descriptions for technical assistance and trainingcomponents of the loan (para. 4.24);

(d) project implementation schedule (para. 4.25);

(e) AASANA to consult periodically with the Bank on the struc-ture and level of airport tariffs (para. 6.05);

(f) certified copies of the audited annual accounts beginningwith the year ending December 31, 1978 to be furnished tothe Bank, not later than four months after the end of eachcalendar year, by independent auditors satisfactory to theBank (para. 6.06);

(g) before November 1 of each fiscal year, a review of usercharges to be made on the basis of realistic trafficforecasts, and tariffs to be adjusted as necessary toproduce a working ratio of no more than 75% in 1978, 60%in 1979-1982, and return on revalued net fixed assets noless than 2% in 1983-1984 and no less than 4% in 1985 andthereafter (para. 6.08);

(h) combined working ratio of the project airports to be nomore than 85% by 1985 and thereafter (para. 6.08);

(i) the Bank to be consulted before any investment in any ofAASANA's facilities of over US$1.0 million, in any oneyear, is undertaken (para. 6.10); and

(j) receivables from operating revenues to be collected, andpayables for working expenses to be paid, within 90 days(para. 6.13).

- 25 -

7.02 Retroactive financing for the foreign costs (estimated at US$1.0million) for the paving and the construction of the drainage canal at Tarijadone after February 28, 1977 and for local and foreign costs for engineeringservices at the three Beni airports and Tarija incurred after December 31,1976 (estimated at US$0.7 million) is included in the proposed loan.

7.03 The proposed project constitutes a suitable basis for a Bank loanof US$25.0 million to AASANA, with a Government guarantee. The term would be20 years, including a grace period of four and one-half years.

April 28, 1977

BOLIVIA

AVIATION l)EVELOPMENT PROJECT

Total Freight Movement in Bolivia

1967 1974Ton-Km % % Ton-Km % % Sources

10 Subtotal Total 10 Subtotal Total

Data for 1967 based on the DMJMROAD TRANSPORT Study for the Ministerio de Trans-

portes y Comunicaciones. Vata forMinerals 46 500 4.9 1.5 - 1974 came from the followingOther Cargo 549 700 58.1 18.1 - - - sources:

Mini. de Transportes yTotal 596 200 63.0 19.6 896 464 65.1 16.3 Comunicaciones Estimate

RAIL TRANSPORT

Minerals 84 900 9.0 2.8 45 300 3.3 0.8Other Cargo 208 700 22.1 6.9 342 700 24.9 6.2 ENFE

Total 293 600 31.1 9.7 388 000 28.2 7.0

RIVER TRANSPORT 11 400 1.2 0.4 24 480 1.8 0.5 Min. de Transportes yComunicaciones Estimate

LAKE TRANSPORT 31 400 3.3 1.0 31 700 2.3 0.6 Min. de Transportes yCommunicaciones Estimate

AIR TRANSPORT 13 300 1.4 0.4 35 378 2.6 0.6

Subtotal 945 900 100.0 31.1 1 376 022 100.0 25.0

PIPELINE TRINSPORT

Crude Oil 1 923 000 - 63.1 3 747 000 - 68.2Petroleum Products _ 176 000 5.8 376 000 - 6.8 YPFB

Total 3 044 900 100.0 5 499 022 - lOo.0 Average growth rate 1967/1974,08.8? yearly

Source: IBRD Mission

February 1977 1

BOLIVIA TABLE 2

AVIATION DEVELOPMENT PROJECT

Comparative Economy Air Fares, 1.976

US$Route Distance US$ Per Mile

(Miles)Bolivia

La Paz - Santa Cruz 343 40.00 .117Cochabamba - Tarija 303 27.00 .089La Paz -- Trinidad 257 18.00 .070Cochabamba - Trinidad 204 15.00 .074Cochabamba - Santa Cruz 198 20.00 .101Cochabamba - La Paz 150 20.00 .133San Borja - Trinidad 130 6.00 .046Santa Ana - Trinidad 87 5.00 .057Cochabamba - Oruro 74 8.00 .108

Brazil

Rio de Janeiro - Sao Paulo 237 28.90 .1219Rio de Janeiro - Belo Horizonte 214 27.60 .1280Rio de Janeiro - Porto Alegre 697 84.60 .1214

Canada

Fredericton - Montreal 350 68.00 .194Edmonton - Peace River 253 37.00 .146Calgary - Medicine Hat 164 22.00 .134

C31-bia

Bogota - Cartagena 409 29.00 .0709Bogota - Medellin 145 14.00 .0965Bogota - Leticia 675 60.00 .0889

Peru

Lima - Pucallpa 307 31.80 .1036Lima - Tingo Maria 206 21.00 .1019Lima - Cuzco 357 37.70 .1056

United Kingdom

Glasgow - London 349 60.00 .172East Midlands - Jersey 254 49.00 .193Aberdeen - Edinburgh 98 26.10 .266

United States of America

Cincinnati - Atlanta 374 48.15 .129El Paso - Tucson 269 38.89 .145New York - Washington 203 34.26 .169Bangor - Presque Isle 136 25.00 .184Albany - Rutland 70 24.07 .344

Source: ABC World Airways Guide, March 1976November 1976

TABLE 3

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Names and Abbreviations of Airports

Apolo AP

Ascencion de Guarayos ASCamiri CA

Cobija CO

Cochabamba CB

Concepcion CP

Charafia CN

Guayaramerdn GY

La Paz LP

Magdalena MG

Oruro OR

Puerto Suarez PS

Potosl PO

Riberalta RI

Robore- RB

Rurrenabaque RQ

San Borja SB

San Ignacio de Moxos SM

San Ignacio de Velasco SI

San Javier JV

San Joaquin Jo

San Jose de Chiquitos JE

San Ram6n RASanta Ana SA

Santa Cruz CZ

Sucre SU

Tarija TJ

Trinidad TR

Yacuiba YA

Bermejo BJ (X)

Puerto Rico PR (X)Reyes RY (X)

San Matlas TI (X)

Santa Rosa SR (X)

Villa Montes VM (X)

(X) Airports which will be under AASANA Jurisdiction.

Source: IBRD Mission

February 1977

TABLE 4

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Forecast Passengers (Embarking and Disembarking) and Freightat Project Airports

Airport PcPassengers Percent

Average AnnualActual Forecast Growth

1970 1975 1977 1980 1985 1990 1975-1990

Riberalta 7,600 13,600 17,500 38,300 57,400 76,700 12

Santa Ana de Yacuma 4,400 9,000 12,000 18,900 32,400 43,600 11

San Borja 1,700 5,100 6,100 8,800 14,600 19,600 10

Tarija 8,500 18,200 24,300 41,500 69,900 96,300 12

Airport Freight (tons) PercentActual Forecast Average Annual

Growth1970 1975 1977 1980 1985 1990 1975-1990

Riberalta 5604'5-1,840 2,650 4,197 6,759 9,931 12

Santa Ana de Yacuma 1,6504/ 1,166 1,360 1,983 3,483 5,118 10

San Borja 2,935 4,706 5,489 8,003 14,060 20,659 10

Tarija3/

1/ Apparent abnormal growth at Riberalta from 1977 to 1980 results from the introductionof jet aircraft and diversion of one half of the projected normal traffic growthfrom Guayaramerin.

2/ Includes non-scheduled traffic. Scheduled traffic will move in passengeraircraft.

3/ No significant freight traffic is anticipated at Tarija.

4/ 1971.

5/ LAB flights only.

Source: AASANA and its consultants and IBRD Mission

December 1976

TABLE 5

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Forecast Aircraft Traffic

Annual Landings1975 1980 1985 1990

Riberalta

Passenger1/ 607 407 611 816

Cargo-4 251 187 302 404

5/Other-- 2,386 4,791 7,812 10,457

Santa Ana de Yacuma

Passenger2/ 333 638 604 813

Cargo- 4 162 177 311 416

Other-51 4,688 7,529 10,547 13,458

San Boria

Passenger- 189 156 260 260

Cargo-1 917 715 1,255 1,679

Other- / 3,259 6,531 10,503 13,752

Tariia

Passenger-/ 570 575 968 1,334

Other-/ 655 1,362 2,562 4,681

1/ Based on passenger growth and on changes from DC-3 and F-27 to B-737and B-727.

2/ Based on passenger growth and on changes from DC-3-and F-27 to F-27 orsimilar aircraft type thru 1984 and B-737 and F-27 thereafter.

3/ Based on passenger growth' and on changes from DC-3 and F-27 to B-737 and F-27.4/ Based on freight growth and on changes from C-47 and C-46 to CV-580.

Assumes 50% of Riberalta freight will move on passenger jetaircraft by 1980.

5/ Includes Air Taxi, Private, TAM, FAB and Flying School Landings.

Source: IBRD Mission

December 1976

TABLE 6

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Cost Estimates

$b (000) US$ (000)Local Foreign Total Local Foreign Total

Civil Works

Riberalta 46,280 78,040 124,320 2,314 3,902 6,216San Borja 44,479 60,221 104,700 2,224 3,011 5,235Santa Ana 46,231 37,049 83,280 2,312 1,852 4,164Tarija 38,903 49,857 88,760 1,945 2,493 4,438

Subtotal 175,893 225,167 401,060 8,795 11,258 20,053

Eng. design& Supervision 32,096 8,024 40,120 1,605 401 2,006

Equipment

Lights, VASIS &Tower Equip. 2,310 23,110 25,420 116 1,155 1,271Navaids andCommunications 9,460 47,300 56,760 473 2,365 2,838Maintenanceequipment 1,376 13,724 15,100 69 686 755Santa Anaequipment 204 2,036 2,240 10 102 112

Subtotal 13,350 86,170 99,520 668 4,308 4,976

Contingencies onConstruction andEquipment

Physical 10% 20,157 33,923 54,080 1,008 1,696 2,704Price 22.8% 49,672 86,068 135,740 2,484 4,303 6,787

Tech. Assistance 7,582 22,727 30,309 379 1,136 1,515Training 200 4,545 4,745 10 227 237

Subtotal 7,782 27,272 35,054 389 1,363 1,752

Contingencies TA& Training 10% 778 2,728 3,506 39 137 176

Cochabamba design 16,000 4,000 20,000 800 200 1,000

Total 315.728 473.352 789,08,0 15,788 23,666 39,454

Price Contingencies, Rates per Year

1978 1979 1980 1981

Foreign 10.0% 8.0% 7.0% 6.0%Local 8.4% 8.0% 7.5% 7.0%

Source: IBRD MissionFebruary 1977

TABLE 7

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Disbursement Schedule

FY78 13US$(000)

December 1977 1,342March 1978 2,904June 1978 3,781

FY79

September 1978 4,370December 1978 4,992March 1979 5,669June 1979 6,877

FY80

September 1979 8,496December 1979 9,408March 1980 10,628June 1980 14,633

FY81

September 1980 18,875December 1980 21,842March 1981 22,440June 1981 22,586

FY82

September 1981 22,669December 1981 24,475March 1982 24,563June 1982 24,811

FY83

September 1982 24,874December 1982 24,937March 1983 25,000

Source: IBRD Mission

February 1977

TABLE 8BOLIVIA

AVIATION DEVELOPMENT PROJECT

Estimated Aircraft Cost Savings in 1981

Savings PerPassenger Cost Saving

Passenger Aircraft Passengers US$ US$

Tarija 31,600 20.55 649,380Riberalta 41,500 15.39 638,685San Borja 9,770 7.29 71,223Santa Ana de Yacuma 22,600 6.27 141,702

Cargo Aircraft Tons Savings PerTon Cargo US$

Riberalta 2,200 309.36 680,592San Borja 8,960 120.51 1,079,770Santa Ana de Yacuma 2,380 83.10 197,778

Delays/Diversions Cost Per Hours ofHour US$ Aircraft Time

Tarija 427 122 52,094Riberalta 427 312 133,224San Borja 407 526 214,082Santa Ana de Yacuma 427 136 58,072

Aeronautical Communications 337 1,089 366,993Runway Maintenance Equipment 337 587 197,819

4,481,414

Source: LAB, AASANA, DGTTA, Mission Estimates

February 1977

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Quantified Project Benefits 1978-1998 US$ (000)

Riberalta Santa Ana de Yacuma Aeronautical RunwayTarija Aircraft Land Value San Borja Aircraft Maintenance Communications Maintenance Total

1978 421 421

1979 526 - - - - 526

1980 632 1,330 - 1,220 - - 334 90 3,6061981 701 1,452 600 1,365 398 100 367 198 5,1811982 779 1,586 - 1,527 444 100 404 222 5,0621983 864 1,731 - 1,709 494 100 445 248 5,5911984 959 1,891 - 1,912 552 100 489 278 6,1811985 1,065 2,064 - 2,139 615 100 538 312 6,833

1986 1,134 2,209 - 2,306 658 100 592 - 6,999

1987 1,208 2,364 - 2,485 704 100 651 - 7,512

1988 1,286 2,531 - 2,679 754 100 716 - 8,066

1989 1,370 2,709 - 2,887 807 100 788 - 8,661

1990 1,459 2,900 - 3,113 864 100 866 - 9,302

1991 1,553 3,104 - 3,356 925 100 - - 9,038

1992 1,655 3,324 - - 990 100 - - 6,069

1993 1,762 3,559 - - 1,061 100 - - 6,482

1994 1,877 3,811 - - 1,136 100 - - 6,924

1995 1,999 4,082 - - 1,216 100 - - 7,397

1996 2,129 4,372 - - 1,303 100 - - 7,904

1997 2,267 4,683 - - 1,395 100 - - 8,445

1998 2,415 5,017 - - 1,495 100 - 9,027

Source: Mission Estimates, AASANA

December 1976'IC

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Sensitivity Analysis of Economic Rate of Return

Best Construction Costs Benefits First years

Estimate -15% +15% -25% +25% return

Tarija 15 18 14 12 19 13 l/

Riberalta 24 28 22 19 29 20

San Borja 24 28 21 18 29 20

Santa Ana de 1/Yacuma 12 14 10 9 15 12

Aeronauticalcommunications 18 23 15 10 26 13

Runway mainte-nance equipment 16 22 11 6 24 24

Total Project 19 22 17 15 24 17

1/ First year return has been adjusted to take into account the effects of generated traffic.

Source: IBRD Mission H|

April 1977

I1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

AASANA

Summary Balance Sheets as of December 31

($b 000)

Assets 1970 1971 1972 1973 1974

Current Assets

Cash 259 240 2,037 4,219 3,666

Short Term Invest-4ients 356 50 20 13 478

Prepaid Items 130 265 225 235 288

Subtotal 745 555 2,282 4,467 4,432

Receivables 5,253 7,315 8,479 15,123 25,407

Inventories 4,760 7,221 7,755 15,907 26,971

Total Current Assets 10,758 15,091 18,516 35,497 56,810

Fixed Assets - Gross 61,253 60,728 61,091 106,450 145,226Less Accumulated Depreciation 4,528 5,778 9,120 12,909 16,578

Net Fixed Assets 56,725 54,950 51,971 93,541 128,648Construction in Progress - 6 - 568 3,941

Total Fixed Assets 56,725 54,956 51,971 94,109 132,589

Total Assets 67,483 70,047 70,487 129,606 189,399

Liabilities

Current 2,712 4,653 4,981 5,792 13,937Deferred 1,480 2,151 2,738 3,447 4,581

Capital and Reserves(Closing - December 31) 63,291 63,243 62,768 120,367 170,881

Total Liabilities 67,483 70,047 70,487 129,606 189,399

Source: IBRD Mission

February 1977

BOLIVIA

AVIATION DEVELOPMENT PROJECT

AASANAStatement of Revenues

($b Million)

Funds 1/Passenger from National Treasury"

Year End Landing Airport Overflight Navigational Landing NavigationalDecember 31 Fees Tax Fees Fees Messages Other Fees Fees Total Revenue

1975 27.5 11.9 4.5 2.7 2.9 3.9 1.8 .8 56.01976 34.1 15.8 4.6 2.7 4.4 4.6 2.0 .9 69.11977 46.6 21.8 5.9 3.8 6.0 5.9 2.6 1.1 93.71978 52.6 24.8 6.2 4.2 6.7 6.4 2.9 1.2 105.01979 71.2 33.5 7.9 5.7 8.7 8.4 3.7 1.6 140.71980 86.8 41.3 9.2 6.7 10.3 10.0 4.4 2.0 170.71981 95.8 45.8 9.8 7.4 11.2 10.8 4.8 2.2 187.81982 115.4 55.4 11.4 8.9 13.2 12.9 5.8 2.6 225.61983 125.4 60.4 12.1 9.7 14.2 13.9 6.3 2.9 244.91984 148.6 71.7 14.1 11.5 16.8 16.6 7.6 3.5 290.41985 159.5 76.8 15.0 12.3 17.9 17.9 8.3 3.8 311.51986 169.2 81.6 15.9 13.1 18.9 19.4 8.9 4.1 331.11987 179.3 86.5 16.8 13.9 20.0 20.9 9.5 4.5 351.41988 189.9 91.7 17.8 14.7 21.1 22.6 10.2 4.8 372.81989 201.2 97.2 18.9 15.6 22.2 24.4 11.0 5.2 395.71990 213.1 103.0 20.1 16.5 23.4 26.4 11.8 5.6 419.9

1/ Reimbursement from the Government for exempt services.

Source: AASANA and IBRD Mission

December 1976

BOLIVIA

AVIATION DEVELOPMENT PROJECT

AASANA

Projected Operating Statements($b Million)

Working Operating NetYear End Operating Working Expenses Surplus/ Income/ Profit/December 31 Revenue Maintenance Wages Other Total (Deficit) Depreciation (Loss) Interest (Loss)

1975 1 56.0 2.4 42.7 6.9 52.0 4.0 7.6 ( 3.6)19761/ 69.1 4.5 54.1 7.0 65.6 3.5 23.8 (20.3)1977 93.7 13.3 55.2 7.2 75.7 18.0 32.9 (14.9) (14,9)1978 105.0 17.1 56.3 7.3 80.7 24.3 32.9 ( 8.6) 7.8 (16.4)1979 140.7 21.2 57.4 7.5 86.1 54.6 32.9 21.7 12.7 9.01980 170.7 32.2 58.6 7.6 98.4 ----- 72.3 -------- 2,1_........3_Q ...... 218 .iLA_

1981 187.8 34.7 59.7 7.8 102.2 85.6 84.2 1.4 36.4 (35.0)

1982 225.6 35.5 60.9 7.9 104.3 121.3 86.0 35.3 39.5 ( 4.2)1983 244.9 36.5 62.1 8.1 106.7 138.2 88.5 49.7 37.5 12.21984 290.4 37.5 63.4 8.2 109.1 181.3 91.0 90.3 34.9 55.41985 311.5 38.9 64.7 8.4 ----- 112.Q…----122J5_------9_4…5…------1,Q_5Q ------32-3 72.7

1986 331.1 39.8 65.9 8.6 114.3 216.8 96.4 120.4 29.6 90.81987 351.4 40.8 67.3 8.8 116.9 234.5 98.9 135.6 27.0 108.6

1988 372.8 41.8 68.6 8.9 119.3 253.5 101.4 152.1 24.3 127.8

1989 395.7 42.8 70.0 9.1 121.9 273.8 103.9 169.9 21.7 148.21990 419.9 43.8 71.4 9.3 124.5 295.4 101.3 194.1 19.1 175.0

1/ Unaudited2/ Estimated

Source: AASANA and IBRD Mission

April 1977

BOL IVTIA

AVIATION DEVELOPMENT PROJECT

Riberalta Airport

Projected Operating Statements

($b 000)

WorkingYear End Operating Working Expenses Surplus/ Operating Profit/

December 31 Revenue Maintenance Wages Other Total (Deficit) Depreciation (Loss)

1975 646.0 177.7 454.6 42.6 674.9 ( 28.9) 200.0 ( 228.9)1976-= 707.0 140.7 531.8 43.5 766.0 ( 59.0) 200.0 ( 259.0)1977 955.0 143.5 593.4 44.3 781.2 173.8 200.0 ( 26.2)1978 1081.0 146.4 605.3 45.2 796.9 284.1 200.0 84.11979 1462.0 149.3 617.4 46.1 812.8 649.2 200.0 449.21980 1902.0 1022.4 629.8 47.0 1699.2 202.8 3109.0 . .906_21981 2157.0 2044.8 642.4 48.0 2735.2 (578.2) 6218.0 (6796.2)1982 2579.0 2044.8 655.2' 48.9 2748.9 (169.9) 6218.0 (6387.9)1983 2804.0 2044.8 668.3 49.9 2763.0 41.0 6218.0 (6177.0)1984 3316.0 2044.8 681.7 50.9 2777.4 538.6 6218.0 (5679.4)1985 3578.0 2044.8 695.3 51.9 2792.0 786.0 6218.0 _-54__ 01986 3776.0 2044.8 709.2 53.0 2807.0 969.0 6218.0 (5249.0)1987 3994.0 2044.8 723.4 54.0 2822.2 1171.8 6218.0 (5046.2)1988 4220.0 2044.8 737.9 55.1 2837.8 1382.2 6218.0 (4835.8)1989 4448.0 2044.8 752.6 56.2 2853.6 1594.4 6218.0 (4623.6)1990 4711.0 2044.8 767.7 57.3 2869.8 1841.2 5479.0 (3637.8)

1/ Unaudited2/ Estimate

Source: AASANA and IBRD Mission

December 1976

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Santa Ana Airport

Projected Operating Statements

($b 000)Working

Year End Operating Working Expenses Surplus/ Operating Profit/

December 31 Revenue Maintenance Wages Other Total (Deficit) Depreciation (Loss)

I/1975-= 452.0 86.8 382.6 39.5 508.9 ( 56.9) 50.0 ( 106.9)1976-, 496.0 93.6 489.6 40.3 623.5 (127.5) 50.0 ( 177.5)1977 658.0 95.5 499.4 41.1 636.0 22.0 50.0 ( 28.0)1978 730.0 97.4 509.4 41.9 648.7 81.3 50.0 31.31979 965.0 99.3 519.6 42.8 661.7 303.3 50.0 253.31980 1291.0 101.3 529.9 43.6 674.8 616.2 50.0 566.21981 1449.0 1406.7 540.6 44.5 1991.8 (542.8) 4629.0 (5171.8)1982 1739.0 1406.7 551.4 45.4 2003.5 (264.5) 4629.0 (4893.5)1983 1882.0 1406.7 562.4 46.3 2015.4 (133.4) 4629.0 (4762.4)1984 2233.0 1406.7 573.6 47.2 2027.5 205.5 4629.0 (4423.5)1985 2593.0 1806.7 585.1 48.2 2440.0 153.0 5629.0 --- (---A Q)1986 2745.0 1780.1 596.8 49.1 2426.0 319.0 5097.0 (4778.0)1987 2902.0 1780.1 608.8 50.1 2439.0 463.0 5097.0 (4634.0)1988 3059.0 1780.1 620.9 51.1 2452.1 606.9 5097.0 (4490.1)1989 3226.0 1780.1 633.3 52.1 2465.5 760.5 5097.0 (4336.5)1990 3402.0 1780.1 646.0 53.2 2479.3 922.7 5099.0 (4176.3)

1/ Unaudited >2/ Estimate M

Source: AASANA and IBRD Mission -

December 1976

BOLIVIA

AVIATION DEVELOPMENT PROJECT

San Borja Airport

Projected Operating Statements

($b 000)

WorkingYear End Operating Working Expenses Surplus/ Operating Profit/

December 31 Revenue Maintenance Wages Other Total (Deficit) Depreciation (Loss)

19751/ 444.0 484.6 418.6 33.1 936.3 (492.3) 50.0 ( 542.3)1976.= 498.0 194.0 535.7 33.8 763.5 (265.5) 50.0 ( 315.5)1977 672.0 197.9 546.4 34.4 778.7 (106.7) 50.0 ( 156.7)1978 756.0 201.8 557.3 35.1 794.2 ( 38.2) 50.0 ( 88.2)1979 1007.0 205.9 568.5 35.8 810K2 196.8 50.0 146.81980 1435.0Q 872.2 579.9 36.5 1488.6 .…….. . 233.0 . .(.286.61981 1605.0 1744.4 591.5 37.2 2373.1 (768.1) 5467.0 (6235.1)1982 2019.0 1744.4 603.3 38.0 2385.7 (366.7) 5467.0 (5833.7)1983 2209.0 1744.4 615.4 38.0 2398.6 (189.6) 5467.0 (5656.6)1984 2664.0 1744.4 627.7 39.6 2411.7 252.3 5467.0 (5214.7)1985 3007.0 1744.4 640.2 40.4 2425.0 582.0 5467.0 (4885.0)1986 3180.0 1744.4 653.0 41.2 2438.6 741.4 5467.0 (4725.6)1987 3360.0 1744.4 666.0 42.0 2452.4 907.6 5467.0 (4559.4)1988 3555.0 1744.4 679.4 42.8 2466.6 1088.4 5467.0 (4378.6)1989 3762.0 1744.4 692.9 43.7 2481.0 1281.0 5467.0 (4186.0)1990 3990.0 1744.4 706.8 44.5 2495.7 1494.3 4728.0 (3233.7)

1/ Unaudited2/ Estimate

Source: AASANA and IBRD Mission

December 1976

BOLITVIA

AVIATION DEVELOPMENT PROJECT

Tarija Airport

Projected Operating Statements

($b 000)Working

Year End Operating Working Expenses Surplus/ Operating Profit!December 31 Revenue Maintenance Wages Other Total (Deficit) Depreciation (Loss)

19 7 5 392.0 95.2 346.5 35.4 477.1 ( 85.1) 100.0 ( 185.1)1975w 465.0 72.5 443.5 36.1 552.1 ( 87.-1) 100.0 ( 187.1)1977 649.0 1946.6 452.4 36.8 2435.8 (1786.8) 4867.0 (6653.8)1978 740.0 1946.6 461.4 37.6 2445.6 (1705.6) 4867.0 (6572.6)1979 1257.0 1946.6 470.6 38.3 2455.5 (1198.5) 4867.0 (6065.5)1980 1666.0 1989.7 480.1 39.1 2508.9 . 842.9) 5298.0 (6140.9)1981 1880.0 2032.8 489.7 39.9 2.7 ( 682.4) 5729.0 Z4ILZY1982 2317.0 2032.8 499.5 40.7 2573.0 ( 256.0) 5729.0 (5985.0)1983 2575.0 2032.8 509.4 41.5 2583.7 ( 8.7) 5729.0 (5737.7)1984 3136.0 2032.8 519.6 42.3 2594.7 541.3 5729.0 (5187.7)1985 3438.0 2032.8 530.0 43.2 2606.0 832.0 5729.0 (4897.0)1986 3732.0 2032.8 540.6 44.0 .6i757 1 14.6 5729.0 ------1987 4021.0 2032.8 551.4 44.9 2629.1 1391.9 5729.0 (4337.1)1988 4307.0 2032.8 562.5 45.8 2641.1 1665.9 5729.0 (4063.1)1989 4613.0 2032.8 573.7 46.7 2653.2 1959.8 5729.0 (3769.2)1990 4949.0 2032.8 585.2 47.6 2665.6 2283.4 5300.0 (3016.6)

1/ Unaudited2/ Estimate

Source: AASANA and IBRD Mission

December 1976

BOLIVIA

AVIATION DEVELOPMENT PROJECT

AASANAProjected Cash Flow

($b million)

Source of Funds 2/ Application of FundsGoverimnent

Debtors Cash World Government Government EqUity for Total Capital Loan Repayment Total Annual CumulativeYear Ended Operating 1/ Less from Bank Equity Equity Non- Cash Cash Invest- Cash Cash CashDecember 31 Surplus Creditors Operations Loan Project Project Requirements Available ments Principal Interest Required Surplus Balance1977 18.0 4.5 13.5 26.8 50.0 157.2 48.2 295.7 282.8 - - 282.8 12.9 12.91978 24.3 1.6 22.7 73.0 42.0 59.9 - 197.6 189.0 - 7.8 196.8 .8 13.71979 54.6 7.6 47.0 88.3 103.0 348.0 33.5 619.8 606.2 - 12.7 618.9 .9 14.61980 72.3 4.4 67.9 248.7 67.6 285.6 - 669.8 645,9 - 21.8 667.7 2.1 16.71981 85.6 3.3 82.3 52.7 25.2 83.5 - 243.7 206.6 - 36.4 243.0 .7 17.41982 121.3 8.9 112.4 9.2 1.3 54.2 - 177.1 105.1 32.2 39.5 176.8 .3 17.71983 138.2 4.2 134.0 1.3 - 34.8 - 170.1 100.0 32.2 37.5 169.7 .4 18.11984 181.3 10.8 170.5 - - - - 170.5 100.0 32.2 34.9 167.1 3.4 21.51985 199.5 4.6 194.9 - - - - 194.9 100.0 32.2 32.3 164.5 30.4 51.91986 216.8 4.3 212.5 - - - - 212.5 138.8 32.2 29.6 200.6 11.9 63.81987 234.5 4.5 230.0 - - - - 230.0 102.8 32.2 27.0 162.0 68.0 131.81988 253.5 4.7 248.8 - - - - 248.8 100.0 32.2 24.3 156.5 92.3 224.11989 273.8 5.0 268.8 - - - - 268.8 100.0 32.2 21.7 153.9 114.9 339.01990 295.4 5.5 289.9 - - - - 289.9 100.0 32.2 19.1 151.3 138.6 477.6

2,169.1 73.9 2,095.2 500.0 289.1 1,023.2 81.7 3,989.2 2,877.2 289.8 344.6 3,511.6 477.6

1/ From Table 13/ Cash requirements to cover lag between disbursements by AASANA or the Government and reimbursement by the World Bank, interest payments andrequired annual cash balance.

Source: IBRD Mission

April 1977

BOLIVIA

&VIATION D1ELOPMEN)qT PROJEC.T

prltoected B6e1e,ncm Sheete ce of Deceffmber 31

6$ etillions}

1977 1978 1979 1980 198L 1982 1983 1984 1985 1986 1987 1968 3989 3890

Aeset s

trent Assets:

Lab 1/ 12.9 13.7 14.6 16.7 17.4 17.7 18.1 21,5 51.9 63.8 131.8 224.1 339.0 477.6eceiv bles 23.4 26.3 35.2 42.7 47,0 56.4 61.2 72.6 77.9 82.8 87 9 93.2 98.9 105.0

36.3 40.0 49.S 59,4 66.4 74.1 79.3 94.1 129.8 146.b . 219.7 317.3 437.9 562.6

Fixed Assets - Gross 718.9 934.9 1,379.1 2,036.0 2,415.5 2,585.2 2,685.2 2,785.2 2.885.2 3,024.0 3,126.8 3,226.8 3,325.9 3,425.9Accueulated deprecialaon 60.9 113.6 146.7 216.0 30 386.2 474.7 565.7 60 756.6 835.5 956.9 1,060.8 1: set fixed asaset ln, uee 638.0 821.t 1,232.4 1,840.0 2,115.3 2,199.0 2,210.5 2,219.5 2,225.0 2,267.4 2,271.3 2,269S9 2,265.1 2,263.8Coc,strc,ctioc, in ptosres t113.5 86.5 253.3 217.5 129.3 - - - -

751.5 907.6 i,485.7 2,357:S' 2,244.6 Z,199T6 5T~ 2,219.5 2,225.0 2,267.4 2,271.3 2,269.9 T2265.1 2,263,8

787.8 947.6 _ 2116.9 2.309.a 2 273 3 2,289.8 2,313.6 2,354.8 2,414.0 2,491.0 2,587.2 2,703.0 2,846.4

Liabilities

Current liabilities:

Trade creditors 18.9 20.2 21.5 24.6 25.6 26.1 267 27.3 26.0 28.6 29.2 29.8 30.5 31.1Ilold backs - 4.6 64,7 -- --18.k9 2 26.3 24.6 90.'3 26.1 26.7 27.3 26 . 28.6 29.2 2 30.S8 31.1

Long-term debt - 8.2% 26.6 99.8 168.1 436,8 489.5 466.5 435.6 403.4 371.2 339.0 306.8 274.6 241.5 209.3

Ceeltal:

Present investment 525.5 525.5 525.5 525.5 525.5 525.5 525.5 525.5 525.5 525.5 525.5 525.5 325.5 525 3New Govermeent equity 235.4 357.3 841} 1 1950 1,303.7 1359.2 1 394.l 1,394,0 1,394.0 1394,0 1 394.0 1 394.0 1 394.0 1 394.3882.98 1,397:3 J18 1, 7,919 .5 T,915- Tg3 1,919.5 t§T5

Belainad earnisgcusL tddefiit

(23.9) (38.8) (55.2) (46.2) (65.0) (100.0) (104.2) (92.0) (36.6) 36.1 t26.9 235.5 363.3 511.5Profit,i(Ions) (14.9) (16.4) 9.0 (18.8) (35.0) (4.2) 12.2 55.4 72.7 90.8 108.6 127.8 148.2 175.001,0510S (38.6) (55.2 4 (65.0) (104.2) (59202) (36.6 36.1 126.9 235.5 363.3 511.5 6w86,3Total Cai,ittl 742.1 827.6 1,321.1 1,655.5 1,729.2 1,780.5 1,827,5 1,882.9 1,955.6 2,046.4 2,155.0 2,282.8 2,431.0 2,606.0Total_ iabllities 787.8 947.6 3,333.5 :j 2,30. 2,273.t 2.313.6 2.354,6 9 2.49 2,587,2 2 2

1/ Table 18Somrtt: IBRD Mission

April 1977

TABLE 20

BOLIVIA

AVIATION DEVELOPMENT PROJECT

AASANA

Schedule of Selected Financial Indicators

Annual Return onCombined Working Ratio Working Ratio Net Fixed Assets in Use

Project Airports AASANA AASANA

(%) (%) (%)

1977 158 81

1978 142 76 -

1979 101 61 2.1

1980 101 58 .2

1981 136 54 .1

1982 112 46 1.6

1983 103 44 2.3

1984 87 38 4.1

1985 81 36 4.7

1986 77 35 5.3

1987 72 33 6.0

1988 69 32 6.7

1989 65 31 7.5

1990 62 30 8.6

Source: IBRD Mission

April 1977

ANNEX 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Bank Group Projects in the Transport Sector

Loan or Effective Amount PresentCredit No. Date (US$ million) Works Status

635-BO November 2, 1971 23.3 CIA YACIBOL - CompletedLoan BAGOC TRANSPOR- in 1972

TADORESGas Pipeline

346-BO February 21, 1973 8.0 Bolivia Railways CompletedCredit (ENFE) in 1977

1121-BO August 6, 1975 28.7 Bolivia Railways UnderLoan (ENFE) 1975/76 execution

investment plan

April 1977

ANNEX 2

Page 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Bolivia Aircraft on Register 1975

NO. OF AIRCRAFT

Lloyd Aereo Boliviano BOEING 727-100 3BOEING 727-200 1FAIRCHILD F-27 4DOUGLAS DC-3 3

Non-Scheduled Airlines DOUGLAS C-54 4DC-7B 1C-53 1C-47/DC-3 10

FAIRCHILD F-27 2CURTISS C-46 20CONVAIR 440 5OTHERS 5

Yacimientos Petroliferos AERO COMMANDER 2

Fiscales Bolivianos D.H. BEAVER 1D.H. TWIN OTTER 2

Air Taxi Companiesand Private VARIOUS SMALL 170

Aerial Work on Training AIRCRAFT 86

TOTAL 320

Source: DGAC

January 1977

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§4

>3 I-tO

ANNEX 3

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Aircraft Accidents in Bolivia

1. The statistics for 1972-1974 were alarming: 112 accidents, ofwhich 54 were major, the aircraft being either destroyed or seriously damaged.Of these, 11 were fatal. Relating this to the approximately 320 or so aircrafton the Bolivian Register evidences a very high rate.

2. The rate was particularly disturbing in the transport aircraftcategory: 36 accidents within three years with only 50 aircraft on theRegister as of 30 October 1974. All but one occurred on non-scheduled oper-ations, and 70% involved total loss or major damage to the aircraft.

3. Of the accidents to transport category aircraft, 56% were CurtissC-46 piston-engined old-vintage aeroplanes, recognized as difficult to main-tain and to fly. Also, general aviation recorded a high rate: 76 accidents,with 154 aircraft on the Register as of 30 October 1974.

4. The statistics were similar in 1975 with 76 accidents, of which 27involved transport-type aircraft (Douglas DC-3, Curtiss C-46, etc.) on non-scheduled operations. This may be related to about 300 aircraft on registerthat year. In 1976, the situation improved as a result of improved control ofairworthiness and flight standards. The airport and enroute conditions, how-ever, continue to limit the achievable safety of operations.

5. Some 22 transport-type aircraft were written off completely as aresult of accidents during 1972-1975, which, even if the aircraft are old,represents a significant loss and increases insurance premiums substantially.

January 1977

ANNEX 4

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Traffic Forecast Methodology

Passenger Forecasts

1. The basic forecasts of passengers and cargo traffic were developedin the feasibility studies for the different airports carried out during 1974-1976 by several entities. The forecasts for Tarija and San Borja were doneby the Bolivian consultant IPA, the one for Santa Ana de Yacuma by a consor-tium of IPA and the Brazilian firm Hidroservicio and, finally, AASANA's ownstaff prepared the forecasts for Riberalta. For passengers, two methodswere employed: one based on previous traffic trends, the other on a multipleregression analysis based on urban population and per capita income. Theresults of these methods were similar.

2. These basic forecasts were revised by the Bank staff in consultationwith AASANA, Oficina de Planificacion. In this revision, two adjustments weremade, first to update the base year for traffic development to a common year1975, and, second, to account for additional traffic growth as a result ofbetter services on completion of the project. This additional traffic is dueprimarily to presently suppressed demand and, to a very limited extent, isthe result of cost reductions for travelers. To determine the additionaltraffic growth, comparisons were made with recent experience with jet air-craft introduction at airports such as Trinidad and Sucre where, despite un-changed or increased passenger fares, accelerated traffic growth has beenexperienced as a result of more reliable services. For traffic developmentprior to project completion, LAB detailed traffic forecasts for the next five-year period have served as a guide to check the validity of the assumptionsmade. For Riberalta, it has been assumed that 50% of the normal traffic atGuayaramerin would be diverted to the new airport. Despite these adjustments,the average growth rate for the 1975-1990 period is less than the actualachieved over the past five-year period.

Cargo Forecasts

3. For cargo, the same entities as mentioned above made the basictraffic forecast. For Tarija, air cargo is so limited that no special cargoflights would be required. The forecasts for the other airports were basedon a continuation of previous traffic trends and the relationship of air cargowith GNP for Bolivia and the province of Beni. These were reviewed againsttendencies in the economic development of the region and, in particular, thecattle industry. The result was the adoption by the Bank staff of lowergrowth rates for the years after 1985. No factor of inducement by betterservices was included since the majority of air cargo is assumed to continueto be carried by propeller-type aircraft.

April 1977

ANNEX 5Page 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Existing Airport Conditions and Proposed Improvements

A. Existing Airport Conditions

(i) Riberalta

The existing airport is located at the southwest edge of the townon a plain between the Rio Beni and an ancient river bed and about 20 metersabove the river. The airport has an elevation of 171.0 m and consists of twodirt, lime and gravel runways sparsely covered with grass. The main runwayis 1,800 x 50 m on an alignment of 9/27 and has an effective gradient of 0.45%;the second runway, 1,100 x 50 m on an alignment of 15/33, is rarely used. Theairport has a small terminal building served by a partially asphalt pavedapron of 26,800 m2. Although relatively well drained, the operational sur-faces of the airport suffer during the wet season, and constant maintenanceis required to repair soft spots.

There is small control tower with old communications equipmentadjacent to the terminal. The airport does not have lights, but has an NDB.

Between the threshold of R/W 09 and the river are two residentialblocks. Since all except the lightest aircraft must use this runway, thehouses are continually subjected to dangers relating to low flying aircraftduring critical periods of their operation as well as attendant noise, fumes,etc. Expansion of the runway would necessitate demolition of these housesand would separate from the town the remaining flat land to the south of therunway, without the construction of a costly road along the river edge. Expan-sion of the runway at the opposite end would require excessive fill due to theclose proximity of the ancient river bed (between 15 and 20 meters lower thanthe runway elevation).

The short runway alignment is even more critical as far as the loca-tion of the town is concerned. Flights to R/W 15 must pass over the centralportion of the town. Expansion of the runway in this direction would not bepractical since it would split the town in half. Expansion in the oppositedirection would be restricted, in the same manner as the other runway, by theancient river bed. However, even if the costs for this extension were accept-able, the necessity for flights over the town would not be accepted.

(ii) San Borja

The existing airport is located directly adjacent to the northeastside of the town, between the town and the Rio Rapulo. It is at an elevation

ANNEX 5Page 2

of 193.6 m and consists of a single 1,800 x 50 m dirt and lime runway coveredwith grass on an alignment of 15/30. The runway has an effective gradient of0.06%. A small terminal building with a 13,500 m2 apron and three slaughter-houses are located on the town side of the runway. The grass has been wornthin in many places, and, during the wet season, the airport must be closedfor extended periods because of excessive softness of the runway.

There is a small control tower near the terminal which contains someold communications equipment, and there is also an old NDB located at the air-port. The runway is not provided with lighting, and no operations are allowedduring the hours of darkness.

(iii) Santa Ana

The existing airport is located about 2 km to the southwest of thetown at an elevation of 220.0 m. It consists of a single 1,500 x 50 m dirtand lime runway covered with grass on an alignment of 14/32, which has aneffective gradient of 0.21%. There is a small terminal building with a controltower on the northeast side of the runway, served by a 1,200 m2 apron. Aslaughterhouse has been built on the side opposite the terminal at the edge ofthe flight strip. Everywhere except directly on the runway are large chimney-type ant hills.

The runway is flooded during the wet season and, for a considerabletime after recession of the water, must remain closed because of soft operatingsurfaces.

The tower has some old communications equipment, and the airport hasan NDB; the runway is not provided with lighting, however, and all operationscease at dusk.

(iv) Tarija

The existing airport is located about 3 km to the east of the townacross the Rio Bermejo at an elevation of 1,861.0 m. It has two runways. Thelonger, originally 2,000 x 45 m with an effective gradient of 0.72%, is inthe process of being strengthened and lengthened to 2,800 x 45 m to accommo-date Boeing B-727 aircraft. The second, 1,220 x 80 m of dirt, lime and sand,is being regraded at the intersection of the two runways near the terminalarea. The alignment of the main runway is 15/33.

The terminal building is modest but suitable, with an apron of 3,520m2 and an attached control tower. The tower contains old communications equip-ment, and the airport has an NDB but no runway lighting.

ANNEX 5Page 3

The river passes close to the northwest end of the runway and alongthe southwest side. A deep arroyo crosses the extended centerline of therunway at the southeast end. The northwest end of the river has been pro-tected with riprap, but the southeast end is badly in need of similar protec-tion to prevent erosion of the runway end.

When completed in the spring of 1977, the prime runway will beserviceable in most weather conditions, but will require heavy maintenanceto remain so.

(v) Cochabamba

The existing airport is adjacent to the southwest side of the cityat an elevation of 2,547.0 m in a mountain valley which runs roughly northwest/southeast. The airport has two runways, only one of which is in use. Themain runway, 04/22, is 2,500 x 45 m with a gradient of 0.22% and is asphalt-paved, but it is aligned so that all operations pass over the center of thecity. The closeness of the mountains on the northeast city end requires low-level turns either on final approach or just after takeoff. A hill whichpenetrates the obstruction clearance zones just south of the extended centerline at this end further complicates operations. At the southwest end, themountains, while providing more clearance, still force low-level turns duringboth operations.

The second runway, 1,500 x 30 m on an alignment of 13/31, wasasphalt-sealed at one time, but has now mostly deteriorated and is seldomused.

The terminal area is on the north side of the northeast end of R/W22. The terminal building is overloaded during periods of heavy traffic. Acontrol tower is attached, which contains the major weather station forBolivia. All equipment is old. The apron is 20,000 m2 asphalt paved. Apaved taxiway extends to the maintenance base of LAB near the intersection ofthe two runways.

The airport has an NDB, and a VOR has been purchased but not yetinstalled. Edge lighting has recently been installed on R/W 04/22, its taxi-ways and the apron.

B. Proposed Project

(i) Riberalta

A new airport will be constructed at a site about 5 km northeastof the town. Approaches to the single runway will be entirely clear ofbuilt-up areas. The runway will be 2,000 x 45 m paved with asphaltic concreteand will be stressed for a Boeing B-727-200. A terminal building designed fora peak hour of 200 passengers will be constructed near the middle of the

ANNEX 5Page 4

north side of the runway. It will be served by an apron sized for three B-727aircraft. The apron will be connected to the runway by short lead-in taxiways.The terminal area will be provided with a paved access road from the main high-way which passes the airport site on the west. Adequate automobile parkingareas will be provided as well as a fuel storage area. A control tower and ashed for emergency equipment will be built. All necessary utilities will beprovided. A perimeter chain link fence will be provided. The entire areawill be suitably drained.

The aircraft operational areas will be provided with edge lighting.New VHF and HF communications equipment will be installed. A VOR/DME anda 50W NDB will be installed, as well as a VASI system at one end of the run-way.

(ii) San Borja

A new airport will be constructed at a site about 4 km northwest ofthe town. Approaches to the single runway will be entirely clear of built-upareas. The runway will be 1,800 x 30 m paved with asphaltic concrete and willbe stressed for a Fokker F-27. A terminal building designed for a peak hourof 100 passengers will be constructed near the middle of the east side of therunway. It will be served by a paved apron, sized for three F-27 aircraft,which will be connected to the runway by a short paved lead-in taxiway. Theterminal area will be provided with a gravel access road from the nearest tow.nroad. Adequate automobile parking areas will be provided as well as a fuelstorage area. A control tower and a shed for emergency equipment will hebuilt. All necessary utilities and a perimeter chain link fence will be p,o-vided. The entire area will be suitably drained.

The aircraft operational areas will be provided with edge lighting.However, the runway edge lighting will be spaced for a 45 m runway rather thanfor the 30 m being constructed. New VHF and HF communications equipment, aVOR/DME and a 50 W NDB will be installed, and there will be a VASI system atone end of the runway.

Because of the major meat air cargo business, a multiple positiongravel aircraft apron with gravel lead-in taxiway to the runway will be pro-vided beyond the terminal area on the same side of the runway to accommodatethe reconstruc Lon of exisLing slaughterhouses.

(iii) Santa Ana

A new runway will be constructed at the existing site parallel tothe existing runway but about 300 m from the face of the existing terminalbuilding. Approaches to this single runway will be entirely clear of built-

p areas. The runway will be 1,800 x 30 m crushed rock with double sandasphalt seal, and will be stressed for a Fokker F-27. The terminal buildingwill be renovated for a peak hour of 100 passengers. It will be served bya sealed apron sized for three F-27 aircraft and connected to the runway by

ANNEX 5Page 5

a short sealed lead-in taxiway. The terminal area will be provided with agravel access road from the nearest road in town. Adequate gravel automobileparking areas will be provided as well as a fuel storage area. The existingcontrol tower will be renovated, and a shed for emergency equipment will bebuilt. All necessary utilities will be refurbished. A perimeter chain linkfence will be provided. The entire area will be suitably drained.

The aircraft operational areas will be provided with edge lighting.New VHF and HF communications equipment will be installed. A 50W NDB will beinstalled in addition to a VASI system at one end of the runway.

Because of the major meat air cargo business, a multiple positiongravel aircraft apron with gravel lead-in taxiway to the runway will be pro-vided on the opposite side of the runway from the terminal building to accom-modate the reconstruction of existing slaughterhouses.

(iv) Tarija

The new 2,800 x 45 m crushed rock runway will be overlayed with10 cm of asphaltic concrete for its entire length. The two lead-in taxiwaysand the three B-727 position aprons will also be paved. The second runway willnot be paved, but grade transitions between the two runways will be provided.The runway, apron and taxiways will be provided with edge lighting and a VASIwill be provided at one runway threshold.

The existing terminal building and control tower are adequate, butnew VHF and HF communications equipment will be provided as well as a VOR/DMEand a 50W NDB.

Chain link fencing will be provided around the entire perimeter ofthe airport. The arroyo passing the southeast threshold of the runvay will bediverted and armored with riprap, and the portion within 150 m of each side ofthe extended runway centerline will be covered.

C. Engineering

Design and construction supervision for the above airport work willbe provided.

Design of a new runway for Cochabamba will also be provided. Thisrunway will probably be aligned on 13/31, which parallels the major axis ofthe Cochabamba valley. The position of the runway will be about 500 meters tothe southwest of the existing R/W 13/31. Such a location will require a newtaxiway sy2Le.i and a relocation of the terminal area. It is also probablethat the maintenance base of LAB will be relocated. A feasibility studycarried out in 1975 proposed such positioning.

ANNEX 5Page 6

D. Other Project Components

Various special components and communications, navaid, lighting andmaintenance equipment proposed for inclusion in the project are listed in

Annexes 6, 7 and 9.

February 1977

ANNEX 6Page 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Location List for Equipment Included in the Project

Airport Lighting (R/W, T/W, Apron, Obstruction and Beacon)Riberalta, San Borja, Tarija and Santa Ana

VOR'sRiberalta, San Borja, Tarija and Robore, Caranavi

DME'sRiberalta, San Borja, Tarija and Trinidad, Caranavi

NDB's 1KWTrinidad, Cobija, Robore, Sucre and Yacuiba

NDB's 50WRiberalta, San Borja, Tarija, Santa Ana, Apolo,Ascencion, Magdalena, San Ignacio de V., San Jose,San Javier, Guayaramerin

L 50WLa Paz, Guayaramerin, Sucre and Trinidad (2)

VASILa Paz, Cochabamba (2), Trinidad (2), Santa Cruz (2)and Sucre (2), Riberalta, San Borja, Santa Ana andTarija

TX HF ISB IKWTrinidad (4), Cochabamba (2), La Paz (2)

TX HF SSB 150W, 4 channel (2 at each total 36)Cobija, Riberalta, Guayaramerin, Santa Ana, SanJoaquin, San Ramon, Magdalena, San Ignacio de M. -

Sucre, Potosi, Camiri, Yacuiba, Tarija - Apolo,Rurrenabaque, San Borja, Oruro, Charana

RX HF SSB 4 channels (4 at each of above, total 72)

RX HF ISB 4 channelsCochabamba (4), Trinidad (8)

Tower Equipment (VHF, tape recorders, met., etc.)Riberalta, San Borja, Santa Ana and Tarija

ANNEX 6Page 2

Teletypewriter equipmentTerminal and Control Equipment

La Paz, Cochabamba, Santa Cruz and Trinidad

Transmitter Group (6 circuits each)La Paz (3), Cochabamba, Santa Cruz and Trinidad

Receiver Group (6 circuits each)La Paz (3), Cochabamba, Santa Cruz and Trinidad

Teletypewriters ROLa Paz (18), Cochabamba (6), Santa Cruz (6), andTrinidad (6)

Teletypewriters ASRLa Paz (8), Cochabamba (2), Santa Cruz (2), andTrinidad (2)

Teletypewriters KSRLa Paz (8), Cochabamba (6), Santa Cruz (6) andTrinidad (6)

Portable TDLa Paz (2)

Power SupplyLa Paz (5), Cochabamba (2), Santa Cruz (2) andTrinidad (2)

ReperforatorLa Paz (18), Cochabamba (6), Santa Cruz (6) andTrinidad (6)

January 1977

ANNEX 7

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Regional Maintenance Equipment

D-6 TractorFront End LoaderMotSrgrader5 mJ Dumptruck .(3)Dual Wheel Self-Propelled Sheeps Foot Roller with BladeHand Compactors (2)D-24 Scraper1,500-Gallon Tank Truck

Santa Ana Airport Maintenance Equipment

Asphalt Mixing Plant 8T/HrBitumen Boiler/Sprayer 500 galsAsphalt Cauldron 500 kgDirect Drum Hand SprayerTandem Vibratory Roller 1,140 kgCompressor, Breaking Tools and Hoses, 125 cfm, 100 psiGarage Compressor, 100 psiOxy-Acetylene Burning GearWelding Transformer and ToolsCarpenter's Tool KitElectrician's Tool KitDiesel Fitter's Tool KitVehicle Mechanic's Tool KitPavement Maintenance Hand Tools

January 1977

ANNEX 8

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Draft Technical Assistance Job Descriptions

1. Advisor to the Technical Director

The Advisor to the Director, who is the immediate assistant of theExecutive Director, must have a university degree and experience in aviationinfrastructure. He must also have the same qualifications as are requiredfor the position of the Executive Director.

The Advisor shall advise the Technical Director in his daily respon-sibilities to:

(a) Direct, coordinate, supervise and evaluate the work of theoperational divisions in accordance with the policy and/orplans of action adopted;

(b) Assist the Executive Director in the study and preparationof the Institution's policies and also help him with thetasks of direction and coordination with specific functionswithin his field of competence and with other matters forwhich his assistance is needed;

(c) Check on the pertinence of procedures, regulations, manualsand other instruments within his field of competence;

(d) Supervise the progress of programs, projects and works, and,together with the heads of technical departments, study anyactions or measures for effecting corrections or changes;

(e) Comply with and enforce resolutions, rules, procedures andall other provisions governing technical operations at air-ports or at enroute stations;

(f) Substitute for the Executive Director and exercise hisauthority in accordance with the general rules, in thelatter's absence;

(g) Represent the Executive Director and exercise hisauthority in such official activities as the latter mayindicate to him, and perform all such tasks as he maydelegate to him; and

(h) Perform all other functions pertinent to his position.

ANNEX 8Page 2

2. Accounts Division Chief

The Accounts Division Chief shall be responsible on a day-to-daybasis to:

(a) Ensure that the financial records are kept in accordance withregulations as established by the Government and in a mannercompatible with generally accepted accounting principles.This shall encompass AASANA Headquarters, Regional Offices,Airports and enroute stations managed by AASANA by locationand Cost Center;

(b) Ensure that recommendations are presented to management for thesetting of structure and level of tariffs, as may be required,in accordance with a review of cost data in (a) above.

(c) Ensure that monthly financial status reports of investmentundertaken by AASANA by location and Cost Center are prepared;

(d) Ensure development of manpower, operating and capital budgetsby location and Cost Center annually displayed by month forthe operating year, and also the preparation of annual budgetsfor a projected period of five years;

(e) Ensure that accounting data are provided for planning anddecision-making purposes;

(f) Ensure that AASANA's monthly budgeted and actual financialstatus reports are prepared;

(g) Direct the taking of inventory for general balance sheetpurposes;

(h) Supervise the general balance sheet preparation;

(i) Centralize operating and other expenditures on the basisof a cost accounting plan and the programs budget;

(j) Ensure that summary accounts to be sent to debtors areprepared, and summary accounts sent by creditors are checked;

(k) Ensure that year-end adjustments or corrections for theaccurate determination of the Institution's financial,economic and assets situation are made;

(1) Supervise the implementation of a coordinated costs system;

(m) Ensure that vouchers used for the recording of transactionsare properly filed;

(n) Analyze and act on financial reports from the regional offices;and

(0) Perform any other functions assigned by the Department Chief.

ANNEX 8Page 3

3. Construction and Supervision and Maintenance Combined Divisions Chief

The Chief of these combined Divisions shall:

(a) Inform and advise the Department Chief on the work of theDivision, proposing the most appropriate measure and methodsfor performing its functions;

(b) Direct supervision of construction, improvement and/or mainte-nance of runways, taxiways, parking aprons, drainage, accessroads and other civil works carried out at airports andenroute stations managed by AASANA;

(c) Direct supervision of construction, improvement or expansionand/or maintenance of airport buildings and other architec-tural or service facilities at airports and enroute stationsmanaged by AASANA;

(d) Be responsible for the preparation of, review and approval of,progress payment certificates.

(e) Be responsible for the preparation and approval of work changeorders;

(f) Be responsible for the preparation and updating of the technicalspecifications required for works construction, and enforcementof compliance therewith;

(g) Be responsible for the quantitative calculations and unit prices,budgets, work schedules and construction methods for the work ofthe division;

(h) Supervise the different tests required to ensure the properexecution of works;

(i) Coordinate with the Studies and Projects Division in decidingon work changes, in issuing orders for such changes and inperforming any corrections to the work done by the division;

(j) Direct the corresponding technical inspections and recommendacceptance of the works;

(k) Monitor supervision of the construction works when such super-vision is carried out by third parties;

(1) Supervise the preparation of programs, budgets and technicalspecifications related to airport and enroute stationmaintenance;

ANNEX 8Page 4

(m) Schedule and evaluate execution of the maintenance workscarried out by the different regional centers;

(n) Periodically direct the inspection of the different airportsand enroute stations within the AASANA network, to ensurecompliance with the maintenance program;

(o) Direct studies and propose the purchase and replacement ofmachinery and equipment required for airport and enroutestation maintenance;

(p) Supervise the establishment and updating of unit prices formaintenance work, by region; and

(q) Perform other duties as assigned by the Department Chief.

4. Air Navigational Aids Division Chief

The Chief of this Division shall:

(a) Ensure that the level of standard approved for the facilityis implemented and the radio navaid systems are maintainedso that the safe operation of aircraft is guaranteed;

(b) Supervise the preparation and implementation of the rulesand regulations necessary for the proper maintenance andconservation of radio navaid equipment, installations andcomponents;

(c) Supervise the preparation of technical instructions andpublications for the optimum use of the facilitiesinstalled and/or maintained;

(d) Ensure that the operation of the equipment and facilitiesfor which the Division is responsible are continuallymonitored and periodically evaluated;

(e) Ensure that systems for recording adjustments, operatingreports and flight test reports are systematically analyzedand evaluated;

(f) Coordinate the Division's activities with the OperationsDepartment, regional airport managers and companiesoperating aircraft in order to provide the assistancerequired to improve service;

(g) Cause all pertinent frequencies to be monitored and recommendthe use of specific frequencies for aeronautical radio navaidservices in accordance with the regulations;

ANNEX 8Page 5

(h) Study and make recommendations on requirements for specializedpersonnel; and

(i) Perform other duties as assigned by the Department Chief.

5. Telecommunications Systems Division Chief

The Chief of this Division shall:

(a) Supervise the installation and maintenance of all communicationsequipment and systems necessary to ensure the optimum provisionof air traffic control and information services in accordancewith the approved operating regulations;

(b) Study and make recommendations on requirements for specializedpersonnel;

(c) Ensure that the performance of the equipment for which theDivision is responsible is adequately monitored and period-ically evaluated;

(d) Ensure that the systems for recording adjustments, operatingreports, flight test reports, etc., are systematicallyanalyzed and evaluated; and

(e) Perform other duties as assigned by the Department Chief.

February 1977

ANNEX 9Page 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Special Components of the Project

Airport Access Roads

The new airport at Riberalta would be constructed southeast of thetown along an existing highway. The project would include an access road fromthis highway to the terminal area (1 km).

The new airport at San Borja would be constructed 4 km northwest ofthe town. The project would include an access road from an existing mainroad at the outskirts of the town to the terminal area of the airport.

The existing access road at Santa Ana would be regraded and spreadwith gravel from the town to the terminal area (2 km).

No road work is necessary at Tarija.

Electric Power Supply

The project would provide prime and standby engine generators forthe three Beni airports. Power-generating equipment necessary at Tarija andother locations for Navaid or Com equipment is being provided under a grantfrom the UK (next page).

Potable Water Supply and Sewage Disposal

Water for the project airports would come from wells. It would betreated before entering the distribution system. Sewage would be disposed ofby means of septic tanks and leaching fields.

Slaughterhouse

Because of the location of the proposed new runway at Santa Ana,an existing slaughterhouse would have to be demolished. A new slaughter-house would be constructed under the project in a more suitable locationrelative to the runway and terminal area.

ANNEX 9Page 2

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Engine Generator Sets - Grant Aid from United Kingdom

All engine generator sets will be dual, rated for elevation, aircooled diesel with electric starting equipment and automatic transfer switchesand isolation switches.

Size Location

10 KW Apolo10 KW Ascension de G.10 KW Camiri10 KW Concepcion10 KW Magdalena10 KW Rurrenabaque10 KW San Ignacio de M.10 KW San Ignacio de V.10 KW San Javier10 KW San Joaquin10 KW San Jose10 KW Charana25 KW Guayaramerin25 KW Oruro25 KW Potosi25 KW Puerto Suarez25 KW Robore25 KW Yacuiba25 KW 2 sets Spare35 KW Cobija35 KW Sucre35 KW Tarija

NOTE: One of the spare 25 KW sets should be installed at Caranavi for theproposed VOR.

Januarv 1977

ANNEX 10Page 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Project Progress Monitoring Indices

Date AccomplishedConstruction or To Be Met

Completion of draft construction working drawingsfor Tarija. February 1977

Completion of draft contract documents for Tarija. February 1977

AASANA and Bank review of draft drawings anddocuments. February 1977

Advertisement for interested contractors for Tarijapaving. April 1977

Completion of final contract drawings anddocuments for Tarija. April 1977

AASANA and Bank review of final civil workscontract documents and drawings for Tarija. April 1977

Advertisement for prequalified consultants forRiberalta, San Borja and Santa Ana. April 1977

Invitations to bid issued for Tarija. May 1977

Selection of consultants for Riberalta, San Borjaand Santa Ana. June 1977

Bids opened for Tarija paving. July 1977

AASANA and Bank review of awards. August 1977

Award of contract at Tarija. September 1977

Notice to proceed at Tarija. October 1977

Completion of draft construction working drawingsfor Riberalta, San Borja and Santa Ana. March 1978

Completion of draft contract documents forRiberalta, San Borja and Santa Ana. March 1978

Solicitation of pre-qualification information. February 1978

AASANA and Bank review of Draft drawings anddocuments. March 1978

ANNEX 10Page 2

Review of pre-qualification information. March 1978

Completion of final contract drawings and documentsfor Riberalta, San Borja and Santa Ana. May 1978

AASANA and Bank review of pre-qualified list andfinal civil works contract documents and drawingsfor Riberalta, San Borja and Santa Ana. May 1978

Invitations to bid issued for Riberalta, San Borjaand Santa Ana civil works. June 1978

Bids opened for Riberalta, San Borja and Santa Anacivil works. September 1978

AASANA's recommendation for awards. October 1978

AASANA and Bank review of awards. October 1978

Award and notice to proceed at Riberalta, SantaAna and San Borja civil works. December 1978

Completion of Tarija civil works contract. January 1979

Final acceptance of Tarija civil works contract. January 1980

Completion of Riberalta, Santa Ana and San Borjacivil works contracts. December 1981

Final acceptance of Riberalta and San Borjacivil works contract. December 1982

ANNEX 10Page 3

Riberalta, San Borja and Santa Ana Airports Final Engineering

Short list of potential consultants prepared by AASANA. February 1977

Short list of consultants approved by Bank. February 1977

Draft Terms of Reference for the Riberalta, San Borjaand Santa Ana Airports Final Engineering preparedby AASANA. March 1977

Draft Terms of Reference for Contract reviewed by Bank. April 1977

Fir.al Terms of Reference prepared by AASANA. April 1977

Final Terms of Reference approved by Bank andInvitation to propose sent to approved shortlist by AASANA. April 1977

Proposals for design opened. May 1977

AASANA's recommendation for award. June 1977

Bank review of proposed award. July 1977

Award of Contract. August 1977

Notice to proceed. September 1977

Consultants' draft designs. March 1978

AASANA and Bank review of preliminary designs. March 1978

AASANA and Bank approval of preliminary designs. April 1978

Consultants' final designs and contract documents. May 1978

Acceptance of final designs and contract documentsby AASANA and Bank. June 1978

ANNEX 10Page 4

Maintenance Equipment

Advertisement for interested contractors for airportmaintenance equipment. July 1977

Completion of draft contract documents for maintenanceequipment. August 1977

Solicitation for pre-qualification information formaintenance equipment manufactures. September 1977

AASANA and Bank review of draft contract documents formaintenance equipment. October 1c77

Consultants' review of pre-qualification informationfor maintenance equipment manufacturers. October 1977

Consultants' recommendation of pre-qualified maintenanceequipment contractor list. November 1977

Completion of final maintenance equipment contractdocuments. November 1977

AASANA and Bank review of pre-qualified list andfinal contract documents for maintenance equipment. December 1977

Invitations to bid issued for maintenance equipmentcontract. February 1978

Bids for maintenance equipment contract opened. May 1978

Consultants' recommendation for award of maintenanceequipment contract. May 1978

AASANA and Bank review of award for maintenanceequipment contract. June 1978

Award and notice to proceed with maintenanceequipment contract. July 1978

Delivery of maintenance equipment. October 1980

ANNEX 10

Page 5

AASANA Technical Assistance and Training

AASANA to prepare Terms of Reference for technicalassistance positions for AASANA. May 1977

Review of Terms of Reference for TA positions by Bank. June 1977

Search for grant funding for training by AASANA. June 1977

Search for TA experts by AASANA/Bank or others. June 1977

Review of candidates and selection of experts for TApositions by AASANA and Bank. August 1977

Mobilization of TA experts in Bolivia. December 1977

Preparation of training plan by AASANA and its TAexperts. September 1978

Review of training plan by Bank. October 1978

Selection of trainees-by AASANA. October 1978

Review of training candidates by Bank. November 1978

Placement of trainees in training facilities. December 1978

Completion of TA Training End 1982

ANNEX 10Page 6

Navaids, Com. and Tower Equipment

Advertisement for interested contractors for navigationalaids, communication and control tower equipmentmanufacture and installation. December 1977

Completion of draft construction drawings and contractdocuments for navaids and communications. February 1978

Solicitation for pre-qualification information fornavaids and communications contractor. February 1978

AASANA and Bank review of draft navaids andcommunications drawings and contract documents. April 1978

AASANA's review of pre-qualification information fornavaids and communications contractors. April 1978

AASANA's recommendation of pre-qualified navaids andcommunications contractor list. May 1978

Completion of final navaids and communications contractdrawings and documents. May 1978

Bank review of pre-qualified list and final contractdocuments and drawings for navaids and communicationscontract. June 1978

Invitations to bid issued for navaids and communicationscontract. July 1978

Bids for navaids and communications contract opened. October 1978

AASANA's recommendation for award of navaids andcommunications contract. November 1978

Bank review of award for navaids and communicationscontract. November 1978

Award and notice to proceed with navaids and communica-tions contract. December 1978

Completion of navaids and communications contract. June 1980

Acceptance of navaids and communications contract. June 1981

ANNEX 10Page 7

Cochabamba Airport Engineering Final Design

Draft Terms of Reference for the Cochabamba AirportEngineering Final Design prepared by AASANA. October 1977

Draft Terms of Reference for Contract reviewed by Bank. November 1977

Short list of potential consultants prepared by AASANA. November 1977

Short list of consultants approved by Bank. December 1977

Final Terms of Reference prepared by AASANA. December 1977

Final Terms of Reference approved by Bank andinvitation to proposed sent to approved shortlist by AASANA. February 1978

Proposals for design opened. May 1978

AASANA's recommendation for award. June 1978

Bank review of proposed award. July 1978

Award of contract and notice to proceed. July 1978

Consultants' preliminary design. December 1978

AASANA and Bank review of preliminary design. February 1979

AASANA and Bank approval of preliminary design. February 1979

Consultants' final design and contract documents. July 1980

Acceptance of final design and contract documentsby AASANA and Bank. September 1980

April 1977

ANNEX 11Page 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Summary and Conclusions of Transport Sector Report

Bank Group Operations in the Transport Sector

1. The Bank's first involvement in Bolivia's Transport Sector was asexecuting agency for a UNDP-financed National Transport Survey (1967); thiswas followed by the financing of a Pipeline Project (Loan 655-BO, September1971, US$23 million) and two Railway Projects (IDA Credit 346-BO, November1972, US$8 million, and Loan 1121-BO, June 1975, US$32 million). At present,the Bank is appraising a Third Railway Project (proposed loan of US$35 mil-lion), which would include funds for updating the National Transport Surveyand for subsequent technical assistance to the Directorate of Planning andCoordination, as well as an Aviation Development Project (proposed loan ofUS$25 million). To date, there has been no Bank involvement in the highwaysector.

Sector Knowledge

2. The Bank's knowledge of railways and aviation is good and that ofpipelines is reasonable. There is a gap in knowledge regarding the overalltraffic demand as well as the ability of highways and waterways to meet theexpected demand. The overall knowledge, therefore, is not sufficient to estab-lish the future role that each mode should play or to provide a base for theformulation of a comprehensive transportation policy.

The Transport Sector

3. Bolivia, as a land-locked country with adverse geography and climateand a scattered population, presents serious resource allocation problems withrespect to the role of transport in its development. Its major commodities,oil and gas, are transported fairly efficiently by pipelines, but its otherforeign exchange earning commodities must rely on facilities with high invest-ment and high maintenance costs. In 1974, total freight movements in Boliviaamounted to about 5.5 billion ton-km. Of this total, 75% was carried by pipe-lines, 16.3% by road, 7.0% by rail, 1.1% by waterways, and 0.6% by air.

4. Early development of the Bolivian transport network was based onthe construction of railways to serve the needs of foreign trade and the miningsector in particular. The road network was developed later to meet the needsof internal communication and to fill the gaps left by the railway. Air trans-portation, which has grown rapidly in the last 10 years, serves long-distancepassenger traffic and gives access to extensive isolated areas. The two prin-cipal river routes in Bolivia, the Ichilo-Mlamore and the Beni, are a means ofsupplying the vast areas in the north and northeast, especially for heavy andnon-perishable goods, and Lake Titicaca serves as a navigable link with the

ANNEX 11Page 2

southern Peru railway and the Pacific port of Matarani. Pipelines is thelatest mode that became developed.

Transport Modes

5. By far the most important individual transport mode in Bolivia isthe pipeline, which accounts for a very high share (75%) of freight transport(in ton-km). This reflects both the importance of the petroleum industry andthe relatively low level of development of the rest of the economy. The stateoil company operates 2,462 km of oil pipelines and 754 km of gas pipelines.Compared with this system, the road network of about 38,000 km is much larger,but only 1,166 km are paved and 6,559 km have gravel surface. The railwaysystem is about 3,400 km long, and the river system measures about 1,600 km.The national airline, LAB, has a route network of about 27,800 km, of which11,000 km are within Bolivia.

6. Most of the country is accessible by only one transport mode; forlarge areas of the country, access is available only at high transport costor with poor service, or both. Topography and the quality of the transportinfrastructure place serious restrictions on the vehicles that can be used,i.e., 5-6 ton trucks on most roads, 25-40 ton barges on the rivers, turbopro-peller aircraft of 5 tons payload at most airports and relatively short trains.Although improvements, particularly for railways and aviation, are being made,many of the vehicles (e.g., trucks, barges and aircraft) have not been main-tained properly and are clearly overaged. Bolivia has about 17,500 truckswith a carrying capacity of 88,000 tons. The river barges have a totalcapacity of some 3,000 tons; 50 aircraft, about 300 tons; and 1,950 railwaywagons, about 43,000 tons. These numbers are only roughly indicative, due tothe number of vehicles out of service, e.g., about 40% for the railway wagonsand a similar, but less serious, situation for both aircraft and barges.Other factors are the speed of the vehicles (25-30 km/hour for trucks) and theamount of idle time since vehicles are used for storage. These differenceswould have to be taken into account in any estimate of productivity by trans-port mode. Passenger traffic is served by some 50,000 light vehicles, 4,000buses, eight aircraft in scheduled air services, 188 railway passenger carsand hydrofoils on Lake Titicaca.

7. Traffic data are incomplete, particularly for intercity road trans-port. Apart from the specialized role of pipeline transport, road transportaccounts for 65% of the remaining transport effort as compared to 28% for therailways and small contributions by river, lake and air transport (about 2%each). Intercity passenger transport by railway in 1975 totalled about 832,000passengers for the Western System and 317,000 passengers for the EasternSystem; this may be compared to 463,000 domestic air passengers. Intercityroad transport is probably more important than other modes of transport, butvery uncertain in view of the large number of unaccounted-for travellers bytruck.

ANNEX 11Page 3

8. A common major problem for all transport modes (except possiblylake) is the lack of supporting infrastructure coupled with poor maintenanceof existing infrastructure. This is a serious matter since it limits theuse of larger, more economical vehicles and decreases average utilization.

Transport Planning and Coordination

9. The Ministry of Transport, Communication and Civil Aviation (MTCCA)is responsible for formulating, directing and executing policy. The invest-ment proposals of MTCCA are reviewed by the National Economic and PlanningCouncil (CONEPLAN) to determine the overall level of investment in light ofnational priorities. At present, only four of the five transport modes arefully under the jurisdiction of MTCCA: highways, railways, aviation andwaterways. Pipelines are under the jurisdiction of Yacimientos PetroliferosFiscales Bolivianos (YPFB), which, in turn, reports to the Mlinistry of Energyand Hydrocarbons.

10. A National Transport Survey for Bolivia, financed by UNDP, was com-pleted in 1969, with the Bank acting as Executing Agency. It proposed aprogram for integrated transport development over the following ten years,and those projects which were justified in the Survey have mostly been startedor are included in the 1976-1980 National Development Plan. One of theSurvey's main recommendations was that a Directorate of Planning and Coordi-nation (DPC) should be created. The Directorate was created and, for a time,was attached to the Ministry of Coordination and Planning, but is now inMTCCA. As a means of achieving better planning and coordination, the Bank, in1972, assisted in the preparation of terms of reference for a UNDP-financedtechnical assistance program to strengthen this Directorate.

11. This UNDP-financed program of technical assistance to the Direc-torate of Planning and Coordination, with ECLA acting as executing agency,was begun and cancelled in 1976, due to lack of funds, after only partialimplementation.

12. The gap in knowledge regarding transport facilities and equipment,their condition, age and ability to meet expected demands is serious, espe-cially for highways and waterways. Although many individual project studieshave been undertaken, there has been no real coordination among them. Accord-ingly, the Government has decided that DPC, with the help of consultants,should update the National Transport Survey. The main objectives of thisNational Transport Survey would be to:

(a) analyze and project the transport demand in relation toplanned development of the economy;

(b) review existing capacity and operations;

ANNEX 11Page 4

(c) determine the role of each mode in relation to the demand;

(d) recommend policies and operational improvements designed tomake best use of existing and future capacities;

(e) prepare a program of investments necessary to improve andexpand capacities to meet projected demands;

(f) recommend measures for the strengthening of DPC under MTCCAand develop a new organization and staffing plan for it;

(g) ensure that a maximum amount of working knowledge is impartedto the counterpart personnel, and assure that the organizationof traffic counts and other data collection exercises will beundertaken in such a way that they can most easily be incor-porated in the future routine work; and

(h) indicate the method of implementation for the major policyrecommendations that might serve as terms of reference for asubsequent two-year technical assistance to DPC.

Export-Import Transport

13. Bolivia relies heavily on exports and imports for the developmentof its economy. The main exports are minerals via Peru and Chile, crude oilto Argentina and Chile, gas to Argentina, and agricultural commodities, espe-cially cotton and wood, to Argentina and Brazil. Recently, major sugar exportsto Chile also took place. Imports are mainly wheat and flour from Argentinaand, via Peru and Chile, iron and steel, mechanical equipment, vehicles andother durable goods.

14. The main carrier (except pipelines) is the railway, which, in 1975,carried 350,000 tons of imports and 153,000 tons of exports by the westernnetwork (mainly through Arica and Antofagasta) compared to imports of 167,700tons and exports of 89,600 tons by the eastern network.

15. External transport facilities assume special importance in theeconomy of the nation since most imports and the exports of high-bulk oresand certain farm commodities depend on efficient, low-cost transportation and,especially, on access to the Pacific ports of Antofagasta, Arica and Matarani.Another related problem is that Bolivia's potentially most significant exportmarkets in South America--represented by such cities as Lima, Santiago, BuenosAires, Asuncion, Montevideo, Sao Paulo and Rio de Janeiro--are located atgreat distances from La Paz, ranging from 1,100 to 2,800 km by air and evenfarther by overland and river routes.

ANNEX 11Page 5

Sector Objectives and Strategy

16. The Government's present Five-Year Plan (1976-1980) includes, asmajor goals, the expansion of the main export sectors--hydrocarbons andminerals and agriculture and agro-industries--in order to break the foreignexchange constraint to development. The plan recognizes that infrastructuresuch as transport and communications is basic to the country's developmentand is given high priority. The latest Economic Memorandum on Bolivia (March23, 1977) concurs with this view. The targets for transport call for invest-ments in projects already started of about US$475 million, excluding pipelines:56% for highways, 23% for railways, and 21% for aviation. Some 62% of theseinvestments are in foreign exchange. In addition to these projects alreadyunder way, the Government has under study some US$439 million in possibleprojects. The Five-Year Plan does not include capital investments for water-ways, which are relatively minor.

17. From the Five-Year Investment Plan (1976-1980), it appears that theGovernment's major objectives for the Transport Sector are:

(a) Roads: extension of the road network;

(b) Railroads: rehabilitation and modernization of the NationalRailroad System to allow more efficient operation and tocontinue its financial viability; and

(c) Air Transport: improvement and construction of airportfacilities and improvement of the air navigation system toprovide all-weather availability of most airports.

18. The pipeline subsector has proposed new investments for 1976-1980of some US$799 million, which would extend the pipeline network and increasethroughput over existing lines.

19. The Five-Year Plan addresses itself primarily to new constructionwith no added emphasis being given to rehabilitation and maintenance of theexisting network (para. 20), particularly in the road subsector. Since thetransportation investments are large, and may even be excessive, continuedsector planning and coordination are required to ensure that the projectsunder study are justified in their overall content and are well-timed. Sinceeven the transport investments already' committed are ambitious, it is likelythat most of these projects under study cannot be carried out in the 1976-1980period. In considering the development needs of the country, it should berecognized, however, that not all the perceived investments will necessarilybe economically justified, but each should be a least-cost solution. Inparticular, duplication of services, i.e., parallel road and rail lines,should be avoided.

ANNEX 11Page 6

Bank Group Contribution

20. The Transport Sector Mission identified several maintenance andinvestment requirements (particularly for rehabilitation) in the Boliviantransport sector; it has also pointed out the need for updating the NationalTransport Survey and for strengthening the Directorate of Planning and Coordi-nation under MTCCA. The Bank's main objective is to assist in high priorityinfrastructure projects and to guide in the selection of a future investmentprogram as yet only partly defined, i.e., projects under study estimated tocost US$439 million. This two-part objective would not only deal with overalltransport coordination, but to be effective, would also approach, at the sametime, the most important of the individual transport modes. The Bank'sprevious involvement with railways and pipelines will now be broadened byprojects in aviation and, possibly, in roads. A focus will be put on theselection of projects meeting the development strategy, rehabilitation andmaintenance of the present system with emphasis on the Government-providedinfrastructure and upgrading of managerial capability to perform these tasks.

21. The Bank's immediate measures to assist the Government in reachingthese objectives in the transport sector should be the provision for financingthe foreign exchange component of:

(a) the updating of the National Transport Survey and subsequenttechnical assistance to the Directorate of Planning andCoordination under the proposed Third Railway Project (para.21 (c)) at an estimated cost of US$1.5 million equivalent;

(b) the technical assistance for highway maintenance funded underthe proposed Third Railway Project (para 21 (c)) at an estimatedcost of US$0.5 million equivalent (para. 22);

(c) investments included in ENFE's Five-Year Investment Plan(1977-1981) which are to be committed in 1977 and 1978, andthe continuation of the ongoing program of technical assis-tance to ENFE with an estimated cost of US$32.9 millionequivalent also in the proposed Third Railway Project;

(d) assistance to AASANA for airport construction; provision oftechnical assistance to AASANA; electronic equipment; constructionequipment for runway maintenance; design of works at Cochabamba.The estimated total cost is US$39.5 million, with a Bank contribu-tion of US$25.0 million equivalent in the proposed airfields project.

22. During discussions with the Transport Sector Mission, the Governmentauthorities requested Bank assistance in the field of highway maintenance.The proposed initial project is a Pilot Project in three separate districts(La Paz, Cochabamba and Santa Cruz) of the Servicio Nacional de Caminos (SNC).

April 1977

AlNNEX 12Page 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Details of the Economic Evaluation

1. The most important economic benefits are derived from the use ofmore efficient aircraft or from more efficient utilization of existing air-craft. The basic costs are derived from current aircraft used by LloydAereo Boliviano and the major non-scheduled cargo airlines. These data havebeen compared with cost experience in other countries, particularly theUnited States. The costs have all been referred to 1975 price levels.Similarly, the traffic composition and route lengths have been the latestavailable. For each airport, passengers and air cargo were multiplied byweighted averages of travel distances and by the differential in aircraftcosts.

2. These estimates are based on conservative assumptions. First, rela-tive costs for old aircraft will increase overtime when spare parts becomemore difficult to obtain and maintenance and fuel consumption increase.Second, the benefit data all relate to price levels of 1975 whereas the proj-ect economic costs are mid-1976. Third, with improved aircraft and betterservices, the average stage length for passengers and, to a certain extent,for air cargo, will increase.

3. The basic direct operating cost data for the main types of aircraftare the following:

Boeing Fairchild Douglas Curtiss ConvairB-727-100 F-27 D-C3 C-46 CV-580

…------------------------____ US$-

Block hour cost 1,032 427 357 400 482

Cost per ton-km used forperformed .2012 pass. only 1.1357 .3300 .2754

Cost per pass-km performed .0243 .0664 .0978 used for cargo only

4. The average distances used are the following in km:

Tarija Riberalta San Borja Santa Ana de Yacuma

Passengers 488 365 232 209

Cargo 488 752 232 440

ANNEX 12Page 2

5. Present delays can be caused either on the ground or enroute.Diverted flights normally mean additional time enroute, whereas cancel-lations normally mean non-productive time for an aircraft on the ground.For delays, cancellations or diversions in this economic evaluation, thebenefit-per-hour for better electronic equipment for communications andnavigation or runway maintenance equipment has been assumed as the averagerevenue per block hour less variable costs for an F-27 (i.e., US$700-US$363 =

US$337). For diversions or delays caused by airport conditions, the blockhour cost for F-27 (US$427) or C-46 (US$400) has been used.

6. The differentials in cost between expected future aircraft andcurrent (1975) aircraft use have been converted to an average cost perpassenger or ton of cargo for each airport. Average costs for aircraftinclude depreciation to reflect more accurately the gradual changes fromone type to another of aircraft which are in the present fleet. No newaircraft are expected to be needed only for the relatively limited trafficat project airports. Without the project, additional second-hand aircraftmay have to be purchased. The effect of this is likely to understate bene-fits more than the slight overstatement due to generated traffic by theproject.

7. These have been multiplied by forecast passenger volumes or cargotonnages. The delays, cancellations or diversions have been estimated fromLAB and AASANA daily records for 1975. For non-scheduled aircraft, only thediversions from San Borja have been possible to ascertain. These delays havebeen assumed to grow in the same proportion as traffic over the project period.

8. The economic life of the airports has generally been assumed at 19to 22 years, with the exception of San Borja at 12 years due to the possibil-ity of competition from improved road connections from this community, whichmay change the character of the airport. The physical life of the electronicequipment and the runway maintenance equipment has been assumed at 11 and 5.5years, respectively. No residual values have been assumed.

9. For Riberalta, the site of existing airport land close to builtupparts of the town is expected to yield US$600,000 in today's prices and isincluded as a benefit in 1981. For Santa Ana de Yacuma, the yearly avoidedcost of maintaining the airport has been estimated at US$100,000 based on workscarried out in 1975-1976 which, in the absence of the project, would have tobe carried out annually.

April 1977

ANNEX 13Page 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Financial Assumptions

1. Revenues, expenses and capital costs are stated in constant values(1976), but include price contingencies for project capital costs.

2. Tariffs used are in accordance with the revised User Charges ofAASANA, which became effective in August 1975. Commencing with the year 1977,the date of project implementation, total revenues have been increased asfollows based on expected tariff increases (para 6.08);

Individual Increase Cumulative Increase

1977 20% 20%1979 20% 44%1980 10% 58%1982 10% 74%1984 10% 92%

3. Wages were increased at 2% per year to allow for increased require-ments resulting from greater traffic.

4. Other expenses were increased at 2% per year to allow for the require-ments resulting from increased AASANA operations.

5. Depreciation employed is in accordance with the depreciation policyestablished by the Government.

(a) Civil works (runways, buildings, access roads, fences) - 2.5%commencing when the facilities are expected to be in use.

(b) Aviation equipment (communications, navigational aids, lights) -10% commencing when the facilities are expected to be in use.

(c) Maintenance equipment - 20% commencing when the equipment isreceived and in use.

6. Maintenance:

(a) Civil works after 1976 - 1% of replacement cost per year.

(b) Aviation, ground maintenance, and firefighting equipment -5% of replacement cost per year.

(c) In 1975 and 1976, minimal required to operate existing aircraft.

ANNEX 13Page 2

7. Terms of the Bank loan:

Repayment over 20 years, including a grace period of four-and-one-half years at an interest rate of 8.2%.

January 1977

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