Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 4904

PROJECT COMPLETION REPORT

TOGO

THIRD HIGHWAY PROJECTCREDIT 693-TO

January 23, 1984

Western Africa Regional Of fice

rThis documnent has a restricted distribution and may he used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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FOR OFFICIAL USE ONLY

TOGO

THIRD HIGHWAY PROJECT, Cr. 693-TO

PROJECT COMPLETION REPORT

Table of Contents

Page

Preface .................................................. i

Basic Data Sheets ..... a.................... ................... ii

Highlights ................................................. iv

I. INTRODUCTION ................................. ....... * * . 1

II. THE SECTOR ......................... ......... so .... 1

III. PROJECT FORMULATION ....... ..................... 2

IV. PROJECT IMPLEMENTATION ............ . ................ . 6

V. ECONOMIC RE-EVALUATION ................................ 11

VI. INSTITUTIONAL DEVELOPMENT .......................... 13

VII. BORROWER AND BANK PERFORMANCE ...................... 13

VIII. IMPACT OF PROJECT ............ ........... -..... 13

IX. CONCLUSIONS ................. ......... .... * * * * * * * * * * * 14

Tables

1. Contract Awards2. Forecasts and Actual Costs3. Forecasts and Actual Disbursements4. Economic Re-Evaluation

Annex Borrower Comments

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

TOGO

THIRD HIGHWAY PROJECT, Cr. 693-TO

PROJECT COMPLETION REPORT

Preface

1. This Project Completion Report reviews the performance of theThird Highway Project for which Credit 693-TO, in the amount ofUS$10 million was made effective in September 1977.

2. This report, prepared by the West Africa Region, is based onreview of the project files, correspondence with the Borrower and exami-nation of the transcripts of discussions concerning negotiations andBoard Presentation.

3. In accordance with the revised procedures for project performanceaudit reporting, this Project Completion Report was read by the OperationsEvaluation Department (OED) but the project was not audited by OED staff.The draft report was sent to the Borrower for comments; their reply isshown as an Annex.

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TOGO

THIRD HIGHWAY PROJECT - CREDIT 693-TO

PROJECT COMPLETION REPORT

Basic Data Sheet

Key Project Data

Original Actual

Project Costs (US$ million) 12.9 14.3Overrun (%) 11

Credit Amount (US$ million l 10.0 --Disbursed -- 9.6_./CancelledRepaid --Outstanding -- 9.6

Date physical components completed 09/79 07/80Economic Rates of Return % 22 17Institutional Performance Satisfactory

Cumulative Disbursements(Uss milli-on)

FY78 FY79 FY80 FY81 FY82

Appraisal estimate 2.1 8.1 9.7 10.0 10.0Actual 2.4 4.9 7.8 9.2 9. d

Actual as % ofEstimate 114 60 80 92 96

Other Project Data

Original Actual orPlan Revisions Estimated Actual

Conception in Bank 03/75Negotiations 12/76Board Approval 03/77Credit Agreement Date 04/77Effectiveness Date 09/77Closing Date 06/81 12/82

Borrower Republic of TogoFiscal Year of Borrower January 1 - December 31

Follow on project Fourth Highway ProjectCredit Number Cr. 1139TOAmount (US$ millions) US$20 millionCredit Agreement Date October 25, 1981

1/ Does not include EEC Special Action Credit of US$2 millionadministered by IDA.2/ As of May 31, 1982.

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TOGO

PROJECT COMPLETION REPORT

THIRD HIGHWAY PROJECT

Mission Data

No. of No. of ReportItem Date Persons Man/weeks Date

Appraisal 03/76 3 6 03/17/77

Supervision I 05/77 1 1 06/27/77Supervision II 12/77 2 2 1/2 01/03/78Supervision III 05/78 1 1 06/15/78Supervision IV 12/78 1 1 01/26/79Supervision V 03/79 2 3 05/25/79Supervision VI 10/79 1 1 1/2 11/15/79Supervision VII 02/80 2 2 1/2 03/13/80Supervision VIII 05/81 1 1 1/2 06/22/81

Note: Completion Report was prepared without Field Mission.

CURRENCY EXCHANGE RATE

Name of Currency (abbreviation) CFA Franc (CFAF)

Exchange Rate: Appraisal Year Average (1977) US$1 = CFAF 245Intervening Years (1978-1980) US$1 = CFAF 220Completion Year (1981) US$1 = CFAF 245Average for Project Period US$1 = CFAF 225

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TOGO

THIRD HIGHWAY PROJECT, Cr. 693-TO

PROJECT COMPLETION REPORT

Highlights

1. The project provided a total of US$10 million to: (a) financereconstruction of two roads: Aneho-Tabligbo (45 km) on paved standard andAgou-Notse (51 km) on gravel standard; (b) purchase road maintenance andworkshop equipment; (c) execute feasibility studies for a possible feederroads project, reconstruction of the Bassar-Mango road (137 km) and forimprovement of the Railway National Company's operations; and (d) assistthe Ministries of Public Works and of Commerce and Transport indeveloping the capacity in planning and management.

2. The project was successful. The economic rate of return, of 17%is 5% less than estimated at appraisal. This is mainly due to: (a) theuse of lower savings from paved road improvements than at appraisal; and(b) the lack of relevant data to compute any value added by increasedagricultural production as was done during appraisal.

3. The following points may be of particular interest:

(a) award of contract for construction of the Agou-Notse roadthree years after bids opening (paras. 3.14 and 4.02);

(b) financial difficulties of the Government who was unable topay the contractors its counterpart of 43% for civilworks, delaying for almost one year the excution of theworks (paras. 4.05 - 4.06);

(c) Special Action Credit of US$2 million from the SpecialAction Account contributed by the EEC in order to enablethe Government to pay his arrears (para. 4.07);

(d) amendment of the civil works contracts to put them on anet-of-tax basis and parallel increase from 57% to 78% ofthe expenditures to be financed by the credit(para. 4.07); and

(e) lack of funding for road maintenance budget (para. 4.23).

I

TOGO

Third Highway Project, Cr.-693

Project Completion Report

I. INTRODUCTION

1.01 The project was the third Bank Group operation in the transportsector in Togo. The First Highway Project (Credit 131-TO, US$3.7million, 1968) consisted of a four-year highway maintenance program andpre-investment studies, including the Agou-Notse road which was includedin the Third Highway Project. The Second Highway Project (Credit 450-TO,US$8.7 million, 1973) comprised construction of one section of the mainsouth-north road axis linking Lome with the Upper Volta border and twosecondary roads, technical assistance for highway maintenance, highwaytransport organization, and preinvestment studies, including the Aneho -Tabligbo road, also part of the Third Highway Project.

II. THE SECTOR

The Highway Sector

2.01 Togo is a small country, with a 50 km coastline on the Gulf ofBenin, which forms a narrow 600 km corridor between Ghana and Benin withUpper Volta to the north. Togo's terrain is for the most part flat andpresents no major topographical obstacles to transport.

2.02 Togo's transport system is relatively simple and consisted ofabout 7,400 km of roads and of 436 km of railways linking the then newdeepwater port of Lome, the nation's capital and economic center, withthe rest of the country. Road transport is predotlinant with the networkdensest in the south. The 700 km, south-north road, running the lengthof the country from Lome to the border with Upper Volta, forms the back-bone of the national highway network, complemented by the east-westcoastal road linking Lome with Accra and Cotonou.

2.03 One of the main problems in the highway sector was the imbalancein expenditures for road construction and maintenance between the primaryand secondary road network and the feeder road network. A second problemwas the weakness in overall transport planning and coordination whichexisted, although coordination between transport modes had been studiedin the 1960s before major investments in the sector were made byinternational and bilateral agencies.

2.04 Togo's transport infrastructure grew rapidly in the decadeending in 1975 as a result of heavy investment in the sector, financedmainly by FED, KfW, FAC, and IDA, amounting to about 25 percent of total

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public investment or US$12 million a year in 1971-75, of which about 55percent was spent in the highway sub-sector.

2.05 The Roads Division (RD) of the Public Works Department (PWD) ofthe Ministry of Equipment and Postal Service (MEPS) was responsible forconstruction and maintenance of the primary and secondary road networkbut was handicapped by a lack of experienced personnel. The Ministry ofthe Interior, with assistance from PWD, was responsible for the mainte-nance and improvement of feeder roads. Certain regional and agriculturaldevelopment agencies also undertook limited feeder road construction andmaintenance, but under the limitation that no adequate overall planning,financial or administrative structure exLsted for feeder roads programs.

2.06 Road transport in Togo was mainly in private hands except forthe railway authority and the then newly created national transport orga-nization, Togo-Route, concerned with the transport of goods through theport of Lome to Mali, Upper Volta, Niger and Nigeria. Earlier, in 1969,the Government had created a Road Transport Service (RTS) to oversee roadtransport, including transport licensing,the study of transport costs andthe preparation of transport legislation, which however, was hampered bylack of qualified personnel.

2.07 The Government had pursued a conservative highway sector finan-cing policy, with road user charges covering more than 100 percent ofhighway expenditures. To ensure the means to continue this financialpolicy, the Government doubled road user taxes in early 1976.

III. PROJECT FORMULATION

Project Description

3.01 The Third Highway Project was logical and well timed in thecontext of the ongoing program of Bank group assistance to the highwaysector. It had its origin in the two preceeding projects under whichfeasibility studies for the two main infrastructure components had beencarried out, and in the need to further strengthen the agencies withinthe sector and make institutional improvements.

3.02 The project had, as its principal objectives, the improvement oftwo important roads serving mainly agricultural areas and the preparationof future projects through pre-investment studies. It also provided fortechnical assistance to institute reforms in the transport sector bystrengthening the Government's overall transport planning and coordina-ting capacity through the creation of a specialized unit in the Ministryof Commerce and Transport (MCT), and for continuation of the effortsbegun under the two previous highway projects to build an efficientPublic Works Department within MEPS by providing technical assistance andhighway maintenance and workshop equipment.

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3.03 The project consisted of the following parts:

(a) reconstruction of the Aneho-Tabligbo road (45 km) to pavedstandards;

(b) construction of the Agou-Notse road (51 km) to gravelstandards;

(c) purchase of road maintenance and workshop equipment;

(d) provision of fellowships and technical assistance to PWDfor road maintenance and for strengthening the roadplanning and design unit of AR (Arrondissement Routes ofPWD);

(e) establishment within MCT (Ministere du Commerce et desTransports) of a transport planning and coordination unit;

(f) preinvestment studies of the Bassar-Mango road (137 km);

(g) study for the improvement of the operations of the Reseaudes Chemins de Fer du Togo (CFT); and

(h) study for organizing the construction and maintenance ofthe Borrower's feeder road network.

The project was expected to be completed by December 31, 1980.

3.04 The Aneho-Tabligbo road crosses the densely populated MaritimeRegion, ending at Tabligbo, close to the site of the CIMAO clinkerplant. It had been paved between 1957 and 1963 as a low-standard, one-lane road. However, several sections which were subject to frequentflooding had deteriorated and, under the project, the road was to bereconstructed as a two-lane paved road.

3.05 The Agou-Notse road was to have been cGnstructed under theSecond Highway project, but work was postponed for lack of funds result-ing from cost overruns. The planned two-lane, 8 m wide gravel road was,on completion, to link two agricultural marketing centers and help openup an isolated, sparsely populated area to migration and agriculturaldevelopment.

3.06 Under the First Highway Project, the Roads Division of MEPS wassupplied with new maintenance equipment. The project provided for theprocurement of 23 additional trucks, as well as equipment for the Equip-ment Division workshop in Sokode.

3.07 Technical assistance to the Roads Division was to consist of theprovision of about: (i) 77 man-months of expert services to complete thetraining of road maintenance and central workshop staff and to fill orga-nizational gaps which had continued to hamper productivity; and (ii) 20man-months for the services of an engineer/economist to the Road Planning

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and Design Unit. There was also provision to strengthen the soil-testingroad laboratory by closely associating it with the supervision of cons-truction of the two project roads.

3.08 Technical assistance to MCT provided for about 72 man-months ofconsulting services to the Transport Planning and Coordination Unit(TPCU). TPCU was to assist the Government inter-alia in solving the mainissues in the transport sector and by formulating a national transportpolicy. It was also to supervise execution of the studies for improvingCFT's operations and for organizing feeder road construction and mainte-nance. The study to improve CFT's operation was directed at thereduction of the railway's losses by reducing operating costs, improvingstaff training and productivity and increasing tariffs. The study fororganizing feeder road construction and maintenance was intended todefine the most appropriate organizational framework, and ascertain theneeds and means to construct and maintain feeder roads. The project alsoprovided for fellowships for four DPW engineers to receive two years ofsupplementary education in Mali.

3.09 The preinvestment study of the Bassar-Mango road in the northernpart of the country was to be done in anticipation of the development ofthe area to be served, which was underpopulated but had considerableagricultural potential. The study was to be completed by December 31,1979.

Project Cost

3.10 The total cost of the project, excluding taxes, was estimated atUS$12.9 million, of which foreign exchange US$11.0 million, correspondingto 85 percent of the total, and US$1.9 million local cost.

3.11 The cost of reconstructing the Aneho-Tabligbo road had beenestimated on the basis of unit prices and quantities from the detailedengineering, to which 10 percent for physical contingencies had beenadded. Construction costs for the Agou-Notse road were based on thelowest bid received in Noyember 1974, when the road was orignially sche-duled for construction. Due to the generally poor soil conditions foundin the area, physical contingencies of 15 percent of the total amount ofworks had been added. Costs for the road maintenance and workshopequipment were based on consultants' estimates. All project base costestimates had been updated to January 1977 prices. Price inflatiopcontingencies reflecting Bank guidelines were provided as follows:

Equipment Civil Works and Consulting Services

1976 9% 13%1977 8% 12%1978 7% 11%

Consulting services were estimated to cost an average of $6,900 per man-month.

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3.12 The IDA credit of US$10.0 million was intended to finance 78percent of the total project cost (net of taxes), and the Government wasto finance the remaining 22 percent, US$1.0 million foreign and US$1.9million local costs. Taxes were estimated at US$2.4 million.

Execution

3.13 The MEPS, through the DPW, was to be responsible for projectimplementation, except for the activities of the TPCU and the studies forimproving CFT's operations, and the organizing of the construction andmaintenance of feeder roads, which were the responsibility of the MCT.

Procurement and Disbursement

3.14 Contracts for reconstruction of the Aneho-Tabligbo road and forroad maintenance equipment were to be awarded on the basis of inter-national competitive bidding in accordance with Bank Guidelines. Bidsfor the construction of the Agou-Notse road were obtained in 1974following ICB under the previous highway credit. The Association hadadvised the Government that it had no objection to the award of contractto the bidder who had submitted at that time the lowest evaluated bid,increased in cost to reflect inflation to 1977.

3.15 The credit was to be disbursed to cover 57 percent of the totalcost (including taxes) of the road construction works and 100 percent ofthe foreign exchange cost of equipment and consultants' services.

Negotiations, Board and Effectiveness

3.16 Negotiations were held in December 1976. No outstanding issuesarose, but, the occasion was taken to clarify the situation and reach anew understanding concerning the East-West branch railroad(para. 3.17). The project was approved by the Board on March 31, 1977and became effective September 13, 1977.

Important Covenants

3.17 The main covenants were:

(a) an undertaking to make a study of the operations of therailroad (CFT), and following-Association review, imple-ment the recommendations by December 31, 1979. The provi-sion in previous credits that the Blitta line would not beextended without satisfactory economic justification, andthat before any new major investment in CFT was made theAssociation would be consulted, were reincorporated in theCredit agreement;

(b) the establishment of a Transport Planning and CoordinationUnit (TPCU) within MCT by March 31,1978; and

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(c) the establishment of facilities to systematically collectdata needed to assess the technical, economic and finan-cial aspects of road transport and the highway system.

IV. PROJECT IMPLEMlENTATION

4.01 The project was generally successful. The infrastructure compo-nents were completed with about a 10% cost overrun and with some delay.The technical assistance elements were implemented satisfactorily, withsome exceptions.

Procurement

4.02 Procurement proceeded for the most part on schedule and inaccordance with Bank Guidelines. The contract for the reconstruction ofthe Aneho-Tabligbo road was awarded to Colas-Fourgerolle-Christophe(France) - Clarence - Olympio (Togo) following international competitivebidding. The consultants who had carried out detailed engineering wereengaged for supervision of construction. The Societe Francaise deTravaux Publiques Fougerolle was selected by Government, with Associationagreement, for construction of the Agou - Notse road, the contractorhaving agreed to extend the validity of the bid he made for this road in1974 (which had been evaluated lowest), increased to reflect priceinflation (para. 3.13). The new base price was within the appraisalestimate. The consultants who had done the detailed engineering werehired to supervise construction.

4.03 Highway maintenance and workshop equipment orders were placedfollowing ICB. All equipment was received by December 1978. Other con-sultants were selected to carry out the study of feeder roads and thepreinvestment study of the Bassar-Mango Road.

4.04 While the project had provided for a study of the railroad, CFT,in fact, the Government in October 1977 entered into an agreement withthe African Development Bank to finance a similar study of CFT. Conse-quently, this component of the project was cancelled, without objectionby the Association. In any case the project had only provided US$75,000for the study, which was to cost several times this amount. The Asso-ciation arranged with ADB to receive the consultants' reports and toadvise ADB of any comments. However, the Association was disappointed bythe final report - Modernization of Togo Railways - and in September 1980wrote Government recommending a reassessment of traffic and of the rail-road's future investment program. To assist Government in this, theFourth Highway Project includes four man-years of technical assistance toCFT.

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Construction

Aneho-Tabligo Road (45 km)

4.05 The reconstruction of the road was started in February 1978 andcompleted satisfactorily in July 1980. However, construction took 29months instead of the 18 provided for in the contract. This delay wasdue primarily to the complete interruption of works for a six monthperiod in January-July 1979 when the Government was unable to pay thecontractor the local currency costs. Also contributing to the delay wasthe exceptionnaly heavy rainy season starting in July 1978. In actualitywork on the road was temporarily suspended at the start of the rains butdid not resume until July 1979, the job being shut down formally inJanuary 1979 because of non-payment. The arrears in Government paymentsto civil works contractors had reached US$1.6 million, including theAgou-Notse road arrears (para. 4.06).

Agou-Notse Road (51 km)

4.06 The construction of the road began in September 1977 and wascompleted satisfactorily in April 1980. The delays were due to the samereasons as mentioned above for the Aneho-Tabligo road reconstruction.

4.07 To assist the Government the Association took the initiative inmobilizing the necessary additional financing to enable construction tobe resumed. A US$2 million Special Action Credit was made to Togo fromthe Special Action Account contributed by the European Economic Communityand administered by IDA. It became effective on November 14, 1979. Thisincreased the funds available for the project from the US$10 million inthe IDA Credit to a total of US$12 million. To expedite matters andsimplify arrangements, at the Association's suggestion, the constructioncontracts were amended to put them on a net-of-tax basis and a scheduleof payments to meet the arrears negotiated with the contractors. Theamount of expenditures to be financed under the civil works contract wasincreased from 57% to 78%, effectively providing for full financing ofall construction costs including local costs, net-of-taxes. Thecontractors resumed work in July 1979 when it became evident that paymentof arrears was assured.

4.08 The Togolese evidently could meet little of the local costs from-the outset of constructions in September 1977 and February 1978 respecti-vely. At appraisal and negotiations, there had been no resistance on thepart of Government to finance US$2.9 million of the cost, and nohesitation on the part of the Association concerning this financialarrangement. Subsequently, because of rapidly rising debt serviceobligations, a severe financial squeeze emerged in 1978 and publicfinances have since been under considerable pressure.

4.09 While the problem of arrears arose in the first half of 1978 itdoes not seem to have come to the Association's attention until aboutNovember 1978, when formal suspension of road construction appeared ine-vitable. The Association seemed to have been caught by surprise when the

jobs shut down, unexpected in a country with Togo's record, notwithstanding that the deterioration of Government finances and itsfailure to pay some contractors was flagged in May 1978, and again inNovember 1978 by supervision missions.

Studies and Technical Assistance

Feeder Road Study

4.10 The study (para. 3.03 - (viii)) was started in January 1978 andcompleted satisfactorily in April 1978.. The Feeder Roads Project, Cr.810-TO, US$5.8 million, approved April 23, 1978, had been appraised inthe last half of 1977..The study made it possible to expedite theimplementation of the Feeder Road Project by preparing contract documentsand establishing other procedures.

Preinvestment study - Bassar-Miango Road

4.11 The study of the road (para 3.10) was started in March 1978 andafter substantial changes to the draft report reflecting the comments theAssociation had submitted to the Government, was completed satisfactorilyin final form in May 1979. The conclusion reached was that constructionof a paved road appeared premature and, therefore, the Government and theAssociation agreed that the road should not be considered for inclusionin the proposed Fourth Highway Project, but that consideration should begiven to including the roads' southern section in an agriculture project.

Transport Planning and Coordination Unit (TPCU)

4.12 This unit (para. 3.09) was to have been established byMarch 31, 1978, that is, within a year of Credit approval. In fact, itwas created in June 1980, two years late, designated as a directorate,which gave it direct access to the minister, and called the GeneralDirectorate of Transport (GDT). The delay was attributed to the frequentchange of the ministers responsible for MCT, in which GDT became loca-ted. By June, 1981, a Togolese Deputy Director, transport engineer andeconomist, had been assigned to GDT, and the appointment of an ExpatriateDirector General and second transport engineer, followed soon after, com-pleting the GDT team.

4.13 The project provided for 72 man-months of technical assistanceto GDT, for which consultants were selected. The team leader, togetherwith a transport engineer and a transport economist, commenced theassignment in October 1979. Inasmuch as the project was completed in1981, the expatriate team contract was extended on its expiration inJune 1981, financed by the Fourth Highway Project (CR 1139 TO).

4.14 The GDT, assisted by the consultants, spent 1980-81 on studiesof the evaluation of transport costs, organization of the urban andinter-urban transport industries, preparation of transport regulationplans for coordination of transport modes and a preparation of the trans-port sector investment plan. The consultants services were satisfactory.

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Technical Assistance to PWD

4.15 The First and Second Highway Projects provided very substantialtechnical assistance to the Roads Division (RD) and the EquipmentDivision of PWD to train operating staff, reorganize maintenanceoperations and improve the maintenance of road equipment. The maindifficulty encountered was the lack of qualified counterparts -professionals and sub-professionals - who could be trained. As aconsequence, subtantial gaps in trained staff remained on completion ofthese projects. The project therefore provided 77 man-months: (i) totrain the chief of the maintenance unit and advise RD on maintenance,advise the maintenance inspector and field subdivision heads in theexecution of maintenance works and train Road Sector Chiefs, advise thebetterment brigades and train their staffs and advise the chief of theequipment divisions and complete training of the Central Workshop staff.

4.16 The consultants who provided the technical assistance for themaintenance component of the first two highways projects, continued toprovide it for the Third Highway Project. Their work was completedsatisfactorily in April 1981, and routine and periodic maintenanceoperations improved. However, the maintenance operations continue tosuffer from the drain of newly trained PWD personnel .to the privatesector, and the shortage of road maintenance funds: in fact,deterioration of road maintenance had started in 1977, after years ofwhat was regarded as generally adequate road maintenance, when recurrentfunds for maintenance financed from the general budget started todecrease and their supply became erratic. The Fourth Highway Projectprovides for a program of integration and promotion of technicians withinPWD; in addition, Government agreement to a special annual budget andfunds for road maintenance was obtained.

4.17 The project also provided for a road engineer/economist toassist the RD to reorganize the Planning and Design Unit and train itsstaff with the objective of having ii place adequate local managerialstaff to run the unit by Mtay 1, 1978. In addition, provision wasincluded in the project for four fellowships for DPW engineers. The con-sultants carried out the training and completed the first phase of thereorganization of the Planning and Design Unit in May 1981, including 13technicians who undertook training and were incorporated in the unit.The unit subsequently undertook feasibility studies for strengtheningcertain roads in conjunction with the preparation of the Fourth HighwayProject, in the process receiving some assistance in design and economicevaluation from the consultants. Under the second phase, the consultantswere to train some of the unit personnel in highway construction supervi-sion. Three Togolese received advanced engineering training in the EcolePolytechnique de Montreal in Canada under the fellowships and, on theircompletion at the end of 1979, joined PWD.

4.18 With regard to the provision concerning the soil-testing labora-tory (para. 3.08) the Technical Agency CEBTP, France, (CentreExperimental de Recherches et d'Etudes du Batiment et des Travaux

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Publics), provided on-the-job training to a Togolese engineer and fifteentechnicians satisfactorily, and produced soil and pavement data for thefeasibility studies (para. 4.16) related to the Fourth Highway Project.

Project Costs

4.19 As evident from the Table 2, project costs of constructionappeared to exceed estimates, the Agou - Notse road construction exceededestimates by 29%, and the Aneho - Tabligbo road cost was just about theamount estimated. The entire project cost was about 11% more thanappraisal estimate expressed in dollars. However, nearly all goods,services and other costs were procured in France or locally and paid inFrench francs or CFAF. Taking this into account, and adjusting for thefact that the appraisal cost estimate was at the exchange rate of 245CFAF to US$1.00 and the average exchange rate during implementation wasabout 220 CFAF, the estimated and actual project costs in CFAF are veryclose. On this same basis, the overrun on the Agou-Notse road would beabout 18%.

4.20 The cost of road construction could have been expected toincrease substantially because of inflation, as well as the continuingoverhead costs sustained, during the period the job was idle. However,subsequent to its start the road work was substantially redesigned andstandards of construction changed, at the suggestion of the Associationreducing use of some materials - laterite, sand, cement, etc., whichachieved significant economies. They were however not sufficient toentirely offset the increase in the cost of the Agou-Notse road

Project Execution

4.21 No difficulties were experienced in procurement, and the provi-sions in the Credit Agreement concerning procurement were followed. Nospecial problems occured in the construction activities, other than themajor one - stoppage due to non-payment. Disbursements kept pace withthe appraisal astimate until the work suspension, when they fell morethan a year behind, reflecting the delay in, and payment for the workcarried out after the suspension was lifted. As of May 30, 1982, US$0.40million remained to be disbursed by the Closing Date, December 31, 1982,which had been extended from the original one, June 30, 1981, althoughall funds had been committed. The Special Action Credit of US$2 millionwas fully disbursed by June 30, 1980, reflecting the completion ofconstruction work.

Consultants' Performance

4.22 The various consultants engaged in supervision of the two roadprojects, the preparation of feasibility studies and in providing techni-cal assistance carried out their work satisfactorily. No difficultiesoccurred and no criticism or complaints were voiced.

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Covenant Experience

4.23 Covenants were generally met with, however, exceptions:

(i) The creation of the Transport Planning and Coordi-nation Unit was delayed two years, and conse-quently the amount of technical assistance provi-ded under the project for this unit, was limited(although it will be continued under the FourthHighway Project);

(ii) The funds available for road maintenance wereinsufficient and were not allocated in the mosttimely way, due to the Government's unexpectedlypoor financial position.

V. ECONOMIC RE-EVALUTATION

5.01 During appraisal the Third Highway Project was justified on thebasis of quantifiable benefits arising from:

*(a) Savings in transportation costs on the substantiallyimproved road between Aneho (on the coast) and Tabligbo,the center of an important agricultural region, followingthe road's reconstruction and paving; and

(b) Savings in transportation costs from improved accessfollowing the reconstruction of the Agou-Notse gravel roadplus part of the attributed net value added fromadditional agricultural activity, in as much as the roadlinks agricultural marketing centers and areas .

Additional but unquantified benefits included savings in journey times,increased riding comfort and others such as reductions in the numbers ofroad accidents.

5.02 The overall economic rate of return (ERR) estimated duringappraisal was 22%. For the Aneho-Tabligbo road, sensitivity tests showedthat the ERR varied from a low of 11% under highly pessimisticassumptions to a probable high of 26%. Eighteen percent was theestimated ERR for this road with over one half of the total benefitsattributed to value added by increased agricultural production resultingfrom the access provided by the road.

5.03 On project completion, based on final construction costs andtraffic counted in the years the reconstructed roads have been opened tocirculation, reevaluation of the economic benefits (Table 4) shows anoverall ERR of 17%, some 5% less than estimated at appraisal.

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(a) Aneho-Tabligbo Road: the re-estimated ERR is asatisfactory 19% and lies in the appraisal range of 18% to26% ERR;

(b) Agou-Notse Road: the benefits based on reduced vehicleoperating costs yield an ERR of 14% which is alsosatisfactory but lower than the appraisal estimate of 18%which, however, also included value added benefits.

5.04 The lower ERRs are only partly due to the modest increases inthe costs of civil works (paras. 4.19-4.20). The main reasons for themare (i) the use of lower savings from paved road improvements, on thebasis of recent estimates of vehicle operating costs (VOC) in Togo madein conjunction with the Fourth Highway Project; and (ii) the lack ofrelevant data to compute any value added by increased agriculturalproduction in the area of influence of the Agou-Notse Road as was doneduring appraisal of the project.

5.05 A comparison of VOC's used during appraisal with those used inthe economic re-evaluation indicates that although VOC's have increasedfor all vehicle types, the savings from improving a paved road from"poor" to a "good" condition are smaller in absolute terms, due toincreasing fleet utilization and the large percentage of newer and morefuel efficient vehicles. This is also indicated by MCT's statistics onnew vehicle registrations, and average vehicle age. Thus, despite theoverall increase in traffic, especially trucks, on the Aneho-Tabligboroad, smaller benefits from road improvements diminish the ERR.

5.06 The impact of the re-estimated VOC's on the unpaved Agou-Notseroad is different. Although in relative terms the differentials fromimproving an earth track from "poor" to "good" condition are smaller thanon paved roads for similar vehicle types, in absolute terms, they arelarger because of the higher reference index. This is reasonable in thatthe scope for greater vehicle utilization is limited on unpaved roads andthe advantages of younger and more fuel efficient vehicles are offset bythe higher fixed costs which must be amortized over the shorter life andsmaller lifetime mileage vis-a-vis the typically higher life-timemileages on paved roads. These larger VOC savings from upgrading theAgou-Notse road and a two-fold increase in traffic over appraisalestimate (108 vehicles in 1980 as compared with an appraisal estimate of45) partly offset the fact that the appraisal also included value addedbenefits while computing the ERR.

5.07 The reliability of the traffic data was questioned in theappraisal report for the Third Highway Project. Although the quality oftraffic data is improving as result of the technical assistance under theThird and Fourth Highway Projects, caution is needed in accepting the MCTcounts because regular traffic counts, done only since 1978, vary indepth and coverage and systematic procedures for weeding out sourceinaccuracies are not fully implemented: the Fourth Highway Projectprovides for this.

- 13 -

VI. INSTITUTIONAL DEVELOPMENT

6.01 The institutional development components of the project weresatisfactory. In particular, the continuing effort to improve mainte-nance advanced the capability of the maintenance establishment, includingpersonnel, to the point where it was approaching self-sufficiency. Asnoted (para. 4.16), this was in at least one respect a mixed blessing, asfully trained technicians and managers continue to be attracted to theprivate sector. As a result, the Government is seeking to make the jobsmore attractive under the Fourth Highway Project.

6.02 The creation of the TCPU, even if late in the project, was alsoa solid accomplishment. On the basis of its composition, and the work ithas been doing in conjunction with the consultants providing technicalassistance, there is a reasonable prospect that it will take hold andbecome a force in sector planning.

VII. BORROWER AND BANK PERFORMANCE

7.01 The Borrower's performance was quite adequate. The implementa-tion of the project was successful due in considerable measure to thesupport and cooperation of the Borrower. Most important was theworsening liquidity shortage of the Government, which lead to itsinability to pay the local costs of the civil works contractors, andconsequent serious delay in construction. However, this situationreflected the financial weakness in the macro-economic situation and doesnot imply any lack of Government committment to the project. In thisrespect, the Government helped expedite the processing of the SpecialAction Credit, which made additional funds available to proceed withconstruction. An instance of inefficiency on Government's part was itsdelay in establishing GDT, which appears to have been the product ofintra-ministry politics.

7.02 The Association's performance was good. Project formulation wassound, in particular the composition of technical assistance was appro-priate to the highway sector's state of institutional development.Implementation proceeded well and when the Government's shortage of fundsarose and construction was on the verge of suspension, the Associationresponded quickly in mounting the Special Action Credit. Parenthe-tically, it was fortunate that at that juncture there was available arelatively open-ended fund - the EEC's Special Action Fund - which, witha minimum of bureaucratic activity, could be utilized.

VIII. IMPACT OF PROJECT

8.01 The project in its entirety made a sound impact on the sector.The road construction components were part of a continuing program andwere timely, and fully justified as indicated by the economic rate ofreturn (para. 9.01). As noted (paras. 6.01, 6.02) the institutionaldevelopment component had a valuable and probably lasting effect on

-14 -

sector institutions and capabilities. To the extent that some of theinitiatives in this respect could not be addressed fully under the proj-ect, the Fourth Highway Project is to continue the process.

IX. CONCLUSIONS

9.01 The project was on the whole successful. The reconstruction ofthe Aneho-Tabligbo road was completed satisfactorily, as was theconstruction of the Agou-Notse road. However, their completion wasdelayed about one year because of the suspension of construction by thecontractors in the face of Government's inability to pay the largearrears which had accumulated- The situation was resolved by theprovision of a US$2.0 million Special Action Credit to Government fromthe EEC's Special Action Fund, with the Association acting as ExecutingAgency.

9.02 The economic re-evaluation of the road components indicates thattheir reconstruction was fully justified , with an overall Economic Rateof Return of 17% , with individual ERR's of 19% and 14%.

9.03 The institutional development initiatives in the project, andthe technical assistance provided by it for the purpose, were also suc-cessful. In particular, maintenance institutions and capabilities werebolstered, and a transport planning coordination Unit,TCPU was created,although with two years delay. The unit appears to be well established,and, with continuing technical assistance under the Fourth HighwayProject, should be able to assume an important role in sector planning.

9.04 The Government supported the project and cooperated in its im-plementation, and its performance was adequate. The project was wellformulated and the Bank supervised the project competently.

9.05 As the third in a series of projects in Togo aimed at building-up and maintaining road infrastructure and improving road sector institu-tions and capabilities, the project met objectives and paved the way forcontinuing Bank group assistance, under the Fourth Highway Project, nowunderway.

TOGO

PROJECT COMPLETION REPORT

THIRD HIGHWAY PROJECT - CR. 693-TO

Contract Awards

Completion 1)ate

Project Item Executed by Contract Signed Contract Actual

A. Construction of Aneho-Tabligbo Road Joint Venture1. Construction COLAS 02/22/78 09/22/79 07/802. Supervision Gendron Lefebre 04/05/78 09/79 05/80

B. Construction of Agou-Notse Road1. Construction Fourgerolle 08/12/77 01/24/79 04/802. Supervision DIWI 09/01/77 02/17/79 04/80

C. Equipment1. Road Maintenance Miscellaneous

Suppliers 03/23/78 10/03/78 03/782. Workshop 07/17/78 12/17/78 12/78

D. Technical Assistance1. Soils Laboratory under A&B 07/26/78 - 12/812. Maintenance Program 10/25/77 11/25/79 04/813. Road Design and

Planning Unit Consultants 09/04/79 10/01/80 05/814. Transport Planning

and Coordination 07/31/79 12/31/82 06/82

E. Railway Studies Deleted

F. Feeder Road Studies 02/22/78 03/07/78 04/79

G. Study of Bansar-Mango Road Consultants 03/02/78 08/79 08/79

TOTAL

PKO, lj | *:). _OPLE I ION E PORtI

T1111() HIWIM45M 'iDdi (hT - Cit. . 9 3-TO

Forec:ast nid /A tOua Costs 3/ 5/

(I;St vsi 1 livon)

AL Appraisal/ ~Cost FsittuatnesAt Apjlra i SslI)i!/

In: c il g Act ua .Acut1 vs

Contract Amolot CooWill ient i .±s COIlI'dtl.

1 l- ajeeL ILeil USI; isilltIlo liFreigi l.ocaI Tolotal Foreign l.ocalI 'oti I Est (LIma I Z Auioi]Lt Z

A. USObi:rutLi0(o of AMlOM-

Tabld iyto Road1. Colnstroctiul 3.78i 4.DtD 0.7 iJU 4.79i) 4.U67 .718 4.785 90) 129

2. Supervisin )0.43 .400 *1!( .510 .526 .132 .0,5(15t 129 153

ti. Colistruc tloll ot-±Lou-Nutse Roadl1. Constroctioti 3.55 2.865 .527 3.392 1.329 .571 J.99(J 11l

2. Supervisioun 0.47 U.320 .(11u 0.400 .623 .156 .779 1 94 in W

1 . Road 11tiiitenance -- ~~~~~~~~~~~~1 .0411 1.11.5 1.155 795 0 795 09

2. Wuokslhl .78 )

D). 'Ioo(nulc I1 Ass) stauCO1. SoIlls Laboratory under AiB 0.1l) -- -- . 127 .036 .)61 114 NA

2. Maloteaance Progralil 0.57 0.552 .0(64 (.616 .708 .079 .1It; 1: S 139

3. IRoad Design aidlallalilg Ulnit 0.18 0.167 (0.()13 0.180 .389 .043 .432 2410 (33

4. Tiranapor i Plaiinii igand Coordinatilon 0.67 0.630 ().(6(1 0.690 .851 .095 .940 1 17 17i

E, . F I±loIwsi1Ljp -- 0.0i05 0 0.U05 .1)48 0 .048 96 NA

; I. I Ia tJwbLt il.tles 0i -- i0)77 t0.0 12 0.089 -- NA -- __ NA

;. kceder -o,ad Studies 0.05 0.05( 0 ((.050 .042 .OtJ5 .il4/ 2 100

1(. StL~ou ufbasaris._-Mcango l(lRoad 0.67 l.95ll U.192 1.142 .563 .141 .704 /4 ()5

tOITAI. l111 .90i 13.019 12.6-. 1.97t 14.244 itl N

IN RIOIJND FIGURLES 11.() 1.9 12.9 12.3 2.0 14.3

I/ At an eschange rate of US$1 - CtAt 2452/ At ain excliiage rate uf US$1 - iTAF 2203/ N-:t of tlXes 6 aid duties4/ Financed by AfDB with Canadian aid_/ 'Tli table covers costs financed by thet aggregate amount of the US$10 ialillolu A3soclatolo Credit and the U1S$2.1 milluOn Special Actioll Credit

- 17 -Table 3

TOGO

PROJECT COMPLETION REPORT

THIRD HIGHWAY PROJECT

Forecast and Actual Disbursements(US$'000)

IBRD Fiscal Actual Total Appraisal Actual DisbursementsYear and (cumulative) (cumulative) as PercentageQuarter of Appraisal Estimate

197812/31/77 512 100 51203/31/78 1,050 600 17506/30/78 2,363 2,100 113

197909/30/78 3,600 3,600 10012/31/79 4,000 5,100 7803/31/79 4,565 6,600 6906/30/79 4,931 8,100 61

198009/30/79 5,385 9,100 5912/31/79 5,516 9,400 5903/31/80 5,735 9,600 6006/30/80 7,826 9,700 80

198109/30/80 8,595 9,800 8812/31/80 8,960 9,900 9003/31/81 9,084 10,000 9106/30/81 9,217 10,000 92

198209/30/81 9250 10,000 9312/31/81 9507 10,000 9503/31/82 9513 10,000 9506/30/82 96002/ 10,000 96

198309/30/8212/31/82

Closing dates December 31, 1982 06/30/81

1/ The EEC, US$2.0 million special credit Funds, which were fullydisbursed June 30, 1980, are not included in this table.2/ As of May 30/82, there was US$400,000 remaining undisbursed: allfunds were committed.

111114i Nl(;tlWAY 11iOJtc r (Gi udl_c95-101

I 'l0JlA't CMI*8'Lfl. I(3 Rtt)tIi

Ecousviiic 1o-ovao Iiiat ll.l of the Anuho - jAbco and the A9OII - 1lotse RIload

A)h- dOlaubbl I F9, W ") O Al7;,u_ N,1. tm 51l -1 111

Ap*X "|:;2.Actu2±iA2ŽiroAs A ActuA!

(:,,Alstrucitoi Co t wsli miIilon) Y 5.300 5.443 3.792 4.679

cL,Ino,iIC 1.Ita (years) 2011979-98) 2011980-99) 15111979-95) 15Jl180-94l

W.ISlgJtdd Avua lgs. Irailic (upd) 1914 19'9 2.- 19U-99 190 1981 19/1 1919 19IYO 19)9 19c10 19d1 2/

p-assenger Car 253 340 374 294 308 402 "j IB 20) 50 53 61

Pilc-up 1:19 150 143 182 191 24d 6- -- 21 22 25

Medium Truck 39 57 62 73 99 119 1i 2S 25 51 35 30

lleavy Truck 7 10 10 I -- -

lotal 368 537 590 559 611 78535 3. 41 45 102I t8 124

Annual ldffllc CGiw,li (S1) blst E$tImatu Low Estimato lSTIastte heSl ll.llO r stli4te(1979-11) 10.0 6.0 11982) 20.0 (119/-93) 7.0 1oi I igl*t veh IClc,;s 119U12-18) 10.0 Ir all vehicles

119U9-911) 5.0 5.0 (1983) 15.00 c-Idor las

(19di4) 12.00 (197-93) 9.0 for lrac-, (1919v-94) 5.0 lor all vehiclos

(19d5-di8) 10.0 categorles(1969-99) 5.0

4/

thilcla Oporal l.j Costs (US/kwl) Paved Rodd Condition Paved (toad CondItionf' UliidVd If l H ion v od_sI Rul _CondItIon i OD1;ood (E,igI tro) ack Good (En,jilwoared) Track

Passenger Car 11.2 17.9 16.2 19.1 1d.2 28./ 20.1 30.2

Plck-up 9.1 17.1 14.5 17.0 Ih1.2 2b1.1 17.l) 31.9

MediLan truck 20.7 39.9 46.0 57.0 35.9 /3.1 54.9 100.0

Ii.avy ]fuck 29.0 56.2 87.2 116.0 Oi8.9 125.7 1()1.0 161.0

(coil.111c Ralu ol 4Natui li Best tstiidta tLow EstIlidto Estlnale tksIlE.stI tc Estimat5

26$ 18% 19' Ity 14%

I/ Includes contlngiecles anid supoivIslon.

/ SplIl butwhn,,, passn9g Ccdar anld pick-ups bdsed on: (I) "Lstlmatlono du Parc Aulo,m*l,ia logolals" Dlrectoelat of Transport. Oct. 19*31; (111 tnq dnlt 4e CdxipIeg. 4e iialfIc nil 191 siwr I Axo

Noid-Sud du logo," Iraospoil I levO ng'd and coordildt Ionll s.rViC; dnd (IIII) "E1udU Iotu sur Ida Tda I Icot Icton et la Reolaso"ntat Ioll d,. :- rlalsyc Is RLIOl.rs," MIiis 'tIy of (:,i.uirco dnd lirensport,Mlay 19Ul.

5/ llioJecld in, tito basis ol tled hilyh grwtli rage estimadto of 10% per year.

4/ fo iith l(gI*m.y Prmoject, 5AH 8Impr I No. 5190-TO, Aprl 16, 19131.

5/ kixludos valua adLded abid lbasmmd on vehicle opuiesting cost saviligs dbovO.