Document of

The World Bank

FOR OMCLAL USE ONLY

ReNC N 12080

PROJECT C0MPLETION REPORT

REPUBLIC OF GUINEA

THIRD HIGHWAY PROJECT(.REDIT 1457-GUI)

JUNE 30, 1993

MICROGRAPHICS

EReport No: 12080Type: PCR

Infrastructure Operations DivisionOccidental and Central Africa DepartmentAfrica Regional Office

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

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CURRENCY EXCHANGE RATES

Name of Currency: Syli (GSY)

1984 . 23.01985 . 62.01986 . 352.01987 . 398.01988 . 520.01989 . 590.01990 . 647.01991 . 781.0

ABBREVIATIONS AND ACRONYMS

item English-French

ADT Average Daily Traffic/Trafic Journalier MoyenAfDB African Development Bank/Banque Africaine de DeveloppementBADEA Arab Bank for Economic development in Africa/Banque Arabe pour le

Developpement Economique en AfriqueCGPR Managemetit Council of the Road Project/Conseil de Gestion du Projet RoutierCNR National Road Council/Conseil National des RoutesEEC European Economic Community/Communaute Economique Europ6enneERR Economic Rate of Return/Taux de Rentabilite EconomiqueICB International Competitive Bidding/Appel d'Offres InternationalIDA International Development Association/Association Internationale pour le

DeveloppementIMF International Monetary Fund/Fonds Monetaire InternationalMATHU Ministry of Land Development, Housing and Urbanism/Ministbre de I'Amenagement

du Territoire, de l'Habitat et de l'UrbanismeMIGAT Ministry of Infrastructure and Land Development/Minist4re de l'Infrastructure et des

Grands Amenagements du TerritoireOPR Road Project Office/Office du Projet RoutierPCR Project Completion Report/Rapport d'Achbvement de ProjetSOGUITRO Guinean Road Works Company/Societe Guin6enne de Travaux RoutiersUSAID United States Agency for International Development/Agence des Etats Unis pour le

D6veloppement InternationalSAR Staff Appraisal Report/Rapport d'Evaluation

FOR OFFICIAL USE ONLY

THE WORLD BANKWashington, D.C. 20433

U.SA

Office of Director-GeneralOperations lvaluation

June 30, 1993

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECTs Project Completion Report on GuineaThird HighMa- Project (Credit 1457-GUI)

Attached is the "Project Completion Report on Guinea - Third HiSghayProject (Credit 1457-GUI)" prepared by the Africa Regional Office. No Part Itwas prepared by the Borrower. The Credit (SDR26.5 million of May 1984) vas tosupport rehabilitation and maintenance of the road network, institution-buildingwithin the Ministry of Works, staff training, and medium-term planning. TheCredit was closed two years behind schedule and has been fully disbursed.

Bank assistance to Guinea has always emphasized strengthening ofmaintenance capacity and efficiency. The First Highway Project of 1976 createdan autonomous road maintenance operation; the Second Highway Project of 1980transformed this autonomous body into a departmental operation; the Third HighwayProject transformed the departmental operation back into a unit that wastheoretically autonomous but, in fact, had no independence. Little of thetraining program was implemented.

Physical targets were met, but with long delays, with cost overrunsof more than 60S, and with substantial quality shortcomings. The economic ratesof return are acceptable but disappointing when compared to expectations.Institutional development objectives which zere preeminent in this repeaterproject were only partially met. Overall, the project is rated as marginallysatisfactory and sustainability as uncertain.

The PCR is of satisfactory quality. The project may be audited alongwith the first two highway projects and the port project.

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

FOR OMCIAL USE ONLYREPUBLIC OF GUINEA

THIRD HIGHWAY PROJECTCREDIT 14S7-GUI

PROJECT COMPLETION REPORT

CONTENTS

PrefaceEvaluation Summaqy

PART I. PROJEliCT REVIEW FROM BANK'S PERSPECTIVE

A. Project Identity .......... .................... 1B. Background .................... 1C. Experience under the First and Second Projects .... ....... 2D. Project Objectives . ............................. 3E. Project Description and Costs ........ .............. 4F. Project Organization . ............................ 5G. Project Implementation ........... ............... 6H. Project Results and Sustainability ....... ............. 9

I. Bank Performance . ........................... 17J. Borrower Performance ............. ............. 18K. Project Relationship ............................ 18L. Consulting Services . ........................... 19M. Project Documentation and Data ....... ............. 20N. Findings and Lessons Leaned ....... .............. 20

PART II. PROJECT REVIEW FROM BORROWER'S PERSPECTIVE

PART HI. STATISTICAL INFORMATION

1. Related Bank Loans and/or Credits ...... ............ 232. Project Timetable ............................. 243. Credit Disbursements ........... ............... 244. Project Implementation ............ ............. 255. Project Costs and Financing ......... ............. 256. Project Results ............................... 267. Compliance with Legal Covenants ....... ............ 278. Use of Bank Resources ............ ............. 28

Annex Economic Evaluation .............................. 30

Map - IBRD No. 17479

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

REPUBLIC OF GUINEATHIRD HIGHWAY PROJECT

CREDIT 1457-GUI

PROJECT COMPLETION REPORT

PREFACE

This is the Project Completion Report for the Third Highway Project in the Republic ofr iinea, for which Credit 1457-GUI in the amount of SDR 26.5 M was approved on May 1,1984. The Credit was closed on September 30, 1991, two years behind schedule. The Creditwas fully disbursed as of March 3, 1992.

ITe PCR was prepared by the Infrastructure Operations Division of the Occidental andCentral Afri X 'Department on the basis of the Staff .1ppraisal Report, the Credit Agreement andAmending Agreements, the Project Agreement and !DA correspondence files. The Borrower hasnot yet submitted its own assessment of the Project for Part II of this report.

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REPUBLIC OF GUINEATHIRD HIGHWAY PROJECT

CREDfT 1457-GUI

PROJECT COMPLETION REPORT

EVALUATION SUMMARY

Background

i. Heavy rainfall and steep terrain make Guinea's roads hard to maintain. For many years,the country's economic isolation and low level of agricultural production contributed to theneglect of road infrastructure, except for roads linking bauxite mining areas to Conakry's port.Beginning in 1976, a road maintenance office was created under the Ministry of Public Worksand received $US27 million in IDA funds to support its operations under the First and SecondHighway Projects (1976-1984). Initially, an autonomous force account operation, this officecarried out rehabilitation and maintenance of 2,100 km of paved and gravel roads under the FirstProject and 3,575 km of rehabilitation and maintenance of earth and paved roads under theSecond Highway Project. ITese were impressive achievements, but fell short of appraisal targetsin physical terms. The Third Highway Project was built on the experience of the first twoprojects as part of a program now being supported by two ongoing projects: a Transport SectorProject and a Fourth Highwdy Project, and one just appraised, the Transport and UrbanInfrastructure Project (paras. 1-9).

Objectives and Description

ii. The objectives of the Third Highway Project were to assist Government with:(a) rehabilitation and maintenance of the priority road network; (b) institution building for roadmaintenance and rehabilitation; (c) staff training; and (d) defnition of medium-term priorities forthe transport sector. The maintenance office was to be made autonomous, as it had been underthe First Highway Project, and more emphasis was placed on the training of local staff. The roleof consultants was also increased, compared to the Second Highway Project, to manage theoperation itself and introduce private sector style record keeping, cost monitoring, and workprogramming in order to prepare the organization for future privatization. This was necessarybecause force account was not intended to be a long-term solution to road maintenance. Theultimate objective was not self-sufficient force account operations, but Government-managedprivate contracting (para. 10,15).

iii. The US$73.7 million Project approved by the Board for US$28 million IDA financingwas to be cofinanced by BADEA (US$9 million for equipment, spares and transport studies) andAfDB US$14.6 million for civil works) with Government providing US$22.1 million (equivalent)in loczl cost financing. Civil works components making up 53% of Project costs involved thereconstruction or rehabilitation of half the primary paved road network, including its "backbone,"the Conakry-Mamou Road, and two "ribs," (Mamou-Labe and Mamou-Kissidougou, about600 km) through ICB (see Map. IBRD-17479). The Road Project's Office force account brigadeswere also to carry out the regravelling and rehabilitation of 1,100 km of gravel and earth roads,3,000 km of equipment-xi.based routine maintenance (grading and patching). Labor basedmaintenance of shoulders and drains over 2,500 km would also be carried out with projectsupport through cantonnage (paras. 11-14).

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Implementation Experience

iv. Tle Project was to start in July ,984 and take four years. It was negotiated in Ma ,u1983 and became effective only in December 1984. This delay was due to difficulties inidentifying cofinancing and rot related to the advent of a new regime following the death ofSekou Toure in 1984. Consultants were slow to set up new procedures for maintenanceoperations. and the procurement of equipment and spares was also delayed. Relations betweenthe contractor-consultants and their supervisors (engineering consultants in the Ministry) werestrained. The contractor-consultants failed to adequately supervise brigade work and train staff,and the hoped-for partnership among consultants and local staff never materialized. Unexpectedlyrapid political and economic change wider the new regime gave new impetus to the privatizationof the road maintenance office. Internal record keeping and work planrAing procedures weregradually and successfully introduced; however, the maintenance office, from a financial pointof view, never became fully autonomous. The closing of the special project accounts in 1986-87during bank reform, de.ays in the Government's disbursement of salaries and bonuses andprocessing of local purchases during the 18-month closure of the special accounts, and internalreorganizations of the maintenance office and its parent Ministry (beginning in 1986), all furitherhandicapped equipment-based maintenance operations. Nonethe.ess, the number of brigades wasexpanded to seven from the three which were foreseen at appraisal, and maintenance brigadeoperations averaged 200 km per year of regravelling, and 900 km per year of regrading duringthe 1985-88 seasons (paras. 21, 24-29).

V. Civil works for reconstruction and repaving also started late and took longer thananticipated, because the works required were substantially greater than anticipated, the contractorperformed poorly, and payment by the Government of local cost invoices to contractors wasdelayed. The Closing Date for the Project was extended twice, primarily because of the latenessof these works. The Project was closed two years late, in September 1991. The implementationtook nearly seven years, from effectiveness to closing, and covered six rather than the fourm aintenance seasons anticipated at appraisal (paras. 22-23).

Results

vi. Reconstruction and repaving targets were largely achieved (about 580 of 615 km, or94%). However, they took much longer and cost 65% more than estimated at appraisal, becauseof greater than anticipated increases in drainage works and surface deterioration. Part of theincrease was due to unforeseen implementation delays and to the failure to plan for culverts andother drainage works needed in Guinea's climate and terrain. Maintenance works wereimpressive - 3,048 km of grading (114% of appraisal target), 830 km of regravelling (186%),and 410 kn of earth road rehabilitation (63%) during the first four seasons - the quality,however, is uncertain. The Bank's insistence upon initial standards, even when the roadsnecessitated rehabilitation rather than maintenance, also contributed to the poor end result. Acontract for 19 bridges and culverts on a single paved section was added to the Project works asa first step toward the correction of drainage inadequacies. This accounts for much of theincrease in cost (paras. 31-35).

vii. Institutionally, the Project represented an important transitional period between thetraditional, centralized force account operations and a future setup involving fully competitiveprivate contracting. The results can be seen as having exceeded expectations in that the mnmber

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of maintenance brigades was larger and force account operations were privatized, all within theProject's lifetime. However, the Govemment's preference for contracting works to the privatizedmaintenance office, SOGUlTRO, over capable, small local contractors has resulted in a localconstruction market which has not grown to its full potential. Moreover, labor-based routinemaintenance was only implemented under the Fourth Highway Project. Little of the trainingprogram foreseen at appraisal was implemented, due to the neglect of on-the-job training byconsultants, and tardiness in the preparation of a training plan. The transport plan study led tothe establishment of an effective local planning unit within the Ministry (computer training of thisstaff is one of the Project's few successful training activities), and, under the Transport SectorProject, to the establishment of the Road Fund, a domestic financing mechanism for roadmaintenance (paras. 36-44).

viii. The Project cost US¢95.7 million, or US$22 million over appraisal estimates. This doesnot include the cost of completing road paving undet the Transport Sector Project. A substantialreallocation of MDA funds was made, thereby reducing funds intended for maintenance andrehabilitaton to an eighth of the original funding level, and increasing threefold funds used forreconstruction and repaving. IDA funding for equipment and spares purchases was also threetimes higher than anticipated, in part because intended BADEA cofinancing was not disbursed.In addition, disbursements for maintenance were made to suppliers rather than to the maintenanceoffice, on the basis of the brigade performance foreseen in the appraisal report, and in spite ofthe introduction, in 1989, of internal contract agreements with each brigade, on the basis of costaccounting (paras. 45-54).

Sustainabifity

ix. Regarding the institutional arrangements which will allow for competitive local biddingon most works, it is difficult to measure the extent of sustainable improvements and whether thenew institutional setup will prove satisfactory. SOGUITRO, a public works contractor andequipment rental company, formed from within maintenance office operational divisions, has asubstantial advantage in local bidding for maintenance works paid for under the Road Fund(paras. 39-41, 56).

x. Institutional arrangements, which have been supported under subsequent projects, can besustained. Sustainable road maintenance and investment in Guinea require sound planning, a self-sustaining source of domestic funding. Judging from Third Highway Project completion data,efforts initiated under this project and followed up under the Transport Sector and FourthHighway Projects have been successful in establishing these two conditions. A fully operationaltransport planning unit was created with computer modelling and up-to-date traffic data. Adomestic financing mechanism (Road Fund) was established for providing funds for roadmaintenance (paras 42-44, 57).

xi. In view of the rates of return (para. 55), the rehabilitation of the Conakry-Mamou Road,and the resurfacing of Mamou-Labe, Mamou-Kissidougou, and Dubreka-Forecariah, aresustainable. The 36% rate of return for the maintenance operations executed under the Project,is disappointing. This is explained by the lack of continuity in routine maintenance operationswhich were carried out once only instead of every year. Therefore, the sustainability of themaintenance operations is poor. Moreover, despite the implementation of a labor-based routinemaintenamce program under the Fourth Highway Project and the availability of good localcontractors and funds, maintenance was given a low priority.

v

xii. Institutional sustainability also requires an adequately trained and remunerated staff, andthe Government's commitment to the cost effective use of resources and giving first priority toroutine maintenance. Inadequate training programs under the Third Highway Project are beingcompensated for under follow-up projects; however, staff salaries have remained inadequate.(para. 57).

Findings and Lessons Learned

xiii. Project Preparation

(a) At the time of appraisal, closer attention needs to be given to accurate assessmentof work volume and definition of realistic and appropriate physical standards,including drainage (para. 69).

(b) Implementation schedule and related contingency allowances should be based inlight of experience in previous project in the country (para. 69).

(c) Dettiled engineering studies should be available before Credit effectiveness toallow an early start-up of the Project (para, 69).

(d) Standard bidding documents should be furnished to the Borrower to accelerateprocurement procedures and review by the Bank (para. 69).

(e) Detailed terms of reference for training should be prepared in order to implementan adequate training program and to be able to assess its execution (para. 72).

xiv. Project Implementation and Supervision

(a) More resources should be allocated by the Bank for supervision. At the time ofthe Third Highway Project, internal coefficients used in Bank-wide resourceallocation favored new loan preparation to the detriment of project supervision.Some Project issues could have been addressed more quicldy through longersupervision missions (para. 70).

(b) More coordination is needed between sector operations teams and countryoperations teams and with IMF teams (para. 71).

(c) The impact of a significant change in the political, economical and financialsituation of the country on the Project should be assessed and the Project shouldbe redefined on the basis of this assessment, as necessary (para. 71).

(d) When possible, consultants should be subject to incentives to improve theirperformance (para. 72).

(e) Detailed review of documents and rigorous adherence to Bank's procurementguidelines do not in themselves guarantee a good performance of the contractor(para. 72).

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(t) The issue of Borrower's failure to provide counterpart funding and timelypayment of staff salaries, has to be addressed on a country basis to avoidcompromising the Project's objectives (para. 75).

y . Insfludons

(a) Setting-up new institutions or reforming existing ones requires careful and time-phased design of components. Specific definition of institutional arrangements,a detailed action-plan and timetable are preferable to vague assurances concerningthe establishment of a new structure or organization (para. 73).

(b) Some institutional arrangements may be difficult to implement. Decision can betaken either to go ahead or to wait that the overall framework be ready for thisimplementation. The choice made under the Third Highway Project, to go aheadproved to be adequate because the preliminary measures led to a betterpreparation of future projects, and finally to an acceleration in imnproving theinstitutional framework (para. 74).

REPUBLIC OF GUINEATHIRD HIGHWAY PROJECT

CR)ED)T 1457-GUI

PROJECT COMPLETION REPORT

PART I. PROJECT REVIEW FROM BANK'S PERSPECTIVE

A. Project Identity

Project Name : Third Highway ProjectCredit Number : 1457-GUIRVP Unit : Africa RegionCountry Republic of GuineaSector Transportation

B. Background

1. The highway Project being evaluated here is the third such project to be completed withBank support over the last 20 years, in a program now being continued by two ongoing projects:a Transport Sector Project (appraised 1987) and the Fourth Hiahway Project (appraised 1988).This PCR presents the accomplishments and shortcomings of the Third Highway Project in thecontext of past Bank involvement in the sector and with a brief indication of later developments.An overall evaluation of the program as a whole should ioe possible only at the completion of thetwo later projects.

2. The Republic of Guinea presents an unusually challenging enviromnent for a highwaysproject, particularly one focussing on maintenance and rehabilitation as well as on paving andnew construction. Meteorologically, Guinea's coastal area and the highlands where most of thepopulation lives are subject to four meters of rain annually, falling between April and October,compared to about one meter a year for most other areas of the West African coast. Geologically,Guinea is blessed with a large area of central highlands, the Fouta Djallon. Rising rather abruptlyfrom a many-rivered coastal area, this plateau lies between 500 to 1,500 m above sea level.Guinea's southern forest area is also quite elevated (500 -1,000 m ), and together with the FoutaDjallon, separates the coast from the upper Niger basin in the eastern part of the country. Theonly other area in West Africa where such rain and terrain is found is in Cameroon. As a resultof the heavy rains and steep grades, road surfaces in Guinea erode relatively quickly: gravellosses on most gravel and earth roads average 1.5 cm to 2 cm per year, ranging up to 4 cm to6 cm on the most heavily travelled sections (SAR, Annex Table 2-3).

3. Guinea's longstanding political and economic isolation had also contributed to the difficultnature of the road transport environment. Protected by a treacherous Atlantic coastline and well-armed tribesmen, this area was bypassed during the early colonial area. It was eventually annexedby the French, who built a 600-km railroad from Conakry to Kankan on the Niger across theFouta Djallon, and a road system to feed the rail line. This transportation system was abandonedalong with productive plantations when in 1958, under Sekou Toure's leadership, Guinea declinedto join the French franc zone. Centralized economic policies oudawing private enterprise andfixing producer prices below production cost forced producers in one of the region's richest

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farming areas to export illegally much cash crop production. rhe public sector came to befinariced almost exclusively out of receipts from enclave bauxite operations, developed in partwith World Bank financing in the late 1960s, while the rest of the economy made its ownarrangements. Dual markets and dual exchange rates became a way of life.

4. Roads first constructed by the French in the early part of tfe century, including the 600km east-west section linking the coastal capital, Conakry, with Mamnou in the central highlandsand Kournissa on the Niger River, were left to deteriorate during the 1960s and early 1970s.Falling agricultural exports and restricted vehicle and fuel imports led to reductions in roadtraffic. For many years, highways were seen not as the backbone of the transport system, butmainly as feeders to the rail system, which carried most goods traffic until the 1970s, by whichtime long neglect had rendered it uneconomic to rehabilitate. Another major factor in the declineof the road system was the Government's preoccupation during the 1960s and 1970s with theinfrastructure needs of the nascent bauxite mining operation, an enclave located 200 km north ofConakry on the Atlantic Coast. The Bank's 1970 proposal to prepare a highway maintenanceproject was only taken up by Government in 1974, following a shift in economic strategy torenew the emphasis on agriculture, and preparation of a first Transport Sector Paper for Guinea.

5. The Third Highway Project also faced new opportunities and difficulties engendered byunexpectedly rapid political and economic change following Sekou Toure's death in 1984. Inpost-Toure Guinea, new opportunities for private enterprise, combined with the continued lowlevel of Governnment revenue, increasing inflation and shortages of imported goods, served onlyto intensify incentives to divert Government property, esp. cially fuel, spare parts, vehicles andequipment. While economic liberalization and reform opened the door for private enterprise, putgoods back on the shelves, farmers back in their fields, and brought foreign suppliers of goodsand services back into Guinea, it will take a long time for the economy to recover from 25 yearsof isolation, and for suspicion of capitalism to subside after 25 years of Marxist ideology. In themeantime, the increased pressure from heavier traffic due to economic revival shortened thelifetime of any road improvements made, and hastened surface failure on unimproved sections,compared to what was anticipated at appraisal of the Third Highway Project.

C. Experience under the Flrst and Second Projects

6. By the time of the First Highway Project (IDA US$14 million, total US$18.6 million,1976-1980), years of economic decline and lack of maintenance had led to a severely dilapidatedroad system. The network consisted of 4,300 km primary roads, of which about 1,100 kan paved,1,200 km secondary, and 5,000 km tertiary roads. The First Highway Project supported themaintenance or rehabilitation of about 2,100 km of paved and gravel roads by force account, orabout 85% of the appraisal estimate. Guinean staff commitment resulted in a high output at thebrigade level. Travel times were substantially reduced, resulting for example in a doubling oftraffic on the Mamou-Dabola section of the main east-west road, compared to the pre-projectlevel, and access was substantially improved to many farming areas. The main shortcomings inthe First Highway Project execution were slow startup, considerable diversion of equipment tonon-project uses, and a drop in efficiency following brigade reorganizations. A reduced scopeof works was completed 14 months later than foreseen; completion of road works planned underthe First Highway Project was financed with about US$1 million of Second Highway Projectfunds (see PCR No. 4358, March 1983).

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7. Diversion of equipment continued to be a problem during the Second Highway Project(IDA US$13 million, EEC US$4 million, total US$29.5 million, 1980-1984), despite furthermeasures to reduce it. The overwhelming economic incentives fostering diversion of all projectinputs, including fuel and spare parts, derived from the simple fact that the equipment for theseprojects was virtually the only such equipment in the entire country, and from the inadequacy ofpublic sector wages. Low even by West African standards, wages could cover only a part of afamily's basic needs, with the result that workers could survive only by diverting the goods towhich their jobs gave access ( two liters of fuel equalled a day's wages for most workers, atankful more than a monthly salary).

8. By linking appraisal of the Third Highway Project with meeting targets for the SecondHighway Project, IDA put pressure on Government to greatly improve output, and rehabilitationbrigades were able to meet targets during the 1982 and 1983 campaigns. The equipment diversionproblem appeared to have been resolved, with most of the diverted equipment returned to theunits by late 1983, except for some intended for the resurfacing unit. However, overallproduction shortfalls at the end of the Second Highway Project were considerable: the 975 kmof earth roads rehabilitated by December 1983 met only 63% of the appraisal target; maintenanceand grading on unpaved roads covered 2,420 kam (70%), only 180 km of patching of paved roadswas carried out ('4%), and no resurfacing of paved roads was done, though 300 km had beenincluded at appraisal. As in the case of the First Highway Project, startup delays wereexperienced and project completion was delayed by a year (see PCR No. 5653, May 1985).

9. A major assignment facing the Bank team when preparing the Third Highway Project in1981-82 was to redress the main factor held to be responsible for poor performance under theSecond Highway Project, namely project organization and leadership. This included rethinkingthe role of consultants versus local staff both in project management and works execution. Otherproblems in the Second Highway Project requiring resolution involved poor quality of patchingand resurfacing work, poor consultant performance, and Government difficulties with meetinglocal and foreign exchange contributions to project costs. Problems ancountered in both the Firstand Second Highway Projects included inadequate routine maintenance through cantonnage,emphasis on quantity rather than quality of works, delayed repair works due in large part to sparepart shortages resulting from procurement delays, and administrative delays in purchasing fueland materials and paying wages and bonuses.

D. Project Objectives

10. The objectives of the Third Highway Project were to assist Government with:(a) rehabilitation and maintenance of the priority road network; (b) institution building for roadmaintenance and rehabilitation; (c) staff training; and (d) definition of medium-term priorities forthe transport sector. The ultimate purpose of the highway network is to support agriculturaldevelopment. The ultimate purpose of the Third Highway Project was not self-sufficient forceaccount operations, as foreseen under the First and Second Highway Projects, but the eventualtransformation of the existing force account road maintenance office into an entity that wouldfunction like a private contractor. This was possible under the Toure regime because the PublicWorks Secretary at the time favored introduction of more efficient work programming and otherpractices borrowed from private sector practice. Then, after Sekou Tour6's death in 1984, thegoal shifted to conversion to Government-managed private contracting of equipment-based road

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maintenance, with privatization of the road maintenance office seen as an intermediate steptoward this ultimate institutional goal.

E. Project Description and Costs

11. For cofinancing purposes, the project was divided into two packages is follows:

Package A Total Cost (1984US$ M)

1. Equipment-based rehabilitation androutine maintenance of unpaved priority network 15.8

2. Equipment and building construction 7.43. Labor-based routine maintenance of

shoulders and drainage along priority network 2.94. Technical assistance, training, transport plan 8.8

Subtotal, Package A 34.9

Package B1. Reconstruction of paved Conakry-Mamou Road (255 km) 27.72. Resurfacing of 360 km of most trafficked paved roads 11.0

Subtotal, Package B 38.7

Total Project Cost 73.6

12. Cofinancing arrangements for foreign exchange costs (70% of total) included US$28million IDA, parallel financing of US$9 million for equipment and spare parts by BADEA (ArabBank for Economic Development in Africa), which had also cofinanced the Second HighwayProject, and joint financing of the Conakry-Mamou Road by IDA and the African DevelopmentFund (US$14.6 mnillion from AfDB). Government was to cover all local costs, in part with theuse of Government funds earmarked for PL 480 counterpart use, with USAID's approval.

13. The Third Highway Project was ambitious in attacking head-on two areas that had notbeen receiving major attention in the earlier projects: the paved network and routine maintenance.Half the paved road network (615 km out of 1,140) would be reconstructed or rehabilitated,including the heavily trafficked Conakry-Mamou Road (255 km), the backbone of the network,carrying in 1980 3,000 vpd near Conakry and about 600 vpd near Mamou, and 360 km of thenorth and south "ribs," Mamou-Labe and Mamou-Kissidougou. On the unpaved priority networkwhich had been the focus of the earlier projects, periodic regravelling of 445 km of laterite roads(most of which had been rehabilitated under the First Highway Project), and rehabilitation of 640km of earth roads. These works were to be carried out by contractors, rather than by forceaccount which had given poor results in earlier projects. In addition, routine maintenance wouldbe carried out on the rest of the unpaved network (3,000 km), including bridge maintenance,grading of gravel roads, and patching of paved roads, by the force account brigades. Finally,labor-based routine maintenance would be carried out on shoulders and drains through lengthmenor cantonnage along 2,500 km of roads with over 40 vpd in traffic, or virtually the entire prioritynetwork. IDA would provide assistance for staff training and Government would finance localmaintenance costs.

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14. Taking into account the financial constraints, compromises had to be made in physicalsta.ndards of the more cosdy components for stretching project design to cover the entire spectrumof roadwork needs. For example, on the Conakry-Mamou Road, the most expensive singlesection, substantial realignment would have been economically justified but the least-costalternative was chosen. Therefore, only spot geometric improvements on 10 km were included,because they could not safely be postponed, with selective strengthening on the remaining 245km. For the resurfacing of other paved roads, the standard adopted was to lay a single bituminoussurface treatment where traffic exceeded 200 vehicles per day, and sand slurry where traffic fellbelow that level; the stated objective was simply to halt base deterioration and to postpone theneed for reconstruction or overlay for some five to eight years. All of these works were intendedto be completed within the four-year project period, starting in July 1984.

15. Training received particular emphasis in the Third Highway Project. Non-workscomponents accounted for about 20% of total estimated project cost, and provided for renewalof highway and workshop equipment, rehabilitation and construction of buildings, technicalassistance, training, and a medium-term transport plan. About 300 road maintenance office staffwould be trained, including all division-level supervisory staff and all technical and administrativetasks essential to the supervision and operation of the DT or Division of Works. At the provinciallevel, 200 or so engineers, assistant engineers and field supervisors would be trained in planningand implementing routine maintenance on a task basis, a new approach in six of the sevenProvinces. Moreover, technical assistance input was beefed up by comparison with the earlierprojects: a team of eight experts would assist the road maintenance office by providing 213 staff-months of engineering consultant input, plus a further 276 staff-months of contractor-consultantassistance to the force account brigades. This was a substantial increase compared to the 264staff-months total provided under the Second Highway Project.

F. Project Organization

16. Institutional arrangements established during preparation of the Third Highway Projectwere considerably more complex than for the earlier projects, and were designed to correctproblems encountered during their implementation. During the First Highway Project, works hadbeen carried out by a highly successful Project Directorate which had been set up to functionautonomously from the then Ministry of Public Works. It had been an objective of the SecondHighway Project to integrate this unit into the Ministry but this did not work; a new Ministerwith less commitment to the project had been appointed at the beginning of the Second HighwayProject and used the centralized structure of the Ministry to divert project equipment andmaterials, and overruled project staff orders with his own verbal instructions. This interferencecould not be prevented by institutional means, nor were there any control systems in place tomonitor resource use.

17. Several major institutional changes were made in 1982 taking into account the lessonslearned from the previous projects. They aimed at improving the productivity of mechanizedmaintenance and establishing an effective labor-based maintenance program. The former RoadProject Directorate in the Ministry was made into an autonomous Road Project's Office (Officedu Projet Routier, OPR) independent from the Ministry, as under the First Highway Project.OPR was given discretion to hire and fire staff and determine their compensation, to procurematerials and spare parts, and was assigned full responsibility for carrying out all project tasks

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and managing project resources. Within OPR, the unit responsible for works execution, the DT(Direction des Travaux or Division of Works ), was clearly separated from other unitsresponsible for project financial administration, works supervision, manpower planning andtraining, and studies and data collection. This IDA-prompted change took place in the context ofGovernment's decision in 1982 to reorganize the Ministry of Public Works into the Ministry ofInfrastructure and Major Works (Ministere de l'Infrastructure et des Grands Amenagements duTerritoire, MIGAT). Responsibility for labor-based routine maintenance was transferred to theprovincial level of Government, along with the corresponding staff, about half of the formerministerial maintenance staff. The Ministry's Secretariat for Public Works retained responsibilityfor mechanized periodic and routine maintenance and for major infrastructure construction works.

18. Institution-building under the Third Highway Project focussed on road maintenance. Theproject included 200 man-months of engineering consultants and 276 man-months of contractorconsulting services. OPR's role in the execution of reconstruction and resurfacing works wouldconsist of contracting and supervision works. Therefore, the Project included 113 man-monthsof engineering consultants for design and supervision of works.

19. A new organization was defined for mechanized maintenance which would combine theadvantages of an integrated management package, critical with respect to cost controls, with on-the-job training for local staff in management, administration, and construction at senior andintermediate levels. Mechanized maintenance would be carried out by the DT within OPR.Managerial responsibility would be assigned to an expatriate consultant contractor. DT works andperformance would be supervised by OPR, while OPR itself would be overseen by aninterministerial Road Project Management Council (CGPR, Conseil de Gestion du ProjetRoutier), which was to meet at least once a year. Staff from the 12 former force accountbrigades, remaining in OPR and not transferred to the provinces, would be reassembled into threefield brigades, each assigned to a specific region of the country.

20. The Government agreed to the transfer of force account staff to the Provinces for labor-based maintenance, and to other changes. However, these arrangements were not implementedbefore Board presentation. Therefore, issuance of official instructions to provincial authorities toapply this new policy was made a condition of credit effectiveness. Annual maintenance programsand budgets would be prepared by a National Maintenance Coordinator within MIGAT, andapproved by a second interministerial body: the National Road Council (CNR, Conseil Nationaldes Routes). CNR was also to review MIGAT road investment plans and road classificationproposals. A significant policy change would be introduced regarding the remuneration oflaborers, in order for labor-based provincial operations to succeed. Laborers would beremunerated on a task basis rather than a monthly basis, and at a level about three times higherthan previously, in order to compete with returns to agricultural work by casual workers. (Inactual fact, neither the CGPR nor the CPR ever met, and the task-based remuneration schemewas never implemented.)

G. Project Implementation

21.. The Third Highway Project was identified in 1981 and appraised in 1983. It becameeffective only in December 1984, due to a one-year delay in finding cofinancing for the US$73.7million project, and a nine-month delay to satisfy effectiveness conditions concerning counterpart

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funding and special accounts. Both supervising and contractor consultants to OPR were in placeby early 1985 but were slow to set up new programming, organizational and managementstructures. Slow procurement further contributed to delays in slow startup of reconstruction andpaving works, which began in late 1987 and early 1988 instead of September 1985, as foreseenin the appraisal report. Moreover, these works took longer than anticipated, resulting in twopostponements of the project closing date. Project implementation took nearly seven years fromeffectiveness to closure. Its lifetime spanned six maintenance seasons rather than three (1985-1990, Octber-July) and covered ten years from identification to closure. All Project componentswere delayed and the Project closed two years late, in September 1991.

22. Reconstrucdon and Resurfacing of Paved Roads. Reconstruction of the Conakry-MamouRoad and paving of the Dubreka-Sierra Leone, Mamou-Labe and Mamou-Kissidougou roads wasdelayed because of the need to update the 1981-82 technical documents for early 1986 startupconditions, and by slow procurement review on the Bank's part. On the other hand, the improvedpolitical climate in Guinea and stricter observance of ICB procedures resulted in stiff competitionfor the Conakry-Mamou contract and dramatically reduced bid prices compared to the appraisalestimates. Lower cost and failure to comply with Bank procurement procedures resulted infnancing of the Conakry-Mamou Road being taken over by AfDB. This allowed IDA funds tobe reallocated to the resurfacing of other paved roads (Dubreka-Sierra Leone, Mamou-Labe,Mamou-Kissidougou), urgently in need of additional funds because of severe road deteriorationsince appraisal.

23. Road works started two to three years late, In early 1987 (Conakry-Mamou) and early1988 (Dubreka-SierraLeone, Mamou-LabelKissidougou), and completed five years late (1990/91)compared to appraisal estimates. In addition to taking longer because the volume and nature ofworks were substantially greater and more complex than what had been anticipated at appraisal,these works were slowed down by poor contractor performance. Poor on-site organization andother internal problems were compounded by conflict between the contractor and Governmentover 9 to 12-month delays in the payment of large local cost invoices by Government. Primarilydue to the lateness of these works, the closing date for the Project was extended twice, fromSeptember 1989 to September 1990 in July 1989, and from September 1990 to September 1991in May 1990. The Conakry-Mamou Road did cost less than estimated at appraisal (although morethan the contracted bid), and the Dubreka-Sieria Leone Road about 50% more, but the other tworoads cost several times above appraisal estimates. Works required on the second section of theMamou-Kissidougou Road (Faranah-Kissidougou) were actually only completed under theTransport Sector Project.

24. Periodic and Routine Maintenance. The major handicaps encountered for periodic androutine maintenance during period implementation were: IMF-inspired closing of the specialproject accounts in December 1985 for an 18-month period, long delays in Government paymentor non-payment of local costs (consultants' invoices, project unit staff, laborers' salaries andbonuses), difficult relationships between the two technical assistance teams, poor performance ofthe contractor-consultant, and several reorganizations of both OPR and its parent Ministry.According to OPR records, brigade operations over the 1985-88 seasons averaged about 200 kama year of regravelling and about 900 km a year of regrading, plus about 350 km of rehabilitationof earth roads in 1986. The contractor consultants in particular failed to design appropriateprocedures which could make the unorthodox institutional arrangement fulfill its promise toimprove maintenance performance, preferring rather to fall back on inappropriate past experience

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in new road construction operations. The initial 1985 (October 1985-March 1986) maintenanceprogram suffered so much from these shortcomings and from the contractor-consultants'additional failure to supervise the brigades or to provide on-the-job training, that much of thework had to be redone the next year. While internal record keeping and work planningprocedures were gradually and successfully introduced over the next few years, OPR neverbecame fully aultonomous from a financial point of view, and the hoped-for partnership betweenthe two consultants and between consultants and local staff never fully materialized.

25. Some failures by the Bank and the Borrower contributed to the poor actual result for roadmaintenance despite the impressive numbers of kms !naintained. The maintenance program didnot include culverts and other drainage works, which would have contributed to improve roadpreservation although these works are not normally part of routine maintenance in countries withmore normal rainfall. Without drainage works carried out, some roads whose surfaces had beenmaintained could be impassable during four months of rains. The Bank insisted on remainingwithin standard maintenance guidelines defined at appraisal although some roads neededrehabilitation more than maintenance. As a first step towards correcting drainage inadequacies,a contract for 19 bridges/culverts on the Kindia-Gaoual Road was added in 1986 to worksfinanced under the Project. Drainage works were also added to the road paving contracts(Mamou-Labe, Mamou-Kissidougou); these supplementary works increased the amo-nt of thecivil works component as determined at appraisal.

26. Contracting out road maintenance works was part of the Project's objectives butencountered implementation difficult-es. The 19 bridges contract under the Third Highway Projectwas awarded to the same firm that had demonstrated consistently poor performance as contractorconsultant. The rehabilitation of 1,085 km of unpaved roads, which originally was to becontracted out because of the poor quality of rehabilitation work carried out by force accountunder earlier projects, actually remained on OPR's work program. A mid-project attempt to fimda way to contract these works out to reliable local contractors failed for lack of an adequate legaldefinition of small entrepreneur, among other reasons. Only about 400 km of rehabilitation wasactually done under the Third Highway Project and executed by OPR, despite the Bank's repeatedrecommendations for these works to be contracted out. Routine labor-based maintenance(cantonnage) got underway very late because the provincial branches of the Ministry which wereto oversee these works were not operational. It took a long time for the Government and the Bankto agree on specific arrangements for carrying out these works, despite assurances given ateffectiveness. Finally, this component was transferred to the Fourth Highway Project over thecourse of 1988, and by early 1990 a frst group of lengthmen had begun cantonnage on theConalry-Kindia Road, with two more to start on the Kissidougou-Kankan Road in May 1990.

27. BuUding Construction and Equipment Purchase. This component of the Project wasexecuted without major difficulties, but for the supply of spare parts. OPR office and workshoprehabilitation were carried out expeditiously and the renovated facilities were ready for use inMay 1986. Computer equipment purchased and installed in these facilities proved a valuable toolin startup of transport planning activities (see para. 28). Road maintenance equipment and spareparts financed under the project cost more and arrived later than expected (January-May 1986).This hindered maintenance operations in the project's first years (1984-85). By 1988, amultiplicity of additional, bilaterally financed, road maintenance equipment was delivered toOPR, none of which had been discussed with the Bank. Therefore, more equipment was arrivingthan could usefully be employed by OPR. Supply of spare parts and road maintenance inputs

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(chiefly fuel) was an endemic problem. A purchasing agent was engaged in early 1987 becauseof inadequate Government purchasing procedures. Lengthy procurement disputes delayed theselection of the agent. However. neither the use of this agent nor cther procurement alternativesproposed was acceptable to BADEA, which was to have financed some equipment and most spareparts purchases. A Japanese grant later became available under the Special Fund for Africa forequipment supply. However, the deficit in financing for spareparts was never made up.

28. h-ansport Plan and Staff Training. Although a first phase of the Transport Plan wascarried out in late 1985, the final Plan was delayed until the Transport Sector Project to take intoaccount, on the one hand, the lack of data on infrastructure conditions and traffic, and ondevelopment programs for agriculture and industry which could have provided a basis fortransport demand forecasts, and on the other hand, the coverage of macroeconomic aspects oftransport sector needs under the structural adjustment effort. Therefore, the second phase of theplan under the Third Highway Project, carried out traffic counts and origin-destination surveys.A qualitative "sketch" transport plan was prepared and more substantive work was carried outonce the data became available. The plan also included a proposal for restructuring the Ministry,including analysis of staffing and training needs. A new transport planning division was createdand staff trained to collect traffic and origin-destination data and analyse it using computermodels. This work was continued under the Transport Sector Project, under which an updatedtransport plan provided a good basis for medium-term planning as originally intended.

29. Although training was one of the major objectives of the Project, results were mitigated.Computer training was the most successful training activity under the Third Highway Project. On-the-job training of field crews in road maintenance operations fell far short of what was neededand expected: supervision missions repeatedly commented on the negative impact on maintenancework of negligent or inexistent supervision and training, and reported that the contractorconsultants' training advisors were assigned by the Ministry to works not included in the project.The training program for mechanics was hampered by delays in arrival of spare parts andequipment in the early years and lack of logistical support necessary for the mechanics in trainingto accompany the brigades to service on-site equipment. Mechanic trainees were not wellmotivated due to the untimely payment of salaries, and because OPR had no policy concerningemployment opportunities for those who would complete the training. Although the supervisingconsultants had prepared a training study in 1986, no training proposals for other OPR staff hadbeen financed in July 1987. A contract for courses abroad was signed (Tractebel) only inNovember 1987. Training activities linked to labor-based maintenance (cantonnage) nevermaterialized (support of cantonnage activities was transferred to the Fourth Highway Project).

H, Project Results and Sustainability

'30. Overview. In view of the rates of return (see para. 55), the rehabilitation of the Conakry-Mamou Road, and the resurfacing of Mamou-Labe, Mamou-Kissidougou, and Dubreka-Forecariah, are sustainable. The rate of return of maintenance operations is disappointing for suchoperations. This is explained by the lack of continuity in routine maintenance operations, whichwere carried out once only, instead of every year. Therefore, the sustinability of the maintenanceoperations is poor. However, institutional arrangements, which have been supported undersubsequent projects, can be sustained.

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31. The Third Highway Project fell short of attaining its stated objectives with respect tomaintenance, and completed road reconstruction and repaving works only at a much higher cost,due to a powerful combination of factors: radical shifts in the larger political, economic andfinancial environments just after negotiations, initial technical optimism (or underdesign) atappraisal, chronic non-performance of consultants, constantly changing institutional environmentwithin the ministry involved, flawed procurement review and limited supervision resources onthe part of the Bank, and dominance of personal over public interests on the Borrower's side inthe later years of projet implementation. In this case, all of these factors may be seen to stemfrom deep-rooted institutional blind spots and rigidities. At the present time (Spring 1992), someof the changes required to create and sustain an adequate road transport sector in Guinea havebeen made, and others are underway.

32. Thus the Third Highway Project should perhaps be seen as a transitional project, spanningthe difficult period between traditional force account maintenance operations and a future setupwhere a competent and competitive private contracting sector performs road maintenance andconstruction. During such a period, it is perhaps inevitable that physical work targets will fallvictim to institutional transformation. Viewed from this perspective, the project's failure toimprove road conditions as much as expected may be seen as an acceptable price for unexpectedlyrapid institutional evolution. At appraisal, no one could have foreseen that by the end of theproject period, force account operations would be abolished and a local private construction sectorwould be vigorously budding and ready to take on routine maintenance operations.

33. Impact on Road Conditions. Compared to appraisal targets of 3,000 km of grading,patching and other mechanized routine maintenance, 445 km of regravelling, and 640 km ofrehabilitation of earth roads, OPR records for the 1985-1988 seasons show a total of 3,408 kmgraded (net of 356 km which had to be redone because of poor quality of works), or 114% oftarget, 829 km regravelled (186%), and 410 km rehabilitated (63%). Nonetheless, at the time ofthe appraisals of the Transport Sector Project (April 1987) and the Fourth Highway Project(January 1988), little improvement in the status of the road network could be noted, except forreconstructed and repaved prinary sections. Large areas of the countryside were still said to beisolated, with flows of agricultural products far below potential levels and transport costsremaining high. Traffic levels were said to be low mainly because of the severe deterioration ofthe trunk network in 1985-86 when Guinea experienced exceptionally heavy rains, compoundedby a breakdown of the fuel distribution system outside Conakry, fourfold increases in fuel costs,and shortages of spare parts. However, despite improvement of maintenance, which was one ofthe objectives of the Third Highway Project, Guinea still lacked periodic maintenance capabilityand had therefore elected to focus on rehabilitation along with construction of new paved roadsrather than on road maintenance. Severe rainfall conditions in the coastal areas also explain whyroad regravelling under the First and Second Highway Projects resulted in only short-livedimprovements.

34. Of the 615 km of paved roads to be reconstructed under the Third Highway Project, allbut 30 km were built: Conakry-Mamou (255 km), Dubreka-Forecariah (60 km), Mamou-Labe(148 km), and Mamou-Faranah (120 of 190 km). Work on the Faranah-Kissidougou section (ofwhich 30 of 140 km were also to be repaved) was carried over to the Transport Sector Project,and this follow-on work appears to cover actually part of the Mamou-Faranah section as well.In addition to these works, an additional contract to rebuild 19 metal bridges was added during

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implementation, along with substantial increases for drainage works on the road reconstructioncontracts.

35. There is little information in Bank supervision reports on the final result of the Conakry-Mamou road reconstruction, since financing of this component was wnolly assumed by AfDB.The least cost alternative selected in 1981 deferred all geometric improvements which couldsafely be postponed and included only selective strengthening and spot geometric improvements,despite the fact that a large part of the road was nearing the critical fatigue point even at thattime. By the time of the 1985 update of engineering documents for the Conakry-Mamou Road,the collapse of the road base was no longer imminent but actual. With respect to the other roadrepavings, supervision reports indicate both a cost-containment attitude by the Bank, and anacknowledgement that work volumes on the highland roads (Mamou-Labe, Mamnou-Faranah) hadto be increased substantially because of their deterioration since the time of appraisal.

36. Operational Impact. Operational performance of OPR and its road maintenance brigadesincreased during the project's lifetime. In 1985, operations were limited to a single brigadebecause of the lack of equipment and spare parts. Although handicapped in 1986-88 by theclosure of special accounts and delayed salary payments, OPR records nonetheless show anaverage of 900 km grading and 200 km regravelling in each of the three seasons 1986-1988. Bythe end of this period, it was operating seven brigades, including one in the Conakry urban area.

37. A number of measures were introduced under the Third Highway Project which improvedthe operational performance of the brigades and succeeded in large part in transforming OPRoperations from force account to a private-oriented entity. The 12 small brigades of the SecondHighway Project were reorganized into three regional brigades with mobile field offices. Costaccounting (comptabilite analytique) and work programming were introduced by the contractor-consultant and later taken over by OPR staff. By early 1991, the maintenance programming andcontracting unit, transferred from OPR to the Ministry, was preparing standard contract formsfor small operators to carry out equipment-based maintenance of unpaved roads, in competitionwith larger contractors and, later, with the privatized OPR (SOGUITRO). Such standard formswere also developed to allow competitive bidding for labor-based routine maintenance works byindividual lengthmen (cantonnage). This represented a long-awaited agreement by the Governmentas to how labor-based maintenance (drain and brush clearing) should be handled, after a longperiod of inactivity by the provincial Ministry offices which were to manage the cantonnage, andlengthy discussions on a number of other alternatives.

38. Despite these measures, the sustainability of the road maintenance system in place isquestionable. Extensive site visits carried out by the May 1990 Bank supervision mission foundno sign of any routine maintenance during the 1989 season, particularly on some vulnerablesections awaiting reconstruction where surface failure was occurring (Faranah-Kissidougou andothers). The performance of hie contractor consultant for on-site supervision and training waspoor. This had already been a problem during the Second Highway Project, and continuedthroughout the Third Highway Project. Although the Ministry had contracted with OPR insteadof local private construction firms to carry out mechanized routine maintenance of unpaved roads,OPR's complement of graders was inadequate to do the work. Emergency repairs were agreedupon but never carried out, despite the availability of local funds and local contractors.

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39. Institutional Impact. Over the ten-year period covered by this report, OPR has beentransformed from a force account operation into a parastatal (SOGUITRO) in search of a privatepartner. First established under the First Highway Project as a separate force account unit withits own budget and staff, an arrangement which worked reasonably well, the unit was broughtinto the Ministty under the Second Highway Project, with engineering consultants acting in anadvisory role. No longer autonomous, the unit fell prey to a self-serving minister until early1982, at which time consultants were given responsibility in order to control project resources.Beginning in 1984 utnder the Third Highway Project, management of the unit's road maintenanceoperations was taken over by contractor consultants, while administrative functions such assupervision, planning and training were handled by a separate set of engineering consultants. Theconsultants were to set up internal work programming, cost accounting, and other managementprocedures required to improve efficiency so that the organization could function as a contractingoutfit rather than as a force account operation.

40. This arrangement failed to work because the unit was never given financial autonomy andbecause of chronic and unresolved conflicts between the two consultant teams. In 1986,consultants were again made advisory, and the planning, supervision and training functions weretransferred back to the Ministry, as a first step towards privatization. However, a 1988 studyindicated there was little private sector interest in forming a joint venture. It was then proposedthat OPR be transformed into a private company (SOGUlITRO) which would acquire and rent outto local contractors, Government's considerable pool of road maintenance equipment.

41. But this would have required dismissal of most brigade staff, with the expectation thatthey then might have joined or started local private firms eligible to rent equipment and competefor road maintenance contracts. Although IDA was prepared to finance training assistance tothose wishing to set up their own firms, the Government was anxious that in a new competitiveenvironment, some staff might find themselves unemployed, or local firms might find themselvesunderbid by foreign firms established in Guinea. Therefore, SOGUlIRO was created with bothoperational (brigades) and equipment rental divisions. This option represented the bestcompromise possible at the time, although two other optiont could have been envisaged: (a) aseries of small contracts with competent local entrepreneurs in a competitive environment withequipment rental available to all (not favored by Government for the reasons mentioned above);and (b) an incentive-based, self-contained, all-encompasing contract with a single foreigncontractor (virtually impossible under Bank procurement guidelines).

42. Policy Impact. The policy impacts of the Third Highway Project have been much greaterthan foreseen at appraisal: (a) a domestic financing mechanism (Road Fund) was established forproviding funds for road maintenance; and (b) a fully operational transport planning unit wascreated with computer modelling and up-to-date traffic data.

43. The provision of local financing for maintenance operating costs, particular by foreigncurrencies needed for annual equipment renewal, was a major issue during Project preparation.Thus, during this phase, the Government failed to fulfill a covenant of the Second HighwayProject, to provide US$1.5 million for equipment renewal likely because, in the meantime, it wastaking delivery of some US$12 million of maintenance equipment financed by other donors,without consultation with the Bank. The Bank accepted the transfer of operationally soundequipment from the Second Highway Project to the Third Highway Project in lieu of the US$1.5million and the covenant was considered complied with. To implement a permanent financing

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mechanism, the Bank suggested customs duties on vehicle imports be payable directly by theimporter into a foreign bank in foreign currency. The first US$5 million would have been usedfor financing spare parts, fuel and equipment replacement. Similarly, earmarking a fixed amountof excise duties on fuel imports would have provided the local currency for road maintenancefinancing. The Guinean Govermnent agreed to consider implementation of such measuresfollowing the first phase of the transport study to be carried out under the Third Highway Project.Establishment of the Road Fund was made a condition of effectiveness of the Fourth HighwayProject, and was in place by 1989.

44. The rationalization of transport investment was another major policy issue. Governmenth-'4 agreed at negotiations: (a) to include in its transport investment plan only the priorityiuivestments which would be identified in the transport plan study to be financed under theproject; (b) to carry out only works included in this investment plan; and (c) to establish anorganization for transport planning based on the study. However, following the change in regimeafter Sekou Toure's death in March 1984, the regulatory environment of the sector changedconsiderably, and a number of transport investment initiatives were promoted by foreigncontractors before the transport study could be launched. The Bank acted consistently andvigorously to bar any major infrastructure investments until a medium-range transport plan couldbe prepared in 1987. This plan formed the basis for the investment program agreed on duringappraisal of the Fourth Highway Project, which was also circulated by Goverment during theApril 1988 Donor's Conference. However, the Government had accelerated the time span forprogram execution from 20 to 10 years, included in the program the US$12 million Fatala bridge(considered a major white elephant by the Bank), and left unclear the future of the OPR roadmaintenance brigades. Nevertheless, the preparation of this investment program remains one ofthe major achievements of the project.

45. Project Costs and Financial Managemnen. Overall, the Third Highway Project costUS$10 million (13%) more than the appraisal estimates. This overrun does not include the costof finishing up road paving under the Transport Sector Project. Substantial reallocation of IDAfunds was made on two occasions during project implementation. Funds in Category 1, forperiodic maintenance and rehabilitation of earth roads, were reduced by half, in late 1988, andthen by more than half again in late 1990. Funds in Category 4B, for reconstruction and repavingwork on paved roads, were increased by threefold (see Part m, Table 3-B). In the case ofmaintenance, this is explained by the shortcomings of consultants and institutional arrangements,and the freezing of special accounts and then counterpart funding shortages. In the case of majorworks, higher costs came from an initial technical underdesign, compounded by the three-yeardelay in startup of works. Amounts of funds under Category 3, equipment and spares purchase,were also three times higher than anticipated at appraisal, in part because BADEA cofmancingintended for this purpose could not be used due to BADEA's inacceptance of use of a purchasingagent.

46. Price Waterhouse's first annual audit report covering OPR's 1985 operations points outa number of administrative and accounting deficiencies, including lack of controls of OPRinventories, maintenance costs analysis, and progress reports, and poor programming of fieldactivities. These deficiencies were mostly due to slow startup of internal procedures byconsultants and were corrected in subsequent years. OPR also acquired a PC/AT computer andtrained staff in using it to help improve its performance. In 1986, when management control wasformally transferred from consuitants to Guinean staff, operation of these procedures was also

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successfully transferred. Despite the introduction of internal contract agreements ("para-contrats")with each brigade based on cost accounting procedures beginning with the 1989 road maintenancecampaign, the mechanism specified in the appraisal report for disbursement of funds underCategory 1 for maintenance work was never actually applied. While the SAR stated that IDAdisbursements for maintenance would be paid directly to OPR on the basis of annually reviewedcost performance of the brigades (actual versus agreed unit billing rates), IDA simply paidsuppliers' bills and Government paid staff salaries.

47. Procurement and Disbursement. The Bank did not help accelerate the procurementprocess. Procurement for major works and equipment purchases for the Third Highway Projecttook place prior to the 1987 regionalization of procurement review within the Bank, which tendedto correct the kinds of problems experienced in this and other projects. Under the centralizedreview process, three- to five-month delays in Bank approval at various stages of procurementwere cowmon because of the slowness of the centralized review process. Also, while great carewas given to detailed review of documents (for example, four-page telexes listing detailedchanges in wording were common) and to monitoring rigorous adherence to Bank Guidelines, inno case did the Bank fail to concur with the final selection of winning bidder.

48. The adherence to Bank's guidelines was not a guarantee of good performance by thecontractor. This is particularly puzzling in the case of the repeated selection of one particularcontractor with an ibysmal performance record (Astaldi) during previous Bank's projects. Thecontractor was first selected as contractor-consultant for maintenance operations, despite theGuinean project manager's lack of confidence in its ability to perform. Although the Bankrequired extension of prequalification procedures to allow six other contractors to submitproposals, this contractor was selected. At the time of prequalification in 1984, few firms wereinterested in working in Guinea, aad apparently the only ones deemed to have proven their abilityto carry out the works according to prequalification criteria, were those few, like this one, whohad been operating in Guinea for some time. The contractor continued to perform poorly forpaving works on Mamou-Labe, Mamou-Faranah, and the 19 metallic bridges contracts. Theprequalification of this contractor is hard to understand because it was already acting as contractorconsultant for maintenance operations under this project and therefore should have been excludedfrom prequalification for other project works.

49. Procurement performance was relatively satisfactory on the Guinean side for this project,since most procurement took place before the unfortunate change of procedures in mid-1989 whennon-technical representatives from other ministries were allowed to challenge public workscontract awards on spurious technical grounds, thereby delaying them. Bid evaluation reportswere prepared by technical staff in the Ministry concerned, and reviewed by the National TenderBoard. The Third Highway Project thus escaped from serious delays in contract award whichslowed startup of the Transport Sector and Fourth Highway Projects.

50. Problems with road maintenance equipment and spares procurement led first, to shortagesof critical equipment and spares, and later to excess of equipment which OPR was unable to fullymobilize or which was inadequate. Early in the project (Spring 1985), because local suppliersdemanded very high prices and because normal Government procurement and payment proceduresresulted in very long payment delays which discouraged firms from doing business in Guinea,it was decided to purchase a first lot of urgently ne1 ded equipment and spares through localcompetitive bidding and a second lot through ICB. For further supply of spare parts, OPR would

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contract a purchasing agent from a shortlist established by IDA. Delivery of critically neededshipments was delayed in the early part of the project; then, during the 1985 road maintenancecampaign, only a single brigade was able to operate using equipment from the Second HighwayProject that had been temporarily repaired. However, by 1989, large amounts of bilaterallyfinanced road maintenance equipment were arriving, intended for use by provincial maintenanceunits; since these units had never been set up (contrary to assurances at effectiveness of the ThirdHighway Project), OPR became responsible for the new equipment. Therefore, OPR ended upwith a plethora of trucks, which often carried goods and were used for other purposes unrelatedto the project, but without enough graders, urgently needed for maintenance.

51. The purchasing agent for spares was engaged in January 1987 but ended up purchasingonly minor amounts of spares financed under the IDA credit. The bulk of spares and materialspurchase was to have been financed by BADEA, but BADEA rejected both the purchasing agentarrangement and every other spares procurement arrangement proposed. According to theCompletion Report completed by project consultants, no equipment or spares was ever purchasedfor this project with BADEA funds.

52. The closing of the special accounts from December 1985 to June 1987, through whichmuch of the original SDR 3.2 million in Category 1 for equipment-based maintenance andrehabilitation was to have been disbursed, resulted in major disbursement delays in 1985-89, aswell as contributing to the reallocation of most of the amount under this Category to resurfacingworks (Category 4B). Another cause of IDA disbursement delays was the two-year delay instartup of major reconstruction and resurfacing works (from 1985 to 1987). Actual IDAdisbursements as a percent of appraisal estimate were only 6% in FY85, rising to 58% by 1989;the addition of US$10 million to project cost in 1990 resulted in disbursements of 103% and120% in 1990 and 1991 (see Table 3-A, Part IH).

53. On the Borrower's side, shortages of counterpart funding to pay contractors andconsultants, particularly acute from 1988, and chronic inability to pay staff salaries on time(delays of three to six months were normal), along with non-payment of bonuses required toincrease performance in operations where wages and salaries remain below survival level, werealso a major cause of shortfalls in performance and delays throughout the Third Highway Project.Despite assurances at effectiveness, either the special local counterpart funding account was neveropened, or it was opened but never functioned prior to the December 1985 shutdown of thespecial accounts, because in July 1988, an IDA supervision mission was happy to note that thisaccount had recently been opened for the first time. In the absence of local currency accounts,all local payments had to follow Government's time-consuming payment process. Even afteraccumulating the more than 30 signatures required, an invoice would only be paid if sufficientfunds were available, a fact known only to the signatory of the final check, Guinea's Treasurer.

54. Counterpart funding shortfalls and delayed local cost payments penalized the labor-basedmaintenance program (cantonnage); according to the Completion Report prepared by projectconsultants, the pilot cantonnage teams which were organized in the Mamou district inl990 couldnot be sustained because payments were not regular and adequate. Cantonnage contracts includingtraining and monitoring of 10-15 man jobber teams are now being financed under the FourthHighway Project. Other delays attributed to local counterpart funding problems in the ThirdHighway Project are the preparation of final enginering and bidding documents for the repavingwork which were held up because a minor topographical task could not be paid for, and the

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execution of the paving works themselves (the contractor threatened on two occasions to abandonthe works if huge backdue invoices of local costs were not paid).

55. Economic Impact. For the road maintenance component, the rate of return is estimatedat 36%, compared with more than 100% in the SAR. The SAR assumed that maintenance wouldbe regularly carried out, and in particular, that routine maintenance would be carried out everyyear. Under these conditions, periodic and routine maintenance together would give rise to astream of benefits over the lifetime of the roads. Actually, this was not the case. Grading wascarried out once only, and not on rehabilitated or regravelled roads. For the construction andresurfacing component the rate of return is 24%. ERRs per subcomponent are as follows:

- Conakry-Mamou : 26%- Mamou-Labe : 17%- Mamou-Kissidougou: 25%- Dubreka-Forecariah : 32%

In the SAR, the rate of return for the construction of the Conakry-Mamou Road was estimatedat 75%. The difference can be explained by cost escalation and traffic shortfalls compared to1980 traffic levels which were used in calculating SAR rates of return. The SAR estimated therate of return of the resurfacing subcomponent at 41 %. Rates range from 17% to 32%.

56. Project Sustainability. By the completion of the Third Highway Project, efforts initiatedunder this project and followed up under the Transport Sector Project and the Fourth HighwayProject had established in Guinea four conditions required for a sustainable framework for roadmaintenance and investment: (a) sound planning, including regular traffic data collection; (b)development of maintenance and construction standards based on local conditions; (c) a self-sustaining source of domestic funding for maintenance and rehabilitation; and (d) institutionalarrangements which allow for competitive local bidding for routine maintenance and periodicmantenance works, with frequent visual and geotechnical supervision to assure quality of workperformed. The transport planning unit first established within OPR and transferred into theMinistry during the 1986 reorganization, has continued to collect traffic data, an activity begunby consultants financed under the Third Highway Project. The road system has been classified,and typical technical and standard bidding documents, which take into account Guinea's rainfalland terrain conditions, are being prepared for spot improvement works under the Fourth HighwayProject. Establishment of the Road Fund in 1990, a condition of effectiveness of the FourthHighway Project, is intended to provide a sustainable local funding source for road maintenanceand rehabilitation. The new institutional setup allows SOGUITRO (a works contracting andequipment rental company formed from OPR's operational divisions) to bid for maintenanceworks, to be paid for by the Road Fund. Whether this will prove a satisfactory arrangementremains to be assessed after completion of the ongoing projects.

57. For such a program to be institutionally as well as financially sustainable with localresources, two further conditions would have to have been fulfilled: adequately trained andremunerated local staff, and Government commitment to cost-effective resource use, i.e., givingfirst priority to routine maintenance, especially of newly paved or regravelled roads. Despite theThird Highway Project's ambitious objectives, these objectives were poorly achieved except forearly successful computer training, and later short courses in Belgium, of which no report on

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results is yet available. Therefore, staff training continues to be a priority under the follow-onprojects. Because basic road infrastructure were lacking at the end of the First Republic,Government priorities have so far left routine maintenance in last place, with first place goingto large-scale paving works and spot improvements. However, a pilot labor-based routinemaintenance component is now underway with IDA support under the Fourth Highway Project,and more emphasis is given on road maintenance in the future Transport and Urban InfrastructureProject under preparation (FY93).

I. Bank Performance

58. Although the highway engineer who had supervised the Second Highway Project andappraised the Third Highway Project went on record in 1984 saying that two short supervisionmissions during the dry season were not enough to adequately supervise a single highway project,two-person supervision missions with both engineer and economist were carried out but once ayear, complemented by one-week, one-person missions once or twice a year. Despite thesubstantial resources allocated to the project, these were mostly concentrated in the appraisal andstartup stages. Bank staff carried out nine missions, including four by the Loan Officer, prior toproject effectiveness, and 24 supervision missions between November 1984 and October 1991(three to four missions a year). However, from mid-1987, the supervision missions covered boththe Third Highway Project and the Transport Sector Project; in mid-1988, the Fourth HighwayProject was added to the supervision load. Therefore, none of the six missions which addressedproblems in the Third Highway Project between October of 1986 and August of 1988, a periodof intensive preparation and startup for the Transport Sector Project, filed a supervision summary(Form 590) for the Third Highway Project.

59. Not enough engineering staff were available to supervise the project. Because of theorganizational and institutional issues which had to be addressed in Conakry, no time wasallocated to visit roads and works. Over its ten-year lifespan, the project had four task managers,of which the first and last were highway engineers; during the five core years of implementation(1986-1990), an economist and then a financial analyst managed the project. While the economistwas almost always accompanied by an engineer, from 1988 to mid-1990, a staff engineeraccompanied Third Highway Project supervision missions only once a year, with a short interimvisit by a Senior Engineer on two other occasions. The May 1990 supervision mission was thefirst to include a highway engineer who would also soon be taking over as task manager, whichwould ensure a smoother transition between the two task managers. This mission was also thefirst time in at least two years that a Bank mission had taken a comprehensive first-hand look atroad maintenance, based on site visits covering thousands of kilometers of road. Such first-handvisits are especially important in situations, such as those in Guinea during this period, when themaintenance and rehabilitation works were suffering from a number of problems, and theincentives were great for local staff and consultants to overstate achievements.

60. Some other weaknesses can be found in Bank supervision: (a) the procurement reviewsappeared to focus more on details of wording than on selection of competent bidders or solvingproblems; (b) information on the progress of the most expensive single project component, theConakry-Mamou Road, goes virtually unmentioned in Bank supervision reports (only workssupervision was IDA financed since AfDB had taken over financing of construction following a

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procurement dispute); Bank staff also understated project problems in the supervision summaries,in contrast to the stronger wording of aide-memoires left in the field.

61. A more substantive, technical issue is raised by the reluctance of Bank staff to face upto the issue of gross underestimates of works required for road maintenance and rehabilitation.Despite admissions in a number of supervision reports that in fact, adherence to specificationsestablished at appraisal could barely keep road surfaces from deteriorating further, these werecoupled with insistence on keeping costs down as much as possible. Only when faced withincontrovertable evidence in the case of the repaving of the Labe-Mamou-Faranah sections in thelater years of the project, did the Bank accept the tripling of the cost over appraisal estimates inorder to compensate for overly optimistic feasibility study estimates of road works and omissionof essential drainage works in these estimates, and severe deterioration over the six to seven yearssince the feasibility study's completion.

62. The lack of coordination between the various parties involved in Guinea was also anissue. Supervision reports did not record any communication or coordination between the Bankproject teams and the IMF and Country teams during economic reform. The reports deplored theclosure of special accounts in 1986 and 1987 but did not indicate whether this was a deliberateand necessary, or only an accidental, casualty of banking reform under structural reformprograms designed by IMF and Country teams. However, Programs' loan officer must becredited with successfully quashing French-led efforts to push through economically unjustifiedinvestment in rail infrastructure during 1985 donors' meetings, since Government and donors hadin principle agreed to postpone any new transport investment until after completion of thetransport investment study financed under the Third Highway Project.

J. Borrower Performance

63. Government's failure to provide adequate counterpart funding, delays in the payment ofwages and salaries, non-payment of bonuses, and inability or reluctance to simplify local costpayment procedures have already been noted, along with the tendency to solicit bilateralequipment purchases without reviewing actual needs or discussing them with Bank staff. Also,despite strong and effective leadership by the Guinean Project Director and the Secretary forPublic Works, particularly prior to merging of Transport and Public Works into a single Ministryin mid-1988, and efforts made to achieve the Project's objectives, other priorities, more orientedtowards new construction than towards road maintenance, came from outside the Ministry. Forexample, much of the year lost seeking cofinancing for the project in 1982 could have beenavoided, had Government preferred to request that financing zrailable from Middle Easternsources be used for the Third Highway Project, rather than for the paving of a 132-km road inthe southeast region (Nzerekore-Gueckedou) at a cost of US$96 million. This preference for newconstruction emerged more definitely following a change of Works Secretary in mid-1988.

K. Project Relationship

64. While differences in legal requirements and procurement procedures ultimately led to non-disbursement of BADEA cofinancing for equipment, spares and supplies, coordination withAfDB, the other major project cofiancer, during implemention was good, including

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coordination of supervision missions at the first stage of Project implementation. AfDB had beenable to take over financing of the Conakry-Mamou Road in early 1986 when Bank objections toprocurement procedures for this contract threatened to delay its startup. Fortuitously, improvedworking conditions following economic liberalization had drawn more bidders and lowered bidscompared to what had been anticipated at appraisal, so that AfDB funds were sufficient to financethe entire foreign exchange needs of the contract (although cost overruns later necessitatedsupplementary AfDB financing).

L. Consulting Services

65. The institutional arrangements devised at appraisal sought to establish clearresponsibilities for works program supervision and works execution within OPR by assigningseparate consultants to support each function. Tbis arrangement, developed in a political contextin which privatization of works execution was impossible, proved unworkable and was revisedin 1986 in the more liberal economic context of the next regime. The engineering consultantrecruited under the Project was the same firm which had performed variably, at timesunsatisfactorily, as project consultants in the First and Second Highway Projects (LouisBerger/Tractionnel). Therefore, this firm was supervising another group of consultants selectedas contractor consultants who were in fact replacing them in their former operational role. Thiswas infortunate and set the scene for the worst possible working environment, in which theGuinean project director (OPR head) found himself arbitrating between the two groups ofexpatriates. Moreover, the contractor consultants performed poorly in support of maintenanceoperations: slow startup, failure to establish cost accounting procedures until late 1988, failureto assign needed technical staff to maintenance brigades and to carry out on-the-job training,repatriation of a works supervisor and a mechanic following irregularities (sale of project spareparts) in March 1986, and failure to replace the repatriated staff for nearly a year. The same firmalso performed poorly on three contracts (repaving of Mamou-Labe, Mamou-Faranah and 19bridges) because of poor worksite organization and poor choice of supervising staff. The situationdeteriorated further when the same engineering consultant was selected for supervising theseworks.

66. The operational framework within which consultants had to provide assistance was notdesigned for encouraging good performance. Successful execution of the assignment which theseconsultants had been given would have required a creative response to a challanging situation,but this did not happen. The consultants were unable to perform tasks required in order to carryout good maintenance works: careful analysis and tailoring of technical solutions to the specificconditions of each portion of the road section; an ability (and desire) to work closely with, andfoster skill development in, local maintenance brigade staff; and above all, an underlying levelof interest in succeeding at a specialized task which this contractor had not previously undertaken.These responses would have been expected from the contractor if financial incentives had beenincluded in its contract, but the provision for performance-related bonus payments had beenstricken from the firm's original contract with Government because this type of clause was notpermitted under Bank procurement guidelines for consultants. Finally, all this was taking placein an organizadon which was supposed to be learning how to operate as if it were actually acontractor. However, OPR's management had neither the ability to hire and fire staff (antil1987), set salaries or wages, nor pay its suppliers.

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M. Project Documentation and Data

67. Filing and reporting were uneven. An enormous amount of documentation was availablefor the preparation of this completion report, including about 4,000 pages of internal filescovering a ten-year period. Absorbing and synthesizing the mass of material would have beenmade much easier if as suggested by a Bank reviewer of the July 1986 supervision report, allsupervision reports had included a tabular format recording for each component, achievementsin kilometers during the period under review, compared to targets set at appraisal. The November1987 supervision report was missing from the files and had to be retrieved from Transport SectorFiles. Another missing report, that of the November 1984 effectiveness mission, could not belocated, nor could a number of annual maintenance operations reports and audit reports preparedby consultants. Also from 1987, when the Bank reorganized and available resources formaintaining files and other support tasks were reduced, the files contain much lesscorrespondence than in the earlier years and many more "loose ends" (beginnings of stories towhich the ends are missing or vice versa).

N. Findings and Lessons Learned from Experience

68. Project Preparadon

(a) At the time of appraisal, closer attention needs to be given to accurate assessmentof work volume and definition of realistic and appropriate physical standards,including drainage.

(b) Implementation schedule and related contingency allowances should be based inlight of experience in previous Projects in the country.

69. Project Implementaton and Supervision

(a) More resources should be allocated by the Bank for supervision. At the time ofthe Third Highway Project, internal coefficients used in Bank-wide resourceallocation favored new loan preparation to the detriment of project supervision.Some Project issues could have been addressed more quickly through longersupervision missions.

(b) More coordination is needed between sector operations teams and countryoperations teams, and eventually with IMF teams.

(c) The impact of a significant change in the political, economical and financialsituation of the country on the Project should be assessed and the definition ofthe Project should be redefined on the basis of this assessment, if necessary.

(d) Although the Bank recommends a system of incentives, for example in order toimprove the performance of staff in the ministries in developing countries,consultants hired under Bank's financing are not subject to a similar systemwhich is not allowed by the Bank's procurement procedures. Poor performanceof consultants is an issue that still needs to be addressed in Sub-saharan Africa.

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Improved performance of technical assistance would accelerate capacity-buildingand reduce supervision needs.

(e) Detailed review of documents and rigorous adherence to Bank's procurementguidelines do not guarantee a good performance of the contractor.

70. Insitutions

(a) Setting-up new institutions requires careful and time-phased design ofcomponents. Specific definition of institutional arrangements, a detailed action-plan and timetable are preferable to vague assurances concerning theestablishment of a new structure or organization.

(b) Some institutional arrangements may be difficult to implement. Decision can betaken either to go ahead or to wait that the overall framework be ready for thisImplementation. The choice made under the Third Highway Project, to go aheadproved to be adequate because the preliminary measures led to a betterpreparation of future projects, and finally to an acceleration in improving theinstitutional framework.

(c) The issue of Borrower's failure to provide counterpart funding and timelypayment of staff salaries has to be addressed quickly to avoid compromising theProject's objectives.

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REPUBLIC OF GUINEATIRD HIGHWAY PROJECT

CREDIT 1457-GUI

PROJECT COMPLETION REPORT

PART II. PROJECT REVIEW FROM BORROWER'S PERSPECTIVE

Borrower's input pending

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REPUBUC OF GUINEATHIRD HIGHWAY PROJECT

CREDIT 1457-GUI

PROJECT COMPLETION REPORT

PART IH. STATISTICAL INFORMATION

1. RELATED BANK LOANs AND/OR CREDfTs

Credit Title: Credit 953-GUI and EEC-33-GUI, Highways II

Purpose: Road Rehabilitation and Maintenance

Year of Approval: 1979

Status: Completed in mid-1984

Credit Tide: Credit 1815-GUI, Transport Sector

Purpose: Sectorwide rehabilitation and upgrading of essential transport infrastructureand policy program.

Year of Approval: 1987

Status: On going

Credit Title: Credit 1915-GUI, Highways IV

Purpose: To increase the National Road Network and enhancing its level of service; andstrengthening the new Ministry of Transport and Public Works' capability formanaging the National Road Network.

Year of Approval: 1988

Status: On going

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2. PROJECr TIMErABLE

Item Original Date Revised Date Actual DateIdentification 11/81Pre-appraisal MissionAppraisal Mission 01/83 01/83Credit Negotiations 06/83 03/83Board Approval 08/83 04/17/84Credit Signature 05/01/84Credit Effectiveness 12/06/84Credit Closing 09/30/89 09/30/91 09/30/91

3. CREDIT DISBURSEMENTS

A. Cumulative Estimated and Actual Disbursements(US$ million)

Fiscal Year FY85 FY86 FY87 FY88 FY89 FY90 FY91 FY92

Appraisal Estimate -- 10.5 17.4 23.1 26.6 28.0

Actual 1.6 2.9 5.5 9.2 16.1 28.7 33.5 --

Actual as % of Estimate 6% 11 20% 33% 58% 103% 120% --

B. Allocation of Credit Proceeds(SDR million)

Original ActualCategory Allocation Disbursement

(1) Maintenance Rehab. Works PTA 3.210 0.455

(2) Civil Works & Materials 12 81 0.170 0.295

(3) Equipment for PTS B2, C3 0.850 2.54S

(4-A) Reconstruction of the 4.320 0.000Conakry-Mamou Road

(4-8) Resurfacing for PT E2 5.820 15.334

(5) Consultants-Training PTS C,D 5.640 7.209

(6) Initial deposit Special Account 0.500 0.113

(7) PPF 279-GUI 0.950 0.210

(8) Unallocated 5.040 0.000

TOTAL 26.500 26.'.61in"gt :mm=

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4. PRoJECT IMPLEMENTATION

Indicators Appraisal Estimate Actual or PCR Estimate

Indicator I Establishment of the Road Project Office

Indicator 2 Road Construction Equipment Renewal

Indicator 3 Reconstruction of Conakry-Mamou Road byContractors

Indicator 4 Periodic Maintenanc of Paved Roads by Contractors

5. PRoJECT COSTS AND FINANCING

A. Project Costs

SAR Esimates Actual Costs

itLln Local Cos o Toa Loa t 1 Foreign T Total

Plus Taxes j_Costs__ Cost Plus Taxes j_Costs Cost

A-1. Labor-based Maintenance 2.867 0.0 2.867 0.675 0.583 1.258Works

A-2. Equipment-basedMaintenance and 8.377 7.446 15.823 6.766 10.422 17.188Rehabilitation Works I

A-3. Equipment renewal, 0.150 7.281 7.431 0.081 3.259 3.340buildings

A-4. TA, audit, traiing 0.668 8.174 8.842 0.483 9.500 9.983

B-1. Rhabilitation Conakry- 7.217 20.S42 27.749 3.778 34.056 37.834Mamou Road

B-2. Resurfacing of paved 2.856 8.130 10.986 6.417 19.636 26.053roads

GRAND TOTAL 22.136 51.572 I____70 ____9_ 7.4

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B. Project Financing

Source SAR Estimates Actual Total Highway III Other Projectsl_________ |USS Million USS Million Project

IDA 28.0 41.9 33.5 8.4

ADB| 14.6 36.8 34.1 2.7

BADEA 9.0 4.8 4.8 0.0

JAPAN 0.0 5.1 5.1 0.0

Government 22.1 20.3 18.2 2.1

_TOTAL I 737 108.9 9 57 13.2

6. PROJECT RESULTS

A. Economic Impact

Economic Rate of Return | SAR Estimate | Actual (at Fial Development)

Highway Maintenance Program 100% 36%

Paved Road Rehabilitation and 65% 14%Resurfacing

Total Project 16%

B. Studies

Purpose as DefinedItem at Appraisal Status Impact of Study

Transport Plan Study Prepare medium-term Study completedtransport plan and afollow-up road mainte-nance & rehabilitationprogram.

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7. COMPLIANCE WITH LEGAL COVENANTS

Credit Asreenent Condition Statw

Section 2.02 (b) Borrower to open and maintain in a Special Account, and operate It Complied.in accordance with Schedule 4 of the Credit Agreement

Section 3.03 For the purposes of Parts A, B and C of the Project, the Borrower Complied.shall:(a) not later than 10/31 of each year, submit to IDA for itsreview, a program for road construction, spot improvement and roadmaintenance to be carried out during the following year;(b) establish and maintain a Road Fund on terms and conditionssatisfactory to IDA and replenish said fund on the 1st day of eachquarter during which the Project is executed.

Section 3.04 For the purposes of Part B, the Borrower shall:(a) submit to IDA for approval, model technical and standardbidding documentsfor spot improvement works; Final draft submitted.(b) circulate after consultation with IDA, guidelines for theidentification, selection and execution of spot improvement works.

Complied.

Section 3.05 For the purposes of PArt C.1 of the Project, the Borrower shall In progress.submit a program to IDA for review for the periodic maintenance ofthe national road network by qualified and experiencedcontractors.

Section 3.06 The Borrower shall employ consultants to assist the road Complied.maintenance division of OCTP in the execution of Part C.2 of theProject.

Section 3.07 For the purposes of Part D, the Borrower shall not carry out any Not complied.final engineering design unless the estimated ecornmic rate of Kankan-11 Zerekorereturn, calculated on the basis of methods satisfactory to IDA engineering design isexceeds 10X, and works are expected to start within a period of on-going withoutthree years. feasability study

carried out.

Section 3.08 For the purposes of Part E, the Borrower shall: Complied.(a) submit to IDA the training program to be undertaken by thecandidates for foreign felLowships;*b) take all necessary measures to ensure all staff havingreceived such training, remain assigned for a period of at least3 years.

Section 3.09 The Borrower shall complete the transfer of responsibilitiesfor Complied.maintaining and improving rural tracks from DGTP to the Ministryof Agriculture and Animal Resources.

Section 4.01 (a) Maintain recors and accounts adequate to ref tect resources and Complied.expenditures, in respect of the Project, of the department or theagencies of the Borrower.

Section 4.01 (b) Have the Special Account and all other Project Accounts audited Complied with beforefor each fiscal year by independant auditors acceptable by IDA. 1990.

1990 audit on-going.

Section 4.01 (c) For all expenditures with respect to which withdrawals from the Complied.Credit Account were made on the basis of SOE, the Borrower shallmaintain records and accounts; retain, until at least one yearafter issue of audit report; enable IDA's representative toexamine such records; and ensure that the audit report containsseparate opinion by the auditor as to the reliability of theraised withdrawals.

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8. USE OF BANx RESOuRCES

A. Staff Inputs(Staff Weeks)

Activity PY81 1.Y82 I Y Y84 FY8 PY86 E Y87 FY88 M89 FY90 FY91 FY92 TOTAL

Preappraisal 5.2 6.9 - - - 12.1Appraisal - 12.9 39.2 23.4 - - - - - - - - 75.5Negotiations - - - 4.7 - - - - - - - 4.7Supervision - - - 1.7 18.9 19.8 12.4 7.9 15.2 12.5 4.5 1.1 94.0Other - - - - - - - - - - - .9 .9

TOTAL 5.2 19.8 39.2 29.8 18.9 19.8 12.4 7.9 15.2 12.5 4.5 2.0 187.2

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B. Mission Data

Month/ No. of Days in Performance Types ofActivity Ya Persons Eld Siccialization Ratine P

Identification 02/81 2 12 HE,TE n.aPrparation 06/81 1 7 HE n.a.Preappraial 03/82 4 17 HE,EC n.a.Appris 02183 4 18 E,EC,TRP,EDC n.a.Post Appraisal 1 03/83 1 14 LO n.a. Availability of CorinancingPost Appraisal 2 08/83 1 5 EC n.a. Availability of CofinancingPro-Negotiations 11/83 1 12 LO n.a. Availability of CofinancingNegotiations 03/84 5 - LE,HE,EC,LOA,LOPost Negotiations 06/84 1 4 LO n.a. Transport Investmnent

Supervision 1 11/84 2 10 HE,EC n.a. Effectiveness and startupPost Effectiveness 03/85 1 12 LO n.a. ProcuremnentSupervision 2 04/85 1 7 HE n.a. Limited SupervisionSupervision 3 05/85 4 12 2 E,EC,DF 2 Managerial, TechnicalSupervision 4 11/85 4 9 E,EC, 2TRP 2 Project ManagementSupervision 5 02/86 3 12 EDC,E,EC 2 Availability of Funds, and bMm_tSupervision 6 04/86 1 2 EC n.a. Limited SupervisionSupervision 7 06/86 2 20 HE,EC 2 Availability of Funds, and

Management.Supervision 8 10/86 1 12 HE 3 Availability of Funds, and

Management.Supervision 9 01/87 2 S HE,EC n.a. Limited SupervisionSupervision 10 07/87 2 4 EC,HE n.a. Limited SupervisionSupervision 11 11/87 2 3 PA,HE n.a. Limited SupervisionSupervision 12 03/88 1 2 TB n.s. Limted SupervisionSupervision 13 07/88 2 6 FA,CIS 2 Availability of FundsSupervision 14 11/88 1 4 PA n.a. Limited SupervisionSupervision 15 03/89 1 3 PA 2 Technical and OrganizationalSupervision 16 06/89 1 2 TE 2 Technical and OrganizationalSupervision 17 07/89 2 3 FA,CIS 2 Compliance with Legal Covenants

and Procurement Progress.Supervision 18 10/89 1 3 PA 3 Availability of Funds.Supervision 19 01/90 1 3 FA 2 Compliance with Legal Covenants

and Availability of Funds.Supervision 20 05/90 2 5 FA,HE 2 Availability of Funds.Supervision 21 09/90 2 4 FA,HE 2 ManagementSupervision 22 01/91 2 3 HE,TE 2 ManagementSupervision 23 05/91 3 6 HE,TE,FA 2 Procurement, ManagementSupervision 24 10/91 4 S HE,TE,2FA 2 Development Objectives

E = Engineer, EC Economist, DC = Division Chief, TRP = Transport Dcpartment PeopleEDC = Education, HE = Highway Engineer, CIS = Construction Industry Specialst,PA = Fmancial Analyst, TE = Transport Engineer, LE = Legal, LOA = Disbursement Officer,LO = Loan Officer, TEC = Transport Economist

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Annex

REPUBLIC OF GUINEATHIRD HIGHWAY PROJECT

CREDIT 1457-GUI

PROJECT COMPLEIION REPORT

ECONOMIC EVALUATION

Road Maintenance

1. The detail of maintenance works carried out under the Project by OPR is provided inTable 1. From 1985 to 1988, 829 km of roads have been regravelled, 409.5 km have beenrehabilitated and 3772 km have been reprofiled. A force account brigade was specialized on theurban network but no assesment of its activities was established.

2. OPR has not been able to sustainably maintain the roads and was consequently liquidated.This situation has been taken into account in the economic evaluation of the project whenconsidering that, in the situation with project, roads on which maintenance operations had beencarried out, were no further longer maintained. In the situation without project, roads weresupposed not to be maintained.

3. Grading operations are supposed to be carried out on roads in average condition. Thebenefits of grading are measured only during one year. Regravelling operations are executed onroads in poor condition, and rehabilitation on roads in very poor condition. Benefits are measuredduring a period of time depending of the traffic volume:

(a) less than 25 veh/day 8 years;(b) from 25 to 50 veh/day : 7 years;(c) from 50 to 100 veb/day : 6 years; and(d) more than 100 veh/day : 5 years.

4. During this period, the condition of roads is deteriorating and roads are in poor conditionat the end of the period.

Road construction works

5. The road construction works consisted in paving the following sections:

(a) Conakry-Mamou;(b) Mamou-Labe;(c) Dubreka-Forecariah; and(d) Mamou-Kissidougou.

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6. Roads were earth roads in very poor condition before the execution of works. Thepavement design was calculated for a 15-year period, at the end of which roads would be in poorcondition and need rehabilitation. Maintenance carried out on the new roads consists of astrengthening 7 years after construction. In the without project situation, roads are supposed notto be maintained.

Traffic

7. Traffic volumes are indicated in Table 2. Basic data are coming from a 1990 origin-destination survey. Traffic before 1990 were estimated by applying to the 1990 traffic the averageannual growth rate for passengers (8.4%) and goods (7.2%) corresponding to the variation ofvehicle-kilometers at 12 stations during the 1986/1991 period. Traffic volumes represent the long-distance traffic and consequently underestimate the values.

8. The 1990 OD survey was carried out during the months of July and August.Consequently, traffic volumes were adjusted by a coefficient taking into account the monthlyvariation of traffic, supposed equivalent to the monthly variation of fuel consumption amountingto 1.31.

Project Cost

9. The final report of the Technical Assistance gives an assessment of the works, goods andservices contracted during the period of the Project. The money of payment is also indicated.However, the exact period of disbursement is not known but for road construction contracts. Forother contracts, the annual amounts have been estimated based on the date of signature of thecontract and its forecasted period of execution.

10. The local counterpart provided by the Government for OPR operating expenses areindicated for each year of the Project in the above report.

11. All foreign currency expenses have been converted in local currencies using tie averageannual exchange rate which gives a result in current Guinean Francs. These amounts wereconverted in constant prices using the local consumer price index. Results are given in Table 3.

12. Works on Mamou-Labe and Mamou-Kissidougou were not completed when the Projectwas closed, and are still financed under the Fourth Highway Project. However, the economicevaluation has been carried out assuming that all costs and all benefits were charged to theProject.

Project Benefits

13. Benefits are coming from the reduction of vehicle operating costs (VOC). 1996 valueson paved road in good condition are coming from the 1987/1996 Plan of Transport carried outduring the Project. Values in 1985, starting year of the Project, are deducted from the 1986values by the application of the price revision index between 1985 and 1986 and ratios provided

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by the Third Highway Project Staff Appraisal Report for other conditions and other qualities ofroads. The road condition deteriorating after road improvement, annual VOCs values areinterpolated between the value after works are executed and the value at the end of the period oflife of the works according to the periods of time defined in para. 3.

Results

14. Costs and benefits flows are presented in Tables 4 to 9 for the road maintenancecomponent, for the road construction works and for the entire Project. OPR operating expenseswere charged to the road maintenance component. Rates of retrun are as following:

(a) road maintenance : 36%(b) Conakry-Mamou : 26%(c) Mamou-Labe 17%(d) Mamou-Kissidougou 25%(e) Dubreka-Forecariah 32%(f) entire Project 26%

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GUINEA -- Third Highway Project Credit 1457-GUIProject Completion ReportECONOMIC STUDY

CONAKRY-MAMOU 15.50887Investment Maintenance Benefits Total 1.263

1986 919 -919 -9191987 2788 -2788 -22081988 2076 -2076 -13011989 1978 -1978 -9821990 3074 -3074 -12081991 843 -843 -2621992 -20 5474 5454 13441993 -20 5473 5453 10641994 -20 5483 5463 8441995 -20 5503 5483 6701996 -20 5533 5513 5341997 -20 5573 5553 4261998 -20 5621 5601 3401999 -3893 5677 1785 862000 -20 8459 8439 3212001 -20 9128 9108 2742002 -20 10052 10032 2392003 -20 11313 11293 2132004 -20 13024 13004 1942005 -20 15337 15316 1812006 -20 17646 17626 165

GUINEA -- Third Highway Project Credit 1457-GUIProject Completion ReportECONOMIC STUDY

MAMOU-LABE -3Investment Maintenance Benefits Total 1.172

1986 420 -420 -4201987 502 -502 -4281988 1219 -1219 -8871989 1504 -1504 -9341990 2650 -2650 -14041991 257 -257 -1161992 -12 1497 1485 5731993 -12 1534 1522 5011994 -12 1572 1560 4381995 -12 1611 1599 3831996 -12 1651 1639 3351997 -12 1692 1680 2931998 -12 1734 1722 2561999 -2184 1777 -406 -522000 -12 2327 2315 2512001 -12 2494 2482 2302002 -12 2710 2698 2132003 -12 2992 2979 2012004 -12 3363 3351 1932005 -12 3856 3844 1882006 -12 4378 4366 183

. 34 -

GUINEA -- Third Highway Project Credit 1457-GUIProject Completion ReportECONOMIC STUDY

MAMOU- KISSIDOUGOU -4Investment Maintenance Benefits Total 1.251

1986 0 0 01987 220 -220 -1751988 470 -470 -3001989 896 -896 -4581990 2059 -2059 -8411991 1331 -1331 -4341992 125 -125 -331993 -15 1978 1962 4091994 -15 2027 2011 3351995 -15 2077 2062 2751996 -15 2128 2113 2251997 -15 2181 2166 1841998 -15 2235 2220 1511999 -15 2291 2276 1242000 -1700 2348 647 282001 -15 3215 3199 1112002 -15 3492 3477 972003 -15 3856 3840 852004 -15 4334 4319 772005 -15 4969 4954 702006 -15 5817 5802 662007 -15 6744 6729 61

GUINEA -- Third Highway Project Credit 1457-GUIProject Completion ReportECONOMIC STUDY

DUBREKA- FORECARIAH -1Investment Maintenance Benefits Total 1.316

1986 0 0 01987 0 0 01988 582 -582 -3361989 360 -360 -1581990 71 -71 -241991 0 -4 457 453 1151992 0 -4 468 464 891993 -4 480 476 701994 -4 492 488 541995 -4 504 500 421996 -4 516 512 331997 -4 529 525 261998 -338 542 204 81999 -4 710 706 202000 -4 728 724 152001 -4 780 776 132002 -4 847 843 102003 -4 935 931 92004 -4 1051 1048 72C-1 -4 1169 1166 6

- 35 -

GUINEA - - Third Highway Project Credit 1457-GUIProject Completion ReportECONOMIC STUDY

TOTAL INVESTMENT COMPONENT 17Investment Maintenance Benefits Total 1.243

1986 1339 0 0 -1339 -13391987 3510 0 0 -3510 -28241988 4347 0 0 -4347 -28141989 4738 0 0 -4738 -24671990 7853 0 0 -7853 -32901991 2431 -4 457 -1978 -6671992 125 -36 7439 7278 19731993 0 -51 9464 9413 20531994 0 -51 9573 9522 16711995 0 -51 9695 9644 13611996 0 -51 9829 9778 11111997 0 -51 9975 9924 9071998 0 -385 10133 9748 7171999 0 -6095 10456 4360 2582000 0 -1737 13862 12125 5772001 0 -51 15616 15565 5962002 0 -51 17101 17050 5252003 0 -51 19096 19045 4722004 0 -51 21773 21722 4332005 0 -51 25331 25280 4052006 0 -47 27841 27794 3592007 0 -15 6744 6729 70

GUINEA -- Third Highway Project Credit 1457-GUIProject Completon ReportECONOMIC STUDY

TOTALTHIRD HIGHWAY PROJECT -37Investment Maintenance Benefits Total 1.262

1985 362 0 0 -362 -4571986 1842 0 660 -11e2 -11821987 6403 0 1724 -4679 -37081988 4837 0 1723 -3114 -19551989 5321 0 1802 -3518 -17511990 8376 0 1526 -6850 -27001991 2435 -4 1874 -565 -1761992 125 -36 8324 8163 20211993 0 -51 10074 10023 19661994 0 -51 9822 9771 15191995 0 -51 9956 9905 12201996 0 -51 10047 9996 9751997 0 -51 9975 9924 7671998 0 -385 10133 9748 5971999 0 -6095 10456 4360 2122000 0 -1737 13862 12125 4672001 0 -51 15616 15565 4752002 0 -51 17101 17050 4122003 0 -51 19096 19045 3652004 0 -51 21773 21722 3292005 0 -51 25331 25280 3042006 0 -47 27841 27794 2652007 0 -15 6744 6729 51

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o,,,ft b. (.WKIA io-7 Riverss n o--.

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/ tlIERIA j KILOMETERS 0 40 80 120 160 Y

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