Document of The World Bank IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA IDA-3550A) ON A CREDIT

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank Report No: ICR IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA IDA-3550A) ON A CREDIT IN THE AMOUNT OF SDR MILLION (US$162.0 MILLION EQUIVALENT) TO THE REPUBLIC OF MOZAMBIQUE FOR PHASE I OF THE ROADS AND BRIDGES MANAGEMENT AND MAINTENANCE PROJECT Transport Southern Africa 2 Africa Region December 20, 2007

2 CURRENCY EQUIVALENTS (Exchange Rate Effective June 30, 2007) Currency Unit = New Mozambique Metical (MZN) MZN1.00 = US$0.04 US$1.00 = SDR0.66 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS ANE APL CAS DCA DNEP DP EIA EIRR FM FMR GoM HIV/AIDS ICR ISR IDA INAV HDM km LDP M&E MMEMAP MoF MoPD MoPWH MoSA MoTC MTR NGO NVP PAD PARPA PDO PIP Administraçao Nacional de Estradas (National Road Administration) Adaptable Program Loan Country Assistance Strategy Development Credit Agreement Direcção Nacional de Estradas e Pontes (National Directorate of Roads and Bridges) Development Partner Environmental Impact Assessment Economic Internal Rate of Return Financial Management Financial Monitoring Report Government of Mozambique Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome Implementation Completion and Results Report Implementation Status Results Report International Development Association Instituto Nacional de Viação (National Traffic Institute) Highway Design and Maintenance Model (World Bank) Kilometer Letter of Development Program Monitoring and Evaluation Mitigation Measures and Environmental Management Action Plan Ministry of Finance Ministry of Planning and Development Ministry of Public Works and Housing Ministry of State Administration Ministry of Transport and Communications Midterm Review Non-governmental Organization Net Present Value Project Appraisal Document Plano de Acção para a Redução da Pobreza Absoluta (Action Plan for the Reduction of Absolute Poverty) Project Development Objective Project Implementation Plan

3 PRISE PRSP QAG QER RBMMP RED RF RMI ROCS RVP SDR TA UASMA VAT Programa Integrado do Sector de Estradas (Integrated Road Sector Program ) Poverty Reduction Strategy Paper Quality Assurance Group Quality Enhancement Review Roads and Bridges Management and Maintenance Project Road Economic Decision Model Road Fund Road Management Initiative Roads and Coastal Shipping Regional Vice President Special Drawing Rights Technical Assistance Unidade de Assuntos Sociais e Meio Ambiente (Social and Environmental Unit of the ANE) Value Added Tax Vice President: Obiageli Katryn Ezekwesili Country Director: Michael Baxter Sector Manager: C. Sanjivi Rajasingham Project Team Leader: Dieter E. Schelling ICR Team Leader: Subhash C. Seth

4 MOZAMBIQUE Phase 1 of the Roads and Bridges Management and Maintenance Project CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives, and Design Key Factors Affecting Implementation and Outcomes Assessment of Outcomes Assessment of Risk to Development Outcome Assessment of Bank and Borrower Performance Lessons Learned Comments on Issues Raised by Borrower/Implementing Agencies/Partners Annex 1. Project Costs and Financing Annex 2. Outputs by Components Annex 3. Economic and Financial Analysis Annex 4. Bank Lending and Implementation Support/Supervision Processes Annex 5. Summary of Borrower's ICR and/or Comments on Draft ICR Annex 6. Comments from Cofinanciers and Other Partners/Stakeholders 52 Annex 7. List of Supporting Documents MAP

5 A. Basic Information Country: Mozambique Project Name: Roads and Bridges Management and Maintenance Project Project ID: P L/C/TF Number(s): IDA-35500,IDA-3550A ICR Date: 12/20/2007 ICR Type: Core ICR Lending Instrument: APL Borrower: GOV.OF MOZ Original Total Commitment: XDR 127.4M Disbursed Amount: XDR 126.8M Environmental Category: A Implementing Agencies: ADMINISTRACAO NACIONAL DE ESTRADAS (ANE) Cofinanciers and Other External Partners: ISLAMIC DEVELOPMENT BANK African Development Bank (AfDB) Department for International Development UK (DFID) European Commission JICA OPEC Fund for International Development DANIDA Swedish International Development Agency (SIDA) Arab Bank for Economic Development in Africa (BADEA) Nordic Development Fund NORAD KFW Government of Ireland B. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: 01/13/2000 Effectiveness: 06/04/ /04/2002 Appraisal: 03/12/2001 Restructuring(s): Approval: 07/19/2001 Mid-term Review: 04/15/ /19/2005 Closing: 06/30/ /30/2007 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Risk to Development Outcome: Bank Performance: Borrower Performance: Satisfactory Moderate Satisfactory Satisfactory i

6 C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Moderately Satisfactory Agency/Agencies: Overall Bank Performance: Satisfactory Overall Borrower Performance: Satisfactory C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Performance (if any) Potential Problem Project No at any time (Yes/No): Problem Project at any time (Yes/No): DO rating before Closing/Inactive status: No Satisfactory Quality at Entry (QEA): Quality of Supervision (QSA): None None Rating D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration Health 1 1 Roads and highways Theme Code (Primary/Secondary) Gender Secondary Secondary HIV/AIDS Secondary Secondary Infrastructure services for private sector development Primary Primary Other accountability/anti-corruption Primary Primary Rural services and infrastructure Secondary Secondary E. Bank Staff Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Callisto E. Madavo Country Director: Michael Baxter Darius Mans Sector Manager: C. Sanjivi Rajasingham Maryvonne Plessis-Fraissard Project Team Leader: Dieter E. Schelling Abdelmoula M. Ghzala ICR Team Leader: ICR Primary Author: Subhash C. Seth Subhash C. Seth ii

7 F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The objective of the Project is to assist the Borrower in: (i) improving the coverage and conditions of roads and bridges in the territory of the Borrower; (ii) strengthening the Borrower's institutional capacity to manage and administer the road sector; (iii) establishing financing mechanisms for roads maintenance;(iv) promoting the use of local resources in roads construction and management; and (v) improving road transport safety. Project Performance Indicators: The Roads and Bridges Management and Maintenance Project (RBMMP), APL Phase 1, supported the Government's roads sector strategy and the four-year road program ( ). The following indicators were designed at sector level to assess the performance of each Project Development Objective (PDO). However the output indicators for the Bank's own target and specific contributions to project components are summarized in the main text Section 3.2 and Annex 2 "Outputs by Components" Table A. Revised Project Development Objectives (as approved by original approving authority) There were no changes in the project development objectives (PDO). (a) PDO Indicator(s) Indicator Indicator 1 : Value quantitative or Qualitative) Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Condition of roads improved -- length of road in good and fair condition (in km): Good - 11,500 Good - 6,000 Good - 11,500 Good - 8,900 Fair - Fair - 7,500 Fair - 3,500 Fair - 8,452 3,500 Total - 13,500 Total - 15,000 Total - 17,352 Total - 15,000 Date achieved 12/31/ /31/ /31/ /31/2006 Comments The actual value of good and fair roads (17,352 km) has exceeded the target (incl. % (15,000 km) by 15%. The rating of this PDO is assessed as "Satisfactory". achievement) Indicator 2 : Borrower's institutional capacity strengthened: Value quantitative or Qualitative) ANE Roads Board not operational ANE Roads Board operational ANE Roads Board operational ANE Roads Board operational Date achieved 12/31/ /30/ /31/ /31/2003 Comments (a) ANE Road Board was established in October 2003 and is now operational. iii

8 (incl. % achievement) Indicator 3 : (b) Due to shortage of technical manpower in Mozambique, sufficient staff could not be trained in technical and financial management. The rating of this PDO is assessed as "MS" Road Fund (RF) revenue generated to establish financing mechanisms for road maintenance: Value quantitative or Qualitative) US$28.7 m US$51 m US$55 m US$61.3 m Date achieved 12/31/ /31/ /31/ /30/2007 Comments (incl. % achievement) Indicator 4 : Value quantitative or Qualitative) RF revenues exceeded the targets by up to 20% each year starting RF was separated from ANE in 2003 as planned. The rating of this PDO is assessed as "HS". The use of local resources in road construction promoted: Material testing in progress but no technical specifications published Technical specifications published and applied in APL Phase 2 roads Technical specifications published and applied in APL Phase 2 roads Technical specifications published and applied in APL Phase 2 roads Date achieved 12/31/ /31/ /31/ /30/2007 ANE with the support of Univ. of Texas completed material testing on some Comments sections of road N-1. The new technical specifications were applied in the (incl. % design of APL Phase 2 roads, which is cost effective by 20%. The rating of this achievement) PDO is assessed as "S". Indicator 5 : Road transport safety improved: Value quantitative or Qualitative) Action plan to be updated Strategy approved by INAV Strategy approved by INAV Road safety strategy developed and action plan updated Date achieved 12/31/ /31/ /31/ /31/2006 Comments (incl. % achievement) Road safety strategy developed by the INAV has been approved and published by the MoPWH. All the agreed road safety activities could not be completed (see para. 50.E). The rating of this PDO is assessed as MU (b) Intermediate Outcome Indicator(s) Indicator Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Indicator 1 : Kilometers of roads that received routine maintenance. Value (quantitative or Qualitative) 10,000 km 14,000 km 14,000 km 13,100 km Date achieved 12/31/ /31/ /31/ /31/2006 Comments (incl. % achievement) Achieved 94%. The road km that received routing maintenance is 94% of the original target value. The road km that received periodic maintenance (1788 km) is also 94% of the original target value (1900km) (see Annex-2, Table B). iv

9 G. Ratings of Project Performance in ISRs No. Date ISR Archived DO IP Actual Disbursements (USD millions) 1 12/27/2001 Satisfactory Satisfactory /19/2002 Satisfactory Satisfactory /27/2002 Satisfactory Satisfactory /22/2002 Satisfactory Satisfactory /30/2002 Satisfactory Satisfactory /21/2003 Satisfactory Satisfactory /23/2003 Satisfactory Satisfactory /13/2003 Satisfactory Satisfactory /11/2004 Satisfactory Satisfactory /30/2004 Satisfactory Satisfactory /14/2004 Satisfactory Satisfactory /26/2005 Satisfactory Satisfactory /23/2005 Moderately Satisfactory Moderately Satisfactory /31/2005 Moderately Satisfactory Moderately Satisfactory /22/2005 Moderately Satisfactory Satisfactory /16/2006 Satisfactory Satisfactory /30/2006 Satisfactory Satisfactory /04/2007 Satisfactory Satisfactory H. Restructuring (if any) Not Applicable v

10 I. Disbursement Profile vi

11 1. Project Context, Development Objectives, and Design 1.1 Context at Appraisal 1. Mozambique became independent in 1975 and a peace agreement was signed in Since 2003, it has sustained real annual growth of more than 7 percent. The roads sector has made significant contributions to recovery by rehabilitating war-hit roads, providing access to isolated areas, and lowering transportation costs on primary roads. In August 1998, the government of Mozambique (GoM) announced its road policy and strategy, which gave priority to improving roads, expanding links to agricultural areas, securing access to ports, and upgrading corridors to neighboring countries. It also emphasized the need for: (i) providing sufficient resources for undertaking annual road maintenance regularly; (ii) decentralizing both management and decision making; (iii) strengthening institutions responsible for the management of the road network; (iv) promoting use of local resources in road works; and (v) incorporating social issues, such as road safety, HIV/AIDS prevention, and poverty reduction, into road programs. 2. The first goal of the GoM s roads sector strategy was to improve the north-south National Road N1 that runs from Maputo to Nampula and farther to Pemba. This road is critical to strengthen national unity, promote internal commerce, and improve access to major social, political, and commercial centers by significantly reducing travel times. The national Road N1 was and still remains the spine of the country s transportation system. For Mozambique s economy, it is essential to keep the N1 in trafficworthy condition. The second goal of the GoM s roads sector strategy was to ensure secure and continuous connection of all provincial capitals to National Road N1. With regard to the secondary road network, the government's priorities were to maintain and rehabilitate only those roads that were economically viable or that served social objectives. 3. Mozambique s classified road network the national and regional roads consists of 29,349 kilometers (km) of roads, of which 5,814 km (or 20 percent) are paved. No systematic survey exists on the extent and condition of the non-classified road network, but it is estimated that about 3,000 km of urban roads (about 500 km of which are paved) exist, in addition to 5,000 km of district roads, all unpaved. The total road network length is estimated at about 37,349 km (see Table 1). Table 1 Road Network of Mozambique (in kilometers) Type of road Paved Unpaved Total Classified roads 5,814 23,535 29,349 Urban nonclassified roads (estimate) 500 2,500 3,000 Rural nonclassified roads (estimate) 0 5,000 5,000 Total 6,314 31,035 37, The main issues that needed to be addressed in the roads sector at the project preparation stage are summarized as follows: Improving the coverage and condition of the roads network Connecting agriculturally productive areas to the rest of the country through improvements in the road network Strengthening capacity to manage roads sector activities effectively, sustainably, and transparently, at central and local levels

12 Ensuring the sufficient, timely, and stable flow of funds for roads maintenance, and establishing policies and processes for reviewing and adjusting funding sources for road maintenance Involving road users in setting road priorities and in monitoring and evaluating the roads program Decentralizing responsibilities to the regional institutions best able to bear them, and ensuring the accountability and transparency of these institutions Fostering the development of the national road construction industry, and finding the appropriate balance between the public and private sectors in the roads sector Improving roads safety, and Reducing the spread of HIV/AIDS that is associated with improved road networks 5. The GoM started its relationship with the World Bank through the First Roads and Coastal Shipping Project (ROCS-1) approved in 1992 and closed in 1999, followed by ROCS-2 approved in 1994 and closed in Under these two operations, 3,800 km of roads were rehabilitated, 3,000 meters of metallic bridges were installed, 2,000 km of roads received periodic maintenance, and more than 14,000 km received routine maintenance. In addition, significant progress in institutional strengthening and building human resource capacities was made through education and training in the highway sub-sector. Important institutional and policy reforms were initiated, including the creation of a Road Fund (RF) in 1995 within Direcção Nacional de Estradas e Pontes (DNEP) or National Directorate of Roads and Bridges (transformed to Administraçao Nacional de Estradas (ANE) or National Road Administration in 1999), separation of force account construction companies from DNEP in 1997, and privatization of a state-owned construction company (now called Construtora de Estradas Terrapalanas e Alcatroadas. (CETA). Under ROCS-2, the Bank also supported GoM in rehabilitation of some roads and bridges on emergency basis which were washed off during the floods of 2000/ This project, the Adaptable Program Lending Phase 1 (APL-1) to support the Roads and Bridges Management and Maintenance Program (RBMMP) was first in a series of three phases, and was designed to contribute to the GoM s high-level objectives of stimulating economic growth and reducing poverty through improved road infrastructure, better sector policies, and enhanced roads sector management. At the time of project preparation the GoM sent a Letter of Development Program (LDP) to the International Development Association (IDA) in May 2001, which provided an overview of the ten year road program to improve the primary and secondary road network in the country. The LDP also emphasized the gradual increase of road maintenance funding, and the shift from the emergency type of road operations under ROCS I and ROCS II to a more systemic approach under the RBMMP. An APL was designed to support the ten year program (2001 to 2010) at an estimated cost of US$1.7 billion (IDA contribution, US$432 million) in three phases. Phase 1, of four years duration, supported periodic maintenance, selected rehabilitation and institutional reforms in the roads sector. Phases 2 and 3 would be contingent on achievement of agreed triggers. This implementation completion and results report (ICR) is for APL-1, which supported GoM s four year road program ( ) at an estimated cost of US$703 million (IDA contribution, US$162 million). APL-1 was approved by the Board of the World Bank on July 19, 2001; became effective June 4, 2002; and was scheduled for closing June 30, It finally closed, however, on June 30, To move from APL Phase 1 to Phase 2 there were nine triggers and by June 30, 2007 the project closing date of Phase 1, seven triggers were fully achieved and two triggers were partially achieved. The fully achieved triggers were: (a) Phase 1 road program completed; (b) RF separated from ANE; (c) Roads Board fully functional; (d) RF provide agreed level of maintenance funds; (e) road safety plan satisfactory completed; (f) HIV/AIDS prevention measures related to the road sector implemented; and (g) preparatory activities of phase 2 satisfactorily completed. The two partially achieved triggers were: (a) financial management (FM) of ANE and RF is satisfactory (while the FM of the RF was fully satisfactory, ANE s FM still showed weaknesses this has been addressed in APL2 by moving the FM responsibility 2

13 from ANE to RF); and (b) financial and technical audits carried out (these were done but the quality of the technical audits was not satisfactory this has been taken into account in the design of APL2 through elaborate joint financial, technical and procurement audits agreed amongst all stakeholders). Given that the triggers for APL Phase 1 were substantially achieved, APL Phase 2 was approved by the Board on May 23, 2007 and the credit became effective on October 5, Original Project Development Objectives (PDO) and Key Indicators (as approved) 8. Project objectives. As stated in the Development Credit Agreement (DCA) the objectives of the RBMMP APL1 were to assist the Borrower in (i) improving the coverage and conditions of roads and bridges; (ii) strengthening the Borrower's institutional capacity to manage and administer the roads sector; (iii) establishing financing mechanisms for roads maintenance; (iv) promoting the use of local resources in roads construction and management; and (v) improving road transport safety. In addition, the secondary objectives were to help prevent the spread of HIV/AIDS and to encourage employment of women in the roads sector. 9. Key performance indicators. The key performance indicators included measures of improved road coverage and quality, such as size of the maintainable network, kilometers of roads under periodic maintenance, kilometers rehabilitated, traffic volumes, truck freight rates, and percentage of roads in fair or good condition. They included indicators of improved roads sector policies and management, such as implementation of institutional reforms intended to improve roads management; installation of new FM systems for the ANE and the RF; and periodic transfer of required amounts to the RF. They included management benchmarks, such as the time for tendering, contracting road works, and payment to contractors; and the percentage of works completed on time and within budget. Finally, they included measures of social impacts, such as decreases in number and severity of accidents per vehicle kilometer traveled, increase in HIV/AIDS awareness of people working on and living near roads included in the program, and number of women workers employed by the program. A comparison of the performance indicators planned at project appraisal in March 2001 and achieved by December 2006 is given in Annex 2, Table B. 1.3 Revised PDOs (as approved by original approving authority) and Key Indicators, and Reasons/Justification 10. The PDO and key performance indicators were not revised. 1.4 Main Beneficiaries 11. As envisaged in the Project Appraisal Document (PAD), the primary target group included several organizations and government agencies: the ANE, the RF, the Ministry of Public Works and Housing (MoPWH), the Ministry of Transport and Communication (MoTC), and Instituto Nacional de Viação (INAV; the National Traffic Institute). The project supported financing of civil works and capacity building programs through providing technical assistance (TA) in specialized areas, training of staff, and equipment. The provincial offices of the MoPWH also benefited from TA in strengthening management capacity in road maintenance. The program also contributed to economic growth and reducing poverty by lowering transportation costs, reducing travel time, increasing quality and coverage of roads, and improving sector policies. The program contributed to the national effort to prevent the spread of HIV/AIDS by carrying out awareness campaigns and distribution of condoms at work sites. The project s main beneficiaries identified at appraisal remained unchanged during project implementation. 3

14 12. The program also benefited the entire population, including road users, transporters, and rural dwellers, because the investments were targeted to improve the country's regional and national road network and to provide linkage with underserved rural areas. This provided rural people with better access to markets, health and education facilities, and other basic services. The program also provided social support to disadvantaged women by encouraging the employment of women at all levels and in all capacities. In addition, the program benefited nongovernmental organizations (NGOs), civil society organizations, and the private sector by providing them with the opportunity for employment generation through participating in the construction and maintenance activities of national and regional roads. Local contractors were allowed to use the benefit of domestic preference of 7.5 percent while competing with their international counterparts. 1.5 Original Components (as approved) As stated in DCA, the project comprised the following three components: Component A: Roads and Bridges 14. Carrying out periodic maintenance on about 525 km of primary roads in the provinces of Maputo, Gaza, Inhambane, Sofala, and Manica, through, inter alia (i) earthworks, including patch works, pothole repair, local reinforcement, single layer or double layer pavement, resurfacing of gravel roads, and resealing; (ii) maintenance and repair of road shoulders and drainage works; (iii) maintenance of the roadsides, including clearing of drainage structures and cleaning and reshaping ditches; (iv) drainage improvement, including rehabilitation of drains and ditches and masonry works; and (v) maintenance and repair of bridges. 15. Carrying out rehabilitation of about 313 km of N1 primary roads in the Borrower s provinces of Maputo and Inhambane, through, inter alia (i) full base reconstruction, asphalt strengthening overlays, selective deep patching and overlays, granular base overlay and surfacing, surface treatment with major shape correction, recycling of one or more pavement layers, vegetation control, repainting road markings, repairing and replacing road signs, and weigh bridge facilities; (ii) reconstruction of the roadsides, including clearing of drainage structures and cleaning and reshaping ditches; (iii) drainage improvement, including rehabilitation of drains and ditches and masonry works; and (iv) maintenance, repair, and rehabilitation of bridges. 16. Carrying out rehabilitation of about 412 km of rural roads in the Borrower s provinces of Gaza, Nampula, and Tete, through, inter alia, (i) improvement of structural strength, shape, drainage, ride quality, and performance; (ii) minor improvement to geometric and structural standards; and (iii) maintenance, repair, and rehabilitation of bridges. 17. Carrying out emergency repairs, design of tender documents, and supervision of works on roads and bridges made necessary by floods or other natural disasters. 18. Carrying out civil works and installation of traffic signs to improve road safety. Carrying out engineering design, preparation of bidding documents, and supervision of the abovementioned civil works through the provision of technical advisory services Component B: Institutional Strengthening and Policy Reforms 19. Establishment of an institutional framework for the roads sector through the provision of technical advisory services. 4

15 20. Capacity building of the ANE and the RF for management, technical and financial auditing, procurement, disbursement, accounting, financial management, and project management, through the provision of technical advisory services. 21. Establishment of a financial management framework for the ANE and the RF through the provision of technical advisory services. 22. Carrying out of the identification and implementation of road safety measures through the provision of technical advisory services. 23. Strengthening of the ANE s social unit responsible for addressing HIV/AIDS prevention measures and social and labor impact of roads activities, through the provision of technical advisory services. 24. Capacity building for carrying out training programs for environmental assessment and Mitigation Measures and Environmental Management Action Plan (MMEMAP) through the provision of technical advisory services. 25. Raising awareness of communities about the environmental issues regarding the project, including the publication of overviews regarding project operations, and carrying out communication campaigns regarding environmental issues, through the provision of technical advisory services. 26. Raising road user awareness, including consultations with road users regarding road maintenance, roads sector strategy, decisions on project issues, and need for the adjustment of road user fees by carrying out communication campaigns including workshops, through the provision of technical advisory services Component C: Strategy and Preparatory Activities for Further Investments 27. Carrying out revisions to and updating integrated roads sector strategy to incorporate priorities identified during stakeholder consultations, through the provision of technical advisory services. 28. Carrying out environmental, socioeconomic, and social impact assessments of roads works for further investments, through the provision of technical advisory services. 29. Preparation of engineering designs and tender documents for the construction and rehabilitation of roads for further investments, through the provision of technical advisory services. 1.6 Revised Components 30. The project components and its associated subcomponents were not revised. However, the scope of works under Component A Roads and Bridges was substantially modified (see section 1.7 below). 1.7 Other Significant Changes 31. There were no changes made in the project design, objectives, and components. However, changes were made in the project implementation schedules, scope and scale, funding reallocation, and implementation arrangements, which are summarized as follows: 5

16 (a) Implementation schedule. The project closing date was extended two times first by 18 months from July 1, 2005, to December 31, 2006; and the second time by six months from January 1, 2007, to June 30, The second extension, giving a total of two years, was approved by the Regional Vice President (RVP). The main reasons for these extension were (i) a delay in credit effectiveness; (ii) insufficient time allowed in the initial plans to carry out the necessary activities; (iii) inadequate institutional capacity of the ANE in the procurement of civil works and consulting services contracts; and (iv) time-consuming bureaucratic procedures for getting approval from the Ministry of Finance (MoF) before signing contracts (see also paragraph 35). (b) Scope and scale. Under Component A, Roads and Bridges, the following changes were made: rehabilitation of primary roads changed from 313 km to 456 km, and periodic maintenance changed from 525 km to 295 km. This was caused by delays in the preparation of engineering design and bidding documents; pre-contract award services; and contractors mobilization, which led the roads to deteriorate further before the commencement of works; accordingly, the scope of periodic maintenance decreased and rehabilitation increased. As a result of high traffic levels on main roads, the economic returns are still satisfactory. The rehabilitation of rural roads changed from 412 km to 76 km because insufficient funds were left to complete this activity. Emergency repairs changed from an estimated US$6 million to US$1.5 million because the needs for the emergency repairs were found to be less than the appraisal estimates. (c) Road safety civil works. Civil works relating to road safety (see paragraph 18 above) have not been carried out as intended. Civil works and installation of traffic signs to improve road safety have been implemented as a natural part of regular civil works contracts, but not as stand-alone traffic sign installation contracts, as intended. Road safety measures (see paragraph 22 above) have been identified by the road safety TA through road safety audits but none of the recommendations have been implemented, mainly because the TA was engaged at a very late stage of the project. However, these recommendations are now being implemented under APL-2. (d) Funding reallocations. a reallocation of funds between categories was approved by the RVP on December 21, The reallocation was necessary because more funds were required for rehabilitation works and less for periodic maintenance works. Funds allocated for road safety were used within the rehabilitation and periodic works contracts as an integral element of the bidding documents and were not executed as separate contracts as originally planned. Also, less funding was used for rural roads than originally planned because of cost increases experienced on the main road contracts. (e) Implementation arrangements. Throughout, the overall implementation arrangement remained the same as agreed at appraisal; however, under the ANE, one new unit was created that was directly responsible to the Director General for management of environmental and social issues. This unit was created in 2000 and is known as Unidade de Assuntos Sociais e Meio Ambiente (UASMA) (Social and Environmental Unit). 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design, and Quality at Entry 32. The project was prepared based on the GoM s approved 1998 roads sector policy. It focused on improved road infrastructure, better sector policies, and enhanced roads sector management. The objectives were important for the country and sector because they aimed at stimulating economic growth and reducing poverty. The project objectives were consistent with the Bank s Country Assistance Strategy (CAS), Mozambique s poverty reduction strategy (Plano de Acção para a Redução da Pobreza Absoluta; PARPA), and development priorities. The design of the project components was adequately linked to 6

17 achieving the project objectives. The Borrower s institutional capacity, availability of counterpart funding, and the implementation period were discussed while designing the project components and scope of works. The lessons learned from the previous transport sector projects were reflected in its design. The project design was appropriate because it took into consideration what had been achieved in the roads sector under its two predecessors ROCS-1 and ROCS-2, and what remained to be done. During the October 1999 seminar, the GoM announced plans to implement the second and third generation institutional reforms over the following years. The third generation reforms were compatible with the Bank s recommended model in its Road Management Initiative (RMI), and they include (a) separating the execution and funding functions and (b) establishing a RF as an autonomous legal entity governed by a Board of Directors with representation from the private sector. APL Phase 1 supported the GoM in implementing these reforms and the RF was separated from ANE in The three phase approach was adopted to ensure that policy and institutional reforms were implemented before undertaking major investments in works. To ensure sustainability in the roads sector, APL-1 placed emphasis only on urgent periodic maintenance and rehabilitation of the classified road network. The large investment needed for the construction of high level bridges (Zambezi River and others) was placed under APL-2 and APL-3. The project recognized the need to give more importance to connecting agriculturally productive areas through extending rehabilitation to rural roads, promoting road safety, reducing the spread of HIV/AIDS, raising awareness of communities about environmental issues, and building capacity through appropriate TA and training programs. The APL-1 work program was based on the integrated roads sector strategy, which was developed through extensive consultations with all key stakeholders, including representatives of central and local government agencies, the private sector, NGOs, academic institutions, the donor community, and road users. To reach a consensus on development priorities in the roads sector, four stakeholder workshops were held: two in Maputo, and one each in Beira and Nampula. It was made very clear in the PAD that the later phases would not be activated until institutional reforms had been completed, mechanisms for sustainable financing had been put into place, and the RF had been performing satisfactorily. 34. No Quality Assurance Group (QAG) review for quality at entry was carried out for this project. However, a Quality Enhancement Review (QER) took place (see paragraph 65). 2.2 Implementation 35. The client took more than nine months to meet the effectiveness condition of signing a subsidiary agreement. The preparation of engineering design and bidding documents of civil works, although started under ROCS-2, took more time than expected. The ANE took longer than programmed in following the procurement process for large work and consulting services contracts. Approval from the MoF was necessary before the ANE could sign the works contracts, which required long bureaucratic procedures. As a result, contractors mobilization was substantially delayed and there was practically no disbursement during the initial two years. The ANE was created just a few months before the appraisal, and it was still in a transition phase, which affected the implementation of the project; the project closing date was extended by two years. However, in the later part of project implementation, progress gained momentum and funds were disbursed 99.5 percent by October 31, 2007, the end of the four month grace period after the closing of the Credit (see paragraph 69). 36. The midterm review (MTR) of APL-1 was held from April 25 to 26, The ANE prepared a MTR report, which was discussed in a roads sector workshop attended by about 200 participating stakeholders. The MTR report made several recommendations with respect to improved roads sector planning, works implementation, and FM. The key findings of the MTR were as follows: (a) revenues to the RF from road user charges were sufficient to cover routine maintenance activities; (b) mechanisms for the transfer of funds to the RF had changed since 2002 and the regularity of payments to the RF was 7

18 satisfactory; (c) successful bids for the nine IDA-financed projects along National Road N1 were 54 percent higher than the original estimates for rehabilitation and 135 percent higher for periodic maintenance; (d) the ANE s annual plans had departed significantly from those contained in the project implementation plan (PIP) and interventions had focused on rehabilitation rather than on periodic maintenance because delays in project start caused roads to further deteriorate and the planned periodic maintenance works became rehabilitation; (e) there had been considerable delays in the procurement of civil works and engineering and consultancy services; (f) significant delays had been observed with respect to payments by the ANE on account of delays in releasing counterpart funds from the MoF; and (g) the TA approach needed to be revisited because TA staff were involved more in line functions instead of conducting on-the-job training for ANE staff. 37. No QAG review for supervision was carried out for this project Major Factors Affecting Implementation 38. Factors outside the control of the GoM or implementing agencies (i) Change in world market prices. Increases in costs of fuel, construction material (cement, steel, and asphalt), equipment, and spare parts resulted in higher bid prices compared with the appraisal estimates. (ii) Fluctuation in the foreign currency rates. The depreciation of the US dollar versus special drawing rights (SDR) during the project implementation period brought more dollars to the credit, but this benefit could not be realized because: (a) during when the bids for the large civil works contracts were launched, the lowest bid prices were much higher than the appraisal estimates; and (b) during the South African Rand (SAR) appreciated, which contributed to higher bid prices because the local expenditures in SAR needed more United States Dollars from the Credit. (iii) Insufficient qualified staff. Because national staff with adequate technical skills are rare in the country and the region, the ANE could not employ sufficiently qualified and experienced staff and had to depend largely upon foreign TA. As well, the ANE could not engage national staff to work with TA staff for counterpart training. (iv) Poor performance of some contractors and consultants. Though the consultants and contractors were selected using transparent and competitive procedures, the poor performance of some contractors and consultants resulted in implementation delays or cost overruns of civil works contracts. 39. Factors generally subject to government control (i) Delay in meeting the effectiveness conditions. During project appraisal and negotiations, the GoM agreed to sign the subsidiary agreement between the government and the ANE as an effectiveness condition. However, it took a long time to prepare and sign the subsidiary agreement, which delayed the project effective date by nine months. (ii) Lack of counterpart funding. In the LDP the GoM committed to contributing US$3.3 million per year as counterpart funding, but during project implementation, late release of counterpart funding delayed contractors payments. The situation was much improved by the end of (iii) Bureaucratic procurement process. Even though the Bank provided the required clearances to sign the contract documents within reasonable time, ANE could not sign contracts until the mandatory approval from the MoF was received; this long bureaucratic procedure unnecessarily delayed the execution of works and delivery of services. 8

19 (iv) Delay in recruiting ANE key staff. As the ANE was an autonomous agency, the terms and conditions for employment of its staff were less attractive compared with the private sector and that delayed the outputs of the project. (v) Delay in refund of VAT claims. The civil work contractors paid in advance 17% extra as value added tax (VAT) to various suppliers with the understanding that GoM will refund contractors at the time of payments. The delay in payment of VAT refunds to contractors resulted in increase of bid prices by 20%. Despite MoF s assurance, the payment of VAT refunds could not be regularized and on recommendation of GoM, IDA is now financing VAT payments. 40. Factors generally subject to implementing agency control (i) Management effectiveness. Decision-making processes relating to procurement, contract management, and the monitoring and evaluation framework resulted in delays. These processes need to be accelerated. (ii) Inadequate information management system. Some studies were undertaken to strengthen the information management system, but the ANE could not implement the recommendations of the studies during the life of APL-1. (iii) Effective use of technical assistance. The ANE did not place much emphasis on using TA staff for job-oriented training of national counterparts and as a result the impact of TA on institutional building was not very effective. (iv) Comprehensive progress reporting. The ANE prepared progress reports on individual project activity, but it could have produced more comprehensive project progress reports for the information of all stakeholders and road users. 2.3 Monitoring and Evaluation Design, Implementation, and Utilization 41. M&E design Prior to project appraisal, the QER panel advised to design performance indicators taking into account: (a) the key milestones of achievement in terms of program objectives; (b) indicators more specific in terms of values; and (c) include monitoring and assessment framework. Accordingly, at project negotiations a set of performance indicators with appropriate values and milestones was agreed (see Annex 2, Table B). The key indicators were: condition of road network; collection of RF revenues for road maintenance; and annual expenditure on road maintenance. In addition, the institutional performance indicators were: separation of the RF from ANE; improvement in procurement; no delay in contractors payments; and setting up of a system to monitor the performance of the contractors and consultants. All these indicators were relevant, appropriate, and were adequately linked to PDOs. However, due to limited capacity of ANE, the monitoring and assessment framework was not designed in defining clearly the roles and responsibilities for collecting data, carrying out base line studies, and evaluating the performance of each PDO. 42. M&E implementation. The monitoring and evaluation of the project was implemented consistent with the agreed design. Data were collected from the road condition surveys, collection of RF revenues, annual expenditure on road maintenance, and the road lengths that received routine and periodic maintenance. Data was also collected from the progress reports of ANE, RF, and the provincial offices. The methods used to collect data were generally reliable and reasonably correct. The road safety data such as number of clashes and fatalities per 10,000 vehicles were collected from INAV. Due to lack of a 9

20 monitoring and assessment framework some data on the improvement in procurement for the delivery of works and services, delay in contractors payments, performance of the contractors and consultants could not be assessed. Under APL-2, a well designed sector monitoring and assessment framework has been designed, which was discussed and agreed in a stakeholders workshop that was attended by government agencies, IDA, and development partners (DP). 43. M&E utilization. The data have been well utilized in the preparation of annual road maintenance programs, allocation of the maintenance budget to provinces, transfer of RF revenues, developing action plans aimed at policy and institutional reforms, restructuring of ANE, and in the decision-making process wherever needed. The data collected have also been utilized in the preparation of the follow-on operation APL-2 in the road sector. 2.4 Safeguard and Fiduciary Compliance 44. Environment. The project was rated as Environmental Category A. Before project appraisal, a full environmental impact assessment (EIA) was carried out for all planned road works and the conclusion was that the planned road works would only have limited negative impact on the environment. None of the road works were located in sensitive ecological areas, and involved only minor resettlement issues. In the ANE, UASMA was responsible for monitoring the implementation of the environmental management plan for all works. To ensure adequate supervision the ANE produced: (i) Environmental Guidelines for Road Works in Mozambique ; (ii) environmental management guidelines (1996); and (iii) a field manual (1998), which were reviewed by the Bank supervision team. The UASMA carried out site visits to ensure quality assurance, and environmental inspection checklists were used for each of the site visits. 45. Financial management and disbursement. The quarterly Financial Monitoring Reports (FMR) were received regularly, though they were not fully compliant with the agreed format and the procurement sections were missing. Despite the ANE s efforts to reconcile special accounts regularly, substantial delays were noted in responding to the transactions that were deducted from the withdrawal applications. The ANE submitted audit reports regularly and auditors highlighted in their management letters some weaknesses in the internal control system, which were addressed by the ANE and supervised by the Bank financial management specialist. In some Implementation Status Results and Report (ISR), the availability of counterpart funding was shown as unsatisfactory ; as a result, payments to contractors were delayed. However, the Bank team raised the issue with appropriate authorities, the situation improved during project implementation, and by the project closing the issue was resolved satisfactorily. 46. Procurement. Before project appraisal, an assessment of the ANE s procurement management capacity was carried out. Overall procurement risks were assessed and an action plan to mitigate the procurement risks was agreed on. Despite the ANE s efforts to implement the action plan, procurement delays occurred. To deal with complex issues, the ANE engaged a contract management specialist and a claims expert through the project financed TA program. In general, the Bank s procurement guidelines and standard procedures were followed satisfactorily and no major procurement problems were encountered during project implementation. Procurement plans were discussed during every supervision mission. Post-procurement reviews for selected contracts were carried out and the Bank team discussed its reports with the ANE. 47. Social issues. The Bank supervision team identified gaps in the technical capacity within UASMA and financed short-term TA to engage a social specialist to prepare a resettlement action plan and a resettlement policy framework, not only for the Bank-supported projects but for all other projects that fall under the responsibility of the ANE. At the time of project approval, it was believed that the maintenance or rehabilitation of the road segments would not entail land acquisition or resettlement. 10

21 However, in case of one contract, mostly in the city of Maputo, it became necessary to acquire about 1,300 land parcels within or near the road reserve including houses and informal businesses, and areas for borrow pits, construction camps and drainage. This property acquisition followed government procedures, which was not consistent with the Bank's Safeguard Policy and in order to bring it back to social safeguard compliance the Bank team undertook a resettlement audit and ANE implemented its recommendations. It was agreed that ANE in collaboration with provincial and land officials will be responsible for all land acquisition, compensation evaluation, negotiations and payments, and as well as for dispute regulation. 2.5 Post-Completion Operation/Next Phase 48. The preparation of the follow-on project commenced at the MTR of this project in May In the meantime the GoM, jointly with the DPs prepared a follow-on project in the amount of US$1.043 billion to be executed in a sector-wide framework representing an integrated roads program for the calendar years , called Programa Integrado do Sector de Estradas (PRISE) or (Integrated Road Sector Program) PRISE has successfully adopted the lessons learned at the MTR, including those related to capacity constraints and those related to the need for harmonization of DP procedures. After confirmation that the triggers for APL-2 had been successfully fulfilled, IDA contributed to PRISE a US$100 million credit, which was approved by the Board on May 23, 2007, and became effective on October 5, PRISE includes a pooled fund that is jointly funded by the RF and a number of DPs. IDA will contribute US$35 million to the pooled fund, while the balance of the credit will finance the rehabilitation and upgrading of priority sections of the N1 through parallel funding. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design, and Implementation 49. The project was designed to contribute to its high-level objectives to stimulate economic growth and contribute to poverty reduction through improved road infrastructure, better sector policies, and enhanced roads sector management. The project objectives were clear, relevant, and important, fitting with the development priorities of the country in the roads sector and consistent with the GoM s sector policy and strategy. The project components were reasonable and had good linkage with the project objectives. The program strongly supported the CAS objectives to promote economic growth to reduce poverty and improve the well-being of the Mozambican people. The government's growth and poverty reduction strategy paper (PRSP) and the CAS explicitly identified increased investment in infrastructure (roads, in addition to energy, water, and communications) as the single most efficient contribution to long-term growth and to improved well-being of the poor. The program was designed to contribute to the PRSP and CAS goals in several ways: (i) supporting economic opportunities (first CAS pillar) by improving rural access to markets and services (particularly for densely populated and high agricultural potential areas); (ii) improving traders' access to neighboring countries and maintaining the principal national and coastal links to promote tourism and national unity. It was also designed to support government efforts to rehabilitate and maintain feeder roads serving the rural poor. It also contributed to help increase human capabilities (second CAS pillar) by supporting activities to prevent the spread of HIV/AIDS and reduce injuries and deaths from traffic accidents and promoting gender equity by encouraging employment of women in the roads sector at all levels and in all capacities and increasing female access to transportation. It also contributed to improving governance and public administration (third CAS pillar) by establishing an efficient and accountable institutional framework for roads management and administration, fostering private sector participation in road rehabilitation and maintenance, and strengthening decentralized road planning and management processes. 11