Document of The World Bank FOR OFFICIAL USE ONLY Report No. 18739 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF ZAMBIA TRANSPORT ENGINEERING AND TECHNICAL ASSISTANCE PROJECT (Credit 251 5-ZA) December 22, 1998 Transport 1 Eastern and Southern Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (as of December 31. 1992) Currency Unit = Zambia Kwacha (K) K 1.0 = US$0.007 US$1.0 = K140 Average Annual Exchange Rates Year K per US$ 1993 = 452,76 1994 = 669.37 1995 = 857.23 1996 = 1,203.71 1997 = 1,333.81 1998 = 1,634.50 (Jan. to June) (as of June 30, 1998) US$1.0 = KI,903.38 WEIGHT AND MEASURES 1 Metric ton (tonne) = 1,000 kg or 2,205 pounds 1 Meter (m) = 3,2809 feet 1 Kilometer = 0.6214 miles ABBREVIATIONS AND ACRONYMS AfDB African Development Bank CAP 766 Roads and Road Traffic Act DANIDA Danish Intemational Development Agency DC = District Council (urban and rural) DISS Department of Infrastructure and Support Services FRS = Feeder Roads Section HMS = Highway Management System IDA = International Development Association ICR = Implementation Completion Report MCT = Ministry of Communications and Transport MLGH = Ministry of Local Government and Housing MOF Ministry of Finance MWS Ministry of Works and Supply NCC National Construction Council NRB = National Roads Board PSRP Public Sector Reform Program RD Roads Department RDC = Rural District Council RMI = Road Maintenance Initiative RMOT Road Maintenance, Organization & Training Study ROADSIP = Road Sector Investment Program RRP = Roads Rehabilitation Project SRP Social Recovery Project TETAP Transport Engineering and Technical Project FISCAL YEAR January 1 -December 31 Vice President: Mr. Callisto E. Madavo Country Director: Ms. Phyllis R. Pomerantz Technical Manager: Mr. Yusupha B. Crookes Task Leader: Mr. Stephen Brushett FOR OFFICIAL USE ONLY REPUBLIC OF ZAMBIA TRANSPORT ENGINEERING AND TECHNICAL ASSISTANCE PROJECT (CREDIT 2515-ZA) IMPLEMENTATION COMPLETION REPORT TABLE OF CONTENTS Page No. Preface EVALUATIONSUAIIARl' . . . . . i PROJECT BACKGROUND ................................... i PROJECT OBJECTIVES ...................................... i PROJECT IMPLEMENTATION ...................................... ii PROJECT SUSTAINABILITY ...................................... ii PROJECT OUTCOME .......................................iii PROJECT OPERATIONS .......................................iii KEY LESSONS LEARNED ...................................... iii PART I. PROJECT IMPLEMENTA TION ASSESSMENT ...................................................................... ...... . ... I A. PROJECT BACKGROUND ..........................................I B. PROJECT OBJECTIVES .......................................... I C. EVALUATION OF OBJECTIVES AND RISKS ..........................................3 D. ACHIEVEMENT OF OBJECTIVES ..........................................5 E. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT . . 6 F. PROJECT SUSTAINABILITY .......................................................................8 G. IDA PERFORMANCE ......................................................... ..........I. 9 H. BORROWER PERFORMANCE ................ ............. ............................... ...........9 l. ASSESSMENT OF OUTCOME ...................................................................... 10 J. FUTURE OPERATIONS ......................................................................I I K. KEY LESSONS LEARNED ........................................................................ 12 PARTII: STAR T ISTICALANN!XES .........................S...................I................I...........I.............. .......................................... 13 TABLE 1: SUMMARY OF ASSESSMENTS .14 TABLE2: RELATED BANK CREDITS .I TABLE 3: PROJECT TIMETABLE.I5 TABLE 4: CREDIT DISBURSEMENTS: CUMULATIVE ESTIMATES AND ACTUAL .16 TABLE 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION .16 TABLE 6: KEY INDICATORS FOR PROJECT OPERATION .16 TABLE 7: STUDIES INCLUDED IN PROJECT .1 7 TABLE 8: PROJECT COSTS.20 TABLE 9: PROJECT FINANCING.21 TABLE 10: ECONOMIC COSTS AND BENEFITS ..21 TABLE I 1: STATUS OF LEGAL COVENANCTS ..22 TABLE 12: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENT . .......................................... 24....... 24 TABLE 13: BANK RESOURCES - STAFF INPUTS ..24 TABLE 14: BANK RESOURCES - MISSIONS ..25 PART III. AIDE MEMORE ..27 PARTIV: BORROWER CONTRIBUTION TO THE ICR .34 MAP: IBRD No. 29636.41 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. REPUBLIC OF ZAMBIA TRANSPORT ENGINEERING AND TECHNICAL ASSISTANCE PROJECT (CREDIT 2515-ZA) IMPLEMENTATION COMPLETION REPORT PREFACE This is the Implementation Completion Report (ICR) for the Transport Engineering and Technical Assistance Project, for which Credit 2515-ZA in the amount of SDR 6.2 million (US$8.5 million equivalent) was approved on September 30, 1993 and became effective on November 29, 1993. The credit closing date was extended from June 30, 1997 the original closing date to June 30, 1998. Final disbursement was on December 16, 1998 at which date a balance of SDR 702,836.21 was canceled. The ICR was prepared by Rosemary M. Cubagee (Consultani) and Subhash Seth (AFTTI) and finalized by the Task Team Leader, Stephen Brushett (AFTTI) and was reviewed by Yusupha Crookes, Sector Manager (AFTTI) and Phyllis Pomerantz, Country Director (AFC02). Preparation of the ICR is based on materials in the project files, interviews with Government officials and on the findings of the ICR mission fielded July 13-26, 1998. The Borrower contributed to the preparation of the ICR by providing views reflected in the ICR mission's Aide-Memoire, and preparing its own evaluation of the project. REPUBLIC OF ZAMBIA TRANSPORT ENGINEERING AND TECHNICAL ASSISTANCE PROJECT (CREDIT 2515-ZA) IMPLEMENTATION COMPLETION REPORT EVALUATION SUMMARY Project Background 1. After several unsuccessful efforts at economic reform in the 1970s and 1980s, in 1991 the Zambian government initiated a reformn program to encourage movement to a full market economy, and to significantly reduce the role of government in productive and commercial economic activities. The reform program had relied in part on provision of increased incentives for agricultural production and the promotion of the private sector, both by supporting new entries and privatizing a large portion of the public sector. However, the creation of the necessary enabling environment for enhanced growth and productivity continued to be hampered by the existence of infrastructure, including the road network, which was poorly maintained and run down. Expenditures in the road sector had for some time remained well below the level needed for sustainable maintenance. The legislative framework for roads was outdated and responsibilities were not clearly defined. Road sector agencies did not generally have the requisite resources, staffing and tools to undertake their assigned responsibilities. The need was seen to restructure expenditures and to improve planning allied with new initiatives to strengthen the road sector institutional and financing framework. The project was to help lay the groundwork for this effort and to prepare a follow-on project to address priority investment needs. Project Objectives 2. The project objectives were to: (a) design and implement transport sector policy reforms, in particular through: (i) a program of regulatory and institutional reform to improve the management of the national road network and to put the financing of roads on a sustainable long-term basis, and (ii) enhanced opportunities for private sector participation in the rehabilitation and maintenance of roads; to strengthen the Government's capacity to plan and coordinate public expenditures for roads, and to monitor sector performance; and (c) carry out the preparatory engineering work for the first year program of the proposed multi-year Roads Rehabilitation Project. The project components were: (i) Policy Support; (ii) Project Preparation; and (iii) Institutional Development and Studies. The project objectives were appropriate, realistic and relevant to the needs of Zambia and were consistent with the agenda for reform being developed by the RMI program. A wide range of institutional reforms were required as Zambia did not have the financial or technical capacity to rehabilitate and maintain a - ii - well functioning network. The project was well designed to address the reforms required and provided for linkage between these reforms and investment program preparation. The only proviso is that the policy reform objective was possibly too ambitious to have been fully achieved in the timeframe of the project. Two objectives - design and implementation of policy reforms and preparation of the follow-on project - are judged to have been substantially achieved. One objective - strengthening planning and coordination capacity - i!s judged to have been achieved to a considerable extent. Project Implementation 3.The project suffered from a slow start-up due to: (i) discontinuity in project management, (ii) weaknesses in coordination of the various implementing agencies, and (iii) delays in the planned strengthening of capacity of some of these agencies. Performance substantially improved from mid-1995 with the NRB given a pivotal role in project management and all components - save for one which was dropped from the project and financed by DANIDA - were completed with minor delay and with some cost savings compared to appraisal. A number of additional subcomponents were undertaken to refocus and help accelerate the achievement of project objectives from the time of the mid term project review held in October 1995 and to take advantage of the cost savings. This helped to enhance and expedite the preparation of the follow- on project. Action plans have been prepared for all studies completed under the project and implementation is under way on recommendations in most cases. From these plans has been developed the Government's letter of road sector policy of March 1997, containing agreed undertakings on actions and measures to be taken to advance road sector reform. IDA performance is judged as more than satisfactory during supervision where synergies with the RMI program were effectively utilized. Borrower performance is judged as more than satisfactory during implementation as early delays were overcome and capacity constraints were quite effectively addressed. The project was completed by April 1998 and the credit closing date had to be extended by one year to June 30, 1998. Final estimated project cost is US$8.6 million and disbursements of IDA credit proceeds amounted to US$7.9 million. Project Sustainability 4. The project has laid a strong foundation for the management and sustainable financing of the road sector and played a very important role in designing and preparation of the follow-on ROADSIP. Substantial progress has already been achieved namely: setting up the Road Fund, the NRB and carrying out the PSRP based strengthening of MLGH and the RD. Sustainability depends though on Government's willingness to continue to implement reforrns and to carry forward all the agreed recommendations of plans and studies executed under the project. The letter of sector policy and the agenda of actions to be undertaken under the follow-on project, which was developed after substantial internal stakeholder consultation, augurs well for the future in this regard. Sustainability is thus rated as likely. - iii - Project Outcome 5. The project outcome is rated as satisfactory. Substantial progress has been achieved against three indicators of development impact developed during project supervision i.e., completion of studies and production of action plans for the implementation of key recommendations enjoying strong stakeholder support; restructured and strengthened road agencies having appropriate tools, personnel and resources to carry out planning and implementation of road works; and improvement in road maintenance performance measures by volume of expenditure and the quality of work carried out. Some high quality outputs were produced in the course of the project notably - the road safety action plan, road sector environmental guidelines, and the economic evaluation manual. Project Operations 6. There are no future operations of the project as such. However, the project has helped future operations in the road sector in four ways - preparation of the follow-on project, Project to Support the Road Sector Investment Program (ROADSEP), which is a sector operation enjoying IDA and other external financial support; development of an agenda for further policy and institutional reform outlined in the Government's letter of sector policy of March 1997 and being monitored on an annual basis; development of specific sector performance targets under ROADSIP to better measure progress on improving network quality; and improvement in sector management organization and capacity. Key Lessons Learned 7. The key lessons learned from the project are as follows: (a) A satisfactory outcome for a technical assistance project, as in this case, is most likely where policy reform is effectively linked to investment support. Government and local stakeholders must be effectively engaged in the development of the reform agenda from the outset and should be able to perceive the consequent benefits from this reform in terms of improvements in the design and eventual implementation of the investment program. (b) A significant number of activities not foreseen at appraisal were completed under the project whereas not all the specified outputs of studies identified at appraisal were carried through. The experience of this project underlines the value of flexibility in the development of project components - and specific activities - to achieve project objectives. Experience also demonstrates perhaps the need to avoid overspecifying the intended outputs from any given study, such as the anticipated creation of a national highways authority emanating from the transport policy study. (c) Sector policy and institutional reform require political commitment, a clear timetable and a set of realistic and achievable steps in order to be successful as well as to be based on sound, well argued analysis of alternative approaches. All -Iv - such may not be achievable under the aegis of a single project. Effective involvement of stakeholders not only in the consultative stage but also in the decision making process will likely make it more sustainable in implementation, however long the process may take. (d) The effectiveness of IDA's performance was enhanced by the synergies between the preparation and implementation of the project and the development of the RMI program in Zambia. This experience points to the value of such synergies, and the associated incremental resources, for advancing a difficult policy agenda whilst helping build stakeholder understanding and commitment to reform. (e) Despite an overall satisfactory outcome, project implementation was delayed in the early stages. Early attention to project management and coordination arrangements in project processing and early remedial action where such arrangements are not performing for whatever reason may lead to considerable benefits in terms of more timely and effective implementation performance. Such action could cover inter alia appropriate institutional arrangements as well as payments and incentives for staff. REPUBLIC OF ZAMBIA TRANSPORT ENGINEERING AND TECHNICAL ASSISTANCE PROJECT (CREDIT 2515-ZA) IMPLEMENTATION COMPLETION REPORT PART I: PROJECT IMPLEMENTATION ASSESSMENT A. Project Background 1. After several unsuccessful efforts at economic reform in the 1970s and 1980s, the Zambian government introduced new policies from 1991 to encourage movement to a full market economy, and to significantly reduce the role of government in productive and commercial activities. The reform program had relied in part on provision of increased incentives for agricultural production and the promotion of the private sector, both by supporting new entries and privatizing a large portion of the public sector. However, the creation of the necessary enabling environment for enhanced growth and productivity had continued to be hampered by the existence of infrastructure which had been poorly maintained and run down, which was particularly true of the roads sector. 2. In the road sector, expenditures had for some time remained well below the level needed to maintain the network in a stable condition over the long-term. At the time of project launch, the spending on roads under the jurisdiction of the Roads Department (RD) covered only 20 to 40 percent of the requirement for the 7,000 km of trunk and main roads, and only 10 to 20 percent for the 14,000 km of district roads. The nearly 16,000 km of roads under the jurisdiction of District Councils (DCs) were in worse condition and deteriorating at a faster pace than the RD-maintained roads. In addition, the existing regulations governing roads which dated back to 1969 no longer reflected current practices and policies. None of the ministries and agencies in the sector had the requisite resources, staffing and tools to undertake its assigned responsibilities in an adequate manner. The need was, therefore, seen to restructure the expenditures and improve planning in the roads sector to increase efficiency of use of scarce resources. This was to be allied with new initiatives to increase revenue mobilization from domestic and external sources. These measures were likely to require a number of policy reforms and strengthening of existing institutions or creation of new institutions for sustainability. The Government had shown a broad commitment to sectoral changes before project launch by participating in the Road Maintenance Initiative (RMI) program which has helped build a consensus among public and private sector stakeholders in Zambia on the nature and direction of changes that would be required. B. Project Objectives 3. As stated in the Memorandum and Recommendation of the President for the project dated May 20, 1993, there were three main project objectives. The first was to design and implement transport sector policy reforms, in particular through (a) a program of regulatory and institutional reform to improve the management of the national road network and to put the financing of roads on a sustainable long-term basis, and (b) enhanced opportunities for private sector participation in the rehabilitation and maintenance of roads. The second was to strengthen Government capacity to plan and coordinate public expenditures for roads, and to monitor sector performance. The third was to carry out the preparatory engineering work for the first year program of the proposed multi-year Roads Rehabilitation Project (RRP). 4. To achieve the above stated objectives, the project comprised the following components: (a) Policy Suppor: a national road transport policy study, which was aimed at carrying out administrative reclassification of the road network (rnuch of which was not gazetted at the time), working out the detailed implications of establishing an autonomous Highway Authority to take over the responsibility for managing the entire road network in Zambia, proposing arrangements for road financing, including the possible introduction of an explicit road tariff, to be followed by preparing a draft Highway Authority Bill for consideration by Parliament. (b) Project Preparationi: consulting services for carrying out detailed engineering studies for the first year of the five-year prioritized road rehabilitation program, which was under active consideration by the Government at the time of TETAP's appraisal. The five-year road program was prepared on the basis of an AfDB- financed Road Maintenance Organization and Training Study (RMOT). Under TETAP, it was agreed to carry out engineering design and preparation of bidding documents for the rehabilitation of the Kapiri-Nakonde road. In addition, it was agreed to finance the feasibility study and the subsequent preparation of tender documents for rehabilitation of the Luangwa Bridge, a major bridge on the Great East Road that was constructed in 1968 and that was showing signs of serious structural defects at the time of TETAP's appraisal. (c) Institutional Development: This component combined a range of studies and technical assistance to help the various institutions involved with some aspects of road planning and management to fulfill their responsibilities. These included the following: (i) The design and implementation of a highway management system (HMS) which was designed to assist the Govemment in adapting technical standards to levels that are economically sustainable and, based on an analysis of pavement structural strength, traffic data, environments, and technical options, to identify and assign priorities to road rehabilitation and periodic maintenance. The outcome of the HMS was aimed at strengthening the capability to develop annual and rolling programs of road works and expenditures that would optimize the net social benefits for any prevailing level of funding. (ii) The undertaking of an equipment management and maintenance study to explore how RD's large equipment, plant and vehicle fleet could be managed and maintained in an efficient manner, including what role the private sector might play in providing equipment and maintenance services to RD. (iii) A study of the local consulting and construction industry to establish the range and competence of domestic construction and consulting firms, identify any constraints hampering their development, and prepare an action plan for removing constraints to their development; (iv) The establishment of a feeder roads section wilthin the Ministry of Local Government and Housing (MLGH) to cover roads managed by - 3 - the Rural District Councils (RDC). The key function of this section was to channel funds from the development budget to support construction and rehabilitation of RDC roads and, if required, implementing the collection of local revenues for maintenance of RDC roads. Also, this section was to annually recommend to the Ministry of Communications and Transport (MCT) the appropriate level of grant from the recurrent budget to support the maintenance of RDC roads. The FRS was assigned to carry out a comprehensive inventory of all RDC roads to prepare a prioritized maintenance program by placing emphasis on labor-based maintenance methods whenever possible. (v) A specialized private accounting firm to assist the implementing agencies in maintaining the project accounts and to carry out the annual audits. 5. During implementation, to refocus and accelerate project achievements (with particular regard to the preparation of the follow-on project) and to take advantage of project cost savings, a number of additional subcomponents of the project were undertaken under the framework of the original project objectives. These were as follows. Under Policy Support: (i) renumbering of the road system; (ii) preparation of background papers for a Roads 2001 workshop held February 1996 to launch the proposed sector investment program; (iii) preparation of a bankable document for soliciting domestic and external support for the program; (iv) preparation of an environmental mitigation plan and guidelines for the roads sector; (v) preparation of a road safety action plan; (vi) preparation of a program implementation manual and an economic evaluation manual for the program. Under Project Preparation: feasibility studies and preliminary design for Lusaka and seven other urban centers (Ndola, Kitwe, Livingstone, Kabwe, Kasama, Mansa and Solwezi) for the purposes of identifying a first year program of accelerated urban road rehabilitation. Under Institutional Development: (i) additional support for project management and capacity building through an adviser for MILGH and an Executive Secretary for the newly established National Roads Board (NRB), and (ii) support to the start-up of a community roads program under the Social Recovery Project (SRP). C. Evaluation of Objectives and Risks 6. All the project objectives were appropriate, realistic, and relevant for the needs of road sector in Zambia, and were consistent with the agenda for national road policy reforms identified in the RMI seminar held in February 1993. Following many years of neglect, road expenditures remained well below the level needed to maintain the network in a stable condition. The RMI seminar helped the Government to build a consensus on the nature and directions of changes required. This helped the design of interventions under TETAP which was to be complementary to the RMI and which was aimed at supporting and assisting the reforrns identified. In the roads subsector, a wide range of institutional reforms were required as the country at that time did not have the capacity, either technical or financial, to rehabilitate and maintain a well-functioning road network. TETAP was designed to address all the reforrns needed and all its three objectives were stated in an order of priority. 7. The first objective emphasized the design and implementation of transport sector policy reforms to improve the management of the national road network and to put the financing of roads on a sustainable long term basis. The Roads and Traffic Act (CAP 766) gave the responsibility for roads to a single Ministry for Works, Transport and Communications. At the - 4- time of project appraisal, this was no longer the case with no fewer than three separate ministries carrying out important roles in the road sector, i.e., MCT was responsible for setting overall transport policy; MWS was the designated authority for all trunk, main and district roads, and was responsible for the construction, rehabilitation and maintenance of these roads; the DCs under MLGH were responsible for the remainder of the road network. CAP 766 did not address the provision of any specific financing to support maintenance of urban and rural district councils roads. Therefore the project objective of bringing about institutional reforms linked to help the achievement of sector policy reforms was appropriate. The component of the project to support this objective was appropriately designed, but was in retrospect probably too ambitious to have been readily achieved with the timeframe and resources of the project. Even with the additional and complementary resources provided through the RMI program, it was always likely to be a lengthy and complex process to move from broad consensus about the need for reform to: consensus about the detailed institutional framework to be adopted and its subsequent implementation; and drafting and adoption of the necessary legislative instruments. The risk of Government's political ability not being sufficient to implement (at least some of) the requisite reforms was, however, recognized at project appraisal. 8. The second project objective relating to strengthening Govemment's capacity to plan and coordinate public expenditures for roads and to monitor sector performance, was appropriate and very important for the country and sector because of the weak institutional capacity of the road institutions, particularly in handling technical planning, financial monitoring and contract management. The project component for institutional development was designed to support enhanced capacity as the process of determining the best medium-term institutional framework for the road sector was being determined under the project's first objective. The component was appropriately designed in that it sought to address capacity constraints not only in the public sector - measures to strengthen and restructure the RD and to create a feeder road section in MLGH - but also the private sector through the construction industry study. A further risk had been correctly assessed at project appraisal that the capacity of various implementing agencies might build up more slowly than anticipated and that greater emphasis needed to be placed from the outset on the private sector, both external and domestic. 9. The third project objective relating to carrying out the preparatory engineering work for the first year program of a proposed multi-year RRP, was timely and appropriate. The design of the project recognized that substantial resources would have to be put into the road network to address the backlog of maintenance and the rehabilitation of strategic routes if the new road sector policies were to have an impact on the overall quality of the network. The project component included the preparation of a manageable number of subprojects of the proposed program. The choice of these subprojects appears to have been consistent with the five-year work program which was an outcome of the RMOT study. The inclusion of these activities were justified by the need to reduce the risk of closure of the Great East Road due to bridge failure and of substantial increases in vehicle operating costs due to further deterioration on the Great North Road. These two roads assure international traffic, with the latter being particularly critical as the principal link of Zambia to the port of Dar-es-Salaam. D. Achievement of Objectives 10. Of the three project objectives, two have been substantially achieved and one has been achieved to a considerable extent. The first on designing and implementing transport sector policy reforms is substantially achieved. Major progress has been made towards the design and implementation of transport sector policy reforms and achievements can be recorded with regard to reforms to strengthen management and financing of roads. An overarching national transport policy framework was drafted as far back as mid- 1995, but is not expected to be finally adopted by Cabinet until early in 1999 A letter of road sector policy has though been prepared and signed in March 1997 as a basis for the follow-on project to TETAP (Project to Support a Road Sector Investment Program, Credit 2993). A Road Fund was established October 1993 under existing financial legislation followed by the establishment of a National Roads Board (NRB) in October 1994 under statutory instrument. These measures represent significant achievements in relation to putting financing on a sustainable long term footing and to enhancing opportunities for private sector participation in the roads sector. The Government has moved towards the establishment of an explicit road tariff. A fuel levy was introduced in 1993 at K 10 per liter, was subsequently raised to K 30 per liter and to K 40 per liter and has been since 1997 set at 15 percent of the wholesale price of fuel. The impact of this levy has been a steady increase in the resources available to the Road Fund for routine maintenance. The NRB has taken on the role of managing the Road Fund and has been an important catalyst for increasing financing and improving management in the road sector. The majority of Board members, including the Chairman, are from the private sector. Under the project, significant work has been accomplished, including the preparation of the necessary legislative instruments, on both road reclassification and on a national highways authority. The Government declined to pursue the latter reform during the life of the project, deciding instead first/y to strengthen the existing implementing agencies in line with the Public Sector Reform Program (PSRP) and secondly to reassess the case for further reform on the basis of experience. 11. The second objective with regard to strengthening the Government capacity to plan and coordinate public expenditure for roads and to monitor sector performance has been achieved to a considerable extent. Whereas significant achievements have been recorded in terrns of strengthening the existing implementing agencies and the newly created NRB, follow-up on specific programs and action plans developed under the project to this end have been uneven. The main developments can be summarized thus: (a) The NRB has a fully functioning secretariat and now has in house capacity in procurement, financial management and highway engineering. (b) The Department of Infrastructure and Support Services (DISS) in MLGH has been restructured under the PSRP and is fully staffed to provide the feeder road support function, though with the continuing assistance of external consultants. (c) The restructuring of the RD under the PSRP is at an advanced stage and, despite implementation delays, remains on track for phasing out of force account and for increasing reliance on the management of works carried out on contract by the private sector; (d) The HMS has been designed and installed in the RD but this has suffered some implementation problems and the conditions for its financial and operational sustainability have not yet been attained. No decision has yet been taken to contract out management of the HMS though this had been agreed in principle at appraisal. 12. The third objective was substantially achieved with regard to carrying out the engineering design of the first year work program. The preparation of feasibility studies, detailed design and bidding documents for all of the four sections of the Great North Road have - 6 - been completed. The resulting civil works of three sections are to be funded out of the follow- on credit and are expected to start in early 1999. Work on one section of the road (Kapiri Mposhi-Serenje) was subsumed under DANIDA's assistance to the transport sector in Zambia and the civil works are nearing completion following the design financed by IDA. The rehabilitation of Luangwa Bridge on Great East Road was taken over by DANIDA " in toto" and thus no work was funded under the project. The preparation of the follow-on investment program, named Road Sector Investment Program (ROADSIP) was accelerated and the time frame extended to ten years duration following a Cabinet decision taken in February 1997. In line with this program, additional first year works under an accelerated urban road rehabilitation program were identified and preparation was financed out of credit proceeds. E. Implementation Record and Major Factors Affecting the Project 13. The project suffered from a slow start-up due to delays in getting consultancy services' contracts up and running. This, in turn, seems to be related to discontinuity in project management which was the responsibility of the planning department in MCT. Much of this appears due to frequent changes of project coordinator. Much of this was beyond the control of MCT, however, as a number of coordinators left due to perceived low salaries and poor conditions of service in government or due to illness and death in two cases. Project management was rendered difficult in the first 18 months by the lack of effective arrangements for coordinating the inputs from the various implementing agencies. A number of implementing agencies, notably MLGH, were not fully up to speed in terms of the capacity needed to execute components of the project. There were significant overall improvements in project management and coordination from mid-1995 until the end of the project. It was decided to request NRB to carry out these functions on behalf of MCT from February 1995 and to provide more resources for project coordination and for project financial management. Adequate remuneration for the Project Coordinator was provided through the project. This facilitated the completion of all original components of the project, with some delay but with some cost savings. In addition, a number of additional subcomponents (see para 5) were undertaken. While this stretched implementation capacity at times, this did accelerate preparation of the follow-on project to be enhanced in terms of quality and expedited in terms of start-up over and above what had been anticipated at project appraisal. 14. Factors not Generally Subject to Government Control: In this project, there were no important factors which were not subject to control by the govemment in general and the implementing agencies in particular. The only exception in this regard may be that a contributory factor to the frequent changes of project coordinator was the illness and death of some key staff in the MCT after project start-up. 15. Factors Generally Subject to Government Control: The Government was able to determine the pace at which proposed reforms in the financing and management of roads were implemented. Policy in this regard was clarified in the letter of sector policy of March 1997 whose implementation is being monitored under the follow-on project. With regard to financing, the Government has supported the establishment of the Road Fund and the progressive adjustment of the fuel levy to reflect the increasing maintenance requirements of the network. Government has not though taken all steps necessary for a fully fledged road tariff to be put in place, e.g., fuel levy is not determined on the basis of the marginal cost of road damage; fuel levy proceeds are not collected directly by the NRB and deposited directly into the Road Fund account; Government has not yet implemented the deposit of some or all other road user charges into the Road Fund. With regard to road management, the Government has fully supported measures to strengthen the capacity of RD and MLGH (DISS) and has supported additional measures to strengthen the NRB - since August 1997 the costs of the secretariat are met out of the proceeds of the Road Fund. The Government, however, declined to proceed at this stage with the establishment of a national highways authority and with certain other recommendations of the transport policy study. Two further factors were under Government's control. Firstly, there was the provision of counterpart funding, amounting over the life of the project to about 5% of total project cost. These funds were made available but with a delay in early years which contributed some to delays in the payment of consultants. Secondly, the provision of counterpart staff in MLGH/DISS was delayed in relation to the start-up of the feeder road support consultancy, as staff were recruited and confirmed under the PSRP much later than had been anticipated. Similar delays in the implementation of the restructuring of the RD under the PSRP had a lesser effect as counterpart staff were for the most part already in place under the existing structure. 16. Factors Generally Suiject to Implementiig Agency Conttrol: The project relied to a large extent on the output of various consultancy services for the achievement of its objectives. The selection of consultants was carried out in accordance with Bank guidelines and the provisions of the credit agreement. In a number of cases, output from consultants was delayed in relation to anticipated delivery although for the most part this was due to the need for additional or revised work to be carried out, e.g., the proposed designs for three sections of the Great North Road were revised after review. In one case (the national transport policy study), two addenda had to be issued to the final report to address weaknesses and omissions in the consultants' work. In the case of the HMS, the implementing agency did not provide all the material and financial support necessary for successful implementation and as a result the full benefit of the consultancy services financed by the project has not been realized. The RD to date has taken no decision to contract out management services to the private sector although this had been agreed in principle at appraisal. 17. Cost Changes: The project achieved all of its agreed objectives and all the components were implemented within the appraisal estimate of cost. The total estimated actual cost of the project is US$8.6 million compared to an appraisal estimate of US$9.0 million. The estimated foreign exchange component is 79% compared to 70% at appraisal. Significant cost savings were obtained on the components originally identified for financing out of the credit proceeds. The total estimated actual cost of these components came to US$7.5 mn. A major contributory factor though was the decision to finance the Luangwa bridge preparatory work (US$0.8 million equivalent) out of other financing sources. The savings created the opportunity to finance additional subcomponents which helped to accelerate and deepen the process of preparation of the follow-on project. 18. Implementialion Delays: The credit was signed on September 30, 1993 and became effective on November 29, 1993. There were some delays in processing and awarding of consultancy contracts at the start of the project . This was due to the aforementioned problems with project coordination and with the unfamiliarity of most implementing agencies with Bank procedures. As a result, there was a significant disbursement lag in the first two years of the project and disbursements only attained 24% of appraisal estimate. Project implementation gained momentum from mid-1995. Most components of the project were completed within the expected timeframe, taking account of the delayed start - with the exception of the national transport policy study where some work had to be redone, and of the engineering studies for the three sections of the Great North Road where designs had to be modified and the economic viability had to be reassessed. The credit closing date had to be extended by one year, to June 30 1998, to facilitate completion of these components. With the exception of the continuing support to the feeder road program and to the HMS which have been absorbed under the follow- on project, all activities were essentially completed by the end of the first quarter of 1998 compared to the appraisal estimate of project completion of December 31, 1996. 19. Changes in Project Scope: A number of additional subcomponents were added to the project, i.e., preliminary engineering undertaken for the accelerated urban road rehabilitation program, additional policy work undertaken on road renumbering, road safety, environmental guidelines, preparation of working papers and a bankable document, additional feeder survey and inventory work carried out, and additional institutional support to MLGH and NRB (see also para. 5). In addition, one original component, the engineering for the Luangwa bridge was dropped. F. Project Sustainability 20. The benefits derived from all the project components are substantial, and in general have laid a strong foundation for the management and sustainable financing of the road sector, and in particular had played a very important role in the designing and preparation of the follow-on project (ROADSIP). All project studies have been completed and the actions plans have been prepared. The degree of internal consultation in the development of recommendations for policy and institutional reform has been uniformly high. Government capacity to fully and effectively carry out all the identified reforms is, however, limited and there have been delays in following up on agreed action plans in some areas. There are also concerns about the sustainability of some of the institutional improvements supported by the project where there are continued concerns about both technical and financial capacity to manage operations. This is the case with the HMS whose sustainability is in question, unless and until more appropriate management and financing arrangements are put in place for system maintenance, data collection and analysis and operator training. Commitment to carry out reform, however, is indicated by the important steps already achieved. One important element of this agenda is completing the process of policy reform (in particular the process of commercializing the management of the road sector) and of carrying out concomitant changes to the legislative framework. In both these areas, the Government was not able to agree with all the proposal developed as a result of the national road transport policy study. Given though that Government has committed in the letter of sector policy to move forward to implement all the institutional reforns, and particularly these will be further pursued under the follow-on project, the sustainability of TETAP can be rated as "likely". -9- G. IDA Performance 21. Identification, Preparation and Apprai.val: IDA's performance at project identification, during preparation and at project appraisal is rated as satisfactory. IDA played a critical role in helping Government identify a technical assistance project with a key focus on policy measures and institutional reform to initiate the process of commercialization the management of the road sector. Under preparation, IDA was instrumental in developing project components which were well matched with the proposed project objectives. The linkage to the RMI Program helped give the policy and institutional reform process a good impetus although the expectations of what could be achieved within the timeframe and the resources available under the project were possibly set too high. The appraisal process was well conceived and carried out with an appropriate mix of skills and experience represented on the team. One possible adverse comment is that more attention might have been given to project management and coordination arrangements and to the support that might be needed in this regard to the key implementing agencies. 22. Supervision: The IDA supervision was professional, objectively focused and based on solid understanding of the Borrower's institutional capabilities and the IDA's policies and procedures. Supervision performance is rated as more than satisfactory. During project implementation, the IDA and the Borrower relationship was effective and productive. The implementation problems were generally correctly assessed and were reported appropriately in the performance ratings. The timing of supervision missions was appropriate and the time spent in the field was sufficient. Although this may not appear to have been true of the first 18 months of the project during which there was only one formal supervision mission, frequent visits by the RMI program manager in that period were effective in addressing early implementation problems and the start-up of project studies. IDA supervision was particularly useful in assisting the Borrower improve: performance on financial management and accounting design; and implementation of additional subcomponents of the project which helped accelerate preparation of the follow-on project. While the Mid Term Review did not take place as planned by end- December 1994, the major review undertaken in October 1995 which gave rise inter alia to the foregoing was timely and appropriate in the project circumstances. H. Borrower Performance 23. Identification, Preparation and Appraisal: The performance of the Borrower at identification, preparation and appraisal is rated as satisfactory. The depth and quality of Borrower involvement was evidenced by: (a) the active participation of not only the responsible policy ministry (MCT) but also the proposed implementing agencies (NILGH, RD) in these stages of the project; and (b) the environment fostered by the RMI program which helped bring additional public and private sector stakeholders into the process of the design and implementation of road maintenance programs in Zambia. 24. Implementation: The performance of the Borrower during project implementation is rated as more than satisfactory. The Borrower was able to overcome some initial problems with project coordination and lack of capacity in certain agencies which delayed the start-up of most components. Bringing the NRB into the project to play a pivotal role was instrumental in both addressing many of the capacity constraints and enabling the stakeholders represented on the -10- Board to have a say in the timing and content in the implementation of the project and in the preparation of the follow-on project. Project reporting improved during the course of implementation and this was very effective in focusing the effort of IDA supervision missions. Financial management, including the processing of consultant invoices and payments, and the production of accounts steadily improved during the project such that in the last two years of the project the audit could be carried out considerably in advance of the legal required date. The 1997 audit was, however, qualified as a portion of project funds had been diverted to non-project uses. The Borrower dealt with the issue in a timely and effective way, satisfactory to IDA, such that the qualification could be lifted in the subsequent audit and the funds were reimbursed to the project account in full. I. Assessment of Outcome 25. The project achieved all of its objectives in full or in part and the outcome of project is rated as satisfactory. No indicators of development impact were given at appraisal. Three such indicators were developed by IDA during supervision to assess the progress of the project. These were: (i) completion of studies and the production of action plans for the implementation of key recommendations which have strong stakeholder support; (ii) restructured and strengthened road authorities which have appropriate tools, trained personnel and adequate financial resources to carry out planning and implementation of road works; and (iii) improvement in road maintenance performance measured by the volume of expenditure and the quality of work carried out. The project has very clearly allowed the Borrower to advance in all these areas although much is left to be achieved under the follow-on project and subsequent interventions: * Firstly, not only were all studies originally slated for financing completed and action plans prepared, the same can be said for all the additional subcomponents added after the review carried out in October 1995. For the most part the quality of the work produced was high and the essence of the agreed action plans have been captured in the Borrower's letter of road sector policy. Specific mention can be made of three documents: the Road Safety Action Plan which is considered to be one of the best of its kind yet produced in the region; the Guidelines for Environmental Management in the Road Sector which are similarly viewed and which are already in active use in Zambia; and the Economic Evaluation Manual which is in use and is helping implementing agencies design more appropriate maintenance interventions. * Secondly, considerable progress has been made on restructuring and strengthening road sector institutions although, as the Borrower's road sector policy letter recognizes, only a first stage in the process has yet been achieved. With the additional resources being provided under the follow-on project, it will be determined during the first years of implementation if further restructuring will be needed for capacity development and sustainable road sector management. The first review of the sector policy letter took place in October 1998 during which Government confirmed its intention to revise the Roads and Road Traffic Act inter alia to put NRB and the Road Fund on a firm legislative basis by June 2000. - II - * Thirdly, road maintenance planning and implementation has been placed on a sounder and more sustainable footing with the reforms which gave rise to the NRB and the Road Fund. Disbursements on Road Fund financed maintenance programs have risen from K 10.5 billion in 1995 to an estimated K 15.6 billion in 1997. This should rise further to K 18.4 billion in 1998 although the programming of work in both the last two years has been adversely affected by late and erratic releases of fuel levy proceeds to the Road Fund. Thus, while a higher portion of maintenance requirements are being covered now compared to the situation before the project, this has still not reached the level of 50%. The relative rate of improvement has been quite sharp for urban and rural district roads, but much less so for main and trunk roads. Also, there remains some concern about the quality of road work carried out. More than 95% of work is now carried out by the private sector in line with policy to reduce force account, but the number of experienced, local contractors is still quite limited. J. Future Operations 26. As a technical assistance project largely geared to the preparation of a road sector program, there are no future operations of the project as such. However, the project has helped future operations in the road sector in four important ways: (a) The implementation of this project has opened the door for other assistance in the roads sector including not only the follow-on IDA project but also financing from other donors as part of a sector wide approach to road policy and investment. Financing has thus been lined up for most of the estimated requirements of US$450 million for the first five years of ROADSIP (1998-2003). (b) An agenda for follow-on policy and institutional reform building on what has been started under the project is clearly set out in a letter of road sector policy dated March 1997. This letter provides the policy underpinning for the follow-on project under which its implementation is being reviewed on an annual basis. The main elements of sector development strategy addressed in this letter concern: strengthening the institutional framework; rehabilitating priority roads; ensuring effective maintenance; managing maintenance; developing the construction and consulting industry; improving management of plant and equipment; mobilizing and allocating road sector revenues; improving community accessibility; mitigating environmental impacts; improving road safety; revising road sector legislation; and reviewing implementation of ROADSIP. (c) Specific performance targets have now been set for the road sector under the follow-on project which will help the Borrower better measure sector performance. Measures include: funding made available through the fuel levy and other road user charges; completion of road works (routine and periodic maintenance; rehabilitation); proportion of road network in respectively good, fair and poor condition; number and type of local contractors completing training. - 12 - (d) Coordination of implementing agencies and strengthening of project management organization and capacity in the roads sector has been increased as a direct consequence of the project. K. Key Lessons Learned 27. The key lessons leamed from the project are as follows: (a) A satisfactory outcome for a technical assistance project, as in this case, is most likely where policy reform is effectively linked to investment support. Government and local stakeholders must be effectively engaged in the development of the reform agenda from the outset and should be able to perceive the consequent benefits from this reform in terms of improvements in the design and eventual implementation of the investment program. (b) A significant number of activities not foreseen at appraisal were completed under the project whereas not all the specified outputs of studies identified at appraisal were carried through. The experience of this project underlines the value of flexibility in the development of project components - and specific activities - to achieve project objectives. Experience also demonstrates perhaps the need to avoid overspecifying the intended outputs from any given study, such as the anticipated creation of a national highways authority emanating from the transport policy study. (c) Sector policy and institutional reform requires political commitment, a clear timetable and a set of realistic and achievable steps in order to be successful as well as to be based on sound, well argued analysis of alternative approaches. All such may not be achievable under the aegis of a single project. Effective involvement of stakeholders not only in the consultative stage but also in the decision making process will likely make it more sustainable in implementation, however long the process may take. (d) The effectiveness of IDA's performance was enhanced by the synergies between the preparation and implementation of the project and the development of the RMI program in Zambia. This experience points to the value of such synergies, and the associated incremental resources, for advancing a difficult policy agenda whilst helping build stakeholder understanding and eventual commitment. (e) Despite an overall satisfactory outcome, project implementation was delayed in the early stages. Early attention to project management and coordination arrangements in project processing and early remedial action where such arrangements are not performing for whatever reason may lead to considerable benefits in terms of more timely and effective implementation performance. Such action could cover inter a/ia appropriate institutional arrangements and payments and incentives for staff. - 13 - THE REPUBLIC OF ZAMBIA TRANSPORT ENGINEERING AND TECHNICAL ASSISTANCE PROJECT CREDIT 2515-ZA IMPLEMENTATION COMPLETION REPORT PART II: STATISTICAL ANNEXES - 14 - Table 1: Summary of Assessments A. Achievement of Objectives Substantial Partial Negligible Not applicable Macro Policies v Sector Policies V Financial Objectives v Institutional Development V Physical Objectives v Poverty Reduction Gender Issues V Other Social Objectives V Environmental Objectives V Public Sector Management v Private Sector Development V Other (specify) B. Project Sustainability Likely Unlikely Uncertain l ~~~~~~~~~Highly C. Baik Performance Satisfactory Satisfactory Deficient I ~~ ~ ~ ~~~(V) (V) (/) 1 Identification v Preparation Assistance v Appraisal X | Supervision V/ 1l | ~~~~~~~~~~Highly D. Borrower Performance Satisfactory Satisfactory Deficient 11 1 ~~ ~ ~ ~~~~ ~~(V) (V/) (V) 1 Preparation V Implementation Covenant Compliance | Operation (if applicable) Fl Highly Highly IE. Assessment of Outcome Satisfactory Satisfactory Unsatisfactory unsatisfactory 11 ~~~ ~ ~~(V) (V) (V) (V) 1 11 11 - is - Table 2: Related Bank Credits Date of Status Loan/Credit Title Purpose Approval , Highway Reconstruction, (Cr. 469-ZA) To itnprove the Great East Road Sept. 1966 Closed linking Lusaka, the capital, with the agriculturally-rich Eastem Province and Malawi, and of the lGreat North Road. linking the center of Zambia with the Northem Province and East I_________________________________________________ Africa. I Second Highway project, (Ln. 563-ZA) To improve the entire Tanzam Sept. 1968 Closed Highway to suitable standards, with a view to developing transport capacity to the sea tbr landlocked Zambia Third Highway Project, (Ln. 1566/Cr. 798-ZA) To imp.-ove the maintenance of the May 1978 Closed rapidly deteriorating road network and plan for fuiture extension of the network Project to Support a Road Sector Investment To facilitate economic growth and Oct. 1997 Active Program (Cr. 2993-ZA) diversification (particularly in the agricultural sector) through appropriate investments in road intfrastructure and through a sustainable system for the flinancing and management ot the road network. Table 3: Project Timetable Steps in Project Cycle Date Planned Date Actual/Latest Estimate Identification/Preparation February 1992 Appraisal Septenmber 1992 September 1992 Negotiations April 1993 April 1993 Board Presentation June 17, 1993 Signing September 30, 1993 Effectiveness October 1993 November 29, 1993 Project Completion December 31. 1996 March 31, 19981 Credit Closing June 30. 1997 June 30, 1998 Some components were absorbed under the follow-on project. - 16 - Table 4: Credit Disbursements: Cumulative Estimates and Actual (US$ Million) FY93/94 FY94/95 FY95/96 FY96/97 FY97/98 FY98/99 Appraisal Estimate - Cumulative 2.12 5.1 7.6 8.5 8.5 8.5 Annual 2.1 3.0 2.5 0.9 0.0 0.0 Actual - Annual (.0 1.2 3.3 1.5 1.5 0.4 Actual - Cumulative 0.0 1.2 4.5 6.0 7.5 7.9 Actual as % of Estimate 0.0 24 59 71 88 93 Date of Final Disbursement 12/16/1998 Table 5: Key Indicators for Project Implementation No indicators for project implementation were defined in the President 's Report They were not required as standard procedure at the time of appraisal Table 6: Key Indicators for Project Operation Noindi cators forproject operationswere definedinthe President's Report. Theywerenotrequiredas standard procedure at the time of appraisal. 2 Including US$1.0 million initial deposit into the Special Account. - 17 - Table 7: Studies Included in Project Purpose as Defined Purpose as Redefined/and or as Study at Appraisal Added-on Status Impact of Study Part A: 1. Policy Support a. Administrative reclassification ofthe a. No change. Completed. draft final report Most recommendations were accepted A National Road road network- submitted April 1996, final by Govemment. Action on Transport Policy b. Establishment of an autonomous b. At draft final report stage, Government report September 1996 administrative reclassification of roads to Study. Highway Authority to take the determined that as a first step existing road followed by two addenda to be taken in 1999, Action on further responsibility for managing the entire sector institutions would be restructured and the final report institutional and financing reforms road network; strengthened and that the creation of a semi- incorporated in Government's letter of autonomou.s authority would come as a second road sector policy of March 1997. step and be carried out as an extension to the mandate of the NRB. Final report was amended to reflect this policy decision. c. arrangement for road financing c. At draft final report stage, government clarified including introduction of an explicit that road maintenance would be funded by fuel road tariffand preparation of Cabinet levy and by other road user charges channeled Paper for the above arrangements; through the Road Fund. The study was to help and determine ways to set these charges and how best to collect and allocate the proceeds. d. preparation of a draft Highway d. Not applicable. although some preparatory Authority Bill for consideration by work was carried out. Parliament. Added on Studies under Part A 2. Road Renumbering Carry out renumbering of roads in line with Completed after delay. Numbering system is to be installed on System. SATCC standards. the HMS. 3. Preparation of a Setting-up of National Task Force and Completed with submission Workshop was extremely effective in Road Sector commissioning of consultancies to prepare of final reports and holding of generating stakeholder support for Investment Program position papers to formulate project proposal to workshop in February 1996. ROADSIP and for defining the broad (ROADSIP). access donor funding to launch a medium term parameters of ROADSIP. Workshop Road Sector Investment Program. Papers were recommendations on institutional reform presented at Roads 2001 workshop, February were not accepted in full by Government 1996 in Lusaka. however. 4. Preparation of From the starting point of the conmuunique of the Completed with submission Report was instrumental in getting ROADSIP Bankable above referenced workshop, a small group put of draft document in June Cabinet approval and was the basis of Document. together the bankable document which formed the 1996. the undertakings made by Government basis of a Cabinet decision in favor of ROADSIP in the March 1997 letter of sector policy. in February 1997 and which has been used to solicit donor interest in funding of ROADSIP. 5. Preparation of an Committee prepared environmental (technical and Completed. Guidelines Guidelines are available and are in use Environmental operational) guidelines for road rehabilitation and finalized in July 1997 and now. Environmental management unit is Mitigation Plan and maintenance works and helped determine work formally adopted by up and running. Guidelines. program for environment management unit to be government in September set up in RD. 1997. 6. Road Safety Action Study of road safety situation, constraints to Completed. Workshop held Government has agreed with the study Plan. improvement, and preparation of a detailed time October 1997 to discuss draft recommendations. Implementation and frame and cost estimate for a three year action findings and final report sent funding of major initiatives is to start in program. out in March 1998. 1999. - 18 - Purpose as Defined Purpose as Redefined/and or as Study at Appraisal Added-on Status Impact of Study 7. Miscellaneous Certain activities for which financing was Completed, final documents Documents finalized after significant Preparatory provided out of a PHRD grant (no. 29564) for the submitted in draft in March stakeholder input are being used in Activities for preparation of ROADSIP were completed using 1998 finalized in April 1998. practice. ROADSIP. TETAP funding. i.e. the preparation of a project implementation plan and manual. and of an economic evaluation manual. Part B: I. Project Preparation. a. Detailed engineering and preparation a. Additional economic analysis was carried out a. For Great North Road: a. Detailed engineering of tender documents of road on the Great North Road to determine feasible Preliminary design reports Follow-up project to support ROADSIP of Road rehabilitation works to be carried out rehabilitation and maintenance options. completed Nov.-Dec. 1995. provides funding for most elements of Rehabilitation in the first year ofthe proposed multi Final design reports the Cireat North Road rehabilitation Works: and year road rehabilitation program completed September 1996. program. Works should he carried out b. Luangwa Bridge (RRP). i.e. rehabilitation of the Great but subsequently revised in from 1999. Bids were under evaluation Feasibility and North Road (Kapiri Mposhi to order to take account of in last quarter of 1998. SI of the Great Engineering Study. Nakonde) in four sections. i.e. Kapiri- additional options and cost North Road is already under construction Serenje (SI). Serenje-Mpika (S2). savings. Draft tender with DANIDA funding. Mpika-Chinsali (S3), Chinsali- documents completed in Nakonde (S4). March 1998. b. Engineering and preparation of tender b. Luangwa Bridge rehabilitation was taken on for b. Project completed with documents for Luangwa Bridge if rate funding by DANII)A and was thus dropped DANIDA funding. of retum is deemed satistfactory after from the project. feasibility study . Added on Studies Detailed engineering was carried out for the Lusaka A and B desip Road Fund resources were used for under Part B requirements of an accelerated urban road reports were completed in I usaka Group A roads which were 2. Preliminary rehabilitation program added in April 1997. i.e. August 1997 and seven towns completed September 199X ID)A ageed Engineering for Urban Lusaka Group A and B and seven other urban design reports completed to finance Ndola and Kitwe under follow Road Rehabilitation centers (Kitwe. Ndola. Kabwe. l .ivingstone, April 1998 on credit 2993 - Project to Support Program. Solwezi, Mansa, Kasama). ROADSIP Part C: ]. Institutional Developmget. a. Design and a. To help Govemment adapt technical a. No change, except that project input into annual a. Interim report completed a. System has been installed, training Implementation of a standards of road maintenance to road condition surveys and data analysis was May 1996. survey update carried out and about 11 000 kms of Highway sustainable economic levels based on increased to compensate for govemment report completed March roads input. Sustainability ofthe Management traffic. resource limitations. 1997. system is still in question due to System: inadequate management and lack of budget resources. Management has not been contracted out to private sector as originally agreed. b. Equipment b. To explore how RD's equipment b. No change. b. Final report submitted b. Key agreements on further action are Management and could be managed and maintained in October 1996. contained in the letter of sector Maintenance Study: an etficient manner. policy of March 1997. Some progress to date on implementation of reconmmendations. - 19 - Purpose as Defined Purpose as Redefined/and or as Study at Appraisal Added-on Status Impact of Studv c. Study of Local c. To establish the range and competence c. No change. c. Final report submitted July c Key agreements on further action are Consulting and of domestic construction and 1996. contained in the letter ot'sector policy Construction consulting firms. of Mlarch 1997. Some progress on Industry; implementation of'recommendations. establishment ot'a National Construction Council (NCC). d. Establishment of a d. To establish the section, carry out a d. Scope of work was increased to include: i) full d Mid 'I'enn reports d. ERS established and tully staffed as Feeder Road feeder road inventory and prepare feeder road surveys in all 9 provinces and the submitted D)ec. 1996. integral part ot' I)ISS in MIL-. Section (FRS) in the prioritized maintenance programs. preparation of rehabilitation programs for IIDA regular monthly progress External assistance has been MLGH; and funding in 3 provinces (Western. ILuapula and reports submitted. feeder particularly eflective. Northem): and ii) inventory of up to 3.000 road surveys inventories kilometers of urban roads. completed. preparation ot' rehabilitation progr.uns achieved. e. Assistance for e. To ensure project accounts are e. NRB took over project accounting February e. Reports submitted on or e Accounting s' stem and audits h.cve project accounting properly maintained and that annual 1995. audits undertaken by private finm ahead of schedule. helped accountability and and audit audits are canried out. transparency of use of project funds. Added-on Studies under Part C 2. Project a. Payment of salarv and henefits of Advisor in at Completed. a IF1 'ctive Management. M LGH up to June 1994 b. Payment of salary and benefitts of' Executise b Completed. hb Effective Secretary of the NRB (TETAP Coordinator) January 1995 to December 1997. 3. Support to Engineer recruited to launch the community road Ongoinig since October 1997. Ongoing activity. at an early stage with Community Roads component of ROAD)SIP under the Social will he absorbed hv follo%s on tirst projcAts approved in I .uapula Development. Recovery Project. TETAP proceeds used trom credit. province in nid- 199X October 1997 to effectiveness of follow-on credit for ROADSIP. - 20 - Table 8: Project Costs Appraisal Estlnate Actual (IJS$M) (US$M) Item Local Costs Foreiyl Costs ! Total Local Costs Foreip Costs Total National Road Transport Policy Studv( 0.2 () 0.7 0.2 0.6 (.8 First Year Road Rehabilitatioi/ I 0.2 1.( 1.2 0.2 1.9 2.1 Luangwa Bridge/2 0.2 0.0 (0.8 (0.0 0.0 . Highway Management System ().5 1.3 1.X (1.2 1.2 1.4 Equipment Management and Mainteniance 0.1 0(.3 0.4 0.1 0.3 0.4 Study Construction and Consulting Indtistry Study 0.1 (0.2 0.3 (.1 0.2 0.3 Feeder Roads Section (.9 1.4 2.3 (1.6 1.7 2.3 Project Accounting and Auditing 0.( (1. I 0I ().0 (). I 0.1 Additional Policy Studies ().0 0() ().() ().3 0.2 0.5 Additional Project Preparatioi 0.() .0 () (). 1 0).2 (.3 Additional Institutional Development 0.() 0.0 ().. (.1 (0.3 0.4 Total Base Costs 2.2 5.4 7.6 1.9 6.7 8.6 Price Continigencies 0.2 0.5 0.7 Physical Contingencies 0.2 ().5 0.7 Total PrjectCost 2.6 6.4 9.1) 1.9 6.7 8.6 /I TETAP did the engineering study for the Great North Roads - Sections I. 11. Ill & IV. DANIDA took over rehabilitation ol Section 1, 197 km at a cost of DKK 275 million or about US$45.8 million equivalenit. /2 This work was takeni over by DANIDA at a cost of DKK 15 million or about UJS$2.5 million. - 21 - Table 9: Project Financing Appraisal Estimate Actual/Latest Estimate (US$M) (US$M) Local Foreign Total Local Foreign Total Source Costs Costs Costs Costs IDA (By Category) 1. Policy Support (.8 1.3 2. Rural Roads Development 2.4 2.3 3. Institutional Development & 4.3 4.3 Project Preparation 4. Unallocated 1.0 IDA Total 2.1 6.4 8.5 1.4 6.5 7.9 Government Total (.5 0.0 0.5 0.5 0.2 0.7 Grand Total 2.6 6.4 9.0 1.9 6.7 8.6 Table 10: Economic Costs and Benefits No economic rate of rate of return was calculated at appraisal. as it was not appropriate for this type of project. - 22 - Table 11: Status of Legal Covenants Original Revised Credit Covenant Present Fulfillment Fulfillment Agreement Section Type Status Date Date Description of Covenants Comments Credit 3.01 (a) 10 C The Borrower declares its commitment to the objectives of'the Project as set fbrth in Schedule 2 to this Agreement and, to this end, shall carry out Parts A, B and C of the Project through MCT, MWS and MLG. respectively, with due diligence and efficiency and in conformity with appropriate technical. administrative, enviromnenta and tinancial practices, and shall provide. promptly as needed, the funds, tacilities, services and other resources required fbr the Projec 3.01(b) o0 C Without limitation upon the provisions of'paragraph (a) of this Section and except as the Borrower and the Association shall otherwise agree, the Borrower shall carry out the Project in accordance with the Implementation Program set forth in Schedule 4 ot'this Agreement. 3.02 5 C Except as the Association shall otherwise agree, procurement of'the consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be govemed by the provisions of Schedule 3 of this Agreement. 3.03 5.9 CD 12/31/94 10/15/95 (a) The Borrower and the Association shall, not later than l)ecember Review was delayed by slow 31. 1994, or at such later date as the Borrower and the Association start-up of-project. During shall agree upon, carry out a joint in-depth review of Project October 1995 mission, implementation (the Mid-term Review), as set out in paragraph 5 of additional activities were Schedule 4 to this Agreement. (b) Not later than on month prior to agreed: (a) to refocus and the Mid-Term Review, the Borrower shall furnish to the Association accelerate project imple- a report in order to prepare for such review, commenting on project mentation; and (b) to utilize implementation, with a specific evaluation of the effectiveness of cost savings. implementation procedure and proposals to change such, if any. (c) Following such review, the Borrower undertakes to act promptly an( diligently to take any corrective action deemed necessary in order to remedy any shortcoming noted in the implementation ol the Project, or to implement such other measures as may have been agreed upon between the Borrower and the Association in Furtherance of the objectives of the Project. - 23 - Original Revised Credit Covenant Present Fulfillment Fulfillment Agreement Section Type Status Date Date Description of Covenants Commnents 3.04 5,9 CP The Borrower shall: (a) promptly, and in any event not later than As discussed in Table 7, three months, atler the receipt of any study carried out under the follow-up action on study re- Project and Financed out of the proceeds of the Credit, submit to the commendations has yet to Association one copy of such study together with: (i) the Borrower' take place in some cases. detailed evaluation thereof-, and (ii) the Borrower's assessment of thd practicability of implementing the study's recommendations. and (b implement the recommendations of such studies as mutually agreed ,upon between the Borrower and the Association. 4.0 1(a) 1,2.3 C Tlhe Borrower shall maintain or cause to be maintained separate Pertfonance X was generally records and accounts adequate to reflect in accordance with sound sound. although audit of 1997 accounting practices the operations, resources and expenditures, in accounts revealed diversion respect of the Project, of the departments of the Borrower of project tunds. This was responsible for carrying out the Project or any part thereof. subsequently resolved in a manner satisfactory to I[)A however. 4.01 (b) 1,2,3 C The Borrower shall: (i) have the records and accounts referred to in Over the period 1996/8. the paragraph (a) of this Section including those for the Special borroxA er generally submitted Account, for each tiscal year audited, in accordance with appropriat audits well in advance ot'the auditing principles consistently applied, by independent auditors covenanted target dates acceptable to the Association: (ii) furnish to the Association as soon as available but, in any case, not later than six months after the end of each such year, a certified copy of the report of such audit by said auditors of such scope and in such detail as the Association shall have reasonably request. and (iii) furnish to the Association suchl other information concerning said records, accounts and the audit thereof as the Association shall from time to time reasonably requesl Covenant Types: I = Accounts/Audits; 2 Financial.Performance/Revenue Generation from Beneficiaries; 3 = Flow and Utilization of Project Funds; 4 Counterpart Funding; 5 = Management Aspects of the Project or Executing Agency; 6 = Environmental Covenants; 7 = Involuntary Resettlement; 8 = Indigenous People; 9 = Monitoring, Review and Reporting; 10 = Project Implementation not covered by categories 1-9; 11 = Sectoral or cross-sectional budgetary or other resource allocation; 12 = Sectoral or cross-sector policy regulatory/ institutional action; 13 = Other. Present Statuts: C =Covenant complied with; CD =Complied with after delay; CP =Complied with partially; NC =Not complied with - 24 - Table 12: Compliance with Operational Manual Statement [ There was compliance i'ith all pertinent Banik Operations lalnual statements throuhout the project cycle. Table 13: Bank Resources - Staff Inputs Plaiined Revised Actual Stage of l_____ Project Cycle Weeks US$ Weeks US$ Weeks US$ Through Appraisal 35.8 4.6 Appraisal-Board 23.0 75.3 Board-Effectiveness 5.8 18.8 Supervision 1 92.1 355.6 Completion 3.8 8.0 TOTAL 1 160.5 462.3 - 25 - Table 14: Bank Resources - Missions Perfornance Rating Number of Specialized Participated Stage of Project Cycle Mon./ Persons Days in Staff Skills in Previous Implementation Develop. Year Field Represented Mission Status Objectives Conmients (yes/no) Through Appraisal . N.A. Appraisal through Board N.A. approval Board approval through N.A. etYHctiveness Supervision I Oct. 93 2 4 PIE Yes S S Credit not yet eftective. This is the first supervision mission. ECO'TM e Administrative problem (appointment of a new Project Coordinator) due chantges in the Ministries; objections raised by local consulting finms the concem the pmhability of contlict of interest in awarding contracts. Supervision 2 Jun 95 2 6 SR ECO.!TM Yes S S Cumbersome Govemment bureaucracy - the Zambia TE No National Tender Board delay in signing the Tender Contracts, Unavailability of Goverunment counterpart funds the I 0% required for the consultancies managed by the Roads Department. Supervision 3 Oct 95 4 10 SOPOF TM No S S No major problem. Major progress has been made Roads Adviser Yes since the last supervision mission since NRB took TI' No over coordination of project. HE No Supervision 4 Mar 96 7 5 SOPOF`rM Yes S S Use of credit proceeds to finance preparation work for Roads Adviser Yes ROADSIP as agreed. 1'P Yes I IE Yes ECO(x2 Nox2 EnviroTmentalist No Supervision 5 Jul 96 1 5 SOPOF/TM Yes S S Continued Progress being made in most areas; however lack of counterpart staff for consultants for I capacity building was a problem. Supervision 6 Mar 97 3 5 SOPOF/TM Yes S S Delays in payment of contractors. Coordinator HE Yes working without a contract. Follow-up on action ECO No plans needed Supervision 7 Jun 97 2 4 SOPOF/TM Yes S S Continued problem with lock or quality of TP No counterpart staff Supervision 8 Oct. 1997 5 5 SOPOF/TM Yes S S Financial Problems. Diversion of project funds, TP Yes delays in submitting disbursement applications being HE No addressed however, follow-up on action plans needed ECO No .__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ TA N o Completion July 1998 SOPOF/TM Yes S S ICR Mission. 2 10 ECO No - 26 - Status: I Problem Free HS Higlily Satisfactory 2 Satisfactory S Moderate Problems U Unsatisfactory N/A Not available Key to Supervision: Economist ECO Senior Economist SR. ECO Transport Engineer TE Senior Operations Officer/Task Manager SOPOF/TM Transport Planner TP Highway Engineer HE PIE Principal Infrastructure Engineer Team Assistant TA THE REPUBLIC OF ZAMBIA TRANSPORT ENGINEERING AND TECHNICAL ASSISTANCE PROJECT IMPLEMENTATION COMPLETION REPORT PART III AIDE MEMOIRE Introduction 1. A World Bank mission visited Zambia over the period July 13-26. 1998 for the purpose of reviewing with Govemment the preparation of the implementation completion report (ICR) for the Transport Engineering and Technical Assistance Project (TETAP) IDA Credit 2515. The mission comprised Mr. Stephen Brushett (Task Team Leader and Senior Operations Officer) and Ms. Rosemary Cubagee (Consultant). 2. The mission wishes to thank the Zambian Govemment for courtesies and cooperation extended throughout its stay. The mission wishes to particularly acknowledge the assistance provided by the Ministry of Communications and Transport (MCT), by the agency responsible for project coordination, the National Roads Board (NRB) and by the other implementing ministries, the Ministrv of Works and Supply (MWS) and the Ministrv of Local Government and Housing (MLGH). 3. The mission acknowledges receipt of the Govemment's contribution to the ICR in five parts that is: overview report from the TETAP Coordinator, detailed agency reports from MCT, MWS and MLGH, and summary financial information. The mission makes particular note of the fact that meetings were held with the TETAP Technical Committee under the chainranship of the TETAP Coordinator and with the individual task managers to: review the Govemnment's contribution and to mutually: identify the critical issues raised during project implementation: assess the outcome of the project and its impact on the transport sector: and to determine the key lessons learned from project experience. Development Objectives and Performance 4. The primary objectives of the project were to design and implement transport policy and institutional reforms necessary to create a sustainable, efficient system for managing roads. This included reforms to (i) put the financing of roads on a sustainable long-term basis and enhance opportunities for private sector participation in the road sector; and (ii) strengthen the Govemment's capacity to plan and coordinate public expenditures for roads and monitor sector performance. The project also provided for the preparation of the first year of a proposed follow-up road sector investment operation, that is ROADSIP. Key indicators of development impact included: (a) completion of studies and the production of action plans for the implementation of key recommendations which have strong stakeholder support; (b) restructured and strengthened road authorities and agencies which have appropriate tools, trained personnel and adequate financial resources to carrv out planning and implementation of road works; and (c) improvement in road maintenance performance measured by the volume of expenditure and the quality of the work carried out. 5 . Notwithstanding the results of the more detailed analysis to be included in the ICR, performance against these objectives is judged to have been satisfactory, with some provisos. All project studies have been completed and action plans have been prepared. The degree of internal consultation in the development of recommendations for policy and institutional reform has been uniformly high. - 28 - Govemment capacity to fully and effectively carry out all identified reforms is however limited and there have been delays in following up on agreed action plans in some areas. The mission signaled the particular concems in the area of effective action to ensure the sustainability of improvements in the highway management system (HMS) and to accelerate the restructuring of the plant and vehicle pools. Commitment to carry out reform however is indicated bv the inportant steps already achieved. notably the establishment of the Road Fund and the National Roads Board. and by the agenda outlined in the Government's letter of sector policv of March 21. 1997. One important element of this agenda is completing the process of policy reform ( in particular the process of commercializing the maniagement of the road sector) and of carrying out the concomitant changes to the legislative framework. In both these areas, the Government was not able to agree with all the proposals developed as a result of a project study. Current Project Status, Issues and Problems 6. Project Completion and Credit Closing Dates. The mission noted that the Bank had agreed to the Government's request for a one vear extension of the credit closing date to June 30. 1998. The extension was granted to facilitate completion of a number of ongoing activities. With the exception of the consultancy support to the feeder road program and to the HMS. whvhich will be absorbed bv the follow-on Project to Support ROADSIP (Credit 2993). all activities were essentially completed by the end of the first quarter of 1998. 7. Project Management and Accounting. The mission generally commended the exemplary performance of the Government, through the Coordinator, in providing regular reporting on the progress of the project. The mission noted that significant improvements had been obtained in project financial management since the last project review mission in October 1997. Strengthening of NRB accounting staff had facilitated a solution to the problem of delays in the preparation of satisfactory project accounts and related delays in the processing on invoices and submission of disbursement applications. Accounts had now been prepared up to June 30, 1998 and the recovery of all amounts remaining in the Special Account is expected to be realized by end July. The timely preparation of monthly accounts and of withdrawal applications, including Special Account replenishments, had now been achieved over the past six months. Performance on audit was very satisfactory with the report on the fiscal year to December 31, 1997 submitted well within the dates provided in the credit agreement. The mission learned that one qualification on this audit report, concerning the unauthorized disbursement of funds from the Special Account, had now been addressed and the funds had been reinstated. As of June 30, 1998, unaudited total disbursements are put at US$7.66 million equivalent of which: Part A - US$1.13 mn; Part B - US$4.52 mn; and Part C - US$2.01 mn. While the credit is nominally fully committed, it is anticipated that there will be cancellation of a portion of the credit proceeds. 8. Status of Implementation of Project Components. The following summarizes the status of project components according to the findings of the mission. PART A Transport Policy Study The study was completed, with two addenda to the final report, in April 1997. Certain recommendations of the report are expected to be implemented. i.e. concerning road reclassification. Study output on road financing and management was however not satisfactory and significant progress is still to be made under the Project to Support ROADSIP to address the ongoing concerns about the institutional framework for roads. - 29 - Task Force Consultancies These were successfully completed and were useful inputs to the February 1996 Roads 2001 Workshop and to a stakeholder driven process of preparation of ROADSIP. Bankable Document This was successfullv completed in July 1996 and formed the basis of an eventual Cabinet decision in February 1997 in support of ROADSIP. Environmental Management Support Support to the Environmental Management Committee helped adoption of environmental guidelines of the road sector and of an environmental mitigation plan for ROADSIP. Terms of reference were prepared for an environmental management unit to be housed initially in MWS. Road Renumbering S)ystem Govemment has made a decision to adopt SATCC standard road numbering system based on the consultants' report submitted after a long delav. There will be implications for the amendment of the Roads and Road Traffic Act. The new numbering svstem should be installed on the HMS. Road Safety Action Plan The consultant completed the draft road safety action plan which has benefited from the outcome of a stakeholder workshop held early October 1997. The Government has reviewed the report and this has been adopted in final form in January 1998. incorporating also the views of the Bank. The mission noted that clarification of the institutional structure, strengthening of the National Road Safety Council (NRSC) secretariat and the development of a plausible local financing approach were the critical factors for a sustainable strategy for road safety. Funding of the various measures defined for Phase I of the plan. whose total cost is put at US$ 6 mn, is in the process of identification. PART B Equipment Management and Maintenance Situdy The study was successfully completed and many of its recommendations are incorporated in the Government's letter of sector policy. Follow-up on agreed actions has to be accelerated however. Construction and Constulting Industry St7udy The study was successfully completed and many of its recommendations are incorporated in the Government's letter of sector policv. Follow-up on agreed actions have to be accelerated however together with the effective establishment of the National Construction Council (NCC). Serenje to Mpika (Section 2) engineering -30 - The process of prequalifying contractors is essentially complete and, with the tender documents ready since March 1998, invitation to bid is imminent. The review of design and technical specification was completed after significant delavs. A number of options were studied and additional engineering and economic analyses carried out. Mpika to Chinsali (Section 3) and Chinsali to Nakonde (Section 4) engineering The invitation to bid on these two sections was issued June 30, 1998. The review of design and technical specification was completed after significant delays. A number of options were studies and additional engineering and economic analyses carried out. Accelerated urban road engineering Design and tender document preparation for Lusaka A and B has been completed. Lusaka A civil works have been carried out under domestic financing, the scope of work having been increased to include certain elements under Lusaka B. Preliminary engineering and design for selected roads have been completed in seven other towIIs - Ndola, Kitwe. Livingstone, Kabwe, Kasama, Solwezi, Mansa. IDA financing may be provided under the Project to Support ROADSIP for Kitwe and Ndola. Highway Management .System The Govemment is continuing to work on an action plan for the sustainability of the HMS including the need for further extemal support for training and equipment. This is discussed in more detail under the Aide Memoire for the Project to Support ROADSIP as the HMS is an ongoing element of the sector program. PART C Feeder Road Support Program The contract of the consultant extends to December 31, 1998. Support provided has been satisfactory and objectives have generallv been met. albeit with some delays. Consideration is now being given to what further support may be necessary to ensure sustainability and further capacity building in MLGH and in local authorities. The urban road inventories are underway under an amendment to the existing contract with the foreign consultant. The Government had requested an extension in the scope of wvork of the local consultants given that a larger number of feeder roads than originally expected had been identified for survey in the four provinces concerned. This vork has now been satisfactorily completed. Follow-up on Previouslv Agreed Actions 9. The current status of actions which were agreed at the time of the October 1997 mission are given below: By the Government (a) Submit report on remedial action to be take to restore project accounting and to replenish the Special Account by November 30. Complete accounting system improvements including contract execution monitoring function by December 31. - 31 - Status - Achieved (b) Produce provisional accounts to September 30. 1997 and submit to the Bank bv November 30. Produce provisional accounts to December 3I1.1997 and submit to the Bank by January 31. 1998. Status - Achieved (c) Arrange audit of accounts to December 3 1. 1997 and submit to the Bank for review bv March 31. 1998. Status - Achieved (d) Prepare final revised disbursement forecast for credit proceeds and Government counterpart funds to the completion of the project by December 15. Prepare monthly project/financial status report and withdrawal/replenishment applications unitil further notice. Status - Achieved, accounts shou/ld be closed and/fidly reconciled by October 1998 (e) Prepare request to Bank by November 30 to amend the credit agreement to permit under Part B of the project works to be carried out by the MLGH (accelerated urban road engineering). Status - Achieved. amendment has been signed (fe Submit revised tender documents for Serenje to Mpika for Bank no objection by January 16, 1998. Status - Achieved, with some delay (g) Submit draft tender documents for Mpika to Chinsali and Chinsali to Nakonde engineering to Bank for no objection by January 15. 1998. Status - Achieved, with some delay (h) Submit final version of the road safety action plan and agreed recommendations for follow-up by December 15. Status - Achieved, final report dated .January 1998 (i) Follow-up on agreed action plan for strengthening operation of HMS. Status - In progress,,further action needed here By the Bank (a) Provide support, inter alia through the Resident Mission, to accounting system improvements and to Special Account replenishment. - 32 - Status - Ongoing (b) Review provisional accounts to September 3O. 1997 by December 15. Review provisional accounts to December 31.1997 by February 15. 1998. Status - Achieved, financial management specialist in Resident Mission is carrying out this task (c) Review audit of accounts to December31. 1997 by April 15. 1998. Status - Achieved. as above (d) Review request to amend the credit agreemilenit to permit uLnder Part B of the pro ject works to be carried out by the MLGH (accelerated urban road engineering) by December 3 1. Status - Achieved (e) Review for no objection the revised tender documents for Serenje to Mpika by Janiuary 30, 1998. Status - Achieved, with some delay (fe Review for no objection proposals for completion of Mpika to Chinsali and Chinsali to Nakonde engineering bv January 30. 1998. Status - Achieved. with some delay (g) Provide comments on final version of road safetv action plan and agreed recommendation by January 15. 1998. Status - Achieved (h) Review for no objection by November 15 request for extension of scope of work of local consultants for feeder road survey in four provinces. Status - Achieved, extended works have now been sati#s/ctorily completed (i) Review follow-up on agreed action plan for strengthening operation of HMS. Status - Ongoing, to be pursued under Project to Support ROADSIP Agreements and Recommendations 10. The mission agreed with the Govemment on the following next steps for the project: By the Government (i) Submit final project cost estimate and sources and sources of financing for the project, including Government counterpart funds, by July 31, 1998. (ii) Submit withdrawal applications to fully recover the Special Account -33 - balance by July 31, 1998. (iii) Submit any other withdrawal applications for direct disbursement by September 1, 1998. (iv) Close project accounts and submit for final audit by September 30, 1998. (v) Submit final contribution to the ICR, including 10 page overview and executive summary, by September 30. 1998. (vi) Fumish comments on Bank's draft ICR documentation by October 31, 1998. By the Bank (i) Complete preparation of draft ICR documentation and submit to government by September 30, 1998. (ii) Submit final ICR documentation to Board by December 31, 1998. Conclusion 11 The mission is the final one for TETAP. The ICR package is to be completed in draft final form by October 31, 1998 and submitted to the Bank's Board no later than December 31, 1998. Project accounts are in the process of being closed. with the final disbursement of funds to take place no later than October 31. 1998. - 34 - THE REPUBLIC OF ZAMBIA TRANSPORT ENGINEERING AND TECHNICAL ASSISTANCE PROJECT (CREDIT 2515-ZA) IMPLEMENTATION COMPLETION REPORT PART IV: BORROWER CONTRIBUTION TO THE ICR 1.0 INTRODUCTION Transport Engineering and Technical Assistance Project (TETAP) was financed through a Development Credit Agreement signed between the Republic of Zambia and World Bank (IDA) Intemational Development Association on September, 30, 1993 for an amount in various currencies equivalent to 6,200,000 Special Drawing Rates (SDR),to help finance an engineering and technical assistance project for road and transport infrastructure. 2.0 OBJECTIVES The prqject had three main objectives . The first was to design and implement transport sector policy refonns ,in particular through (a) a program of regulatory and institutional ref'onn to improve the management of the national road network and to put the financing of roads on a sustainable long term basis, and (b) enhaniced opportunities for private sector participation in the rehabilitationi and maintenance of roads. The second objective was to strengthen the Goverunent's capacity to plan and co-ordinate public expenditures for roads and to monitor sector performance. The third was to carry out the preparatory engineering workt for the first year program of a proposed multi year Roads Rehabilitation Project (RRP). 3.0 IMPLEMENTATION Under this project there were three parts. Part A was on Policy Support under the Ministry of Communications and Transport. Part B was on Institutional Development and Project Operation under the Ministry of Works and Supply and Part C was on Rural roads Development under the Ministry of Local Government and Housing. The implementationi of'the Project was delayed until Febnuary. 1995. The Committee of Ministers charged the National Roads Board with the responsibility for co-ordinating the implementation of the Project in March, 1995, with Task Managers in each of the tlhee Ministries managing component of projects under respective Ministries. 4.0 PROJECT DESCRIPTION Project Description as per staft' appraisal report is reproduced below:- 4.1 Policy Support Project description as per staff Appraisal report is reproduced below:- A national transport Policy study, which will carry out an administrative reclassification of the road network (much of which was ungazetted). work out the detailed implications of establishing an autonomous Highway Authority to take over responsibility for managing the entire road network in Zambia ,propose arrangements for road financing, including the possible introduction of an explicit tariff, followed by preparation of a cabinet paper summarising the above arrangements and the subsequent preparation of a draft Highway Authority Bill for consideration by Parliament. US $ 0.8 million or 9% of total project cost was allocated. - 35 - 4.2 Project Preparation Detailed engineering of road rehabilitation works will be carried out under the proposed RRP first year program ,based on the five year priority program identified in the recently completed Road Maintenance, Organization and Training Study (RMOT ),and the Luangwa bridge feasibility and engineering study. US$2.4 Million or 27 % of'total project cost was allocated. 4.3 Institutional Development Design and implementationi of' a highway management svstem .including reclassification of roads as mentioned above: an equipment management and maintenance study to explore how Road's departnent equipment could be managed and maintained in an et'ticienit manner, a study of' the local consulting and construction industmy to establish the range and comiipetence ot' domestic construction and consulting finns, identify any constraints hampering their developmenit, and prepare an action plan for removing constraints to industry development; establishment ot' a feeder roads section (FRS) within NLG, which will cover roads managed by Rural District Councils (RDCs).including channiiellinig futinds from the development budget and inproving generation of local revenues tor maintenance ot' RDC roads: and assistance to the implementing agencies in maintaining the project accotilnts and to Ministry of' Finance (MOF) for auditing the accounts. US$5.8 Million or 64 % of total project costs was allocated. Studies included in the project under three areas are detailed in annexes 1,2, and 3 attached. 5.0 PROJECT PERFORMANCE 5.1 Policy support A National Transport policy was carried out with following outcome: 5.1.1 Road Classif ication Administrative reclassitication of road netwvork recommended by the Consultant was accepted by the Government but is vet to be implemented. 5.1.2 Highway Authority Bill Detailed implications of establishhig an autoniomotus Highway Authority (NHA) managing the entire road network in Zambia was worked out by the Consultant through stake holder consultation A Highway Authority Bill was also prepared but the Cabinet did not approve Instead the Government decided to strengthen the National Roads Board established by Govenument in 1994 by giving it more functions including those that would have been performed by NHA. By mid term review the Government will assess whether there will be a need to establish the NHA. 5.1.3 Introduction of an explicit road tariff The Government introduced fuel levy in May 1993 as an explicit road tariff which was increased gradually from KIO per litre in 1993 to K 30 per litre in 1994 ,to K40 per litre in 1996 and to 15 % of whole sale price in 1997. The Govermment did therefore implement transport sector policy reforms through regulatory and Institutional reformns by setting up of National Roads Board with private sector participation, and strengthening it by vesting additional functions to improve the management of National road network. The Govermnent did put the financing of roads on a sustainable long term basis through the introduction of fuel levy as an explicit tariff dedicated for Maintenance and gradually increasing it with a vision to make it self financing Maintenance. The Govermnent has constituted a Task Force to revise the Road Act Cap 464 which will incorporate the reclassification of roads, Institutional and Financial reforms accepted by the Govermnent The total cost of the study was US$0.66M as against allocation of US$0.8 Million. - 36 - 5.2 Project Preparation Detailed engineering Study of Great North Road trom Kapiri Mposhi to Nakonde under the proposed RRP first year Program was undertaken by four Consultanits at a cost of US$2.12 Million compared to US $ 2.7 Million allocated. In addition to the above, one of the most outstanding outcome was the preparation of a ten year Road Sector Investment Programune (ROADSIP). A National Task Force was set up with private and public sector partnership under the leadership of National Roads Board to prepare a Bankable Document to access funding from Road tUsers. Govermnent. World Bank and Doonors tor a multi year Road Rehabilitation Program. The Project aimed at addressing all the ft:cets ot Road Sector in order to bring about total quality managemnent. Thus an Environmelntal Management Study. Road Safety Management Study. and Road Numbering and Mapping Study were undertaken as part iofpro ject preparationi at a cost of US$ 335.71() bringing the total cost of project preparation to UJS $ 2.46 M. These four studies were outside the original project design anid wvere additional studies undertaken withini the project cost. The Government has launched the first tive year phase of a ten year ROADSIP with pledged funds to the tune of US$45() Million from Road IJsers. Govenunent. World Bank and Donor Community. Government has initiated action to implement the action plan on enviroiunenital Manageiment. Road Safety, Road numbering and Mapping System, and also commission civil works in the four sections of the Kapiri Nakonde Road designed under this study. TETAP has therefore been managed to give birth to a longer tern, Multi Million Dollar Road Sector Management Programme for greater sustainability. 6.0 INSTITUTIONAL DEVELOPMENT 6.1 Highway Management System Highway Management System was designed and implemented and is now being used as a tool for planning and management of road Maintenance and rehabilitation. The problem of sustainability of the System remains to be addressed. 6.2 Reclassification, Numbering and Mapping Reclassification, numbering and Mapping of road network in Zambia has been undertaken. Revision of' the Act is to be undertaken to incorporate the recommended classification and numbering system. 6.3 Equipment Management and Maintenance Study Equipment Management and Maintenance study was completed and the recommendation to sale Road Equipment, gradual phasing out of Force Account restructuring of Roads Department to plan and supervise road works by contract Account with greater involvement of private sector is being undertaken at a slower pace due to the delayed implementation of public service reform Programme. 6.4 Study on Construction and Consulting Industry Study on Construction and Consulting Industry was completed and the recommendations are being implemented. A private sector driven National Council for Construction has been established with public sector partnership. National Construction Policy has been formulated by the Government. Procurement and Tender Procedures have been decentralised and streamlined to be more transparent and accountable. Plant Pools, credit facilities for small scale contractors, training and development of small scale contractors, instituted. Contracts packaged ceiling limits for National Competitive bidding increased and weightage given for local contractors consultants and collaborative ventures to implement recommendations for sustainability. 6.5 Feeder Roads Section Feeder Roads Section established and strengthened in the Ministry of local Government and Housing. Survey of all feeder roads undertaken and inventory published. 40 % of road fund channelled for maintenance of feeder roads on sustainable basis. In addition inventory of urban roads undertaken and engineering design of selected priority roads undertaken in 8 of the 10 Provincial towns. Priority roads in the - 37- Lusaka City designed under TETAP have been rehabilitated and road works in the second and third cities of Zambia designed under the study are to be rehabilitated under ROADSIP before end of the year. Training and development of staff at MLGH and Councils were not achieved fully and is an ongoing process. Detailed reports from each of the three implementing Ministries are enclosed as annexures 4, 5, and 6. (See Project File). 6.6 Financial Performance 6.6.1 Project Accounting - Accounts were audited by Auditor General and External Auditors, Deloitte and Touche on quarterly basis and audit reports submitted. However a sum of US $ 115 ,820 was debited to the account through wrong instructions, which the Bank absorbed and credited the account. 6.7 Bank Performance The performance ot'the World Bank need to he commended tor guidance and facilitation provided to move the project torward despite the initial delay of 18 Monthis and the concomitant problems .Special mention must be made ot' the Task Manager for the project at World Bank without whose guidance and timely interventions the project could not have succeeded to the extent it did. 6.8 Borrowers Performance Borrowers pertonnance could be evaluated in relation to lessons from previous Bank /IDA involvement. By undertaking reforms in Institutional refonms in the Road Sector through the setting up of National Roads Board, Mobilising additional reveniues to support road maintenance and channelling these revenues to various road authorities through the setting up of road funid and National Programme of road Maintenance allocating 40 % to Main Roads. 40 % to rural roads and 20% to urban roads on an annual basis; and by creating more opportunities for the private sector to participate in the design, construction and maintenance of roads tlirough phasing out torce account and restructuring of roads department. the Borrower had performed very well and overcome the shortcomings identified in the earlier IDA projects. 6.9 Sustainabilitv The sustainability ot the project is assured through the draft Transport Policy, road sector Policy approved by the Govenunent and communicated to the World Bank. Institutional fiscal and legal reforms already undertaken as well as proposed initiatives under way. 7Z0 ACHIEVEMfENTS 7.1 All Components commissioned Althouglh the project was commissioned 18 montlhs late all the components of the project were commissioned and completed . 7.2 Saving of US $2.1 million made After having commissioned all the 9 components of the Project and 7 additional consultancies the project was managed to bring about a saving of tlS $2.1 million despite the delayed start-up of the project. 7.3 Additional Consultancies commissioned About twenty additional consultancies were commissioned to provide the input into the preparation of a Bankable Document to access donor funding to launch a medium tenm Road Sector Investment Programme (ROADSIP) within the total cost of the project and beyond the original conceptualisation of the Project. 7.4 Credit Agreement extended to 30 June, 1998 The Credit was extended by one year up to 30 June, 1998. - 38 - 7.5 Auditors' Performance Audit Report on the TETAP Account were submitted by Auditors Deloitte & Touche. on a quarterly basis. 8.0. OUTCOME Outcome of the TETAP Project is given below:- 8.1 Transport Sector Policy formulated. 8.2 Road Sector Policy promulgated. 8.3 Institutional refonr undertaken for management oftroad network. 8.4 Institutional responsibilities defined. 8.5 Sustainable financinig arrangement for maintenance of road network established. 8.6 Additional funds mobilised to finance road sector. 8.7 Highway Management System installed for planuning the management of road network. 8.8 Reforms initiated in the Equipment Management System. 8.9 Intervention undertaken to build local contractor and consultilng capacity. 8.10 Force Accounts discouraged and Contract Accounts adopted to encourage private sector participation in road constniction maintenianice and repair activities. 8.11 Road Nuimberino and Mapping System installed. 8.12 Action Plan to reduce the rate of accidents in the country and improve road safety formulated. 8.13 Environiment Management guidelines fornulated and a unit established to monitor and carry out envirolunental impact assessment in the rehabilitation network. 8.14 Commtnity Road Project launched to maintain comununity roads through community participation and cost sharing. 8.15 Feeder Road Section established in the Ministrv of Local Government and Housing and functions defined. 8.16 Survey of all feeder roads in the country carried out and data base established. 8.17 Ten year programume for rehabilitation of roads launclhed with annual maintenance programme of maintainable roads as the engine of road sector investment in the country. 8.18 Detailed Enginieering of Kapiri/Nakonde road rehabilitation works to, be implemented in the first year of a proposed multi-year road relhabilitation proiect completed and procurement of civil works completed. 8.19 First year feeder roads rehabilitation and accessibility improvement programme launched. 8.20 Engineering of' road rehabilitation works to be implemented under accelerdted Urban Road Rehabilitation Programme in 8 of ten Provincial towns. 8.21 Civil works completed in Lusaka. Procurement of civil works in two other towns Ndola & Kitwe underway. 8.22 Luangwa Bridge strengthened 8.23 Training interventions funded under TETAP to enhance the delivery capability of stakeholder ministries. - 39 - 8.24 Manual prepared for the various facets of Road Sector Investment Programme. 8.25 Local capacity built through the t'ollowing initiatives:- 8.25.1 Local consulting firms colltracted to work with foreign Finns in most of the studies commissioned. 8.25.2 Counterpart statl allocated to most ot' the Consiiltaicies unidertaken. 8.25.3 Vehicles. equipment and furniiture acqutired unider TETAP Studies remained with government Departments and Ministries to enhanice delivery capacity and capability. 9.0 LESSONS LEARNT The following lessons were leamnt from this project:- 1. Project Management and Coordination skill is essential to make strategic and timely decisions at different levels, each member of' the coordinating team playing his/her part et'ectively. 2. The success of a Consultancy study does not depend on the profile ot a tinn or on the Curriculuim vitae of Consultants. These can be deceiving and henice the need to manage the process to ensure delivery. 3. Process Consultancy is a preferred approach to traditional report presentation approach . Reports have no value unless they are implemented to achieve results. Many reports tend to be shelved without being implemented due to several reasons thus wasting resources. It is therefore necessary that wherever feasible, process consultancy approach should be adopted to ensure recommendations are implemented and capacity built to manage the process. 4. Success of a project is judged not by number of reports presented and consultancies paid for but by the outcome of recommendations on the quality of life ot people through improved management of the component of a sector. 5. Sustainability ol a project is key to success . Local personnel shouild be developed on the Job doing the Job to acquire necessary knowledge ,skills attitudes and also providing the tools and motivation required to perform. 6. Pairing of local personnel and counterpart staff with consultants is essential to build the capacity of local tirms and personnel. 7. Vehicles ,computers ,office equipment ,office accommodation and furniture provided in a study should help to build the capacity and delivery capability of clients in the long term and not of the consultants only. 8. Supervision ,guidance and continuos dialogue and feed back from the client is essential for the consultant to deliver to expectations of stakeholders. 9. Follow-up of implementation with well thought-out implementation plan is essential. 10. Intemal control measures should be instituted and reviewed periodicallyto avoid any fraud, with quarterly internal and extemal Auditing. 11. Performance of local Banks should be closely monitored to avoid failures on the part of Banks. 12 Effective communication required between the key players to make timely decisions for efficient management of the Project. - 40 - 10.0. CONCLUSION TETAP Project has achieved not only the set objectives but beyond by providing almost all the input required to launch a multi-million dollar 10 year Road Sector Investment Programme. The Project in brief helped to facilitate the fonnulation of policy. institutional, fiuancial. legal and management information system frameworkt for the management of road sector on a sound toundation. Thle Project provided the data base and the manuals required for efficient and effective management of the road Sector. Above all, private sector participation contributioni and partnership in the road sector management was triggered througlh TETAP. The World Bank publication entitled Findings' in an article on promoting policy reforms for etfective tranisport services in CONESA countries reads as follows: Quote "Seven of tJze area countries have established Roads Boards, wit/l varying fJnctions and success. But none have gained a status and success comparahle to the National Roads Board in Zambia whichI has takenm a strong lead in improving management and creating a sense of ownershipfavourahle to increasing finding and improving petformance. End of Quote The achievements of the Zambian Road Sector has been due to the manner in which TETAP Project was managed. IBRD 29636 \ 22 24- 26, 26 322 34 ZAMBIA X--So \. 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