Document of The World Bank FOR OFFICIAL USE ONLY C-tZ 1%Z -o Report No. P-4689-TO MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 31.3 MILLION (US$40 MILLION EQUIVALENT) TO THE REPUBLIC OF TOGO FOR A TRANSPORT REHABILITATION PPOJECT November 17, 1987 This document has a resticted distribution and may be used by only In ime perouce of the officdal duties. Its couteats may not otherwise be disclosed Wold Bak authsion. CURRENCY EQUIVALENTS Currency Unit CFAF US$1 CFAF 300 CFAF 1 million US$3,333 FISCAL YEAR January 01 -- December 31 SYSTEM OF WEIGHTS AND MEASURES (METRIC) 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) 0.62 mile (mi) 1 square kilometer (kM2) 0.39 square mile (sq mi) 1 metric ton (t) m 2,205 pounds (lb) ABBREVIATIONS AND ACRONYMS item ealish French AfDB African Development Bank Banque Africaine de D6veloppement BOAD West African Bank for Development Banque Ouest Africaine de Ddveloppement CCCE French Development Fund Caisse Centrale de Coopdration Economique FAC French Development Aid Agency Fonda dAide et de Coopdration FED Europear Development Fund Fonds Europ6en de Ddveloppement Kw G,rman Bilateral Aid Agency Agence Allemande d'Aide Bilatdrale (Kreditanstalt ffr Wiederaufbau) m Million Million SFD Saudi Fund for Development Fonds Saudien de D6veloppement UNCDF United Nations Capital Development Fun4 Fonds d'Equipement des Nations Unies UNDP United Nations Development Programme Programme des Nations Unies pour le Ddveloppement FOR OFFICIAL USE ONLY REPUBLIC OF TOGO TRANSPORT REHABILITATION PROJECT CREDIT AND PROJECT SUI4MARY Borrower: Government of the Republic of Togo Beneficiaries: Minlgtry of Equipment and Post at. elecommunications Ministry of Commerce and Transport Amount: SDR 31.3 million (US$40.0 m equivalent) Terms: S:andard IDA terms, with 40 year maturity Onlending Terms: Not applicable Us$ m Financing Plan: IDA 40.0 AfDB 17.0 BOAD 2.3 CCCE 1.4 FAC 1.4 FED 26.6 KfW/ 8.0 SFD - 5.5 UNCDF/UNDP / 2.6 Other Donors - 3.1 Government 22.4 Total 130.3 . Economic Rates of Return: Ranging from 12% to 74% for analyzed road components, with an average of about 45%. Staff Appraisal Report: 7023-TO Map: IBRD 20133 /a Government is approaching SFD to obtain additional financing f- .he project. 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. MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 31.3 MILLION TO THE REPUBLIC OF TOGO FOR A TRANSPORT REHABILITATION PROJECT 1. The following report on a proposed development credit to the Republic of Togo for SDR 31.3 million (US$40 m equivalent) is submitted for approval. The proposed credit would be on standard IDA terms with 40 years maturity and would assist in financing a Transport Rehabilita- tion Project. 2. Background and Strategy. Togo's transport system serves national needs, provides an outlet for three landlocked countries and assures an East-West transit link. Transit traffic in ton-km exceeds domestic transport. The competitive nature of transit traffic and the openness of Togo's economy make an efficient low cost transport system critical to the Government's development effort. The system comprises a relatively extensive (about 7,500 km) and dense (0.13 km/km'), but insufficiently maintained road network; a mainly private sector trucking industry; a partially run down, lightly trafficked, loss-making railway system (about 500 km); and, at Lomi, an efficient and profitable deep-water port and an international airport in need of passenger and cargo handling capacity extensions. The Government recognizes the need to gradually close uneconomic railway services and limit expenditures mainly to rehabilitation and maintenance. The Government's transport sector strategy is to give priority to consolidating past investments, to ensure that new infrastructure construction is economically justified and to improve the efficiency of transport operations through better cost recovery, institutional reform and continued privatization. The above strategy is in line with, and would support, the Government's macroeconomic and structural adjustment policies. 3. Rationale for IDA Involvement. The rationale for IDA support is to help the Government implement a coherent strategy for the trans- port sector covering a realistic package of policy measures, institu- tional developments and sector maintenance and investments based on agreed objectives and annual reviews. This would reinforce preliminary actions already taken by Togo under SAL II, i.e., increasing railway tariffs and the budget allocation for road maintenance, and phasing out an uneconomic railway line. It would be in response to a Government request that the Association assume a leading coordinating role in the transport sector. 4. Objectives. The main objective of the project would be to support the Government's sectoral program of improved use, maintenance and selective rehabilitation of transport infrastructure. This would facilitate growth in agriculture, industry, and tourism and preserve Togo's major role in the sub-regional transit trade. The project would also improve cost recovery and road safety, strengthen the institutional framework, and stimulate the domestic construction sector. Finally, it would protect essential transport and urban infrastructure from coastal erosion. - 2 - 5. Project Description. The project comprises the Government's transport sector investment and maintenance program for the period 1988-1990 as well as sectoral policy and regulatory measures and train- ing. The program is reasonable in size and administratively feasible, as it will incorporate measures to resolve the main constraints facing road maintenance in the areas of funding, executing capacity and, to some extent, general administrative procedures. Road rehabilitation and expanded maintenance for all kinds of roads, including feeder roads, account for about 70% of the project expenditures; new road construc- tion, including bridges for existing roads, about 14%; coastal protec- tion about 10%; technical assistance, training, and an element for future studies account for another 4%, and road safety measures for 2%. The total transport sector expenditure program will be reviewed annually in light of needs, funding, and the results of economic and technical studies. The routine road maintcnance component would concentrate on two pilot provinces; a follow-up operation to extend this part and consolidate the institutional achievements could be considered in the light of Government performance under the proposed project. Due to the magnitude of the coastal erosion along the coast of the Gulf of Benin, the coastal protection component is limited to protecting the most valuable assets and monitoring the littoral processes. Financing for parts of the program has been agreed in principle with AfDB, BOAD, CCCE, FAC, FED, KfW, SFD, UNCDF and UNDP. 6. Agreed Actions. These fall into three categories. Firstly, during negotiations, agreement was reached on the foll-wing: (a) the scope of the 1988-1990 sector expenditure program, s.aject to annual reviews, with a minimum 12% ERR for each new project in *rcess of CFAF 200 million; (b) a program to increase domestic funding for road maintenance; (c) an action plan for institutional reform and strengthen- ing of the Public Works Directorate; (d) the scope and timing of studies concerning (i) a program for increasing road user taxes for heavy vehicles taking into account sub-regional agreements and constraints; and (ii) the financial status and prospects for the Togolese Railways, including an action plan; and (e) a program to improve road safety. Secondly, satisfactory proposals for restructuring the Directorate of Public Works have been submitted for approval by the Council of Minis- ters. Thirdly, (a) the establishment of the revolving fund for road maintenance with an initial deposit of CFAF 300 million; (b) reorganiza- tion of the Public Works Directorate and appointment of senior staff; and (c) appointment of consultants for the Railway study would be conditions of effectiveness. 7. Justification and Benefits. Lack of regularly maintained roads and other infrastructure would increasingly become a deterrent to economic activity, particularly agricultural development and the impor- tant transit trade. Rehabilitation and maintenance of roads and other infrastructure have very high economic returns leading to substantial savings of foreign exchange funds, as do improvements in road safety. The coastal protection component would avoid a potentially calamitous interruption of phosphate exports vital to the economy, and of trans- port along the coastal road; loss of these services would result in serious losses in export earnings and would require costly reconstruc- tion. The component would also minimize involuntary resettlement at An6ho. V 3'- 8. Risks. The main project risks are that the Government may not be able to fully carry through the institutional aspects to resolve the main constraints in mobilizing adequate funding for road maintenance, and the possibility that some donors may offer to finance low-priority investments. These risks are considered to be acceptable in the context of the technical assistan;e and implementation arrangements designed for the project and will be further reduced through close project monitoring and coordination with other aid agencies. 9. iRecMedation. I am satisfie4 that the proposed credit would comply with 'e Articles ot Agreement of the Association and recommend that the Executive Directors approve the proposed credit. Barber B. Conable President Attachments Washington, D. C. November 17, 1987 .4 Schedule A REPUBLIC OF TOGO TRANSPORT REHABILITATION PROJECT Summary Project Cost Estimate and Financing Plan (Net of Taxes and Duties) ------------- US$ million ----------- Local Foreign Total Road Component 17.1 78.8 95.9 Coastal Protection Component 2.1 8.4 10.5 Road Safety Component 0.8 1.4 2.2 Institutional Strengthening (Technical Assistance & Training) 0.4 3.4 3.8 Studies 0.1 1.4 1.5 Refinancing of PPF 0.0 0.3 0.3 Total Base Cost 20.5 93.7 114.2 Physical Contingencies 1.6 7.5 9.1 Price Contingencies 2.4 4.6 7.0 Total Project Cost 24.5 105.8 130.3 Financing Plan Local Foreign Tocal IDA 2.2 37.8 40.0 AfDB 1.0 16.0 17.0 BOAD 2.3 2.3 CCCE 1.4 1.4 FAC 1.4 1.4 FED 3.0 23.6 26.6 KfW 1.5 6.5 8.0 SFD L 5.5 5.5 UMCDF/UNDP 0.1 2.5 2.6 Other Donors (Gap) 0.C 2.3 3.1 Government 15.9 6.5 22.4 Total 24.5 105.8 130.3 a Could be increased to US$15 m if an existing loan of US$10 m were to be transferred from a non-project component. Government is approaching SFD on this point. Schedule B rEPUBLIC OF TOGO TRANSPORT REHABILITATION PROJECT Procurement Method and Disbursements Amounts and Methods of Procurement a (US$ m equivalent) Item ICB LCB Other Total Civil Works 86.0 15.3 8.2 109.5 (26.5) ( 3.0) ( --) ( 29.5) Equipment, Spares, 3.6 2.1 6.5 12.2 Fuel and Materials (2.2) ( --) ( 3.0) ( 5.2) Supervision of Works ** -- 2.7 2.7 ( --) ( --) (1.0) (1.0) Consulting Services, 5.9 5.9 Technical Assistance and Training ( --) ( --) ( 4.3) 4.3) Total (incl. contingencies) 89.6 17.4 23.3 130.3 (28.7) ( 3.0) ( 8.3) ( 40.0) Disbursements IDA Credit Disbursement % of Expendit..es Items Amt. of Credit Allocated To te Fins,cel US$ m A. Civil Works 27.0 90 B. Equipment and Spare Parts 4.0 90 C. Consulting Services, Tech. Assistance & Training 3.3 100 D. Reimbursement of PPF Advance 0.3 Amount Due E. Unallocated 5.4 Total 40.0 Estimated IDA Disbursements /b Bank Fiscal Year: 1988 1989 1990 1991 1992 1993 1994 --------------------(US$ Millions)-------------------- Annual 0 5.6 9.6 9.2 7.6 5.2 2.8 Cumulative 0 5.6 15.2 24.4 32.0 37.2 40.0 /a Amounts include contingencies. Amounts in ( ) indicate IDA financing. /b Based on the West Africa region transport sector investment and maintenance di4bursement profile. -6- Schedule C REPUBLIC OF TOGO TRANSPORT REHABILITATION PROJECT Timetable of Key Project Processing Events (a) Time taken to prepare: 2 years (b) Prepared by: Gcvernment with IDA and consultant assistance (c) Identification: May 1985 -a (d) Appraisal: March 1987 (e) Negotiations: October 1987 (f) Planned Date of Effectiveness: February 1988 List of Relevant PCRs and PPARs: /b Report Board Date of Credit No. Document No. Title Signature 1649 Sec M77-527 Togo-Highways Maintenance 10/10/68 Project (Credit 131-TO) 3987 Sec M82-651 Togo-Second Highway Project 12/28/73 (Credit 450-TO) /a A potential highway maintenance project was originally identified in early 1983. A new road maintenance and rehabilitation project was identified in May 1985 with a Project Brief issued in December 1985. The project scope has been gradually expanded. b PCR but no PPAR prepared for Togo Third Highway Project (Credit 693-TO). -7- Schedule D Page 1 of 2 REPUBLIC OF TOGO TRANSPORT REHABILITATION PROJECT STATUS OF BANK GROUP OPERATIONS IN THE REPUBLIC OF TOGO (as of March 31, 1987) A. Statement of TDA Credits (as of March 31, 1987) Amount (US$ Millions) (less cancellations) Credit No. Year Borrower Purpose Bank IDA b Undiab. b Twelve credits and one loan fully disbursed 3.50 137.67 -- 945-TO 1979 Togo Cocoa/Coffee Development II -- 14.00 1.12 1018-TO 1979 Togo First Education -- 11.00 0.52 1139-TO 1981 Togo Fourth Highway -- 20.00 5.02 1169-TO 1981 Togo Phosphate Engineering ** 5.70 2.66 1270-TO 1982 Togo Teccalcal Assistance II - 3.50 0.03 1302-TO 1983 Togo Second Rural Dev. Cotton Areas -- 23.50 8.73 1326-TO 1983 Togo Restructuring Project CIMA -* 5.70 5.70 1354-T0 1983 Togo Lom6 Water Supply ** 12.00 7.72 1508-TO 1984 Togo Nangbeto Hydroelectric Project ** 15.00 9.09 1568-TO 1985 Togo Education Improvement Project -- 12.40 11.15 1600-TO 1985 Togo Third Technical Assistance -- 6.20 6.20 1302-1-TO 1986 Togo Rural Dev. Cotton Areas II * 6.90 6.90 1745-TO /c 1987 Togo Cocoa and Coffee Dev. III -- 17.90 17.90 TOTAL 3.50 291.47 82.74 Of which has been repaid 1.73 0.86 Total now outstanding 1.77 290.61 Amount sold - -- Of which has been repaid ** -- Total now held by Bank and IDA 1.77 290.61 Total undisbursed -* -- 82.74 /a Prior to exchange adjustment. A Credit 1139-TO and higher are denominated in SDRs and are..ihow in US$ equivalent based on the exchange rates in effect at time of negotiations. Ic Approved but not yet signed. -8- Schedule D Page 2 of 2 REPUBLIC OF TOGO TRANSPORT REHABILITATION PROJECT STATUS OF BANK GI VtP OPERATIONS IN THE REPUBLIC OF TOG (continued) B. Statement of Bank Loans Guaranteed By Ghana. C8te d'Ivoire, and Togo Loan or Credit No. Year Rorrower Purpose Bank IDA Undiab. 1295-WAF 1976 CIMAO Regional Clinker 49.50 -- ** Repaid 21.93 ** ** Now outstanding 27.57 C. Statement of Regional Bank Loans and Credits to: Benin. Burkina Faso, C6te d'Ivoire, Niger, Senegal, Togo Credit No. Year Borrower Purose Bank IDA Umdiab. 969-WAF 1980 BOAD Project Preparation Credit -- 3.0 1.06 1331-WAF 1983 BOAD Regional Development ** 14.0 10.58 2242-WAF 1983 BOAD Regional Development 6.10 -- 3.25 TOTAL 6.10 17.0 14.89 Repaid -- -- -- Now outstanding 6.10 17.0 D. Statement of IFC Investments Fiscal Year Obligator Type of Business Loan Equity Investment Total 1987 PENAFRICA Integrated Textile Manufacturing 7.0 1.0 8.0 Total Gross Commitments 7.0 1.0 8.0 Less Cancellations Total Commitments Now Held by IFC 7.0 1.0 8.0 Undisbursed Balance 7.0 1.0 8.0 IBRD 20133 BUR K INA FAS TOGO TRANSPORT INFRASTRUCTURE ANGO >N J bo.r N,AMTøOO ecffA0 SARAKAWA z kASQU SOTKUBE K uwNou1111 gAMLAMt A '~RXAl1HO Eo g5 s43 n n aseceance A LIG&O \ MA AfAGNANGAN 'ýýG NSV ANFOUIN) rg Q 4KPEM L ATAC#AA LiO " A 000 '140 ULY 1987