92855
                                                                                                   March 27, 2007
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Before the project started, Road No. 13, the backbone of the road system in Lao PDR, was in
serious need of improvement. Its gravel surface limited travel speeds to around 35 km per hour.
Other provincial and district roads were also in a state of disrepair with road maintenance only
rarely undertaken across the network.




Project upgraded a 200-km section of Road 13 and introduced a periodic maintenance program
using competitive bidding. It also set out to improve the Government’s capacity to better manage
its national road assets.




The upgraded section of Road 13 now provides all-weather access to important
agricultural areas in southern Lao PDR. Travel time for transportation of key commodities
to markets has decreased from an average of five hours to less than three, which has
boosted local economic activity. Through a new cost recovery mechanism the government
is now raising close to half the annual funds needed to maintain the road system.


Highlights:
- Through all-weather access, the new roads have increased economic activities in areas that
were once hard to reach. Savings in vehicle operating costs have been estimated at US$39
million a year.
- The project has helped create a sustainable framework for road maintenance. Around 23,000
km of road across the country are now subject to periodic maintenance.
- The government embraced a competitive bidding system in the roads sector. At the end of the
project, 70 percent of routine maintenance and all periodic maintenance were subject to
competitive bidding. The number of private contractors increased from 30 in 1997 to 130 in 2003
(70 of which are well-performing and financially stable) and their capacity to undertake civil
works has dramatically increased.
- The project played a key role in strengthening the government’s capacity to maintain and
preserve its infrastructure assets. It helped establish the Road Maintenance Fund in 2001 with a
road users’ funding mechanism as a sustainable source of income. The Fund’s current estimated
revenues of US$8 million in 2006 represent 40 percent of estimated annual need.
- The government has adopted the project’s monitoring approach to oversee all donor-related
projects.




- US$45.4 out of US$63.7 million.
- Played a catalytic role in reforming the country’s road sector and in improving the institutional
capacity.
- Encouraged the development of a long-term solution to funding road maintenance and was
instrumental in bringing other donors to the table.
- The road sections supported under the project were included in the government’s long-term
maintenance program, partially funded by follow-up support from IDA’s Adaptable Program Loan,
the Road Maintenance Program (RMP).




US$12.6 million co-financing from the government of Lao PDR and US$5.7 from the Swedish
International Development Cooperation Agency (SIDA) and the Nordic Development Fund.




Responding to the government’s commitment to adopting a sector-wide approach to road
maintenance, IDA is proposing a Transport Sector Project and rallying donor support for the
government’s program. The approach has already been endorsed by IDA, the Asian
Development Bank and SIDA.




Third Highway Improvement Project (1997-2003)
Project documents