Document of The World Bank Report No: 21471-UG PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF 50.9 SDR MILLION (US$ 64.52 MILLION EQUIVALENT) TO THE REPUBLIC OF UGANDA FOR A PROJECT IN SUPPORT OF THE SECOND PHASE OF THE ROAD DEVELOPMENT PROGRAM JUNE 7, 2001 AFTTR Africa Regional Office CURRENCY EQUIVALENTS (Exchange Rate Effective March 31, 2001) Currency Unit = Uganda Shilling Ush 1670 = US$1 US$ = SDR I FISCAL YEAR July I -- June 30 ABBREVIATIONS AND ACRONYMS APL Adaptable Program Lending CAS Country Assistance Strategy DMTFU Disaster Management Task Force Unit EIA/SIA Environmental/Social Impact Assessment EIRR Economic Internal Rate of Retum EU European Union GOU Government of Uganda ICB Intermational Competitive Bidding IDA Intemational Development Association MMIS Monitoring and Management Information System MOF Ministry of Finance Planning and Economic Development MOFPED Ministry of Finance Planning and Economic Development MOWHC Ministry of Works, Housing and Communication NDF Nordic Development Fund NEMA National Environmental Management Authority NPV Net Present Value NURP Northem Uganda Rehabilitation Project PEAP Poverty Eradication Action Plan PFP Policy Framework Paper PPF Project Preparation Facility PRSP Poverty Reduction Strategy Program PS Permanent Secretary RAFU Road Agency Formation Unit RDP Road Development Program RDPPI Road Development Program, Phase I RMI Road Maintenance Initiative RSDP Road Sector Development Plan RSISTAP Road Sector Institutional Support Technical Assist. Project SDR Special Drawing Rights TRP Transport Rehabilitation Project TSIREP Transport Sector Investment and Recurrent Exp. Program URC Uganda Railways Corporation Vice President: Callisto E. Madavo Country Manager/Director: James W. Adams Sector Manager: Maryvonne Plessis-Fraissard Task Team Leader/Task Manager: Yitzhak Kamhi UGANDA SECOND PHASE OF THE ROAD DEVELOPMENT PROGRAM CONTENTS A. Program Purpose and Project Development Objective Page 1. Program purpose and program phasing 3 2. Project development objective 6 3. Key performance indicators 7 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 7 2. Main sector issues and Government strategy 7 3. Sector issues to be addressed by the project and strategic choices 9 4. Program description and performance triggers for subsequent loans 10 C. Program and Project Description Summary 1. Project components 14 2. Key policy and institutional reforms supported by the project 14 3. Benefits and target population 15 4. Institutional and implementation arrangements 15 D. Project Rationale 1. Project alternatives considered and reasons for rejection 17 2. Major related projects financed by the Bank and other development agencies 19 3. Lessons learned and reflected in the project design 20 4. Indications of borrower commitment and ownership 20 5. Value added of Bank support in this project 21 E. Summary Project Analysis 1. Economic 21 2. Financial 22 3. Technical 24 4. Institutional 25 5. Environmental 26 6. Social 27 7. Safeguard Policies 28 F. Sustainability and Risks 1. Sustainability 29 2. Critical risks 30 3. Possible controversial aspects 30 G. Main Loan Conditions 1. Effectiveness Condition 30 2. Other 31 H. Readiness for Implementation 31 1. Compliance with Bank Policies 31 Annexes Annex 1: Project Design Summary 32 Annex 2: Detailed Project Description 43 Annex 3: Estimated Project Costs 52 Annex 4: Cost Benefit Analysis Summary, 54 Annex 5: Financial Summary 59 Annex 5b: Financial Management Overview Annex 5c: Fiscal Impact of RDPP2 Annex 6: Procurement and Disbursement Arrangements Table A, Table B, Table C, Table D 72 Annex 7: Project Processing Schedule 77 Annex 8: Documents in the Project File 78 Annex 9: Statement of Loans and Credits 79 Annex 10: Country at a Glance 81 Annex 11: Letter of Development Program from the Government of Uganda 83 Annex 12: Summaries of Environmental Impact and Socio-Economic Assessment Reports 90 MAP(S) UGANDA SECOND PHASE OF THE ROAD DEVELOPMENT PROGRAM Project Appraisal Document Africa Regional Office AFTTR Date: April 25, 2001 Team Leader: Yitzhak A. Kamhi Country Manager/Director: James W. Adams Sector Manager: Maryvonne Plessis-Fraissard Project ID: P065436 Sector(s): TH - Highways Lending Instrument: Adaptable Program Loan (APL) Theme(s): Transport Poverty Targeted Intervention: N Program Financing Data:. ' ' ' . ' . . ..-.:.': -Estim ated ''. ........ .... ...... ...... APL Indicative Financing Plan Implementation Period Borrower (Bank FY).. .............' IDA Others Total Commitment Closing US$ m % USS m US$ m Date Date APL 1 90.98 75.9 28.96 119.94 11/22/99 06/30/2004 The Republic of Uganda Loan/ Credit__ _ _ _ _ _ _ _ _ _ _ _ _ _ APL 2 64.52 66.5 32.48 97.00 07/30/2001 06/30/2006 The Republic of Uganda Loan/ Credit APL 3 100.40 75.2 33.15 133.55 10/30/2002 06/30/2007 The Republic of Uganda Loan/ Credit APL 4 26.25 75.0 8.75 35.00 06/28/2003 12/30/2007 The Republic of Uganda Loan/ C redit _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Total 282.15 103.34 385.49 __ [ I Loan [X] Credit 1 Grant [ J Guarantee [O Other: For Loans/Credits/Others: Amount (US$m): TBD Proposed Terms (IDA): Standard Credit Grace period (years): 10 Years to maturity: 40 Commitment fee: 0.5% Service charge: 0.75% Financing Plan (US$m): Source: Loca..l. Foreign T BORROWER 23.58 0.00 23.58 IDA 9.66 54.86 64.52 NORDIC DEVELOPMENT FUND 0.32 8.58 8.90 Total: 33.56 63.44 97.00 Borrower: THE REPUBLIC OF UGANDA Responsible agency: MINISTRY OF WORKS, HOUSING AND COMMUNICATIONS/RAFU Ministry of Works, Housing and Communications (MOWHC) Address: P. 0. Box 10, Entebbe, Uganda Contact Person: Permanent Secretary/Director of RAFU Tel: 256-41-320101/9/256-41-232814 Fax: 256-41-320135 Email: Rafu@infocom.co.ug Other Agency(ies): Road Agency Formation Unit (RAFU) Address: P. 0. Box 28487, Kampala, Uganda Contact Person: Director Tel: 256-41-232814 Fax: 256-41-232807 Email: rafuiinfocom.co.ug Estimated disbursements ( Bank FYIUS$m): ........ -iFY 2001 "2002:: 20032 2004 005' 2006 Annual 0.00 12.00 22.00 16.00 10.00 4.52 Cumulative 0.00 12.00 34.00 50.00 60.00 64.52 Project implementation period: 60 months Expected effectiveness date: 11/30/2001 Expected closing date: 06/30/2006 NOTE: Credit amounts for Phase 3 and 4 are indicative only, and will be confirmed during subsequent appraisals. The start of Phase 3 and 4 will depend on implementation progress, and the achievement of agreed triggers, and financing requirements and lessons learned during program implementation in Phase 1 and 2. 00$ MI PAD FOt R.. 1Mh ZD2 - -2 - A. Program Purpose and Project Development Objective 1. Program purpose and program phasing: General: The transport infrastructure in Uganda comprises about 34,000 km, out of which national road network 10,000 Iam; district roads 21,000 km; and urban roads 3,000 km; a Railway system includes about 1350 Iam, wagon ferry services on Lake Victoria and air transport facilities including one international airport and eleven domestic air fields. Road transport is by far the most dominant mode of transport and it plays a pivotal role in supporting the economic and social development programs. The roads in general carry over 90 percent of the country's passenger and freight transport and provide the only form of access to most rural communities. The classified roads which make up only 30% of the network, carry 80% of the total road traffic. Uganda's road network also serves as a transit corridor linking the land locked regional countries of Rwanda and Burundi, parts of Eastern DRC and southern Sudan to the sea. Centrally located in the East African Region, the road network is of national and regional strategic importance, since it helps Uganda play a crucial role in the region's economy and regional cooperation. Prior to 1974 Uganda had one of the best highway networks in Sub-Saharan Africa. Between 1974-1985 the whole road network deteriorated sharply due to neglect, mismanagement and lack of adequate maintenance as a consequence of civil strife and disruption of civil administration at the time. The economic consequences of neglecting maintenance took the form of increased transport costs, reduced transport fleets and an approximate 75% loss in road network investment due to deterioration. Uganda during that period registered negative economic growth, and declining agricultural and industrial production, while population growth continued at over 3% per annum. Since 1986, Government policy has focused on improved Transport and Communication infrastructure for accelerated development, to revamp the economy and consolidate national unity and regional coooperation. The 1986-1995 rehabilitation and maintenance efforts improved the condition of the road network from the less than 10% in a good state of repair in 1986 to approximately 70% for the main roads and about 40% in the case of feeder roads by 1995. This duly impacted the development of the national economy such that Uganda registered average annual growth rates of 6% in the 10 years to 1995, with the economy 70% larger than it was in 1986. In 1995, the Government of Uganda (GOU) developed a 10-Year Road Sector Development Plan (RSDP - 1996/7-2005/6) for the national road network, which was endorsed by the participating donors in November 1996. The objectives of the RSDP are: (i) to provide an efficient, safe and sustainable road network in support of market integration and poverty reduction; (ii) to improve the managerial and operational efficiency of road administration; and (iii) to develop the domestic construction industry. Projected total expenditure under the RSDP over ten years was estimated at about US$1.5 billion in constant end-1998 prices, whereas a further US$380 million would be allocated to the District feeder roads, urban roads and other transport projects. The RSDP did not include specific proposals for District (feeder), urban and community roads. However, Government has completed a consultant's study to update its 1992 Feeder Road Strategy paper; following which Government has prepared a final draft White Paper on Sustainable Maintenance of District (feeder), Urban and Community Access Roads (October 2000), which was received by the Bank February 2001. - 3 - The White Paper is to be further disseminated and discussed among key local stakeholders and donors in order to produce the final paper. Consultant's services will be procured to prepare a 10-year Plan for rehabilitation and maintenance of these roads, including a possible 300 km of district (feeder) roads to be upgraded to main road status. The RSDP recognized the need to address weak MOWHC implementation and co-ordination capacity, and the urgent need for major institutional reforms in order to coordinate, manage and implement the 10-Year Plan, as well as sustainable financing for road maintenance. The institutional reforms put in place as a key part of RSDP are based on the commercialization/contracting of technical services and the separation of the procurement and implementation functions from those of planning and coordination; with 2 separate technical bodies formed to be responsible for the respective functions. A Coordination Offfice was established in the MOF with contracted technical staff, who advise a Steering Committee of representatives of all ministries, under the chairmanship of the PS MOF (with plans to extend the committee to include representatives of road users and the private sector). The Coordination Office is responsible for annually up-dating the 10-Year RSDP and overseeing the financing and the performance of the Works and Services. In addition, based on the recommendation of a study financed by IDA, a dedicated professional procurement and implementation agency has also been established (with IDA support under RSISTAP) and named the Road Agency Formation Unit (RAFU). RAFU was set-up to form the nucleus of a future Ugandan Road Agency, the size and scope of which is to be determined based on the experience gained from operating RAFU together with the findings of a special study carried out under the program. Both the Coordination Office and RAFU have been professionally staffed, by open commercial recruitment (ICB), at market rates, using renewable one year performance contracts. These institutional developments are strictly in line with: (i) the civil service reform policy (calling for a reduction in the number of civil servants and the reallocation of the savings to pay the reduced staff commercial salaries); and (ii) the CAS, which supports privatization of services to meet the growing needs of the sector; with ministries honed down to regulatory and policy making duties. The above institutional arrangements have proven effective and are fully supported by all donors - each of whom supports separate elements of the institutional arrangements. The Coordination Office is supported by DANIDA, while EU is funding a number of the RAFU professional staff until it is fully established. IDA is supporting the institutional development in the roads sector and particularly the creation and operation of RAFU under the ongoing RSISTAP. The question of adequate funding for the sector was also addressed by GOU within the RSDP through its commitment to provide for its annual road maintenance requirements and for development projects through the yearly budget. The option of setting up dedicated funding through a Road Fund was left for further study. GOU has consistently met all its maintenance budget requirements, as well as counterpart funding needs. It has also given explicit undertakings to sustain the maintenance funding as well as salary levels and conditions of employment offered by the Coordination Office and RAFU when IDA financing ends - thus guaranteeing the sustainability of the institutional arrangements. However, with a view to further possible institutional development, a succession of sector studies have been carried out and to serve as the basis for establishing a Road Agency. The studies conducted under the Program and under the RSISTAP comprise: (i) a Transport Sector Strategy; (ii) an Update of District (Feeder) Roads Rehabilitation & Maintenance Strategy; (iii) an Environmental Policy & Management Assessment; (iv) a study on the establishment of RAFU; and (v) a Road Sector Management & Financing Study. In addition, the Program supports the Government's 10-year Road Sector Development Plan (RSDP) by: (i) rehabilitating priority links of the national trunk roads network; (ii) by upgrading or rehabilitating feeder roads in selected districts; (iii) by improving road safety with the reduction of road-accident blackspots; and (iv) by reducing costs of construction of low volume traffic roads. -4 - In addition, under the TRP, IDA and NDF have been supporting capacity building of the local construction industry by conducting training of contractors under the District (Feeder) Roads Component, and creating business opportunities for local participation. Local contractors, under the national roads component of TRP for periodic and mechanized and manual routine road maintenance, have already undertaken more than 70 contracts. DANIDA intends to direct some of its funds to RSDP for developing capacity in the construction industry. DANIDA and EDF have projects to provide technical assistance to MOWHC. The Program: The GOU, with Bank assistance and in consultation with other donors, based on the successful implementation of the institutional reforms and sound financial provisions to the sector, developed the Roads Development Program (the Program/RDP) as an IDA-financed Adaptable Program Lending (APL) instrument. The Program supports the implementation of part of the RSDP, over the 1999/00 - 2006107 period. Details of the RSDP are presented in Annex 2, with the financing arrangements presented in Annex 2, Table 1. Over the whole 10-year RSDP period, GOU has committed resources amounting to US$700 million, EDF US$223 million; IDA US$356 million' out of which US$ 282 million is being provided under the RDP (of which the RDP Phase 2 (RDPP2) is to be the 2nd phase, following-on from RDP Phase I (RDPPI)) with the remaining IDA financing provided under the ongoing Transport Rehabilitation Project (TRP - Cr. 2587-UG), Road Sector Institutional Support Technical Assistance Project (RSISTAP - Cr.2987-UG) and El Nino Emergency Road Repair Project (Cr. 3064-UG)); and various bilateral donors the balance. The Board of the Bank approved the IDA Credit for RDP Phase I on June 29, 1999 and the Development Credit Agreement between Govenmment and the Association was signed on November 22, 1999. The Credit became effective on February 1, 2000. The total revised APL Program amount is US$ 282 million equivalent, of which the Phase I Credit is US$90.98 million. The overall RDP Program cost is shown in Annex 2, Table 2, with the costs of the successive APL phases. The scope and timing of components to be implemented under the Phases 2, 3 and 4 of the RDP have been revised on the basis of the stage of fulfillment of the trigger indicators for appraising each Phase mentioned in the Project Appraisal Document (PAD) of June 3, 1999 for the RDPP1. In October 2000, during the supervision mission for the Phase I project and the pre-appraisal of Phase 2, the readiness of the various components was assessed and this has been reflected in the Phase 2 project description below (see also Section B.4 below). Account was also taken of the completion of the National Road Safety Audit Study and a 3-year Action Plan for implementing much needed road safety improvements. Based on these, IDA agreed to a Government March 2000 request to finance Phase I of the National Road Safety Action Plan. During the preparation mission in March 2000, the Nordic Development Fund (NDF) decided with the Bank's consent to provide, under Phase 2, parallel financing for a pilot project component to demonstrate the use of innovative technologies in the construction of low-volume traffic roads. In addition, NDF will, in accordance with their May 2000 Board approval, finance the feasibility study, design and supervision of the new Road Agency headquarters building, programmed for Phase 3 of the program. And in response to a Government request in October 2000, IDA agreed to finance the Atiak-Moyo Road under RDPP3. (This road was originally included in the El Nino Emergency Project but deferred due to the late commissioning of consultants for the design.) The Program's development objectives will be achieved with steady progress in four phases over a seven year period, and include the following phases: The IDA US$ 356m includes USS 15m of the RDP $282m total which is to be spent outside the RSDP period. - 5 - Phase 1: Upgrading of two highest priority national roads, Busunju-Kiboga-Hoima (143 Km) and (RDPP1) Karuma-Pakwach-Nebbi-Arua (Section Pakwach to Arua, 130 Km), including related construction supervision. Carrying out sector policy and management studies, including those related to district (feeder) roads (November 1999-June 2004); Phase 2: IDA-financed: (RDPP2) Upgrading of national roads to paved standard: Karuma-Pakwach-Nebbi-Arua Road (Section Karuma-Olwiyo-Pakwach, 108 kIn) in 2 construction packages; and strengthening National Roads Katunguru-Kasese-Fort Portal, Kasese-Kilembe and Equator Roads, in 3 construction packages (163 krn); Consultancy services for Construction Supervision; Implementation of Phase I of National Road Safety Action Plan (NRSP) including capacity building support to the National Road Safety Council (NRSC) and Traffic Police, as well as the improvement of accident 'black spots', is intended to be taken up as part of the road upgrading/strengthening program; and Preparation of a National Transport Master Plan including plans for Greater Kampala metropolitan area; (July 2001- June 2006). NDF-financed: Pilot project for demonstration of use of innovative technologies in construction of low-volume traffic roads (Matugga-Semuto-Kapeeka, 39 km), including (i) Feasibility Study, (ii) Detailed engineering designs, cost estimates and preparation of bidding documents; (iii) Construction and supervision; (iv) Performance monitoring during and after construction; and (v) Preparation of design manuals, specifications and guidelines; and Feasibility Study and Detailed Engineering Design of new Road Agency headquarters building. Phase 3: Upgrading of National Roads to paved standard; Kampala-Gayaza-Bugema-Zirobwe- (RDPP3) Wobulenzi (70 km) and Kapchorwa-Suam Road (70 kin) and construction supervision. Upgrading of selected district (feeder) roads to national roads standard (about 300 kin); construction of new Road Agency headquarters building and rehabilitation/regravelling of Atiak-Moyo Road (92 kin) (October 2002 - June 2007); and Phase 4: Rehabilitation/improvement of selected district (feeder) roads (about 1,000 kIn) to be (RDPP4) identified by the National District (Feeder) Roads Study, and to be carried out under RSISTAP (June 2003-December 2007). 2. Project development objective: (see Annex 1) The development objective of the Road Development Program, Phase 2 Project (the Project) is to improve access to rural areas and economically productive areas and to progressively continue build up sustainable road sector planning, design and program management capability, as well as road safety management. The Project comprises: (i) upgrading and strengthening of the two high priority national roads; (ii) improvement of safety at selected road accident black spots, and the associated, road safety enforcement and management; (iii) pilot studies of innovative technologies and non-conventional materials in construction of low- traffic volume roads, and consultancy services for the design and construction supervision of a future proposed Road Agency headquarters building. These Phase 2 project objectives complement the objectives of the Phase I project, in meeting the overall objectives of the Program. - 6 - 3. Key performance indicators: (see Annex 1) The key performance indicators include increased industrial and agricultural activity; increased traffic growth; reduced travel time; and reduced transport rates and vehicle operating costs over the national road network. Improvement and integration of the national road network under the Program is subject to an appraisal process aimed at evaluating its technical feasibility and economic viability, as well as to learn from previous phases. Trigger indicators have been presented in Attachment 2 of Annex I which provide an assessment of readiness for implementation of subsequent phases, early identification of risks, and implementation of corrective measures before undertaking Phases 2, 3 and 4 of the Program. 4. Program Development Objective: The primary objective of the proposed Program is to improve access to rural and economically productive areas by removing major constraints to transport services on the country's road network. The Program would also support actions aimed at further strengthening of the road sector management. The Program supports Government's 10-year Road Sector Development Program (RSDP) by supporting the rehabilitation of priority links of the national roads network and district (feeder) roads to be upgraded or rehabilitated in selected districts. B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: IDA/R2000-187 (lFC/R2000-202) Date of latest CAS discussion: 11/16/2000 The program is consistent with the Bank group's Country Assistance Strategy discussed by the Executive Directors on November 16, 2000. A primary objective of IDA's assistance strategy to Uganda is to reduce poverty, through a medium-term strategy focused on private investment-led growth and export diversification. Lowering transport costs, and improving reliability of access to infrastructure, is assumed in the CAS as a key element to facilitate business development and to support poverty reduction. Regionally targeted public investment, mainly in the North, is also considered as a key element in IDA's strategy. The over-arching objective of the Bank Group's Country Assistance strategy is to support Uganda's economic transformation and poverty reduction strategy spelled out in the Government's Poverty Eradication Action Plan (PEAP) and Poverty Reduction Strategy Paper (PRSP) which was discussed by the Board on May 2, 2000 (document number: IDA/SECN2000-145). The emphasis in assistance will increasingly shift to the sector level and cross-cutting public sector management issues. Effectively addressing these issues and facilitating economic transformation calls for broadening of the decision-making process to involve all key stakeholders, particularly the sector ministries, local govermments and civil society. It also calls for a change in the Bank's lending modalities. This would entail moving away from the traditional combination of adjustment operations with discrete investment projects, to supporting a comprehensive reform program through the govenmment's budget, via a series of Poverty Reduction Support Credits (PRSCs). PRSC I Credit was discussed by the Board on May 30, 2001 (document number: IDA/R2001-45). In addition to PRSCs, the Bank would continue supporting some self-standing projects for capacity building and large infrastructure investments (for example, power and roads) which involve intemational competitive bidding, and, in the case of power, supporting a shift to private sector participation. -7 - 2. Main sector issues and Government strategy: The Bank prepared the last Transport Sector Memorandum in February 1991 (Report No 9346-UG). The main conclusions and actions recommended were: (i) strengthen investment planning and program prioritization across the various transport modes; (ii) maximize role of the private sector in transport activities; (iii) balanced program of road rehabilitation and maintenance; (iv) preparation of a strategy for air transport development; (v) commercial strategy for the Uganda Railways Corporation (URC); and (vi) development of local construction industry. Many of these recommendations have been followed under the ongoing IDA-financed TRP. In addition, IDA assisted GOU in the preparation of its 1992 Rural District (Feeder) Roads Rehabilitation and Maintenance Strategy document, which formed the basis for Government, and donor assisted district (feeder) road programs included in the TRP. During implementation of the TRP several positive developments have taken place and important lessons were learnt, including: (i) selection and prioritization of transport sector investments and recurrent expenditures within the framework of the Government's rolling three-year Transport Sector Investment and Recurrent Expenditure Program (TSIREP); (ii) contracting out of road construction, rehabilitation, and maintenance works for both national and district (feeder) roads; (iii) development of a national road maintenance program, with Government contributions rising to US$32 million in FY00/01 from US$15 million in FY96/97; (iv) establishment of a Civil Aviation Authority carrying the responsibility for the aviation sector; and (v) signing of a Performance Contract between URC and the Government, which explicitly recognizes URC as a strategic but commercially oriented entity, and establishes Government's obligation to compensate the URC for non-remunerative services that it is required to provide. Overall, the Government has made progress in addressing the major issues identified in the past. The areas where progress has been slower, or current issues still need to be addressed, are: (i) definition of a policy for concessioning URC; (ii) establishment of a user financed, Road Agency and enhancing road sector program management and project implementation capabilities; (iii) exploring alternative financing sources and to ensure sustainable financing for the expanded road program; and (iv) comprehensive coverage of district (feeder) road needs, including the need to improve the overall condition of the district (feeder) road network to complement an improving national road network; and (v) improving management and financing of district (feeder) roads maintenance at the district level for a sustainable road condition. The Government has initiated action to address these issues, as detailed in its Letter of Development Policy of May 1999 and January 2001. Specifically, altematives for private participation in URC and Uganda Airlines Corporation are currently being considered. A major restructuring effort has also been initiated in the road sector under RSISTAP, leading to the creation of RAFU as an intermediate step towards a possibility for establishment of a semi-autonomous and commercially oriented Road Agency by the end FY 2002 if required. The establishment of RAFU is just beginning to show initial results and the expected improvements to Government's road project management capabilities have become evident, thus creating conditions for the effective implementation of the RSDP. To date, GOU has assured adequate budgetary resources for roads development and maintenance through the provisions under the TSIREP. However, the impact of the expanding road development program on these limited resources still needs to be carefully monitored in order to allow the consideration of alternative sources of finance. In addition, Government has also recently completed consultant studies to review the strategy for the Transport Sector and to update the District (Feeder) Roads Rehabilitation and Maintenance Strategy (the 1999 Strategy Report) for which a Government action plan needs to be firmed up and implemented. Other studies have also started, to identify district (feeder) roads for upgrading to main classified road standards, and establish an overall program to address district (feeder) roads financing and expenditure requirements. In addition, GOU is finalizing preparation of a "White Paper" outlying its policy and strategy for implementation of urban and district - 8 - (feeder) roads. 3. Sector issues to be addressed by the project and strategic choices: Of the sector issues identified above, the project is addressing the following main issues (i) establishment of a sustainable and efficient autonomous or semi-autonomous Road Agency for professional road sector program management and project implementation; (ii) alternative financing sources to ensure sustainable financing for the expanded road program; and (iii) appropriate coverage of the district (feeder) road network, as well as the need to improve the district (feeder) road network's overall condition, as well as its management at the district level. The strategic choices shown below were discussed and agreed with the Government in November 1996 and January 1998. They have been reconfirmed during appraisal of the proposed Program and pre-appraisal of the Phase 2 project. (i) To maintain the existing institutional set-up of MOWHC, or create an user-financed Road Agency focused on efficient implementation of the RSDP. The creation of an effective Road Agency by the end of FY 2002 is being pursued under the RSISTAP through a study for the establishment of the Agency, covering the statutory, legal and regulatory framework required for its establishment and operation. Prior to the establishment of the Agency, consultant services for the study of a transitional institutional arrangement within MOWHC were financed under the PPF for the Phase I project. The transitional RAFU has been established. The institutional arrangement is already ensuring a more effective program management and project implementation capability in the road sector. (ii) To have proceeded with a Sector Investment Project which would have covered both institutional and physical investments, or to phase IDA assistance under successive operations. The size and scope of the RSDP requires an increased absorptive capacity in MOWHC to effectively manage and implement the program. During an Identification Mission in November 1996, IDA agreed with the Government to phase its assistance, beginning with an institutional credit (RSISTAP) to assist in setting up the RAFU and finance initiating activities. This step was followed by investment projects in support of physical road improvements and further enhancement of road sector management and implementation effectiveness under the Program. IDA's Adaptable Program Lending Instrument was selected for program definition for its flexibility and to facilitate this strategy. (iii) To continue the provision offinancial resources for road programs from annual central budgets with their inherent constraints, or explore alternative means and sources of financing, including explicit road user charges and private sector participation. Studies are being undertaken to assess the funding arrangements for the road sector and for the operation of the Road Agency, including the possibility of a user-managed road fund. A Road Management & Financing Study financed under the Program was just completed, suggesting that a revised approach to road financing may be viable through user charges. (iv) To implement an overall national and district (feeder) roads network improvement under the RSDP. Or separate district (feeder) road network needs and address them under complementary programs, recognizing their unique characteristics and management requirements at the district leveL As part of its decentralization strategy, the GOU has recently initiated a program of directly allocating central revenues to sub-national levels of Government for rural infrastructure, including district (feeder) roads, through conditional grants. Through their local representatives, beneficiaries are thus called upon to play a more important role than hitherto in selecting expenditure priorities. Development planning and program coordination and implementation performance auditing remain the primary responsibility of MOWHC. Empirical evidence elsewhere also suggests that operation and maintenance of local infrastructure facilities is better carried out through the direct involvement of beneficiaries, district -9- authorities and communities, rather than through central Govemment agencies. Government has completed in February 2000, a consultant study to define district (feeder) roads strategy including an action plan for the improvement and management of district (feeder) roads and is yet to formally present Government's framework "White Paper". In this context, IDA under Phases 3 and 4 of proposed APL would assist GOU in identifying district (feeder) road rehabilitation and maintenance requirements in selected districts. 4. Program description and performance triggers for subsequent loans: The Program, through rehabilitation, strengthening and upgrading of the national trunk road network, benefits the country economy and supports the major institutional reform in the sector related to commercialization of the management and procurement functions of the implementation agency (MO WHC) and the sustainable secured budgeted financing. The implementation of the Program's four phases are based on the measured progress of these reforms and on the state of readiness of the technical documentation for planned physical investments. The Program supports a total of 92 km of national road rehabilitation; 163 km of national road strengthening and 451 km of national road upgrading, plus 1300 km of development and rehabilitation of district (feeder) roads. In addition, the Program prepared sectorial work in fields of road management and financing (national, district (feeder and urban) roads), environmental and social impact assessment and mitigation, and road safety. - 10 - The triggers indicators have been developed for each of the Phases and their assessment and evaluation for the Phase 2, is described below: Assessing Project Strategy Trigger Indicators Means of Verification and Institutional Building 1. Experience from Phase 1 1 I RAFU key personnel in place and effectively 1.1.I RAFU strategy and action plan of October indicates that the project's handling the implementation process. 2000 for recruitment of technical staff institutional arrangements implemented. reflect effective decentralized 1.2 Admninistrative arrangements permit decision-making, build local effective and timely approval and 1.2.1 FAD established and financial management responsibility and implementation. information technology requirements developed by accountability, and implement June 2000, prior to Phase 2. an effective monitoring and evaluation system. 1.3 The monitoring and evaluation system 1.3.1 Quarterly/Annual Cash Flow Forecast pennits follow-up of project implementation and prepared by start of Phase 1, and updated for Phase assessment of project objectives' achievement. 2. 1.3.2 External auditors appointed by December 1999. Receipt of acceptable FY99/00 financial audit for RAFUJ received on time. 1.3.3 Bi-monthly evaluation reports made available to al participating donors in RSDP. 1.3.4 Government prepares PIP for each Phase detailing planned and actual achievements in preceding phases. 1.4 Sub-projects meet economic, social, and 1.4.1 Base line established for VOC. environmental eligibility criteria. Evidence of 1.4.2 Contract incorporates required mitigation adequate implementation of environmental measures. mitigation measures designed in the Phase 1. 2. Overall strategy for the 2.1 Studies for updating of transport sector and 2.1.1 Studies for updating of transport sector and transport sector and for district district (feeder) road strategies and financing district (feeder) road strategies and financing (feeder) roads identified. completed by GOU. accepted by GOU and IDA. 3. Government strictly adheres 3.1 TSIREP for 3-year rolling periods adequately 3.1.1 TSIREP updated every year in November and to providing the financial cover Sector requirements. accepted by IDA. requirements for road 3.1.2 Timely availability of counterpart funds. rehabilitation and maintenance 3.1.3 Performance audits of maintenance budgeted projects under the TSIREP. resources including physical road condition to be carried out by independent consultants. 4. Government capacity 4.1 Procurement specialist in place and 4.1.1 Procurement specialist is in place and unit building in procurement and procurement unit established within RAFU. established. Procurement and Implementation are disbursement for major civil being effectively managed, without delays. works. 4.2 Design documentation prepared and contract 4.2.1 Detailed Designs and bidding documents documents ready for bidding. accepted by IDA. 4.2.2 Pre-qualification of contractors and short listing of consultants conmmenced. - 11 - Evaluation of the Triggers indicators for moving to Phase 2 The following represents the assessment of actions taken with regard to the above triggers in establishing the readiness of the Phase 2 project for implementation. 1. Institutional & Administrative Arrangements 1.1.1 Recruitment of RAFU additional staff is proceeding according to plan, and the terms of reference satisfactory to the Bank. With effect December 31, 2000, RAFU has 18 technical staff and this is expected to increase to 44 technical experts by June 30, 2001 with: (i) interviews for the Engineering Division Manager, one senior project engineer and 16 project engineers - completed April 2001; and (ii) the arrival of two technical teams of four experts each, in April 2001. 1.2.1The Finance and Administration Division (FAD) of RAFU has been established within the institutional framework of the MOWHC with responsibility for Project financial management. FAD's financial management system has been developed in accordance with the Financial Management Action Plan that was prepared jointly by the Government and the World Bank during RDP Phase I appraisal. Bank Accounts have been opened with CITIBANK Uganda Ltd. in respect of the US Dollar Special Account and the Counterpart Funds Account (Project Account). An initial deposit in the amount of UShs 6,736,664,000 ($4.5m) has been lodged to the Project Account in compliance with Section 3.04 of the DCA. Authorized signatories have been notified to the World Bank. Counterpart funds have been made in accordance with requirements. With the above actions, since the end of June 2000, the Financial Management System (including quarterly reporting and cash flow management) is functioning satisfactorily and the Information Technology Requirements will be finalized to support the same. A well-documented Financial Management Manual has been developed for the Project. The Manual outlines internal control procedures as well as financial reporting arrangements (interim and final) to Government and the World Bank. The Accounting System, based on Excel, is operational; Interim and Final reports and Cash Flow Forecasts have been prepared and a Fixed Assets Register has been established using Excel. In addition, the composition and terms of reference of the Financial Management Sub-Committee (FMSC) have been finalized and members appointed. Furthermore, procurement of a "state of the art" accounting system is well advanced. This is in line with the Action Plan agreed by IDA during Phase I appraisal. 1.3.2 External auditors have been selected. The first audit for RDP, Phase 1 was completed and the Auditor General's Report was submitted to IDA in January 2001. RAFU's audit for the financial year ending June 2000 was completed. The final audit report was submitted to the World Bank in March 2001. - 12 - 1.3.3 Bi-monthly evaluation reports have been made available to all participating donors in RSDP through the coordination office. The Coordination Unit was established in the Ministry of Finance under Danida Funding. The Coordinating Unit has assumed its functions as the Secretariat of the RSDP Steering Committee, monitoring and evaluating the RSDP as well as reviewing and updating the Program. The Steering Committee overseeing the work of the office is chaired by the Permanent Secretary of Finance. 1.3.4 A PIP for Phase 2 was prepared by RAFU in November 2000 and was submitted to IDA during pre-Appraisal. 1.4.1 TOR for the establishment of the baseline for VOC have been agreed. The services of a consultant commenced by the end of October 2000. The Final Report is expected by July 2001. 2. Project Preparation. Sector Studies 2.1.1 All the studies for updating of transport sector and district (feeder) road strategies and financing are now completed. These studies have been accepted by GOU and IDA, except for the Road Management & Financing Study which has been approved in April 2001. In addition, the GOU "White Paper" confirming various recommendation for district (feeder) and urban roads strategy and policy are expected to be finalized in May 2001. 3. Program Budgeting and Maintenance Performance Audits 3.1.1 TSIREP for FY2000/01-2003/04 was issued in October 2000 to reflect the budget which was issued for FY2001/02. The TSIREP was reviewed and updated in March 2001. 3.1.2 In view of concems expressed by the March 2000 preparation mission regarding the timely availability of counterpart funds, a Quarterly Status of Funds Statement and Quarterly Cash Flow Forecast will be included in the Quarterly Project Report that is submitted to the Bank. Note that this trigger is also a requirement for Phases 3 and 4 of the Project. 3.1.3 Performance audits of budgeted resources for the maintenance of the national road rehabilitation program, including physical road conditions, have been carried out by independent consultants recruited under DANIDA funding. The Govemment and all donors at the Steering Committee meeting for RSDP held on March 9, 2000 had agreed the TOR for the assignment The assignment commenced by the end of June 2000 and a final report was submitted at the end of October 2000. 4. Procurement Processing 4.1.1 RAFU has taken steps to complete its recruitment of experts, inculding procurement specialist, for its establishment, in accordance with the agreed Action Plan. Evaluation reports on the various procurements are being submitted on time, as evidenced by the timely submission of bidding documents and prequalification documents for the four construction packages and consultancy services under the RDP Phase 1 Project For example, Bank approval has already been given for proceeding with contract negotiations for all civil works contract packages under RDPP I for which recommendations were sent to the Bank in November 2000. All construction supervision services contracts have been awarded, and services commenced January 2001. - 13 - 4.2.1 Consultants have prepared detailed designs and bidding documents for the Phase 11 projects. The documents incorporated required mitigation measures against adverse social and environmental impacts. (Preparation of detailed designs and tender documents for black spot improvement and pilot project for construction of low volume roads will be perforned under Phase 2 of the Program). C. Program and Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- A ..''''' ,.......,.., - ....... ..... .. ...... tica etnk- i%~ ;.r , -,,,f,~~~., ........... . ................ ,-.N., ,- 0;0. . ...... . . . . . . . Road Upgrading/Strengthening 72.47 85.0 54.35 84.2 Construction Supervision 5.08 6.0 4.06 6.3 ROAD SAFETY 0.0 0.0 Black Spots Improvement 2.78 3.3 2.08 3.2 Design & Construction Supervision 0.30 0.4 0.24 0.4 Institutional Support 1.69 2.0 1.36 2.1 Equipment 0.30 0.4 0.30 0.5 NATIONAL TRANSPORT 0.0 0.0 PLAN/KAMPALA Master Plan 2.66 3.1 2.13 3.3 Total ProJect Costs 85.28 100.0 64.52 100.0 Total Financing Required 85.28 100.0 64.52 100.0 2. Key policy and institutional reforms supported by the project: The main sector policy reforms or complemented by the Program are aimed at building on those supported under RSISTAP and the Phase I Project, and include: (i) improving road sector management through the establishment of a sustainable and effective implementation and procurement capability developed around RAFU; (ii) ensuring sustainability of funding for road improvements and maintenance; (iii)increasing the effectiveness and involvement of private contractors in road works through strengthening project management and contract administration; (iv) improving the environmental and traffic safety management of the road network; and (v) defining overall transport sector strategy and updating the policy framework and strategy for district feeder roads development, maintenance and financing. - 14 - 3. Benefits and target population: The road paving and strengthening works would lead to substantial savings in vehicle operating and infrastructure maintenance costs, as well as reductions in travel time and transport costs for road users in the rural population. Since the identified subprojects are part of a comprehensive countrywide investment strategy for road development, they would contribute to fostering economic growth and poverty reduction through improvements in market integration and accessibility. These anticipated impacts are consistent with the objective of strengthening economic infrastructure, which has been identified in the CAS as a key element in GOU's growth and poverty eradication strategy. The roads selected for inclusion in the Program have all been subjected to feasibility economic analyses carried out on all components proposed for inclusion in the RSDP (summary results of the economic analyses are given in Annex 4). Each road is also being subjected to final technical and economic analysis under RSISTAP before being included in the proposed Program. The components covering sector strategy review and update studies and institutional strengthening financed through the PPF are directly targeted at rationalizing road sector management, thus addressing the pressing need for improvement of public sector implementation capacity. They wiUl build on the institutional restructuring already started under RSISTAP. By identifying activities which can better be performed by the private sector (project management and execution), and target capacity building initiatives for the activities which wil continue to be discharged by the state (road safety, environmental protection, budget management), these components would contribute to the Government's civil service reform program. These objectives have also been identified in the CAS as a central element to be pursued in capacity building efforts. The consultant services, being provided under RSISTAP, are expected to lead to benefits from a reduction in road subproject costs and from availability of improved facilities to road users. 4. Institutional and implementation arrangements: I. Administrative. The Ministry of Works, Housing and Communications (MOWHC) would have the overall responsibility for the implementation of the proposed Program. Recognizing the limitations of MOWHC's capacity to manage the expanded road program under the RSDP, studies are being conducted to determnine the viability and merits of establishing a Road Agency and the contracting out of road services, which can be more efficiently provided by the private sector. As an initial measure, a Road Agency Formation Unit (RAFU) has been established with IDA support under RSISTAP. RAFU, through its management divisions, will form the nucleus of the future Road Agency. RAFU has been mandated to be in charge of (i) road network development and management; (ii) planning and management of network maintenance; and (iii) overseeing the implementation of the Program, with emphasis on technical and financial monitoring and performance evaluation. MOWHC's new role will concentrate on technical and economic regulatory functions, sector planning, safety and environmental protection; and budget programming and execution. A RAFU Desk has been established within the MOWHC and is staffed by a TA consultant financed by DANIDA. The Desk provides secretariat services to the RAFU management committee. The MOWHC has also set up a dedicated unit within the Ministry to increase its effectiveness in providing planning and programming, administration and management support to local govenmment in developing and implementing a national strategic plan for district (feeder) roads development and maintenance. Donor coordination functions have been established. An RSDP Steering Committee (SC) has been constituted, comprising Permanent Secretaries and senior officials of the Ministry of Finance Planning and Economic Development (MFPED), Ministry of Public Service (MPS) and Ministry of Works Housing and Communications and major donors. The PS MFPED chairs the SC. The SC has the functions of: (i) coordinating the planning and implementation of the RSDP and the inputs and requirements of the - 15 - program; (ii) monitoring and evaluation of the program's performance; (iii) disseminating plans and progress information to the public and stakeholders; as well as (iv) organizing donor consultative group meetings. The committee is to be assisted in its work by the Coordinating Office. The committee has been meeting regularly. The RSDP Coordinating Office has also been set up with DANIDA funding and is located in the Ministry of Finance, Planning and Economic Development (MOFPED). The leader of the coordinating office and a technical adviser and the other technical staffs (transport economist and civil engineer) are at post. The Coordination Office is, on behalf of the Steering Committee, carrying out the following functions: (i) collection, analysis and disseminating of program management information; (ii) executing quarterly and annual program technical and financial performance evaluation and financial audits; (iii) annual reviews with proposals for any required RSDP structural adjustments, and updating of the RSDP document including the Pluriannual Expenditure and Financing Plan; (iv) preparing issues to be discussed with the SC, and any required studies and progress reports for quarterly and annual review meetings; and (v) issue information bulletins for dissemination as directed by the SC. 2. Implementation Period for RDPP 2. The implementation period for the RDPP 2 will be about five years, and about eight years for all phases of the RDP. Pre-contract activities are being carried out with the assistance of consultants recruited with financing provided under the RSISTAP. Award of contracts for the construction of the various roads included in the RDPP2, following international competitive bidding, will be made as and when the detailed engineering designs and environmental and social action plans, bid documents and contractor prequalification reports have been completed. The Project Implementation Plan (PIP) prepared by RAFU includes the program of contract awards. In this regard, the detailed designs and prequalification documents have been prepared. 3. Financial Management and Auditing. The Finance and Administration Division (FAD) of RAFU has been established within the institutional framework of the Ministry of Works, Housing and Communications (MOWHC) with responsibility for Project financial management FAD's financial management system is presently being developed in accordance with the Financial Management Action Plan that was prepared jointly by the Government and the World Bank during appraisal of the RDP Phase I project. The following summarizes the present status of the key activities outlined in the Action Plan. (a) The Finance and Administration Manager (FAM) assumed duty on 8 March 1999. Other relevantly qualified and experienced accounting, administrative and support staff have also been appointed (i.e. Senior Administration Officer, Accountant, Personnel Officer, Administrative Officer, Secretaries and Office Assistants). (b) A well-documented Financial Management Manual for the Project was developed and adopted December 1999. The Manual outlines internal control procedures as well as financial reporting arrangements (interim and final) to Government and the World Bank. (c) An Accounting System, based on Excel, is operational. Cash Flow Forecasts have been prepared and a Fixed Assets Register has been established using Excel. It is to be upgraded to a fully computerized Financial Management System based on a conventional accounting package. The procurement process for a financial management information system software is well advanced and the system is scheduled to be operational by August 2001. (d) The Financial Management Sub-Committee (FMSC) was appointed by MOWHC 17 June 1999 in accordance with the agreed terms of reference. - 16 - (e) Bank Accounts have been opened with CITIBANK Uganda Ltd. for the Phase I project in respect of the US Dollar Special Account and the Counterpart Funds Account (Project Account). An initial deposit in the amount of UShs 6,736,664,000 ($4.5m) was lodged to the Project Account in compliance with Section 3.04 of the DCA. Authorized signatories have been notified to the World Bank. FAD's financial management system, in accordance with the Financial Management Action Plan presented in Annex 5b, is expected to facilitate the introduction of PMR-based disbursements during Phases I and 2. Relevantly qualified, experienced and independent extemal auditors were appointed for FY 99/00 and their report was submitted December 2000 and received by the Bank Janaury 2001. 4. Disbursement of IDA Funds. Disbursement from IDA will be made on the basis of incurred eligible expenditures. IDA will make advance disbursement from the proceeds of the Credit by depositing into a Borrower-operated Special Account to expedite Program implementation. The advance to a Special Account will be used by the Borrower to finance IDA's share of Program expenditures under the Credit. Another acceptable method of withdrawing funds from the Credit is the direct payment method, involving direct payments from the Credit to a third party for works, goods and services upon the Borrower's request. Payments may also be made to a commercial bank for expenditures against IDA special commitments covering a commercial bank's Letter of Credit. IDA's Disbursement Letter stipulates a minimum application value for direct payment and special commitment procedures. Upon credit effectiveness, MOWHC will svbmit a withdrawal application for an initial deposit to the Special Account, drawn from the IDA Credit, in the amount agreed to in the DCA. Replenishment of funds from IDA to the Special Account will be made upon evidence of satisfactory utilization of the advance, reflected in the SOEs and/or on full documentation for payments above the SOE thresholds. Replenishment applications should be submitted regularly on a monthly basis. If ineligible expenditures are found to have been made from the Special Account, the Borrower will be obligated to refund the same. If the Special Account remains inactive for more than six months, the Borrower may be requested to refund to IDA amounts advanced to the Special Account. 5. Monitorinr and Evaluation. (i) A monitoring and evaluation system has been developed under the RDP Phase I Project which will be continued under Phase 2; ii) semi-annual progress reports will be prepared on the basis of the project implementation plan; and (iii) a completion report will be submitted by the Govermment to IDA within six months of Credit closing. Annual reviews of project implementation will be carried out before the beginning of each fiscal year to facilitate annual program budgeting. A mid-term review will be carried out 30 months after Credit effectiveness. D. Project Rationale 1. Project alternatives considered and reasons for rejection: Major Program altematives considered include institutional reform and restructuring, infrastructure expenditure strategy, and detailed subproject design 1. Institutional Reform. One altemative considered was to carry out institutional restructuring and to implement all the physical components of the RDP for the classified road network and feeder roads under one project. This was rejected in favor of starting with the institutional reform under RSISTAP, which ensured implementation arrangements were established in the form of RAFU, to serve as the basis for a possible future Road Agency. This ensured that sustainable and effective program management would be - 17 - full functioning before implementing an expanded roads improvement program. 2. Infrastructure Expenditure Strategy. Pre-investment strategies for the national road network, as a whole (10,000 Km), were considered as a basis for the development of the RDP. These were initially rejected, since they did not meet one (or several) of the following screening criteria: (i) compatibility of the expenditure level with macroeconomic targets, both in terms of the impact of the inflow of foreign exchange and the possibility of raising domestic revenue to fund counterpart expenditures; (ii) balanced allocation of resources for investment and recurrent expenditures; (iii) a minimum 12% estimated EIRR, the value assumed for the opportunity cost of capital; and (iv) capacity of the road administration to manage effectively. As a result of the above analysis, specific roads were identified for further technical and economic feasibility, with detailed engineering design studies to be carried out under RSISTAP for implementation under the proposed Program. The overall RSDP was also reviewed and updated during appraisal of the proposed Project. 3. Road sub-component Design and Implementation. The altematives considered included updating the feasibility and detailed engineering studies for all selected roads before implementation as opposed to a phased implementation. The former was rejected by GOU, IDA and other development partners in favor of the latter to allow for the expected slower speed of the build up of institutional capacity and the associated procurement processing through an Adaptable Program Lending (APL) instrument Consequently, implementation of each road sub-component will be contingent on the fulfillment of the following criteria: (i) economic viability established through an EIRR of 12% or above; (ii) completion of bid documents for contract award; and (iii) an environmental/resettlement mitigation plan satisfactory to IDA. These criteria will be tested during preparation of each subsequent phase and fulfilled prior to proceeding with implementation. - 1 8- 2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). LAtest Superv,lon Sector Issue Project (PSR) Ratings ____ ____ ____ ____ ____ ___ . :__ ._._-_-_._-__ :_-_:_-_ (R nk--rinaiced cr eltc on)v - Implmenbrtion Development Bank-financed Progess (IP) Objective (DO) National Roads Strengthening and Fourth Highway S S improvement Road rehabilitation, maintenance and Transport Rehabilitation (TRP) S S strengthening of district feeder road maintenance capacity, and private contractor development Institution building RSISTAP S S National Roads improvements and RDP, Phase I Project S S Sector Institutional Reform Emergency restoration of damaged El Nino Emergency Road U U roads and bridges Repair Other development agencies Nordic Development Fund: District (Feeder) Roads Building of district road rehabilitation Component of TRP and maintenance capacity African Development Fund: District Roads Maintenance Building of district road rehabilitation Project and maintenance capacity, contractor training European Union, Feeder Roads Ditto DANIDA, Feeder Roads Ditto IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory) Note: the unsatisfactory rating for the El Nino Emergency Road Repair credit reflects lack of capacity and expertise within MOWHC establishment (not including RAFU) and a new tax law which complicated and delayed contract awards. - 19 - 3. Lessons learned and reflected in the project design: Experience from past projects in Uganda indicates that the main risk has been the limited capacity of the implementation agency, in particular, the ability of the agency to effectively address problems related to contract management, contract administration, and financial and technical monitoring. There have been substantial delays in the processing and awarding of contracts, leading to substantially higher costs at the initial stages of commencement and to delayed completion. The lessons from the modest success of technical assistance provided to develop the implementation and planning capacity of MOWHC is that major policy changes need to be carried out prior to undertaking major investment programs, and need full commitment by Government to ensure success. The structure of road administration in Uganda has been subject to frequent changes, resulting in confusion, poorly organized planning and administration, and ineffective long-term institutional and staff development. Therefore, major institutional and policy changes, including reorganization and institutional strengthening of road administration, as well as changes in the decision-making process, have been undertaken by the Government. These include the creation of RAFU, to form a nucleus of a possible future Ugandan Road Agency, the size and scope of which is to be determined on the basis of experience gained from operating RAFU and the findings of a special study. Other lessons are that inadequate engineering design and weak documentation resulted in implementation delays and cost overruns. Steps are therefore being taken during Program Phase 1 project implementation to ensure the readiness and availability of completed contract documentation before commencement of works. These steps include, inter alia,recruitment by RAFU of the proper skill mix of professional staff with the ability to oversee the work of the various consultants preparing the designs. The latter is in progress under the RSISTAP. 4. Indications of borrower commitment and ownership: Three main factors are indicative of the Borrower's commitment to the Program. First, the Government considers the availability of basic road infrastructure as a key strategic element in the implementation of Uganda's economic program. Second, the Ministry of Finance has consistently allocated the agreed resources for road maintenance since 1993/1994, showing commitment to the sustainability of the proposed investments. Third, it is the Government's decision to initiate a major sector restructuring including the road sector institutions. The Director of RAFU and key staff (16) have been appointed with the additional managerial and professional staff expected to be on board by June 2001. - 20 - 5. Value added of Bank support in this project: An important source of value added by Bank support is its comparative worldwide experience in the preparation and implementation of major capital expenditure programs. The donor community active in Uganda has acknowledged and recognized the Bank's leadership role during preparation of the RSDP. The Bank also benefits from the experience, both positive and negative, gained in implementing comprehensive road sector development programs with institutional reforms in African countries such as Ethiopia, Mozambique, Tanzania, and Zambia. Another source of advantage is the Bank's experience in road sector reform in the Region gained over the last ten years through the steering of the Road Maintenance Initiative (RMI). This has provided the Bank with the goodwill of beneficiaries and donors in creating a cooperative framework where sector reforms have gradually been shaped, implemented and monitored. The Bank has responded to the Government's request by flexibly targeting, and quickly delivering, its array of lending instruments (including PPF preparatory studies and technical assistance under RSISTAP), in support of a credible assistance strategy, emphasizing sector and institutional reform prior to the commitment of resources to finance physical components. The APL instrument is also providing greater flexibility in adapting project design and financing to client needs as they evolve, as evidenced by the redesign of the Phase 2 project components - including the inclusion of NDF-financed components to be administered by the Bank. The Bank's participation thus provides for better continuity for the implementation of the long-term national program. In addition, despite employment of professional services on the Program, the Bank continues to make critical interventions regarding quality assurance in the procurement and technical fields. E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) t. Economic (see Annex 4): * Cost benefit NPV=US$9. 1 million; ERR = 12 % (see Annex 4) o Cost effectiveness O Other (specify) Road investments under the proposed Program are part of the RSDP, a comprehensive planning exercise carried out by MOWHC in 1996/7. The RSDP reflects investment requirements and economic priorities, and respects macroeconomic constraints, such as overall spending ceilings and inflows of foreign assistance, as well as domestic counterpart funding. Overall, the road expenditure program is balanced, and adequate priority is given to the selective upgrading of roads to paved standards, rehabilitation, and maintenance of existing roads, as well as district (feeder) road development. Investments to be undertaken under the RSDP would yield an EIRR above 12%, the value assumed for the opportunity cost of capital in Uganda. Investments in the four roads included in Phases I and 2 of the proposed Program were subject to specific cost-benefit analysis during appraisal. Basically, the benefit stream comprises the vehicle operating costs and time savings accruing to road users through improved road condition. The cost stream comprises the costs to the road agency arising from the proposed investments, net of any incremental maintenance cost savings. In order to carry out the analysis, traffic projections for various categories of vehicles were prepared, based on 1998/99 base-line traffic counts and on the govemment's GDP and population growth projections. The interaction between traffic, road condition, and vehicle operating costs through time was then modeled using the Bank-developed Highway Design and Maintenance Model (HDM 111). For purposes of analysis, the two roads under RDPP2 (Katunguru-Kasese-Fort Portal, Kasese-Kilembe & - 21 - Equator roads; and Karuma-Olwyio-Pakwach road) were split into five homogeneous sections, to reflect varying road conditions and other physical characteristics, as well as different traffic levels and composition. Several investment and maintenance alternatives were generated and evaluated for each road section, and the one yielding the highest NPV (at a 12% discount rate) was selected. As a result, the investments proposed under Phase 2 of the proposed Program would yield a consolidated NPV estimated at US$9.1 million, with no investment in any road section yielding an EIRR below 12.5%. Each of the Phase 2 road sections was then subjected to sensitivity analysis. To this extent, construction costs were increased by 25% and benefits separately decreased by lowering traffic level in a way that was deemed the most adequate for each section of roads. In this respect, traffic growth for the first six years was halved for Katunguru-Kasese-Fort Portal, Kasese-Kilembe & Equator roads, and traffic growth for the first ten years was halved for Karuma-Olwyio-Pakwach. Overall, results of the sensitivity analysis indicate that returns on investments are highly sensitive to both construction costs and traffic variations, with an integrated NPV of respectively minus US$3.5 million and plus US$0.5 million. On the one hand, two sections yield negative NPV with higher construction costs as well as with lower traffic levels: (i) Katunguru-Kasese-Fort Portal and (ii) Karuma-Olwyio. On the other hand, two sections yield positive NPV with higher construction costs as well as with lower traffic levels: Kasese-Kilembe (with healthy EIRR respectively of 17.4% and 17.2%), and Olwiyo-Pakwach (with an EIRR of respectively 13.5% and 13.6%). Results of the stochastic analysis and sensitivity analyses indicate that there is a relatively high likelihood that the Katunguru-Kasese-Fort Portal Road might fail to yield an ElRR above 12% (between 60-63% likelihood)' . However, concerning Katunguru-Kasese-Fort Portal, the mean expected EIRR is only marginally below 12% and adding expected mean NPVs from the two other sections of roads forming the network (Kasese-Kilembe and Equator Roads), total NPV is positive at U S$ 1.61 million (corresponding to above 12% EIRR). For Kasese-Kilembe and Equator roads, the results of the stochastic analysis and sensitivity analysis are strong, and there is above 100% likelihood that the project will achieve an EIRR greater than 12%. For the Karuma-Olwiyo-Pakwach road, the relative weakness of the mean expected EIRR is above 12% for both sections, with a combined NPV of more than US$3 million. Furthermore, this section of road should not be taken separately from the rest of the network under the study (Pakwach-Arua under RDPPI and Olwiyo-Pakwach under RDPP2), which has positive results. Added to the fact that results from the base case economic analysis are above 12%, it is therefore recommended that investment on both these sections go ahead as planned under RDPP2. The economic analysis rests on the overriding assumption that the overall security situation in Uganda will not worsen. Furthermore, and specifically for the Karuma-Olwyio-Pakwach road sections situated in the NW Region, the key assumption is that economic and social activities, including traffic flows, will regain at least their 1995 levels. On the basis of the Consultant's approach to risk analysis (using symmetrical input data), the probability of the Katunguru-Fort Portal road achieving an IRR of less than 12% is down to 32%. 2. Financial (see Annex 4 and Annex 5): NPV=US$ 0 million; FR1R = 0 % (see Annex 4) The financial implications of the Government's road sector program have been presented in its Budget Framework Paper discussed during its public expenditure review May 1999. As stated in that paper, Government's Poverty Eradication Action Plan identifies six critical sectors that require substantial budget expenditures if the objective of eradicating poverty is to be achieve. Of these, main roads, rural feeder roads and agriculture are seen as directly contributing to increasing rural incomes and supporting the - 22 - private sector. The paper confirms that the road sector continues to be one of Government's fastest growing program, with GOU spending increasing from about US$ 45 million in 1996/97 to a projected US$95 million in 2001/02 (see Table 5.1, Annex 5). This represents a percentage increase of more than 100% over a five-year period. Simultaneously, the sectoral allocation to roads and works would rise to a projected 9.7% in 2001/02 from 5.8% in 1996/97 (see Table 5.2, Annex 5). The medium-term sectoral allocations are also shown in Annex 5a, Table 5.2. This level of expenditure has been discussed with IDA and is considered acceptable, subject to future annual review of public expenditure. Fiscal Impact: The fiscal impact of RDPP2 can be briefly assessed as follows (a more detailed analysis is provided under Annex 5.c) I. The incremental taxes that would result from the project and during its life-time can be summarized by the taxes received from the construction of the following construction projects : (i) Katunguru-Kasese-Fort Portal, Kasese-Kilembe and Equator Roads, 162 km ; (ii) Karuma-Olwyio-Pakwach Road, 107 km ; (iii) black spot improvement, 71 mt ; and (iv) Matugga-Semuto-Kapeeka, 39 km. The details of these taxes are given below: Years 2000101 2001/02 2002103 2003/04 2004/05 2005106 2006107 Taxes from construction - - 4.68 3.00 3.82 1.28 1.37 -Karuma-Otwyio-Packwach Rd. 2.06 1.25 1.25 0.33 0.54 -Kat.-FP, Kilembe & /Equator Rds. 2.62 1.59 1.59 0.41 0.69 -Black spot Improvement l 0.17 0.24 0.06 I -Matugga-Semuto-Ka peeka Rd. l 0.75 0.48 0.14 Note: the level of taxation has been assumed to be 17%, 10% representing net VAT paid by contractors and 7% representing levies, mostly on imported goods. No subsidies are expected to result from the Project. 2. No increase in recurrent costs are expected from the Project because during the construction phase the construction costs are in lieu of the recurrent expenditures related to the respective roads; and the only apparent marginal increase in recurrent costs as forecast in the TSIREP are associated with the possibility of higher recurrent costs of the paved roads as compared to gravel, and the project's upgrading of 107 km of gravel road to paved - which would have minimal effect. 3. The Govemment's medium term macroeconomic objectives are to: (i) maintain macroeconomic stability, especially low and stable inflation (5 per cent or less) to sustain rapid and broad based economic growth of 7 per cent per year; (ii) enable incomes and reduce poverty, (iii) maintain sufficient foreign reserves, equivalent to about five months of imports of goods and services, (iv) provide a buffer against external shock and (v) ensure that the private sector's demands for credit are not crowded out by government borrowing. The Government's fiscal strategy entails maintaining strict budgetary discipline in order to mininmize government borrowing from the domestic banking system, which would either be inflationary or would crowd out private sector borrowing. This has meant that Govemment must maintain tight control over its aggregate expenditures. Budgetary policies also aim to improve the supply side of the economy and therefore to boost economic growth in the medium term, through two channels. Firstly, the expenditure policies are focused on expanding the provision of public goods and services which cannot be supplied by the market but -23- complement private sector investment or enhance the productive capacities of ordinary people, through for example, the construction of rural feeder roads, agricultural research and extension, education and health services, and secondly, the tax policies aim to promote efficient resource allocation by ensuring that tax induced distortions are minimized and that the tax system is conducive to private investment. Direct and indirect tax rates are very competitive both regionally and intemationally, and there are generous depreciation allowances for capital investment in plant and machinery and the degree of horizontal equity in the tax system is high. 4. The overall level of recurrent costs required to operate the sector adequately and the volume of financing provided by the Government in the recent past can be derived from the Transport Sector Investment and Recurrent Expenditures Program (TSIREP) dated October 2000. This report states that in order to optimize the investment made in roads, Government has highly prioritized national road maintenance, to preserve and reinstate the road network to the required level of services. Financing of main road maintenance is basically the responsibility of the Govemment. Government has committed itself to continue increasing funding for maintenance by an equivalent in US$ 4 million annually. Govemment will, in principle, finance all routine maintenance costs by 2001, and seek donor support in road rehabilitation and periodic maintenance operations. The Table below shows funding commitments in US$ to main roads maintenance programs and recurrent expenditures from the beginning of the 10-Year RSDP: 1996/97 to 2003/04 for both the Government and the Donor Community: _____________Actual Provision I Budget Prjections (TSIREP 96-04 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 Grand USS 1= 1,020 1,080 1,200 1,500 1,622 1,800 1,800 1,800 Total Maintenance (in 1998 S) l_l_l _l GOU 15.24 17.58 19.05 28.73 32.01 43.99 44.00 46.00 246.60 Donors 6.89 11.50 13.60 17.20 17.28 19.00 20.90 2299 129.35 Total Maintenance 22.12 29.08 32.65 45.93 49.29 62.99 64.90 68.99 375.95 Recunrent maint. element 3.24 5.10 8.521 9.56 9.63 13.85 19.741 29.61 99.24 5. The Government has demonstrated its commitment to provide the necessary counterpart funds for the project and indeed for the entire roads sector over the medium term. This is clearly illustrated in the Government's Medium Term Budget Framework (MTEF) which is a mechanism for determining Government medium term expenditure priorities and allocating these funds through the budgetary process. The MTEF gives three-year expenditure projections, which are revised annually as part of the budget process. The commitment to allocations to the roads sector are also shown in the TSIREP, developed by the Ministry of Finance, Planning and Economic Development. 3. Technical: The main component of the Project comprises civil works and consultant services in respect of upgrading and strengthening of national roads to paved (bitumen) standard. GOU, with the assistance of consultant services provided under RSISTAP and TRP, had already prepared detailed designs, economic feasibility analyses and environmental impact assessment (EIA) reports for several of the roads proposed for consideration which were reviewed by IDA during Project pre-appraisal. In many cases, the economic feasibility analyses comprised of review, verification and update of existing designs and EIA reports. The final designs are based on Ugandan national road design standards and specifications including safety, - 24 - satisfactory to IDA. Under the same feasibility and detailed design services, contract documents were prepared. The project costs have been arrived at on the basis of the substantially completed detailed designs and the engineer's estimates compared with available cost data for ongoing contracts. Construction supervision will be carried out by consultants. Civil works in all phases will be implemented sequentially following satisfactory completion and acceptance of the results of economic and environmental feasibility analyses. The site for the Pilot Project was selected based on the following criteria: (i) GOU priorities; (ii) suitability of location and site materials; and (iii) length of section to facilitate experimental tests. 4. Institutional: 4.1 Executing agencies: The project builds on the existing institutional arrangements and will contribute to a sustained effort of institutional strengthening. As discussed under Section C.4, overall responsibility for Project implementation rests with MOWHC. The main executing agency is envisaged as a Road Agency which could be established by the end of FY 2001/02; the form, size and scope of which is to be determined as a result of the RAFU performance/experience gained and from the findings of a special study, which started in March 2001. In the interim, RAFU will serve as the institutional nucleus set-up for the formation of the possible Road Agency. The Director of RAFU and other key technical staff have been appointed, with the remaining key technical staff expected to be on board by June 2001. At which time, RAFU will be fully capable of meeting all the procurement and implementation demands of RDP phase 1 and 2, being responsible for processing and managing all construction and supervision consultancy contracts, as well as the consultancy services for the various studies. 4.2 Project management: Project management will be carried out under RAFU until full responsibility has been transferred to the possible Road Agency after it is formed by the end of FY 2001/02. Financial and Procurement Management Systems were reviewed during project preparation stage and action plans have been developed to ensure that the RAFU will operate efficiently until its absorption into the planned Road Agency. 4.3 Procurement issues: There are no major procurement issues. RAFU has employed qualified procurement staff and a detailed procurement plan has been prepared. The RAFU procurement management under Phase I has been efficiently and professionally implemented within the given timetable, while meeting necessary quality requirements. 4.4 Financial management issues: There are no financial management issues. The Finance and Administration Division (FAD) of RAFU has been established within the institutional framework of the Ministry of Works, Housing and Communications (MOWHC) with responsibility for Project financial management. FAD's financial management system, in accordance with the Financial Management Action Plan presented in Annex 5b, is expected to facilitate the introduction of PMR-based disbursements during Phases I and 2. Suitably qualified and experienced independent external auditors have been appointed on approved terms of reference, and an acceptable audit report was submitted by the auditors December 2000 and received by the Bank January 2001. - 25 - 5. Environmental: Environmental Category: A (Full Assessment) 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. An environmental assessment was carried out for each road project as part of the detailed feasibility studies. The main purpose of the road specific ElAs was: (i) to prepare a comprehensive investigation delineating any environmental impacts of the proposed road works; (ii) to describe and quantify these impacts; (iii) to draw up feasible mitigation measures for minimizing, eliminating, or offsetting any adverse effects; and (iv) to recommend the most appropriate mitigation and/or enhancement measures. The potential environmental impacts along the proposed road sections include: stripping of top soil and loss of vegetation due to the creation of borrow pits, soil erosion on road cuts and fills and stripped borrow areas, silting of road side ditches and subsequent sedimentation downstream of water, soil contamination and water pollution due to the spillage of toxic materials, slope stability problems and slopes affected by erosion, poor drainage, various forms of temporary land take, and impacts on human settlements (spread of HIl VAIDS and other infectious diseases, increased levels of accidents). In addition, the potential impact on wildlife along the sections of road passing through the two national parks were considered, prompting the change of category from B to A and to provide adequate controls to protect the animals. In addition to the road specific ElAs, a Sector Environmental Assessment has been undertaken under the PPF to review the environmental aspects of the RSDP with respect to (i) the adequacy of the current national system of environmental policies and regulations regarding environmental impact assessment, resettlement policies and strategies, mitigation, monitoring, and management of road work activities; (ii) the capacity of the MOWHC and the National Environmental Management Authority (NEMA) to commission, facilitate and implement future environmental assessments of road projects; (iii) the identification of programs and organization of training courses targeted to appropriate govemment staff and consultants in environmental assessment techniques and methodologies for road projects, and (iv) an assessment of local consultant capacity and training needs to conduct relevant environmental assessments. 5.2 What are the main features of the EMP and are they adequate? Funds have been provided under RSISTAP for the establishment of an environmental management/liaison unit within MOWHC. This support will provide the needed capacity to coordinate and monitor the environmental and social mitigation measures under the RSDP. This would facilitate coordination between RAFU, MOWHC, NEMA and Uganda Wildlife Authority (UWA) on the implementation and monitoring of the mitigation measures. These teams would work closely with the Engineer, the Contractors, members of the local communities that are affected by the road rehabilitation and representatives of the respective Parks, QENP and MFNP. The success of the proposed EMP rests with: (i) ensuring adoption of appropriate work practices through their specification in a management plan; (ii) contract documentation; (iii) costs and schedules; and (iv) on-site monitoring. The relevant parties have agreed to the institutional, financial, technical, legal, and logistical implications of the implementation of the proposed mitigation measures. In addition, MOWHC/RAFU have ensured that mitigation measures are incorporated in final road designs and contract documentation, and that appropriate expertise is included in the supervision consultants' staff to carry out such measures. 5.3 For Category A and B projects, timeline and status of EA: - 26 - Date of receipt of final draft: April 2000 and May 2000 5.4 How have stakeholders been consulted at the stage of (a) enironmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms of consultation that were used and which groups were consulted? Key stakeholders including NEMA, UWA, RAFU, and MOWHC were involved in the process. A certificate of approval for the environmental assessment has been issued by the National Environment Management Authority (NEMA). The conditions for approval were integrated into the EA, together with the management and monitoring plans. 5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results of the EMP? An environmental and social monitoring plan has been developed outlining the nature, location and methodology of monitoring that should take place during the construction and operational phases. An evaluation has also been made of the bodies/offices responsible for supervising the monitoring tasks. The environmental management/liaison unit within MOWHC will have the overall coordinating role in monitoring the mitigation measures. RAFU, NEMA and the Uganda Wildlife Authority (UWA) will work closely with the Engineer, the Contractors, members of the local communities, and the representatives of the respective Parks, QENP and MFNP. Additionally, environmental specialists will be part of the Engineer's teams and RAFU to monitor the implementation of mitigation measures. Construction related mitigation will be part of the routine inspection of contractor's work which will be included in contract documentation. As the mitigation measures were developed and agreed with the UWA, NEMA and Park authorities, they will be involved in monitoring activities. Some support will be provided to UWA and Park authorities for monitoring impacts of project activities. Particular care will need to be given to controlling and restricting the extraction of construction materials, construction of camp development, restoration of construction sites to natural habitat and control of vehicle speeds and road signing. 6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. Social assessment for the physical components has been conducted prior to pre-appraisal in conjunction with the EIA for the roads to be implemented under Phase 2. The EIA team included social and environmental scientists providing a multi-disciplinary approach to preparing the EIA. Preliminary socioeconomic data have been collected and analyzed from each of the areas where the roads are to be improved. This also included an analysis of the temporary and localized microeconomic impacts resulting from construction activities, as well as the potential for involuntary resettlement. A resettlement and land acquisition policy framwork has been prepared and will be revised to include the quantification of the number of dwellings to be removed, the associated relocation of households, as well as the principles and procedures for compensation. Individual resettlement action plan will also be revised. These analyses concluded that there is no involuntary resettlement. Road safety audits have been carried out under the RSISTAP, which would further provide a basis for road safety education programs to the public, as well as safety considerations in road design, construction and maintenance. Minimizing the adverse impact of HIV/AIDS: HIV/AIDS is associated with the extensive network of truck/bus rest stops and terminals as well as with contractors camps during construction stages of the - 27 - project. The issue has been addressed within the sector strategy and within each individual contract. An HIV/AIDS project currently under appraisal, deals with all sectors and their related Ministries, who will assume leadership and responsibility for implementing these strategies with professional and technical support of health agencies. In addition, each of the physical components included in the Phase 2 Project include provisions for qualified on-site clinic screening and counseling for HIV/AIDS and STD, and awareness and training programs for workers and local people, with associated costs included in the construction contracts. Treatment of the STD cases will also be provided by the on-site clinics, with the HIV/AIDS treatment coordinated through the national program. 6.2 Participatory Approach: Elow are key stakeholders participating in the project? Key stakeholders including NEMA, UWA, RAFU, MOWHC, concerned groups and local communities participated through public consultations, field visits, and surveys for the project. In addition the Road Safety Study results have been publicly discussed at various seminars including government (traffic police and hospitals), private stakeholders and NGOs. 6.3 How does the project involve consultationis or collaboration with NGOs or other civil society organizations? The project involves consultations through meetings and public forums including workshops and seminars to discuss the results of various studies. Consultations with local representatives, women's groups and youth groups have shown that upgrading to bitumen surfacing of the Karuma to Pakwach to Arua Road is very strongly supported. 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? see 5.5 6.5 How will the project monitor performance in tenns of social development outcomes? see 5.5 7. Safeguard Policies: 7.1 Do any of the following safeguard policies apply to the project? .. . ... ... .......... ............... ... ......... ... ........ .. . . .. ... . . .. Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) 0 Yes 0 No Natural habitats (OP 4.04, BP 4.04, GP 4.04) * Yes 0 No Forestry (OP 4.36, GP 4.36) 0 Yes 0 No Pest Management (OP 4.09) 0 Yes * No Cultural Property (OPN 11.03) 0 Yes 0 No Indigenous Peoples (OD 4.20) 0 Yes 0 No Involuntary Resettlement (OD 4.30) 0 Yes 0 No Safety of Dams (OP 4.37, BP 4.37) 0 Yes * No Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) 0 Yes * No Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60) 0 Yes * No 7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies. Mitigation measures associated with the impacts are addressed in the environmental and social management plan. The institutional, financial, and contractual arrangements have been articulated in this plan. In particular, the implementation of an environmental liaison unit within the MOWHC, the appointment of an environmental manager in RAFU and the establishment of a working relationship with relevant parties will contribute to the overall environmental and social management of the program. - 28 - F. Sustainability and Risks 1. Sustainability: The critical factor required for sustainability of the Program and Project benefits is continued Government commitment at the highest level to sector and institutional reform to establish effective management, coordination and implementation, and assure provision of funds and other resources required for maintaining the road network. By involving, right from the start, key stakeholders, including direct beneficiaries, lawmakers and the civil society, the framework has been set for the sustained mobilization of Government and public support. Another key element for sustainability is that producers and road users, through improved accessibility and infrastructure condition quickly realize benefits from the reforms. To this end, RAFU will contribute to ensuring the successful and timely implementation of the proposed project. In addition, Government should strictly adhere to providing the financial requirements for road rehabilitation and maintenance projected under the TSIREP. Government should be prepared to evaluate alternative financing, including private sector participation, in light of the expanding investments in the road sector. - 29 - 2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Ainex 1): Risk~ Risk ~RatigRsMtiaineur From Outputs to Objective Projected level of agricultural and N Government to implement agricultural and industrial production will not be attained. industrial development programs, with annual data collection and analyses to provide updates on performance. Uganda Road Agency or RAFU's S Frequent review and analysis of implementation permanent establishment constituted. progress with Govemment. Adequate budgets will not be released S Annual commitment of funds by GOU through the TSIREP. Appropriate financing arrangements will M Adoption of findings from Road Mgmt. & not be approved by GOU and agreed with Financing Study and workshops for altemative road users sources of financing. Annual national road network M Annual agreement on targets and an independent maintenance program will not be technical audit review of progress as part of implemented as scheduled supervision. From Components to Outputs RAFU's independence to carry out its M Obtain commitment and supportive action from responsibilities will be compromised highest level of Govemment RAFU expedite monitoring and M Arrangements in place, including periodic donor implementation, and studies are not meetings, for review and discussion of progress. completed on time Counterpart funds will not be adequately M Annual review during GOIU/PER discussions. budgeted for, and funds not released in a timely manner Security problems in some project areas S Government to provide protection in affected inhibit surveys, detailed engineering areas during studies and works execution designs and eventual construction Overall Risk Rating M Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk) 3. Possible Controversial Aspects: None G. Main Loan Conditions 1. Effectiveness Condition 1. the Borrower has established the Project Account and deposited therein the initial deposit of US$ 3.0 million equivalent; 2. the Borrower has furnished to the Association evidence that it has: - 30 - (i) committed adequate counterpart funds for the carrying out of the Project in the Financial Years 2001/2 through 2003/4; and (ii) established an accounting system satisfactory to the Association; 3. the Borrower has: (i) adopted the Financial Management Manual, in form and substance satisfactory to the Association; (ii) completed the computerization of the financial management system; and (iii) prepared quarterly and annual cash flow forecasts for the Financial Years 2001/2 through 2005/6; and 4. the Borrower has furnished to the Association (i) a revised Resetdement and Land Acquisition Policy Framework, satisfactory to the Association, and (ii) a revised Resettlement Action Plan for civil works related to upgrading and strengthening of the national roads, to be carried out during the first year after the Effectiveness Date. 2. Other [classify according to covenant types used in the Legal Agreements.] H. Readiness for Implementation Z 1. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. l I 1. b) Not applicable. D 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. (A 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. El 4. The following items are lacking and are discussed under loan conditions (Section G): 1. Compliance with Bank Policies X 1. This project complies with all applicable Bank policies. C1 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies. Yitzhak A. Kamhi lessis-Fraissards Team Leader Sector Manager Country ManagerlDirector - 31 - Annex 1: Project Design Summary UGANDA: SECOND PHASE OF THE ROAD DEVELOPMENT PROGRAM ., 0 ; ,~~~~~. ''' ' : ' '-. , . . 0.. , . , .... . -. , .............. ..... .... ..-........,... Kespi ff iObJ,plv. I: ..- -i. ! nonlte- : i -EvaFipeln--Lin -rds Asupi.1 Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission) To achieve effective market Increasing volume of - Annual Economic - Effective market integration integration by removing agricultural, commercial and Review; will lead to additional existing constraints to road industrial goods nationally in - ESW (periodic) economic growth and the transport services. all seasons. improvement of critical poverty indicators. Program Purpose: End-of-Program Indicators: Program reports: (from Purpose to Goal) To remove existing 1. High percentage of - Annual Public Expenditure constraints to road transport primary, secondary, tertiary, Review; services, and achieve an and district (feeder) roads in - Survey of industrial and efficient, safe and sustainable traffic worthy condition at all agricultural product flows; road network by end-2006. seasons. - Bank supervision and Program Phasing: evaluation mission reports. Phase 1: Sector reforms, 2. Low incidence of policy and management reported road bottlenecks in studies (including distric all seasons (nationally). (feeder) roads); upgrading of 3. Reduced number of two national gravel roads . . . sections to paved standards; Phase 2: Upgrading and strengthening of two national roads sections; Phase I Road Safety Action Plan; preparation of National Transport Plan and Greater Kampala Master Plan; Pilot project for demonstration of use of innovative technologies and materials in construction of low-volume traffic roads; feasibility study and detailed engineering design of new Road Agency headquarters building Phase 3: Upgrading and strengthening of two national roads; rehabilitation/regravelling of one national road in North; secondary and district (feeder) roads upgrading; construction of Road Agency Offices; Phase 4: Rehabilitation/improvement of district (feeder) roads in selected districts. - 32 - KyPeromance : . . . ,. .. :: : : : : : ::::::: ::: :. : : .: . Kieraihy of ObjeCtives - I--1icaOr : Mnitrn : Evaut n : - C Itia As pios - Project Development Outcome I Impact Project reports: (from Objective to Purpose) Objective: Indicators: To widen sector and 1. RAFU fully operational by - IDA supervision and - GOU completes the institutional reforms, and December 2001'. evaluation mission reports recruitment of RAFU staff upgrade the condition of the 2. Reduction in average (including mid-term review with full transfer of national roads between major travel time on national roads and ICR); management functions for urban areas, and improve low compared to baseline; - Travel time survey reports; national roads from MOWHC traffic road designs and road 3. Reduction in transport and - Regular and annual data to RAFU; safety management. vehicle operating costs collection and review of - Government provides compared to baseline; transport prices and vehicle funding; the Public, including 4. Social assessment of operation costs (VOC). NGOs, actively support Road stakeholders' preferences. - Baseline surveys of Safety Program. indicators 2, 3, 4 not later than 6 months after commencement of works contract; - Final indicator surveys within 6 months after completion of the works contracts Output from each Output Indicators: Project reports: {from Outputs to Objective) Component: 1. Existing national roads 1. 108 km of gravel road - Quarterly review of - Projected level of upgraded to paved (bitumen) upgraded; and 163 km of implementation progress agricultural and industrial standard or strengthened; paved road strengthened by reports and IDA supervision production attained; construction well supervised; June 2005; missions; - Total annual development 2. Road Safety Action Plan, 2. Road black spots on 2 - Progress and final study and recurrent budget Phase 1 implemented; major trunk roads identified reports; estimates for 2002/03 - 2004 - 3. National and Greater and reconstructed by June - National Road Safety 2005 (TSIREP) in accordance Kampala Area Transport 2004. Reports. with projections; Plans approved and agreed; 3. National and Greater - Annual road network 4. Innovative low-traffic Kampala Area Transport maintenance program roads designs identified and Plans approved and agreed by implemented as scheduled; adopted. June 2004; - GOU is willing to adopt 5. Road Agency building 4. Innovative design prepared, alternative road financing designs completed and constructed and tested by June including user sources in case adopted 2006. of budget shortfalls; 5. Road Agency Study - Uganda Road Agency completed under RSISTAP by established by the end of FY December 2001 2002/03, if required; - Adequate support for user fees (fuel levy) among road users if necessary as source of financing. -33 - ti0iHierarchy efObjectives h-4 - 1dgiert Mont oring & uti ritIcal Asum o Project Components I Inputs: (budget for each Project reports: (from Components to Sub-components: component) Outputs) IDA-Financed - Disbursement reports - GOU counterpart funds will l.a. national gravel roads l.a. US$ 72.47 million (quarterly); be budgeted and released on upgrading, and paved roads - Implementation progress time; strengthening; reports (quarterly); - Detailed studies of l.b. Consultancy services for 1. b US$ 5.07 million individual roads confinn the construction supervision. economic viability of selected roads; 2. Road Safety: - Minimal interference to the 2a. Black Spots Improvement, 2a. US$ 2.78 million establishment of RAFU and Civil Works the staff selection and 2b. Design & Construction 2b. US$ 0.30 million appointment process; Supervision; - RSISTAP and RDP Phase 1 2c. Institutional Support; 2c. US$ 1.70 million studies completed in a timely 2d. Equipment. 2d. US$ 0.30 million manner. - Security problems in some 3. National Transport project areas do not inhibit Plan/Greater Kampala Master 3. US$ 2.66 million surveys, detailed engineering, Plan. and construction. - NDF Credit approved, and NDF-Financed negotiated. 4. Pilot Low Traffic Road Studies 4a. Civil Works 4a. US$ 8.55 million 4b. Consultancy Services 4b. US$ 2.24 million 5. Road Agency Offices 5a. Consultancy Services 5a. US$ 0.92 million RAFU has been established under RSISTAP. The Road Development Program, Phase 1, is now under implementation by RAFU while its fill establishment continues. - 34 - Annex 1 Attachment I Development of District (Feeder) Roads and Community Roads 1.1 District (Feeder) Roads, Economic Development and Poverty Alleviation Government policy maintains District (Feeder) Roads (DFR) and Community Roads (CR) as essential for the country's overall economic growth, and should form part of a viable and integrated road system. DFRs and CRs provide access to the rural productive areas of the country where presently over 80% of the country's population live and derive their income mainly from agriculture. Agriculture contributes nearly 70% of the GDP and accounts for over 80% of export earnings. The district (feeder) roads provide links to crop production centers and markets, as well as rural industries, health centers, educational institutions and administrative centers and services. In addition, they provide the first viable access to markets in urban centers, and enhance the economic prospects for the poor. The 1998 Poverty Alleviation Program of the Government therefore accorded top priority to the rehabilitation and maintenance of district (feeder) roads and community access roads. 1.2 Developing the Strategy for District (Feeder) Roads and Community Roads. Since 1987, the Government of Uganda has carried out an extensive district (feeder) road rehabilitation effort. In this context, a Strategy Document for Rural District (Feeder) Roads Rehabilitation and Maintenance (1992 - 1997/8), was prepared by the Engineering Department of the MOLG. The strategy document elaborated the policy framework and action plan for the sub-sector. It also provided the basis for implementing a program for district (feeder) roads reconstruction, rehabilitation and maintenance carried out by Government, or with the assistance of various donors including IDA. The objectives of IDA's support to districts (feeder) roads under the 1994/95 Uganda Transport Rehabilitation Project were derived from the 1992 Strategy paper. In addition, Government, together with several donors including (ADB, DANIDA, Germany, Irish Aid and USAID), has implemented programs of district (feeder) roads rehabilitation as part of its overall strategy. About 9000 km (30%) of the RFRs have so far been rehabilitated and or maintained, although many CRs are still inaccessible. Important lessons have been learnt which provide the basis for updating Government strategy. The evidence suggested the following strategic directions: (i) Expansion of the program of road rehabilitation and maintenance using labor-based technologies and construction methods. (ii) Firming up institutional arrangements including building the capacity of MOWHC/RAFU for district (feeder) roads program development and management and providing support to DAs for implementation; (iii) Increasing the use of private contractors and consultants in program execution; (iv) Developing sustainable revenue sources for financing district and community roads maintenance. - 35- Consultancy services for a study to review and update the District (Feeder) Roads Rehabilitation and Maintenance Strategy have been completed. The main objectives of the study were to: (i) review the 1992 Strategy Document in light of new government policies, and identify new and potential constrains and functional deficiencies which have existed or are likely to exist and which have not been completely addressed or implemented in the 1992 Action Plan; (ii) explore new strategies and elaborate on the new operational framework, which also includes urban and community access roads; (iii) develop realistic medium-to-long term strategies which identify responsibilities, appropriate institutional set-ups, resources, time frame, etc. for implementation. The consultant has addressed and made recommendations on the following aspects regarding district and urban roads: (i) rehabilitation and maintenance needs and benefits, where the consultant recommends investing US$65 million/year over seven years to improve the condition of the district and urban road network to less than 15% in poor and bad condition, and the community access roads to less than 50% in poor and bad condition; (ii) strategies in terms of (a) institutions, (b) funding, (c) human resources capacity, execution policy, (d) equipment and support services, (e) planning and programs, (f) community and access roads, and (g) urban roads; and (iii) government policies, in which the consultant supports, among other things, (a) the Decentralization Policy (Local Government Act of 1997), (b) the strategy of contracting out maintenance and rehabilitation work and the development of local contractors, and (c) the use of labor-based technology. An action plan for each of the main strategies has also been proposed. Following the above study, Government has prepared a final draft White Paper on Sustainable Maintenance of District (Feeder), Urban and Community Access Roads (October 2000), which was received by the Bank February 2001. The White Paper is to be further disseminated and discussed among key local stakeholders and donors in order to produce the final paper. 2.0 Development of a 10-year District (Feeder) Roads Development Plan. In November 1996, the Ministry of Works, Transport and Communications (MOWTC) presented to the donors a 10-Year Road Sector Investment Plan covering the period 1997/98 to 2006/07. The plan did not include rural district (feeder), urban and community roads. However, an initial analysis was undertaken for 20 districts for which studies had earlier been completed or information had been compiled into the DFRs planning database. A study will be conducted with the aim of selecting about 300 km of roads out of pre-detenmined length of priority district (feeder) roads which qualify for reclassifying and upgrading to the national road network on the basis of an analysis of their network functions and their economic viability. The upgrading of these roads will be carried out under Phase 3 of the proposed RDP. The selection of roads for reclassification will be made from an overall assessment of district (feeder) roads development and transport needs, as well as its related institutional capacity and resource needs. A complementary 10-year district (feeder) roads improvement plan will be prepared, for which further detailed engineering designs will be carried out. The full details of the district (feeder) roads Plan will be confirmed by the consultant studies and Bank's appraisal of the projects for implementation in the RDP Phases 3 and 4. 2.1 Scope of IDA support to District (Feeder) Roads Under the RDP. During the appraisal of the RDP a review was carried out on possible IDA support under the program that would include the following activities: (i) Rehabilitation of about 300 km of district (feeder) roads reclassified as part of the national road system as well as its associated construction supervision to be implemented under Phase 3 of the RDP. These are expected to be constructed to national roads design standards, i.e., pavement widths of 6m and shoulders 1.5m each. - 36 - (ii) An estimated 72 man-months of technical support (Transport Economist/Planner and a Roads/Transport Engineer) will be provided through the MOPWH or RAFU beginning in Phase 3. The objective will be to strengthen the existing institutional capacity, and increase the effectiveness of RAFU in providing planning and programming, administration and management support to district administrations in implementing a national strategic plan for district (feeder) roads development and maintenance, and for the planning and promotion rural transport services. The proposed scope of the support will be implemented in close coordination with other planned donors financed advisory services currently under discussion. (iii) Rehabilitation and improvement of about 1000 km of high priority district (feeder) roads in about 10 districts. The actual length of roads will be confirmed during the ongoing study in accordance with GOU's poverty alleviation policy as well as traffic volume, proximity to national roads network, and service to greater economic opportunities. 2.2 Program Cost Estimates. Preliminary estimates of program costs were made during the pre-appraisal of Phase 2 project after reviewing the costs of from ongoing donor-financed district (feeder) roads programs, viz., the IDA financed Transport Rehabilitation Program (TRP), AfDF, DAN IDA, Irish Aid, and U SAID supported district (feeder) road improvement programs. The estimated summary District (Feeder) Roads costs are indicated in Table 2, while the overall IOY RSDP District (Feeder) Roads Development Financial Plan is shown in Table 2 of the Annex 1, Attachment 1. - 37 - Annex I Attachment I Table I UGANDA ROAD DEVELOPMENT PROGRAM District (Feeder) Roads Rehabilitation Program Estimated Program Costs Key Assumptions (S million) Unit LengtAV Unit cost MM S/km Item Category Local Foreign Total Phase 3 1. Upgrading FR to Classified gravel Civil Works 15.0 28.00 43.00 kmn 300 143,000.00 Std. (About 300 Ian) 2. Supervision of Works Consultant 0.3 2.7 3.0 Services 3. Technical Support to Districts Consultant 0.1 1.3 1.4 MM 72 20,000.00 Services Phase 4 4. Rehabilitation of feeder roads Civil Works 11.7 14.3 26.0 L/Based 1,000 26,000 kIn (About 1000 km - 10 districts) Other - km 5. Supervision of works Consultant 0.2 1.5 1.7 Services Sub-Total 27.3 47.8 75.1 Contingencies (Physical (10%) and 7.2 12.7 19.9 Price (15%)) TOTAL 34.5 60.5 95.0 - 38 - Attachment 1 Table 2 10-Year RSDP Feeder Roads Development FINANCIAL TARGETS (in M of conatant 1996 USO) - - ~~~~~~~USD iniflation rates/Exchan5 rates: 2% 1,020 2% 1,080 2% 1,200 2% 1,500 2% 1,623 _ _ ~~~~~~~~~~~~~Actual Provisional Budget Code Feeder Roads Donos D~onors GOU 13nsIGU I Donors GOU DonQra GOU 1~,0*GOU TR16 (DI Reha. - IAD3E GOU 120902 : 0 .67 t M (A 8 TIRIB (E0 Rehab. - IFADE GOU 0.7ag 0.67 )7 TR16 (H Rehab. -ERCI 1.3 1.29 TRI6 Q)Feeder Roads Management Unit GOU j0.28 Oi .40.07 TR16 (J1) improvements - EDF GOU j 910.72 0.6 0670.67 TR31 (J) RDP ImprovementIC TR35 (B TRP Rehab. & Maint. IDA_02 .1.6 0.20 O9 0.67 ~1`8 0.60 3~D 0.22 TR61 (A Road Equipment for District Unit GOU 101911.38 TR72 (B Six District Road Netw ork Danida .7 0.05 I '5a 0.12 TR75(Aj AA MP Rehab. Distic Rds ADF ... ..... 012. 03 Other Proj. c/std Recurrent Expenditure for Rest of Netw o GOU 5.00 46 .97.43 - 11.10 Total Feeder Rod: 400 11.56 4.82 10894 2a5 17.28 xll1# 16.03 ItS 16.90 continuie... USD inflation rates/Exchange rates: 2% 1,707 2% 1.820 2% 1.911 2% 2.000 2% 2,100 _________________________________ ~~~~~~~~~Estimates t .... ... .... __________________________ ~~~2002/3 2003/04 200,4105 2008/6 pq Code Feeder Roads Donors tVoitq low Dono0, 00M]W I OW1 GMs6 1W Doorsit lou GMU TRIG f) Rehiab. - IpFAD GIU 2.40 TRIG (') Rehaeb. & MaiL AD 10.66 TR1B(G) Reab*. -JICA I GMO 106 TR16(H Reha, ERC t GOU: 566. TR15 0) Feeder Roads Maragemeri Unkt GMOU5 TR16(J) irnpmveniels.EDF GU36 TR31 (. tDRP lmpuovernelt IA ~ 4~ 46 .258 .2 TFM B TFt Paha. & Makit __A_ TROl (A) Road Equimentfor eDAd UnitQt 60 TR2()Six DNeict Road Network Drd ... . TR7S(A) AAMP' Rehob. Distrid Rds 601 0 3 - OlherPfojects tbd 0.07 1.75 4.51~~~ 1.52 6.74 1.89 1fItS 3.15131 40 ___RecurrentExpenditure for Rest ofNetwork GIOU i 1167 j 12.22118 13.47 B Total Feeder Roads: hIAg 18.631 22.311 19.56I 24.41 20.54 2114 20.54 %#* 66 - 39 - Annex I Attachment 2 Trigger Indicators under the Adaptable Program Lending Instrument It is envisaged to implement the program for road development in four phases, each phase being constituted by a new group of roads. The Bank will support each phase distinctly through a new Credit. The project described in this PAD refers to the second phase of the Road Development Program (RDP, Phase 2) as in the logical framework matrix in Annex 1. The Phase 2 project, and each new phase, is appraised in order to evaluate its technical, economic, social and environmental feasibility, in accordance with criteria satisfactory to IDA, as well as to factor in the experience gained during implementation of the previous phase. This approach of learning by doing allows for continuous adjustment of the individual project design, early identification of risks, and the implementation of corrective measures, before geographic coverage expands. An assessment has been made of the triggers defined previously for Phase 2 to determine the appropriateness and readiness for starting a new Phase. The focus on the second phase of the program and thus the triggers for Phase 3 are based on evidence that the road sector management through the establishment of a sustainable and effective implementation and procurement capability is taking place as planned. As the program rolls out and implementation results are available, triggers for Phases 3 and 4 will be monitored on the basis of indicators spelled out in the logical frameworks of previous phases. -40 - Phase m Assessing Project Strategy and Trigger Indicators Means of Verification Institutional Building Experience from previous phase RAFU key personnel in place and Bi-monthly evaluation reports made available indicates that the project's effectively handling the to all participating donors in RSDP. institutional arrangements reflect implementation process. effective decentralized decision-making, build local Administrative arrangements pernit Government prepares PIP for Phase 3 responsibility and accountability, effective and timely approval and detailing planned and actual achievements in and implement an effective implementation. preceding phases. monitoring and evaluation system. The monitoring and evaluation FAD established and financial management system permits follow-up of project information technology requirements implementation and assessment of developed by June 2000. project objectives achievement. Quarterly/Annual Cash Flow Forecast prepared by start of Phase 1, and updated for Phase 2. Sub-projects meet economic, social, Base line established for VOC. and environmental eligibility criteria. Evidence of adequate implementation External auditors appointed. of environmental mitigation measures designed in the Phases 1 and 2. Receipt of acceptable financial audit for RAFU by December 2000; and subsequent years. Overall strategy for the transport White Paper on district (feeder) roads White Paper implementation plan and line of sector and for district (feeder) prepared action adopted. roads identified. Studies for updating of transport sector and district (feeder) road strategies and financing accepted by GOU and IDA. Government strictly adheres to TSIREP for 3-year rolling periods TSIREP updated every year in November and providing the financial adequately cover Sector requirements. accepted by IDA. requirements for road rehabilitation and maintenance Performance audits of maintenance budgeted projects under the TSIREP. resources including physical road condition to be carried out by independent consultants from end April 2000. Government capacity building in Design documentation prepared and Detailed Designs and bidding documents procurement and disbursement for contract documents ready for bidding. accepted by IDA. Contract incorporates major civil works. required mitigation measures. Procurement specialist in place and Pre-qualification of contractors and short procurement unit established within listing of consultants commenced. RAFU. Procurement evaluation reports professionally continue to be prepared on schedule. - 41 - Phase IV Assessing Project Strategy and Trigger Indicators Means of Verification Institutional Building RAFU to remain or convert to a Uganda Road Agency or RAFU's Legislation prepared and approved by fully established dedicated Road permanent establishment constituted. National Assembly. Agency in charge of managing and operating the road network. Effectiveness of matching scheme District program and financial FAD financial system operational with for financing district (feeder) roads management capacity (resources) and support to districts for implementing maintenance and rehabilitation, systems assessed and developed; and appropriate systems compatible with central and introduction of a financially systems; including budget framework sustainable scheme through, e.g., development systems implemented under the fostering community-based decentralization process; revolving funds for maintenance. Each district demonstrates a Bi-annual evaluation report carried out by substantial adoption of proposed independent consultant in every district finalized scheme. incorporating analysis of results. Agreement with beneficiaries and the implementation agencies. Priority district (feeder) road The implementation capacity in the candidates for rehabilitation in districts is adequate to provide for selected districts identified and timely usage and operation of the maintenance program prepared. district (feeder) roads network. -42 - Annex 2: Detailed Project Description UGANDA: SECOND PHASE OF THE ROAD DEVELOPMENT PROGRAM 1. GOU's 10-Year Road Sector Development Plan (RSDP) and the Proposed Road Development Program (RDP) 1.1 A key element in the implementation of the Government's sector strategy is the RSDP for the national road network which was endorsed at a Donor's Conference held in Paris on November 20, 1996. The primary aims of the RSDP are to provide an efficient, safe and sustainable roads network in support of market integration and poverty alleviation; to improve the managerial and operational efficiency of road administration; and to develop the domestic construction industry. Overall, a projected total expenditure level under the RSDP is estimated at US$1.5 billion for the national road network over 10 years, and US$380 million for the District (Feeder) Roads over the same period (see Table I attached). IDA assistance under the proposed RDP is being provided to support a part of the RSDP (see Table 2 attached). 1.2 Expenditures under the RSDP reflect a strategy focusing on the preservation and selective upgrading of existing road assets. Improvement of main paved and gravel roads would account for some 46% of total expenditures, followed by maintenance for national roads (28%), upgrading and maintenance of district (feeder) roads (16%), and urban roads (4%). Capacity building and studies mostly account for the remaining 5%. Expenditures over the period of the RSDP are estimated at US$1.88 billion. Of this amount, projects worth more than USS I billion would be financed through commitments from donors. The Govemment presented to IDA its proposal for assistance over the period, which after screening of the physical components, amounts to a total cost of about US$380 million. This includes funds under the ongoing Transport Rehabilitation Project, RSISTAP, and El Nino Emergency Road Repair Project (total amount approximately US$100 million), with the balance being provided under the proposed Road Development Program (RDP). 2. Road Development Program, Phase 2 Objectives The objectives of the Road Development Program, Phase 2 Project (the Project) is, just as it was for Phase 1, to improve access to rural areas and economically productive areas and to gradually build up road sector planning and management capabilities. The project comprises: (i) upgrading of one of the highest priority national roads to paved standards, Karuma-Olwyio-Pakwach (108 kIn); (ii) strengthening a major North-South axis, Katunguru-Kasese-Fort Portal, Kasese-Kilembe and Equator Roads (163 kim), including consultancy for construction supervision; (iii) improving road safety by investing in present black spots, including consultancy services and the provision of equipment to the Police; (iv) elaborating a National Transportation Plan and Kampala Transportation Master Plan; (v) a pilot project for the use of innovative technologies in construction of a low traffic volume road (Matugga-Semuto-Kapeeka), including feasibility study and detailed engineering design, construction supervision and project monitoring and manuals; and (vi) consultancy services for the creation of the Road Agency.' The pilot project and the consultancy services for the read agency are to be fnanced by NDF. -43- By Component: Project Component I - US$72.47 million Upgrading of National Roads to Paved (Bitumen) Standard and Strengthening of Paved Roads Karuma-Pakwach-Arua Road. Section: Karuma-Olwvio-Pakwach (108 km) The road comprises the following sections: Karuma-Olwiyo, 45.6 kim; Olwiyo-Pakwach, 62.4 km; Pakwach-Nebbi, 53.7 kmn; and Nebbi-Arua, 76 km. During the RDPP1 appraisal, it was determined that due to insecurity in certain areas along the road, feasibility and detailed engineering could only be carried out for only the Pakwach-Arua section (130 km) for inclusion in the Phase 1 program. Since this time there have been no reported incidents affecting security along the road. The entire gravel road provides the national trunk road access to the districts of Arua, Nebbi and Moyo in the north west of Uganda. This is a very important road for the social and economic integration of the West Nile area with the rest of the country. The road passes through the northern edge of Murchison Falls National Park and traverses rich agricultural areas growing tobacco (Uganda's major growing area), coffee, cotton, tea, maize. groundnuts, simsim, millet, wheat, rice, potatoes and timber. It forms part of the north west trunk road system connecting the towns of Arua and Pakwach to Kampala and is the main outlet to Sudan and North Eastem Congo Republic. The road classification is also class 11 bitumen standard. No major resettlement problems are anticipated and the road would have positive impacts by helping to increase the use of the area as an active trading region with countries neighboring Uganda. The construction of the Karuma-Pakwach section is estimated at US$ 31.86 million including physical and price contingencies but excluding supervision costs, and construction will be divided into packages: Karuma to Olwiyo and Olwiyo-Pakwach. Katunguru-Kasese-Fort Portal, Equator & Kilembe Roads (163 km) The road between Katunguru and Fort Portal is 113 km in length and is in generally good condition, due to abnormally high levels of periodic maintenance. Repair works (comprising some 16-km of reconstruction and 40,000 m2 of resurfacing) were undertaken in 1996 on the section south of Kasese. No visual evidence of insufficient pavement strength was noted. In terms of geology across which the route is located, the road could be broadly divided into two. Within the southem section, to about 62 km, (10 km north of the Hima cement factory) the route predominantly crosses sands, clays and gravels associated with formation of Lake George to the east. To the north of Fort Portal, the route predominantly crosses Gneissic rocks of varying degrees of weathering. The Equator Road is 38 km in length of which the first 20 km has been repaired / reconstructed in line with the work carried out recently north of Kasese towards Fort Portal. To the west, as far as the border with the Congo, the road rapidly deteriorates to a completely failed state, with little intact continuous surfacing. In terms of geology the initial 18 km crosses predominantly volcanic rocks, comprising tuffs and some lava. Further to the east, the existing road is located upon sands, clays and gravels probably associated with Lake Edward to the south. The Kasese-Kilembe Road is 12 km in length. Over the initial 5 km, as far as the security gate, the road is in fair condition. Beyond, the road deteriorates becoming heavily potholed, but not to the extent of the western section of the Equator Road. The geology of the area around Kasese is sands and clays. The road passes across-some 2 km of predominantly Quartzite before passing onto Gneissic rock. The mine area is shown as comprising sandstone, slate and schist. - 44 - The first 20 kn of the Katunguru to Kasese section as far as the Equator Road junction passes through Queen Elizabeth National Park (QENP) while the remainder follows the boundary of the Kahendero area of the Park. Consequently, this section is not heavily settled with the exception of four centers at Katunguru, the Equator Road junction, Mohokya and Kasese. Most of the section north of Kasese is characterized by small settlements, but these are generally scattered away from the road, the exceptions being trading centers such as Rwimi and Kibito. From the junction with the national Katunguru to Kasese road, the first section of the Equator road has few settlements, partly because the southern side is within the QENP. From Munkunyu secondary school the area becomes relatively well settled with increasing density towards Bwera Township close to the Congo border. The Kasese to Kilembe road passes through settlements all the way to Kilembe town. The economic activities in the area are connected with agriculture, industry and tourism. The project area has great agricultural potential, which is favored by good climate and fertile soils. Agriculture is the main economic activity with the large majority (approximately 75%) of the population depending on agriculture to produce enough food both for subsistence and surplus for sale. The areas main active industrial plant is the Hima cement works, which is understood to currently produce 16,000 tons of cement per month, intended to increase to 25,000 tons by 2000/2001. Resources for the attraction of tourists include the game in the Queen Elizabeth National Park, which has experienced steadily increasing visitor numbers over the past decade. It is understood that tourists have expressed some surprise at the presence of a tarmac road passing through the Park. By far, the largest employment sector is agriculture as the majority of the people still live in the rural areas On the whole output is still low. There is little value added and as such these commodities command low prices. The major problems affecting agriculture include poor technology, lack of infrastructure development, lack of markets and unfavorable factors such as uneven rainfall, floods, diseases, pests and inability to get produce to markets particularly in rainy seasons. The construction of the Project roads is estimated at US$ 40.61 million including physical and price contingencies, but excluding supervision costs. Project Component 2 - US$5.08 million Road Safety Improvement and Audit Study Action Plan The study was awarded under RSISTAP (Cr. 2987-UG). The findings of the study were discussed by all stakeholders. As a result, the final report including a 5-year Master Plan and a 3-year Action Plan was issued by October 2, 2000. Phase I of the Action Plan to be implemented under the RDP Phase 2 Project, has been identified and agreed as follows: 1. Civil Works: Accident blackspot improvements (Estimated Total Cost US$2.78 million) Construction of safety improvements at identified accident blackspots on major corridors in general and in particular on the rural highway sections of the Jinja Road (71 kIn) and Entebbe Road (37 kIn). -45- 2. Consulting Services (Estimated Total Cost US$2.00 million). This will include: (i) Design and Construction Supervision of the civil works blackspot improvements. (Estimated Total Cost US$0.30 million) (ii) Institutional Support and Capacity Building (Estimated Total Cost US$1.70 million), comprising: (a) Complete revision of the road safety sections of the Road Design Manual (sections 4, 5 and 6) and the General Specifications for road works; development of a manual for traffic signs and road markings; development of a manual for safety when working on the road; (b) Training and/or workshops for MOWHC and RAFU staff in the use and application of the above manuals and database system; (c) Technical assistance for the National Road Safety Council; (d) Police: Provision of enforcement equipment for speed control and breath alcohol measurement, and training for establishment of the Traffic Highway Patrol Unit; (e) Education: Development of a Road Code; and curriculum for Driving Instructors and Driving Schools; development of road safety as a subject within the Primary School curriculum; and (f) Health: Technical assistance to the Ministry of Health in research of the epidemiology of road traffic injury trauma and identification of interventions required to reduce its impact as a public health problemn. -46 - 3. Enforcement Equipment for the Police (Estimated Total Cost US$0.30 million). Provision of enforcement equipment for speed control and breath alcohol measurement, and training for establishment of the Traffic Highway Patrol Unit. Project Component 3 - US$ 2.66 million Preparation of a National Transport Master Plan and Transport Master Plan for Greater Kampala Metropolitan Area The component include Preparation of the National Transport Master Plan and will include also the Greater Kampala Metropolitan Area. The study will also analyze and propose organizational set-up for implementation of the National Master Plan. Project Component 4 - US$10.79 million Pilot Projectfor Demonstration Use of Innovative Technologiesfor Construction of Low Volume Traffic Roads The objectives of the project are to assist GOU in demonstrating the suitability of selected innovative construction technologies in use elsewhere in the world for low traffic volume roads, and to further their research and development for use in Uganda, including the preparation of related design manuals, specifications, and guidelines. The research will focus on different methods of stabilization of the local materials (with poor properties) for use in construction and use of different methods and types of sealing materials. Scope of Work. The assignment will consist of: (i) Feasibility Study, including socioeconomic and environmental impact assessment, costs and potential cost benefits, and detailed project monitoring program during and after construction; (ii) Based on approval of the Borrower and funding agency, preparation of detailed designs for all proposed methods of construction, including confidential cost estimates and bidding documents; (iii) Construction; (iv) Consultant supervision during construction; (v) Monitoring program during and after construction; and (vi) Preparation of design manuals, specifications, guidelines, etc. based on detailed analysis of data obtained through monitoring program. Proposed Sites. Based on the consultants site visits and discussion with GOU officials, the following sites were selected for the pilot project implementation: (1) Matugga-Semuto (approx. 28 kin) (2) Semuto-Kapeeka (approx. 11 km) The foreseen works on the above national roads with low volume traffic are characterized by reconstruction of the existing alignment and road structure, including related drainage works. - 47 - Since the project represents a multi-complex assignment including research, training and actual construction, the detailed costs can be developed only after preparation of the feasibility study and detailed design. However, for the purpose of defining possible length of the road to be developed, the following basic costs have been estimated: (1) Construction cost: US$300,000/km (2) Consultancy, including research and design costs: approx. 30% of the construction costs The total length to be constructed on the above two mention road sites would depend on the estimated cost per kilometer ratio obtained from the detailed designs. Project Component 5 - US$0.92 million Feasibility Study and Design of a National Road Agency Building This will cover consultancy services for feasibility study, detailed design and construction supervision for the proposed Road Agency headquarters building. Project Component 6 - US$5.07 million Consuldng Services for the Supervision of Civil Works This component will comprise consultant services for the supervision of the civil works included in the project Experts specialized in environmental management will be included in the staff of supervision consultants to ensure that environmental and social adverse impact mitigation measures are carried out. - 48 - Annex 2 Table I GOVERNMENT OF UGANDA - RSDP - USES AND SOURCES OF FUNDS, 1999/97-2005/06 (in constant 1998 USD) _____ _____ Adual ~~~~~~~~~~~ ~ ~ ~~~~~~~~~~~~~~~Prov~ion1al BLip Pmi~ TSIREP Maintuiano. 19919 1997196 199619 1999'0O 20019 2001/2 _ _ __r_b_omDornom GOU Dornom GOUJ Donom GOU Doo G(OU Doorw, (OU Donor, (OU I9W 2.92 2.97 237 3.53 1.00 2.18 2o0 3.31 3.39 4.93 4.04 4A4 IDA 157 2.47 1.58 2Z37 2.05 2.63 1.86 2.57 1.30 4A4 - EDF 0.13 4.83 4.29 3.82 557 3.51 9.00 631 948 6.17 6.1 1 ORID 2.16 1.73 I 326 276 i 4.8 2231 3.98 357 1 &11 4103 1.80 359 ADI - I - I - - - 4.81 1.121 GOCJ 3.24 - 5.10 - 8.52 - 12867 - 11.54 __ - 15.521 cEt,epr*dts - -I- - 8.55 12911 Totil Mairtnm~cs: 659 15.24 11.501 17.88 I 1.60 19.06 17.20 218,73 1729 32-01 19.00 43.99 k~~~~~~~~AuIx ProvvionuI udgt Proj. TS.REP inyrovwrw1996197 1997/96197 1919991I 2000101 2001/92 ConbfbubomDoroom (IOU Donorm (IOU Donom, GOU Donom (Gou I Donor,(ou Donors GIO Ogidia 0.16 12.00 2.81 3.51 9.16 9.06 9.835 837 9.77 3.56 5.71 024 ADF 5.91 1.85 2.02 0.50 0.80 0308 0.05 3.52 6.00 236 7.A8 2.52 KFW 2.02 0.35 024 0.16 - 0.57 ___- 157 623 2865 8.08 0.58 EDF - - 0.64 - 135 -1 3.00 8.72. IDA 8.78 0.38 9.05 0.48 3.13 1.031 5.44 038 -18.20 6.19 26.7 751 RDP 1.568 8.05 16.66 6.47 NDF - - - - -- - - 020 0.06 BADEA -- - - - - - - 0.25 0.14 GOU - - - 4.84 - 4.40 - 4A7 6 883 - 1259 Total mpivwmmnts: 14.85 14.57 113 9.48 1289 15.44 15.98 18.31 41.55 21.391 599 30.33 TOTAL MAIN NETWORK, 21.74 29.80 25.612 27.061 26,491 34.49 33.19 47.04 58.m 53A4 1 9.99 74,321 __________________ ____________ ~~AeNdProvihional Budio Pr TSIREP Feeder Roads 1906197 1197/98 1997/96 19990 200610 2601/2 Cnrbtfm onrs,- OU I Donrs it Dok_ _O_ Dono __X oo-o _O _ Dobm G ADF 18631 2271 2.76 1.85 1.96 2.35 0.30 3.14 6307 1.38 5.00 0.53 IDA 237 0.26 1586 0.20 0.69 0.67 1.18 0.60 3.50 022 - ROP Daida - - - - 1.70 035 158% 0.12 158 -I GOkJ - 9.04 - 8.78 - 14.27 - 12.241 15.18 I - 12221 CVfir Pmrecta - - - - I 5.80 5.001 Total Feadw Roacta 4.00 11.56 4.62 10.841 265 17.26 3.18 16.03 11.15 16.90 13.38 17.T4 ___________________ ~~~~~~~~~AdajmI Provinlonal Budgot Pnoj TSIREP Insti Cap. kldg & Studis 199697 19796 199719 199961 20090 2001/92 r*nt1bLAors Donom, (IGO Donor, (IOU Donom, GOU onr GOU Donorm (IO Donorm ]GO ADF 1.48 0.02 - aoi1 - 0.18 - - - . IDA 0.01 0.03 031 0.02 240 023 4.00 0.19 4,45 0.52 8.17 214 RDP 1.91 0.00 0.22 0.06 2.23 10.56 Dalicia ~ ~ - - 0.10 - 0.10 - 0.71 0.03 053 0.07 0O2 0.061 Other - - - - - - - - - Tot. InstCap.BIdg & S. 1A47 0.051 OAI 0.03 25 .0 4.71 0.23 5.08 0-59 6.79 222 TOTAL RSDP 23.21 2985 263.03 27.09 29 3.9 37.169 4727 6291 X558 X717 776 Adual ProvIsIonal Pro ~ tSIE Urban & O8w Tmrssport 199619 I 99I/861997196 1"98910 2060 20011/92 Coritributomr Donors IGOU IDonors GOU IDonors GIOU Dornom GIOU Donors IGO Doniom (IOU JIICA -1 1.431____ 1.351 5.03 0.531 8.15 2.00 4.79 2.94 5.15 1.58 IDA - , - 0.17 0.08 ROP 0.17 0.06 GOIJU- - - - - - 2A44 OdterPmj - - - - .- Total Urb. & Oth. Tmnsp - 1.43 - 1.35 5.03 0353 6 .151 2.00 1 4.79 2.941 5.32 4.06 _TOTAL ROAD S6CTORI 22 4295 38885 39.28 36.67 5271 49.221 6530 1 79.88 7.9 9 95.48 97.881 -49 - Annex 2 Table I (continued) GOVERNMENT OF UGANDA - RSDP - USES AND SOURCES OF FUNDS, 1999/97-2005106 _______________ ~~(in_constant_1998_USD) _________ _______________________ ~~~~~~~Estima¶tes_ _ _ _ _ _ _ _ 1996197 - 2005106 Maintenance 2002103 2003104 2004/05 2005106 Total GRAND Contributors Doo.GOU Door OU Donor. IODU Donors IGOU Donors GOU TOTAL KFW 0.58 5.83 - 4.11 - 2.00 - - 18090 33.31 50.21 IDA - - - - - 8.25 14.48 22.73 EDF - 8.17 - 5.17 - 3.00 - - 28.56 47.08 75.64 DFtD - 6.27 - 5.82 - 1.50 - - 15.17 32.80 81.88 ADF 3.33 0.81 3.25- 0.79 2.36 0.57 0.73 0.18 14.28 3.46 17.14 GOU - 21.24 - 30.17 - 39.97 47.96 - 195.91 195.91 Other Projects 8.0 .8 1.7 014 2-2.93- 0.98 26.64 1.86 94.86 17.57 112.43 Total Maintenance: 2.0 400 22.99 46.00 1 25.29 48.00 27.31 50.00 182.02 344.60 526.62 Estimates 1996197 . 2005106 niprov.mAents 2002103 2003104 2404105 2005106 Total GRAND C~ontributors Dnrs GOU Donors GOU Donors GOU Donors lGou Donors GOU TOTAL Danide- 3.26 0.89 3.10 0.33 - - 43.82 37.95 81.77 ADF 3.45 1.03 0.88 0.21 . - 28.38 12.07 38.45 KFW 1.31 2.83 - - . 17.88 9.00 2898 EDF 80.73 5.58 58 18 2.78 39.41 13.20 - 194.57 18.08 209863 IDA 48 87 18 13 38.73 13.18 31.23 10.23 18.30 5.34 201.98 80.82 282.79 RDP 47.11 18.19 38.94 13.23 34.90 11.38 18.12 5.91 171.40 59.24 23063 NDF 0.24 1 0.08 0.21 10.07 3867 1.15 1.82 0.57 8.14 1.90 8.04 BADEA -4~58 1.58 311 1 102 - - - - 7.94 2.72 10886 GOU - 8.82 -I . - 2.98 . -42.73 42.73 Other Projects - - 24.21 13.90 39.38 13.98 77.85 22.41 141.44 50.28 191.70 Total Imnprovemnents:' 140.44 34.56 126.40 31.41 113.76 28.32 1109.116 28.32 640.14 232.50 812.73 TOTAL MAIN NETWORK: 161.34 78.56 149.39 77.47 139.05; 78.32 136.53 1 8'.32 822.16 577.191 1.399] _______________________ ~~~~~~~~Estlnnates _ _ __1996197 - 200506 Feeder Roads 2002103 2003104 200410S 2005106 Totls GRAND Contributors Donors GOU Donors 60U Donors laou Donors GOU Donors GOU TOTAL ADF 5.00 0.53 . . 22.12 12.04 34.78 IDA 14.33 4.89 -17.80 5.82 17.80 5.82 12.00 3.92 71.53 22.20 93.73 ROP 14.33 4.69 17.80 5.82 17.80 5.82 12.00 3.92 61.93 20.25 $2.18 Danida . . - - . 4.88 0.18 5.04 GOU . 1187 . 12.22 12.8.3 . ~13.47 - 121.92 121.92 Other Projects 0.07 1.75 45 1.2 6.74 1.89 13.18 3.15 31.28 13.31 44.59 Total Feeder Roads: 194H86 23 95 24.54 20.54 25.16 20.54 103 16.4 300.04 _______________________ _______ ~~~~Estimates _ _ __ _ _ __ISSOtOT_- 200506 unstit. Cap. Bldg & Studies 2002103 2003104 2004105 2005108 Total GRAND Contributors Donors IGOU Donors GOU Donors GOU Donors GOU Dnoors lGOU TOTAL ADF - - - 1 i48 0.21 1807 IDA 3.25 1.58 3.12 1.56 0.22 0.08 0.22 0~08 24.15 8.35 30.50 RDP 0.22 0.08 0.22 0.08 0.22 0.08 0.22 0.08 524 0.83 607 Osnilda 0.41 0.08 . 2.57 0.27 2.84 Other Projects 6.53 2.81 11.14 4862 14.04 8.12 14.04 6812 454 19.68 8542 Tot. tnst.Cap.Bldg & St. 10.19 4.45 14.6 81 146 61 14.26 6 18 739 261 104 TOTAL RSDP `171.53 63.99 163.65 8413 1531 824 11 6494 890 068 1500 ____________________ __ _______ _________ Estimnates _ _ __1996197 - 2005106 Urban & Other Tranasport 2002103 2003104 2004105 2005/06 Totaf GRAND Contributors Donors GOU Donors tlOU Donors joou Donors GOU Dornors GOU TOTAL JICA . .ill . . 4 - . . 23.12 10.92 34.04 IDA 0.21 0.07 185 0.53 2.8510.86 1.68 0.54 6.382 2.08 8.42 ROP 0.21 0.07 1 85 0,53 2.85 J0.88 1.68 0.54 8.36 2.08 . 42 GOU . 3.08 294 .j- 2.92- . 3.06 - 14.42 14 Other Projects 5.15 0 19 4.38 1.71 4.38 1.57 438 1.43 16.28 49 31 Total Urb. L Othn. Transp. 5.36 4.43 6.03 5.19 7.03 5.35 6.08 9.03 47.76 3.0 80 TOTAL ROAD SECTOR 156.29 1107.011 191 99 1108.89 T18-4.88 108.83 1179.91 11.1 1,071.24 886 .8 Notel1: Expenditures are net of taxes, except for RDP Note 2: Total IDA contribution for RDP is USD 238 million (discrepancy with total amount of credit due to: i) final costs lower than previously estimated coats, for anl amrount of $29 M.; and ii) expenditure periods going beyond 30 June 2006, for an amount of $15 M.). Note 3: Total RSDP includes maintenance and improvements for the national road network as well as institutional capacity building expenditures; Total Road Sector includes Total RSDP, plus district (feeder) roads, urban & other transport expenditures - 50 - Annex 2, Table 2 ROAD DEVELOPMENT PROGRAM Phase 1 Phase 2 Phase 3 Phase 4 Total RDP DA IDF GOU Phase I 1. Busunju-Kiboga-Hoima Road (ind. spn) 68.08 68,08 51.28 - 16.80 2. Pakw ach Arua Road (ind. spn) 48.96 48.96 36.88 - 12.08 3. Extemal Auditing Services 0.40 0.40 0.32 - 0.08 4. PPF Studies 2.50 2.50 2.50 _ - Sub-total: 119.94 119.94 90.98 - 28.96 Phase 2 1. Kat.-Kas.-Ft. Portal, Kilembe & Equator Roads (incl. spn) 43.45 43.45 32.73 10.72 2. Karuma Pakw ach Road (ind. spn) 34.09 34.09 25.68 8.41 3. Road Safety (incl. consultancy & spn) 5.08 5.08 3.98 - 1.10 4. National Transport Master Plan & KCC 2.66 2.66 2.13 - 0.53 5. Pilot Project for Constr.of low traffic Vol. Rds (incl. spn) 10.79 10.79 - 8.16 2.63 6. Road Agency Offices - Consulting Services 0.92 0.92 - 0.74 0.18 Sub-total: 97.00 97.00 64,52 8.90 23.58 Phase 3 1. Kapchorw a-Suam Road (ind. spn) 34.60 34.60 26.06 - 8.54 2. Kampala-Gayaza-Wobulenzi Road (incl. spn) 20.35 20.35 15.33 - 5.02 3. Feeder Roads Upgrading Program for 300 km (ind. spn) 60.00 60.00 45.00 - 15.00 4. Atiyak-Moyo Road 10.00 10.00 7.50 - 2.50 5. Road Agency Offices - Construction 7.50 7.50 5.63 - 1.87 6. Extemal Audit Services 1.10 1.10 0.88 - 0.22 Sub-total: 133.55 133.55 100.40 - 33.15 Phase 4 1. Feeder Roads Rehabilitation Program for 1000 km (incl. design & spn) 35.00 35.00 26.25 - 8.75 Sub-total: 35.00 35.00 26.25 8.75 Grand Total: 385.49 282.15 8.90 94.44 - 51 - Annex 3: Estimated Project Costs UGANDA SECOND PHASE OF THE ROAD DEVELOPMENT PROGRAM . . ...............~~~~~~~~~~~~~~~~~~~~....... ... . ...................... - .. ;...... . .... ..... . . . ..............---- -i ~~~~~~~.....,,,. ...... - 0 Civil Works (i) Katunguru-Kasese-Fort Portal, Kasese-Kilembe 13.42 20.14 33.56 & Equator Roads (162 km) (ii) Karuma-Olwyio-Parkwach Road (I07 Ian) 9.14 17.19 26.33 Construction Supervision 0.84 3.35 4.19 ROAD SAFETY 0.00 0.00 0.00 Black Spot Improvement 0.69 1.61 2.30 Design & Construction Supervision 0.05 0.20 0.25 Institutional Support 0.28 1.12 1.40 Equipment 0.00 0.25 0.25 NATIONAL TRANSPORT PLAN/GT. KAMPALA MASTER 0.00 0.00 0.00 PLAN Consulting Services 0.44 1.76 2.20 Total Baseline Cost 24.86 45.62 70.48 Physical Contngencies 2.48 4.57 7.05 Price Contngencies 2.73 5.02 7.75 Total Project Costs 30.07 55.21 85.28 Total Financing Required 30.07 55.21 85.28 Note: IDA's financing - 52 - Annex 3, Table 2 IDA Comoonent 1. Road Upgradlngllmprovement A. Civil Works (i) Katunguru-Kasese-Fort Portal, Kasese-Kilembe & Equator Roads (163 km) 13.42 20.14 33.56 (6) Karuma-Olwyo-Parkwach Road (107km) 9.14 17.19 26.33 B. Construcdion Supervision 0.84 3.35 4.19 11. Road Safety A. Civil Works (i) Black Spot Improvement 0.69 1.61 2.30 S. Consulting Services (i) Design & Construction Supervision 0.05 0.20 0.25 (ii) Institutional Support 0.28 1.12 1.40 C. Equipment - 0.25 0.25 111. National Transport Plant Gt Kampala Master Plan A. Consuitina Services 0.44 1.76 2.20 Total Baseline Cost 24.86 45.62 70.48 Contingencles (i) Physical Contingencies (@ 10%) 2.48 4.57 7.05 (ii) Price Contingencies (@10%) 2.73 5.02 7.75 Total Project Cost 30.07 55.21 85.28 Cornonent to be flnanced by NDF IV. Pilot Project for Constructfon of Low Traffic Volume Road A. Civil Works (i) Matugga-Semuta-Kapeka (39 km) 2.56 5.99 8.55 B. Consultant Services 0.45 1.79 2.24 V. Road Agency Offices A. Consultant Services 0.93 0.45 0.92 (feasibility & detailed eng.; construction supervision; project monitoring & manuals) Total Project Cost 3.49 8.23 11.712 TOTAL PROJECT COST (IDA + NDF Comoonentsl* 33.56 63.44 97.0 * Includes physical and price contingencies **On rounding Note: IDA and NDF is financing total refunded project costs Identtifiable taxes and duties are 24.25 IUS$n) and the total project cost, net of taxes, is 72.75 (USSrn). Therefore, the project cost sbaring ratio is 88.69% of total project cost net of taxes. - 53 - Annex 4: Cost Benefit Analysis Summary UGANDA. SECOND PHASE OF THE ROAD DEVELOPMENT PROGRAM Summary of Benefits and Costs: The proposed investments are expected to yield substantial direct benefits to road users, through considerable reduction in vehicle operating costs. Since the trucking industry in Uganda is competitive and the roads under the Program serve areas of good agricultural potential, at least part of the vehicle operating costs savings are expected to be passed through time to agricultural producers and consumers. Furthermore, the privately provided bus services are highly competitive in Uganda, and have already shown their capability to quickly extend coverage and improve frequencies to more remote areas in reaction to improvements in road condition. To this extent, vehicle operating cost savings are also expected to ultimately benefit low-income bus users leading to improvements in their accessibility to markets and in their availability of social services. Base Case Anyas No. ADT ADr Econonic Costs (11 NPV W12D% IERR |1ctveosli'. oSI IrADT Road Section Km 19 2002 ih. USDkfmI SCF riiLUSD % !NPV(Q22/. IR ERR K-MmSasmseFort Para (2) 1 2J6 56 707 X 2 0.80 1.15 12 (5.40 JX J( ) Kasese-Kiesbe (2) 12.0 44 555 112 0,80 1.18 21.3%/ 0.82 < 0 i2 Eoat rR-d (2) 38.0 301 3 140 0.80 1.34 14.9%D| (0.05) 11.90 0.40 129% KamarnaCWyo (3) 45.6 264 C3 162 14.6%o | (°0) 311' (0Zi1 A l--ach (3) 62.5 8 237 0.83 3.81 16.8%J 1.42 13i5aV 1.18 i3.6V I : : TOT-U_ I 27061 |i -9.1(11 3 Note 1: Ecmnomic costs indude consudion supervisson costs as defined by the Constalnt and physcl oonirgences Noie Z ADT 98 = wAgNed average fnrm: (i) Katun -asese = 393, (ii) Kasese-Hima = 855; and (ii) Hkia-Fort Portal = 580; Crv) Kasese+a;m = 789; (v) +5m4(mbe = 466; Serf-Aty analysis: HiKw Construckn Cost = +25%; Lower Traffic = - 500/0 of traftic g h for the ibst six years pision calaaed as being 7.5% of emsxsudion cost eslimates Note 3: Sensitivity anaysis: Higher Costucon Cost = +25%; Lower Traffic = - 50% of traffic grwh for thefrst 10 yeas aJpersion cabAated as being USD 2.315 nilion for each sedkbn, or rspediey 19% and 15% of mnshbion cost esTiates Main Assumptions: 1. Methodology The economic analysis methodology for road investments under the Project is based on the Bank's Highway Design and Maintenance Model (HDM, Release lll). The HDM-lll allows for the modeling, through time, of the interaction between traffic volume and composition, road condition and vehicle operating costs. As roads deteriorate, reflecting vehicle usage and weather conditions, the vehicle operating costs increase. Investments targeted at improving road condition will, therefore, contribute to reducing vehicle operating costs and to slowing the rate of deterioration of road infrastructure. The life-cycle costs of road usage (to be directly born by vehicle operators) and up-keeping (to be directly bom by the Highway Administration) can then be estimated through time, under alternative investments - 54 - strategies. These strategies cover the trade-offs between mutually exclusive rehabilitation, periodic maintenance, and other road intervention alternatives. The selected investment strategy would be the one yielding the highest NPV for a discount rate of 12%, the value assumed for the opportunity cost of capital under the RSDP. 2. Pluriannual Expenditure and Funding Program Regarding the national road network, the HDM-Ill framework has been initially used at a more aggregate and strategic level. At this level of analysis, network-wide traffic projections and pre-engineering investment costs are considered, whereas traffic levels and road conditions would also be averaged-out throughout parts of the network. Results of this analysis lead to the preparation of an economically justified pluriannual expenditure program. This allowed for the identification of a portfolio of national road subprojects, and the associated investment requirements (i.e. paving, strengthening) capable of meeting the economic screening criteria under the RSDP and to be considered under the Program. The national network-wide analysis, initially developed in 1996, was updated during appraisal for RDPPI by RAFU in a report dated April 1999, in consultation with the mission, for the period 1996/97-2005/2006. Within the exogenously assumed US$1.5 billion budget constraint for national roads under the RSDP, uncommitted resources amounting to US$512 million were allocated to road expenditures, in order to maximize investment efficiency. Basically, a discrete modeling approach was followed, in which multiple maintenance and improvement strategies were initially generated and selected for each network link. For both paved and unpaved roads, these embrace various routine maintenance, periodic maintenance, and upgrading options. The resulting expenditure program, basically covering the 2002/2003-2005/2006 period, and which includes the road subprojects under the proposed Program, is summarized in financial and physical terms in the Table I of this Annex 4. Overall, the study has found that investments under this program are expected to yield a consolidated NPV of about US$ 873 million for the road improvement, and the periodic and recurrent maintenance components. 3. Specific Road Subprojects under the Proposed Program For the identified national road subprojects, specific traffic counts and projections, as well as preliminary engineering designs, were prepared with a view to appraise their economic feasibility. Separate consultant studies cover the four roads identified under the different phases of the proposed APL. For the road subprojects under Phase 2, final engineering design and a revised economic analysis were subsequently prepared. The final reports for the consultant feasibility studies, as revised by RAFU and reviewed of the Bank mission, is available in the Project File (Annex 8). At this level of analysis, the methodology used was also based on the Bank-developed HDM-Ill. Only investments yielding an EIRR estimated at above 12% would be considered eligible for financing under the Program. The economic analysis of the proposed subprojects was subjected to sensitivity and stochastic risk analysis. - 55 - Traffic Projections For the base year 1998/99 traffic, RAFU have basically used the results of the Consultants' own surveys, cross-checked, as needed, with MOWHC traffic data base. Traffic growth rates reflect GOU's GDP and demographic projections, and have been disaggregated on a regional basis. From 2010 onwards, a constant growth rate of three percent per annum was assumed and applied to all traffic and vehicle categories countrywide. These growth-rates have been applied to normal and to diverted traffic. Generated traffic estimates were directly taken from the Consultant's studies. Road Costs The unit construction and maintenance costs are based on engineering design estimates prepared by the Consultants and were reviewed during appraisal. Construction costs considered in the analysis include a 10% allowance for physical contingencies and an allowance of 7.5% for supervision costs. A two-year implementation schedule for physical works was assumed. The economic vehicle operating costs are based on RAFU's estimates based on the MOWHC database. Financial infrastructure costs were converted into economic costs by applying a standard conversion factor going from 0.80 for Katunguru-Kasese-Fort Portal, Equator & Kilembe Roads to 0.83 for Karuma-Olwyio-Pakwach. Prices were assumed at their last quarter of 1998 level (exchange rate US$ I=UGS 1,300). Alternatives For purposes of analysis, the two roads under RDPP2 (Katunguru-Kasese-Fort Portal, Kasese-Kilembe & Equator roads; and Karuma-Olwyio-Pakwach road) were disaggregated into five sections, to reflect varying road condition and other physical characteristics, as well as different traffic levels and composition. Several investment and maintenance altematives were generated and evaluated for each road section, and the one yielding the highest NPV (at a 12% discount rate) was selected. As a result, the investments proposed under Phase 2 of the proposed Program would yield a consolidated NPV estimated at USD 9.1 million, with no investment in any road section yielding an EIRR below 12.5%. Sensitivty analysis / Switching values of critical items: Each of the Phase 2 road sections was then subjected to sensitivity analysis. To this extent, construction costs were increased by 25% and benefits separately decreased by lowering traffic level in a way that was deemed the most adequate for each section of roads. In this respect, traffic growth for the first six years was halved for Katunguru-Kasese-Fort Portal, Kasese-Kilembe & Equator roads, and traffic growth for the first ten years was halved for Karuma-Olwyio-Pakwach. Overall, results of the sensitivity analysis indicate that returns on investments are highly sensitive to both construction costs and traffic variations, with an integrated NPV of respectively minus USD 3.5 million and plus USD 0.5 million. On the one hand, two sections yield negative NPV with higher construction costs as well as with lower traffic levels: (i) Katunguru-Kasese-Fort Portal and (ii) Karuma-Olwyio. On the other hand, two sections yield positive NPV with higher construction costs as well as with lower traffic levels: Kasese-Kilembe (with a healthy EIRR respectively of 17.4% and 17.2%), and Olwiyo-Pakwach (with an EIRR of respectively 13.5% and 13.6%). - 56 - Risk Analysis In order to factor uncertainty into the economic evaluation, risk analyses were conducted by the Consultants using triangular-type probability distributions for two variables considered to mostly influence the project's net benefits: (i) investment costs and (ii) traffic growth. For the construction costs, the lowest and highest possible values were assumed at 90% and 125% of the engineering estimates (most likely values) while for traffic growth the range was from 75% to 110% of the base scenario values. "What if' scenarios were then generated for each road section, combining the likely values for the two selected variables. As a result estimated probability distribution for the EIRR were obtained for each road section. The table below summarizes the results from the risk analysis as the Consultants performed it: Expected Mean Road Sections NPV ($ mil.) EIRR (%) Katunguru-Kasese-Fort Portal -0.42 11.8 Kasese-Kilembe 1.07 20.2 Equator roads 0.96 14.1 Karuma-Olwyio 0.55 12.9 Olwyio-Pakwach 2.47 15.0 Results of the stochastic analysis and sensitivity analyses indicate that there is a relatively high likelihood that the Katunguru-Kasese-Fort Portal Road might fail to yield an EIRR above 12% (between 60-63% likelihood)' . However, concerning Katunguru-Kasese-Fort Portal, the mean expected EIRR is only marginally below 12% and adding expected mean NPVs from the two other sections of roads forming the network (Kasese-Kilermbe and Equator Roads), total NPV is positive at USD 1.61 million (corresponding to above 12% EIRR). - 57 - Experience with tender prices obtained for contracts under Phase I shows prices are well within 1O% of the cost estimates. Hence the probability distribution of construction costs is more likely to be symmetrical than skewed adverselyas assumed in this case. For Kasese-Kilembe and Equator roads, the results of the stochastic analysis and sensitivity analysis are strong, and there is above 100% likelihood that the project will achieve an EIRR greater than 12%. For the Karuma-Olwiyo-Pakwach road, the relative weakness of the mean expected EIRR is above 12% for both sections, with a combined NPV of more than US$3 milUion. Furthermore, this section of road should not be taken separately from the rest of the network under study (Pakwach-Arua under RDPPI and Olwiyo-Pakwach under RDPP2), which has very strong results. Added to the fact that results from the base case economic analysis are above 12%, it is therefore recommended that investment on both these sections go ahead as planned under RDPP2. Annex 4 Table I Main Road Network Financial and Physical Targets, 2002/03 - 2005/06 (expenditures in constant end-1998 million of US$, length in kIn) Total EXPENDITURES 2002/03 2003/04 2004/05 2005/06 (2002/03-2005/06) Improvements 175 158 142 137 613 Periodic Maintenance 45 39 33 29 147 Routine Maintenance (1) 20 30 40 48 138 [Total Expenditures ] 240 227 215 215 897 LENGTH Improvements (2) 70l 63| 57| 55 245 | Periodic Maintenance (3) 2,245 1,950 1,665 1,468 7,328 Routine Maintenance (1) All network 1 Note 1: including patching, spot regravelling and grading Note 2: based on an average of $250,000 per km Note 3: based on an average of $20,000 per km On the basis of the Consultant's approach to risk analysis (using synimetrical input data), the probability of the Katunguru-Fort Portal road achieving an IRR of less than 12% is down to 32%. - 58 - Annex 5: Financial Summary UGANDA: SECOND PHASE OF THE ROAD DEVELOPMENT PROGRAM l. The financial implications of the Government's road sector program have been presented in its budget Framework Paper discussed during its public expenditure review May 1999. As stated in that paper, Government's Poverty Eradication Action Plan identifies six critical sectors that require substantial budget expenditures if the objective of eradicating poverty is to be achieve. Of these, national roads, rural feeder roads and agriculture are seen as directly contributing to increasing rural incomes and supporting the private sector. The paper confirms that the road sector continues to be one of Government's fastest growing program, with GOU spending increasing from about US$45 million in 1996/97 to a projected US$95 million in 2001/02 (see Table 5.1 below). This represents a percentage increase of more than 100% over a five-year period. Simultaneously, the sector allocation to roads and works would rise to a projected 9.7% in 2001/02 from 5.8% in 1996/97 (see Table 5.2). As indicated below, in the future the Government will be assuming an increasing share of the road maintenance budget, with budget allocations increasing by more than 100% for national roads from 1996/97 to 2001/02. National road improvement is only expected to account for about a quarter of Government financed expenditures in 2001/02, compared with a third in 1996/97. Increasing priority will also be given under the Government budget to district (feeder) road maintenance and improvements, with allocations increasing by 50% from 1996/87 to 2001/02. In the process, it will be important that the current detailed accountability and effectiveness measures in place for monitoring development spending should also be implemented for spending funded under the recurrent budget. Table 5.1 Government's Expenditures for Roads In constant end 1998 US$ million pmlementation 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 fRSDP _ Actual Actual Actual Provisional Budeet Proiected OUFunded T TTlI National Roads Maintenance 15 18 19 29 32 44 National Roads Improvements 15 9 15 18 21 30 3 CaDacitv Buildinz 0 0 0 0 1 2 4District (Feeder) 12 11 17 16 17 18 SUBTOTAL GOU FUNDED national & district(feeders) 41 38 52 63 71 94 UBTOTAL DONOR FUNDED national & district(feeders) 27 31 32 41 75 90 DTHER GOU I I 1 2 3 4 DTHER DONOR FUNDED 5 8 5 5 rOTAL GOU 43 39 53 65 74 98 IOTAL DONOR 27 31 37 49 80 95 - 59 - Table 5.2 Medium Term Sectoral Allocatlons Wages, non wage recurrent and GOU funded development expenditures Excluding contingencies, arrears and promising notes Exchange Rates (UGS per USD) 1000 943 1020 1080 1200 1500 1623 1707 1994195 1995196 1996/97 1997/98 1998199 1999/00 2000101 2001102 SECTORAL TOTAL (UGS BILLION, NOMINAL) actual actual actual actual actual provis. budget project Security 103 130 145 127 164 194 215 245 Road & Works 25 28 44 44 71 123 138 160 Agrculture 14 7 10 10 18 21 26 31 Education 118 119 173 204 251 343 388 437 Health 39 42 55 58 73 84 96 116 Law & Order 66 67 72 67 77 86 98 114 Economic Functions/Social Services 54 40 41 43 46 86 89 109 Public Administration (excluding election costs) 118 153 168 154 207 260 277 288 Interest Payments Due 47 54 56 76 82 89 97 -A00 ALL SECTORS 584 640 764 783 989 1,286 1,424 1,600 1994/95 1995196 1996/97 1997/98 1998199 1999100 2000/01 2001/02 SECTORAL SHARES (%l actual actual actual actual actual provis. budget project Securty 17.6% 20.3% 19.0% 16.2% 16.6% 15.1% 15.1% 15.3% Road &Works 4.3% 4.4% 5.8% 5.6% 7.2% 9.6% 9.7% 10.0% Agriculture 2.4% 1.1% 1.3% 1.3% 1.8% 1.6% 1.8% 1.9% Education 20.2% 18.6% 22.6% 26.1% 25.4% 26.7% 27.2% 27.3% Health 6.7% 6.6% 7.2% 7.4% 7.4% 6.5% 6.7% 7.3% Law&Order 11.3% 10.5% 9.4% 8.6% 7.8% 6.7% 6.9% 7.1% Economic Functions I Social Services 9.2% 6.3% 5.4% 5.5% 4.7% 6.7% 6.3% 6.8% Public Administration (excluding election costs) 20.2% 23.9% 22.0% 19.7% 20.9% 20.2% 19.5% 18.0% Interest Payments Due a.0% &4% 7.3% 9.7% 8.3% 69 % 6.a% 1.3% ALL SECTORS 100% 100% 100% 100% 100% 100% 100% 100% Source: Ministry of Finance, Planning & Economic Development Budget Framework Paper, May 21, 2000 - 60 - Annex Sb: Financial Management Overview UGANDA: ROAD DEVELOPMENT PROGRAM PHASE 2 Overall GOU Financial Management Environment A World Bank team carried out a Country Financial Accountability Assessment (CFAA) of Uganda with the participation of a government counterpart team. The CFAA report was issued in January 2001 and provides an analysis of the strengths and weaknesses in the financial management environment at both the central government and local government levels and the private sector. Specific areas addressed in the report included, budgeting and planning, accounting and financial reporting in the public sector, oversight arrangements (including the Office of the Auditor General and the Public Accounts Committee), accountability in Local Governments and Ethics and Integrity, covering the Govermnent's Anti corruption strategy. The report comments on current government efforts to address identified weaknesses and contains an action plan that provides a description of how the identified fiduciary risks are to be mitigated by agreed upon actions by the government. The major recommendations have been incorporated in the Poverty Reduction Support Credit (PRSC) as actions on which satisfactory progress is expected before approval of PRSC 11. The tightening of financial management under the Roads Development Program (11) is fits into the overall financial management framework that is described in the CFAA. 1. General The Finance and Administration Division (FAD) of the Road Agency Formation Unit (RAFU) - within the institutional framework of the Ministry of Works, Housing and Communications (MOWHC) - will be responsible for ensuring that financial management and reporting procedures for RDPP2 will be acceptable to the World Bank and Govermment of Uganda. FAD's financial management system (FMS) supports management in their deployment of limited resources with the purpose of ensuring economy, efficiency and effectiveness in the delivery of outputs required to achieve desired outcomes. Specifically, the FMS must be capable of producing timely, understandable, relevant and reliable financial information that will enable management to plan, implement, monitor and appraise RDPP2's overall progress towards the achievement of its objectives. Although there have been satisfactory improvements in the establishment of FAD's financial management system, FAD is not yet ready for PMR-based disbursements, as discussed in the World Bank's Loan Administration Change lnitiative Handbook (LACI, September '98). Thus, in the short-term, existing disbursement procedures, as outlined in the World Bank's Disbursement Handbook, will be followed i.e. Direct Payment, Reimbursement and Special Commitment. However, the development of FAD's financial management system will be complete once it is futly computerized. The introduction of PMR based disbursements is solely dependent upon this. 2. Financial Management Sub-Committee Reporting to the Management Committee, (which will be chaired by the Minister of MOWHC), a representative FMSC (under the chairmanship of the Permanent Secretary of MOWHC) has been appointed to review the Project Management Report (PMR) every quarter. The PMR will comprise: - 61 - Financial Statements, as discussed below. Members of the FMSC will review and approve Quarterly and Annual Financial Statements; they will also examine material variances between budget/actual figures - seeking remedial action, as appropriate, within an agreed timeframe. * Project Progress i.e. Output Monitoring Report. The format and details of the OMR will need to be developed. An important aspect of the OMR will be the accompanying narrative interpreting the project's progress with agreed financial performance indicators and how costs to date relate to that planned at appraisal, and its likely effect on the program at its completion. * During the period before commencement of disbursement of the IDA Credit on the basis of PMRs, the FAD will prepare on a regular basis quarterly reports and forecasts that are required under PMR-based disbursements and will submit them to IDA for review. These will be produced manually until the time of full computerization of the proposed Programs Financial Management System. The transitional PMRs will be used to assess progress towards meeting the requirements of PMR-based methods of disbursement. At the time of conversion, the project will prepare a reconciliation of project expenditures, disbursements received, and Special Account movements up to the proposed date of the conversion. Staffing/Capacity Building The FAD is headed by a Finance and Administration Manager (FAM) who will direct and guide the financial management operations of RDPP2. He is assisted by a Senior Finance and Administration Officer. The department has also appointed qualified and experienced accounting, administrative and support staff. Reporting and Monitoring Financial reports generated by the financial management system must be effectively communicated to the Financial Management Sub-committee. To achieve this, written reports will be augmented by regular meetings in order to discuss the reports and their ramifications. Internal Controls FAD's internal control procedures are documented by the Finance and Administration Manager in the Financial Management Manual (FMM). The activities of the Project will be periodically reviewed by the Internal Audit Unit of the Ministry of Works, Housing and Communications (MOWHC). That Unit will report to the Permanent Secretary/Secretary to Treasury via the Internal Audit Department of the Ministry of Finance, Planning and Economic Development (MOFPED). - 62 - Information Technology The overall Program's financial management information technology requirements (hardware, software and training) will be developed by Extemal (Systems) Consultants by 31 December 2001 in consultation with the IT Division Manager, the Finance and Administration Division Manager, the Engineering Division Manager, the Head of Procurement, the Director of RAFU, MOWHC and MOFPED. As a transitional arrangement, the accounting records of the Project will be maintained using a conventional spreadsheet package. Planning and Budgeting The Finance and Administration Manager, in consultation with the FMSC and the Director of RAFU, will be responsible for preparing the Project's Quarterly/Annual Cash Flow Forecast and Budget Estimates. Members of the FMSC, in conjunction with the Management Committee, will review and approve Quarterly and Annual Project Financial Statements; they will also examine material variances between budget/actual figures - seeking remedial action within an agreed timeframe. The Management Committee is responsible for approving RAFU's budget. Bases of Accounting - Cash Versus Accruals As RAFU is an integral part of the MOWHC, the Project must meet the Treasury's requirement for cash accounting in accordance with Treasury accounting procedures. In due course, for management reporting purposes, the FMSC/Management Committee will decide whether to convert to an accruals basis of accounting. Procurement of Goods, Works and Consulting Services The Finance and Administration Manager and members of staff are conversant with Govemment and World Bank procurement procedures, as internal control issues and the incurring of liabilities on behalf of RDPP2 will be matters of particular concern to the financial management function - specifically, Government procedures in relation to incurring contractual commitments must be strictly observed. A Quarterly Procurement Management Report (showing the status of procurement, civil works, contract commitments and consulting services) will be prepared by the Head of Procurement/Engineering Division Manager for consideration by the FMSC. Procurement procedures, which must comply with World Bank and Government requirements, are documented in RAFU's FMM. Banking Activities - Flow of Funds For IDA and Government funding, the MOWHC (through FAD) will maintain 3 bank accounts as follows: Special Account in US doliars at a commercial bank acceptable to IDA. Current Account in UShs (Part 2 Account) at a commercial bank acceptable to IDA to which Counterpart - 63 - Funding by Government will be deposited. Initially, a three months float will be provided and it will be replenished thereafter in compliance with Govemment procedures. The inital deposit to be made by GOU is US$3.0 million equivalent. Bank statements for the 2 accounts will be reconciled to the Project's accounting records on a monthly basis. Reconciliations will be approved by the Finance and Administration Manager on a timely basis. identified differences will be expeditiously investigated. Control Procedures and further details on the bank accounts are documented in the Financial Management Manual. World Bank - Withdrawals/ Disbursements While the FAD is not yet ready for PMR-based disbursements as discussed above, existing disbursement procedures, as outlined in the World Bank's Disbursement Handbook, will be followed i.e. direct payment, reimbursement and special commitment The computerization of FAD's financial management system is expected to facilitate the introduction of PMR-based disbursements within about 12 months of credit effectiveness. Fixed Assets, Consulting Services and Civil Works A Fixed Assets Register will be designed and maintained, regularly updated and checked. Regarding Construction/Capital Work in Progress, controls will be established over the awarding of contracts as well as for ensuring that payments are made in a timely and orderly manner in respect of certified work. Contract Status Reports will be prepared quarterly by the Engineering Division Manager for consideration by the FMSC as part of the Procurement Management Report referred to in Appendix 1. Control procedures over fixed assets, consulting services and civil works are documented in the FMM. Financial Reporting (Monthly and Quarterly/Annually) Monthly The Finance and Administration Manager will be responsible for preparing a Monthly Status of Funds Report for the Chairperson of FMSC/Director of RAFU. Quarterly/Annually The Financial Statements, following determination by the FMSC and the Management Committee, will include: A Statement of Sources and Uses of Funds by Loan Category/by Activity; Program Balance Sheet as at the reporting date; Notes in respect of: significant accounting policies and accounting standards adopted by management when preparing the accounts; and any supplementary information or explanations that may be deemed appropriate by management in order to enhance the presentation of a "true andfair view ". Special Account Statement/Reconciliation showing deposits and replenishments received, payments - 64 - substantiated by withdrawal applications, interest that may be earned on the account and the balance at the end of the fiscal year; SOE Withdrawal Schedule (pending the introduction of PMR based disbursements), listing individual withdrawal applications relating to disbursements by the SOE Method, by reference number, date and amount; A Cash Forecast for the next 2 quarters. Indicative formats for Financial Statements are outlined in RAFU's Financial Management Manual. External Audit Relevantly qualified, experienced and independent auditors have been appointed for RAFU on acceptable terms of reference. The external auditor will also be expected to prepare a separate Management Letter giving observations and comments, and providing recommendations for improvements of accounting records, systems, controls and compliance with financial covenants. Conclusion Although the current financial management arrangements satisfy the Bank's minimum requirements under OP/BP1O.2, they are not yet adequate to provide, with reasonable assurance, accurate and timely information on the status of the Project as required by the IDA for PMR-based disbursements. The arrangements do not therefore meet the requirements for PMR-based disbursements, as outlined in the World Bank's Loan Administration Change Initiative Handbook (LACI, September 1998). A detailed financial management assessment was carried out and the completion of the computerization of the financial management system was identified as being required to strengthen financial management arrangements are. This will enable the disbursement of the IDA Credit to be made on the basis of Project Management Report (PMRs). - 65 - Annex 5c: Fiscal Impact of RDPP2 UGANDA: ROAD DEVELOPMENT PROGRAM PHASE 2 The first part of this analysis deals with the budget issues : (i) Govemment fiscal situation ; (ii) overall level of recurrent costs required to operate the sector adequately and the volume of financing provided by the Government in the past; and (iii) availability and certainty of counterpart funds for the project. The second part of the analysis focuses on the direct impacts of the road construction projects under RDP, Phase 2 : (i) incremental revenue from taxes linked to construction projects, (ii) increase or decrease in recurrent costs resulting from the strengthened or upgraded roads; (iii) increase or decrease in maintenance costs resulting from the strengthened or upgraded roads; (iv) prospects for financing additional expenses linked to recurrent and/or maintenance expenditures, if any ; and (v) need to service the debt incurred to build the road. The construction projects taken into consideration in the fiscal impact analysis are: (i) Katunguru-Kasese-Fort Portal, Kasese-Kilembe and Equator Roads, 162 km; (ii) Karuma-Olwyio-Pakwach Road, 107 km; (iii) black spot improvement, 71 km; and (iv) Pilot project for Matugga-Semuto-Kapeeka Road, 36 km. I. Present Fiscal Situation The Government present fiscal situation can be derived from the "Background to the Budget 2000/01" produced by the Ministry of Finance, Planning and Economic Development (MoFPED) in June 2000. This report states that "Owing to the need to keep inflation low in light of the intemal and extemal shocks to the economy during 1999/00, Government continued with a tight fiscal policy stance. Prudent fiscal management enabled the Govemment to deliver macroeconomic stability, robust real economic growth and a relatively stable exchange rate. The resource envelope (that is, domestic revenue plus grants) had a shortfall of about UGS 160 billion during 1999/00 mainly on account of a sharp shortfall in domestic revenue. In view of the sharp shortfall in domestic revenue collection relative to the budget estimate, total Government spending was reduced by UGS 60 billion, consistent with the need to keep inflation low. Domestic revenue (excluding Govemment payments but including appropriations in aid) is projected at UGS 987.8 billion during 1999/00, UGS 134.5 billion below the budget estimate for the year. In real terms, domestic revenue fell from 12.2% of GDP in 1998/99 to 11.5% of GDP in 1999/00. The decline in domestic revenue as a ratio of GDP in 1999/00 was partly due to weaknesses in tax administration, partly due to the impact of the terms of trade shock on real purchasing power, and perhaps partly due to a shift in expenditure towards relatively less taxed goods. The impact of the sharp fall in revenue on Government spending and the overall deficit was to a greater extent reduced by the large inflow of giants, which increased by 46% in 1999/00 over the previous year. External budget support in the form of grants was equivalent to UGS 595 billion in 1999/00 as compared to UGS 407 billion a year earlier. Total government expenditures are projected to amount to UGS 1,779 billion in 1999/00, equivalent to 20.7% of GDP. Excluding externally funded development expenditure, domestic expenditure increased by about 2 1 0 billion during 1999/00 over the previous year. Because the revenue shortfall was not fully covered by external grants and borrowing from domestic banks would have been inconsistent with the inflation target of 5.0% p.a, Government domestically funded expenditures had to be cut by UGS 83 billion from the programmed level. However, the magnitude of the - 66 - expenditure cut was less than the shortfall in domestic revenue and grants combined so that the budget deficit, excluding grants, widened from 7.0% of GDP in 1998/99 to 9.2% of GDP projected for 199/00. A further cut in expenditures was not possible because of the need to finance poverty reduction programs in agreement with multilateral donors on the use of additional resources arising from the HIPC Debt Relief initiatives. The budget deficit was non-inflationary because it was wholly financed by external grants and highly concessional loans. During 1999/00, Government, through a consultative process with stakeholders prepared a comprehensive strategy to deal with the major constraints to private sector development called the medium term Competitive Strategy (MTCS) for the Private Sector (2000-2005). The key elements of the private sector MTCS include reforms in infrastructure provision particularly the utilities; strengthening the financial sector and improving access to credit; reforms in the commercial justice sector; institutional reforms which include dealing with corruption, reforms in public procurement simplifying administrative procedures, and improving tax administration; and strengthening the export sector". - 67 - Provisional Budget Outturn for the Fiscal Years 1998/99 and 1999/00 Outturn Estimate Outturn Deviation Performance 1998/99 1999100 1999100 Ratio Revenue and grants 1,358.210 1,743.606 1,582.967 -160.64 9018% - Revenue I/ 951.273 1,122.301 987.805 -134.50 88.0% - Grants 406.936 621.305 595.162 -26.14 95.8% Total Expenditure 1.501.173 1,838.311 1,778.644 -59.67 96.8% - Recurrent Expenditure 863.786 1,017.391 993.853 -23.54 97.7% o/w Salaries 7 Wages 341.163 391.156 389.900 -1.26 99.7% Interest 68.841 84.130 85.522 1.39 101.7% Other recurrent2/ 388.801 440.626 415.539 -25.09 94.3% Transfer to URA 29.659 35.00 32.391 -2.61 92,5% Statutory 35.322 66.480 70.501 4.02 106.0% - Development Expenditure 635,067 805.720 776.843 -28.88 96.4% o/w Domestic 144,667 271.920 227.243 -44.68 83.6% Extemal 490,400 533.800 549.600 15.80 103.0% - Net Lending 2.319 15.200 7.948 -7.25 52.3% Overall Balance (commitment) (142.964) (94.705) (195.676) -100.97 206.6% - Excluding grants (549.900) (716.010) (790.839) -74.83 110.5% Outturn Estimate Outturn Deviation Performance 1998/99 1999/00 1999/00 Ratio Change in arrears 3/ (145.532) (138.195) (148.300) -10.11 107.3% Adjustment to cash 4/ (42.006) (5.000) (19.668) -14.67 Overall defcit/surluslcash) (246.490) (237.901) (363.6345) -125.74 152.9% Financinp 246.490 237.901 363.645 125.74 152.9% - Foreign (net) 263.239 331.895 315.345 -16.55 95.0% - Domestic (16.749) (93.994) 48.300 142.29 -51.4% Banking System 0.552 (84.044) 59.100 143.14 -70.3% o/w BankofU anda8/ 24.152 | (112.552) -22.900 89.65 20.3% Commercial Banks 9/ (23.600) 28.508 82.000 53.49 287.6% Non-bank (17.301) (9.950) (10.800) -0.85 108.5% Memo 1: GDP at factor cost 7816.240 88l300 8,573.654 Memo 3: as %/oage of GDP - Domestic Revenue 12.3% 13.4% 11.9% o/w excl. Gov't payments 12.2% 12.7% 11.5% - Expenditure 19.2% 20.7% 20.7% - Deficit (commitment) -1.8% -1.1% -2.3% -Deficit (Excl. grants) -7.0% -8.1% -9.2% Deficit (cash basis) -3.2% -2.7% -4.2% Source: Ministry of Finance, Planning and Economic Development. 1/ excludes tax refunds and Government payments 2/ non-debt, non-wage recurrent, including defense, PPAs, etc. 3/ includes reduction of external and domestic arrears 4/ check float and residual - 68 - The overall level of recurrent costs required to operate the sector adequately and the volume of financing provided by the Government in the recent past can be derived from the Transport Sector investment and Recurrent Expenditures Program (TSIREP) dated October 2000. This report states that "in order to optimize the investment made in roads, reinstate and preserve the road network to required level of services, Government has highly prioritized national road maintenance. Financing of national road maintenance is basically the responsibility of the Government. Government has committed itself to continue increasing funding for maintenance by an equivalent in USD 4 million annually. Government will, in principle, finance all routine maintenance costs by 2001, and seek donor support in road rehabilitation and periodic maintenance operations. The Table below shows funding commitments to national roads maintenance programs and recurrent expenditures from 1998/99 to 2003/04 for both the Government and the Development Partners: i___ Actual Provision Budget Proj etions (TSIREP) 96-04 96/97 97/98 98/99 99/00 00/01 01/02 02103 03/04 Grand USD I 1,020 1,080 1,200 1,500 1,622 1,800 1,800 1,800 Total Malntenance (hin98S) I r_ GOUl 15.24 17.58_ 19.05 28.73 32.01 43.99 44.00 46.00 246.60 Donors 6.89 11.50 13.60 17.20 17.28 19.00 20.90 22.99 129.35 Total MaIntenance | 22.12 29.08 32.65 45.93 49.29 62.99 64.90 68.99 375.95 Recun_t matenance element 3.24 8 9.63 13.85 19.74 29.61 9924 The following funds have been committed by the Development Partners for the maintenance of the road network: (i) USD 14.5 million for Road Maintenance in Eastern Uganda by KFW, to expire by 30 June 2002; (ii) USD 13.1 for TRP national Roads Maintenance, by IDA, to expire by 31 December 2001; USD 30.1 million for Southem-Western Roads Maintenance Project, by EDF, to expire by 30 June 2001; and USD 13.4 million for Upgrading Gravel Roads in Western Uganda, by DFID, to expire by 30 June 2003. As mentioned earlier, these funds should slowly decrease overtime as GOU commits itself to take charge of aLl maintenance expenditures as far as the National Road Network is concerned. The Govemment has demonstrated its commitment to provide the necessary counterpart funds for the project and indeed for the entire road sector over the medium term. This clearly illustrated in the Govenmment's Medium Term Budget Framework (MTEF) which is a mechanism for determining Govemment medium term expenditure priorities and allocating these funds through the budgetary process. The MTEF gives three-year expenditure projections, which are revised annually as part of the budget process. The allocations to the roads sector are shown in the TSIREP. - 69 - 11. Fiscal Impact The second part of the analysis focuses on the direct impacts of the road construction projects. The incremental revenue from taxes linked to construction, the increase or decrease in recurrent expenditures and maintenance costs resulting from the strengthened or upgraded roads and the need to service the debt incurred to build the road are enumerated in the attached Table shown below. The following assumptions described below have been used: (i), the years under review were those pertaining to the credit period, that is from 1 July 2001 to 30 June 2007; (ii), the only fiscal impact regarding the disbursement of the loan relevant to this analysis is the credit inflow of capital as reimbursement of both the principal and the interests will not take place during the period of analysis; (iii), the level of taxation has been assumed to be 17%, 10% representing net VAT paid by contractors and 7% representing levies, mostly on imported goods; (iv), there is only a very small increase in the level of recurrent expenditures, that is expenditures which are implemented at least once a year, because there is no new roads being built, but only existing roads being strengthened or upgraded. The following additional costs have been calculated: additional routine maintenance costs = 300,000 UGS'/ x 107 km from upgrading Karuma to Pakwach Section to paved standards = USD 0.017 million with an exchange rate of 1850 UGS to the dollar; UGS 300,000/km is the difference of routine maintenance costs between unpaved and paved roads, as per 10 Year RSDP Update dated April 99. (v), there is no change in periodic maintenance costs as the roads under review will not incur any substantial maintenance investment during the period of analysis. - 70 - FISCAL IMPACT OF RDPP2 (up to the closinq date of the credit) YEARS 2000101 2001102 2002103 2003/04 2004/05 2005106 2005/07 REVENUES Loan Disbursement (1) 3.00 11.00 20.00 16.00 8.50 4.60 Taxes from construction (2) - - 4.68 3.00 3.82 1.28 1.37 - Karuma-OhA*o-Pakwach RD. 2.06 1.25 1.25 0.33 0.54 - KaL-FP, K.mbe & Equator Rds. 2.62 1.59 1.59 0.41 0.69 - Blockspot lmp,ovement 0.17 0.24 0.06 - Matugge.emuto-Kapeeks Rd. 0.75 0.48 0.14 Decrease in recurrent costs (3) - - - - - Decrease in maintenance costs (4) - - - - - - - TOTAL REVENUE 3.00 15.68 23.00 19.82 9.78 5.97 YEARS 2000101 2001/02 2002/03 2003104 2004105 2005106 2006107 EXPENSES Debt Service (1) - - - - - - - Increase in recurrent costs (3) - 0.02 0.02 Increase in maintenance costs (4) - - - TOTAL EXPENSES - - - 0.02 0.02 Note 1: Because there is a 10 year grace period, no reimbursement of interest or capital was included in this analysis Note 2: Assuming 17% taxes Note 3: There is only very minor changes in recurrent expenditures as investments occur on existing roads Note 4: Changes in maintenance costs will not appear before the end of the credit period -71 - Annex 6: Procurement and Disbursement Arrangements UGANDA: SECOND PHASE OF THE ROAD DEVELOPMENT PROGRAM Procurement Procurement Capacity of RAFU 1. The procurement capacity assessment of RAFU was carried out in December 1998 and March 1999. The action plan drawn to build RAFU's procurement capacity called for the establishment of a procurement unit within RAFU. The same has been established, and is fully operational since January 2000. Currently, there are 8 procurement specialists employed in the unit; another 2 will be employed by June 2001 which will bring the total staff strength to 10. 2. RAFU's procurement performance has been found to be satisfactory. RAFU has produced with the assistance of consultants bidding documents, as well as pre-qualification documents, for the four major civil work contracts under RDPPI on schedule. Procurement Implementation Arrangements 3. Supervision of execution of the civil works will be done by consultants provided under the project. Similarly, the National Transport Plan/Kampala Master Plan will be prepared with the help of consultants. The institutional support for Road Safety will also be provided by consultants provided under the project. Equipment for Road Safety will be procured by RAFU through intemational shopping. Procurement Plan 4. A procurement plan for the project has been prepared by the Borrower as part of the PIP, which was finalized during negotiations. Use of Bank Guidelines 5. For civil works and goods, procurement will take place in accordance with the Bank's Guidelines for procurement under IBRD Loans and IDA credits (January 1995, lastly revised January 1999). The Bank's Standard Bidding Documents, the Standard Pre-qulification Documents and the Standard Bid Evaluation Forms will be used for the procurement of civil works contracts. 6. For consulting services, procurement will take place in accordance with the Bank Guidelines for the Selection and Employment of Consultants by World Bank Borrowers (January 1997, lastly revised in January 1999). The Bank's Standard Request for Proposals and Sample Form of Evaluation Report for the Selection of Consultants will be used. 7. A General Procurement Notice (GPN) will be prepared and issued upon Board approval in the United Nations Development Business listing all civil works contracts (above US$ 200,000) and large contracts for consultants services (above US$ 200,000) to obtain expression of interest. The GPN will be updated annually for those contracts still to be let. Procurement Methods (Table A) - 72 - Civil Works 8. Contracts for upgrading of Karuma-Olwiyo-Pakwach section of Karuma-Pakwach-Nebbi-Arua Road (divided into 2 lots) and strengthening of Katunguru-Kasase-Fort Portal, Kasese-Kilembe and Equator Roads (divided into 3 lots), estimated at US$ 72.47 million, wiU be procured thtough ICB. Contracts for black-spot improvements, estimated at US$ 2.58 million, will be procured through NCB procedures satisfactory to the Association. Goods 9. Equipment for Road Safety, estimated at US$ 0.30 million, will be procured through Limited lnternational Bidding by inviting quotations from at least three specialized suppliers in two different countries. Consulting Services 10. Contracts for consulting services for: (i) construction supervision of road upgrading and black-spot improvement works (estimated at US$ 5.37 million); (ii) institutional support for Road Safety (estimated at US$ 1.69 million); and (iii) National Transport Plan/Greater Kampala Master Plan (estimated at US$ 2.66 million) will be procured following Quality and Cost-Based Selection (QCBS) method. Services for tasks that meet requirements set forth in paragraph 3.8 to 3.11 of the consultant guidelines may with the Bank's prior agreement, be procured on single source basis. Prior Review Thresholds (Table B) 11. Procurement documentation for civil work contracts above US$ 250,000 and consultancy contracts above US$100,000 for firmns and US$ 50,000 for individuals will be subject to prior review by IDA. The Borrower will obtain IDA's no-objection to technical evaluation of consultant's proposals before proceeding to public opening of the financial proposals. Goods contracts above US$ 250,000 will be subject to prior review by IDA. Post review of the contracts below the above thresholds will be carried out selectively by IDA supervision missions and/or independent auditors. Terms of Reference for all consultancy contracts, as well as single-source appointments, irrespective of their cost, will be subject to prior review by IDA. - 73 - Procurement methods (Table A) Table A: Project Costs by Procurement Arrangements (US$ million equivalent) Expefidltw. Category ..; ,,, NC 0her~ N 8 . .... .v.:.:. '' '" '0''0''; " ;:'''0; 0 W " ' " ' ;t................:.................. ... .t.. 1. Works 72.47 2.78 0.00 8.55 83.80 (54.35) (2.08) (0.00) (6.50) (62.93) 2. Goods 0.00 0.00 0.30 0.00 0.30 (0.00) (0.00) (0.30) (0.00) (0.30) 3. Services 0.00 0.00 9.73 3.16 12.89 (0.00) (0.00) (7.79) (2.40) (10.19) 4. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) 000) Total 72.47 2.78 10.03 11.71 96.99 (54.35) (2.08) (8.09) (8.90) (73.42) Figures in parenthesis are the amounts to be financed by the IDA and NI:DF credits. All costs include contingencies 2' Includes civil works and goods to be procured through international shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units. - 74 - Table Al: Consultant Selection Arrangements (optional) (US$ million equivalent) Selection- Method:: '-x eatg'y'-CS:Q B. --L''-CQ'. ... ..... .... .. ... . ..... .... .... Expenditure Category, :'QCBS: OS SF8. LCS: C 0 Othe .BF TtlCot A. Firms 9.73 0.00 0.00 0.00 0.00 0.00 3.16 12.89 79)_(°°°) (°-°°)(7.79 (0.00) (0.00) (0.00) 00) (2.40) (10.19) B. Individuals 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) Total 9.73 0.00 0.00 0.00 0.00 0.00 3.16 12.89 (7.79) (0.00) (0. 00) (0.00) (0.00) (0.00) (2.40) (10.19) 1\ Including contingencies Note: QCBS = Quality- and Cost-Based Selection QBS Quality-based Selection SFB Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc. N.B.F. - Not Bank-financed Figures in parenthesis are the amounts to be financed by the Bank Credit. Prior review thresholds (Table B) Table B: Thresholds for Procurement Methods and Prior Review Contract Value: ContrOat Subject to Threshold . Procurament :..po .--. w ExKniditure Cae oy (US$ thousands) - 1. Works $250 and above ICB All Less than 250 NCB* None 2. Goods $250 and above LIB All 3. Services $100 and above (firms) QCBS All 4. Miscellaneous 5. Miscellaneous 6. Miscellaneous * Contracts for blackspot Improvements estimated to cost less than $250,000 per contract, up to an aggregate amount of US$ 2.58 million, may be procured through National Competitive Bidding. Total value of contracts subject to prior review: Overall Procurement Risk Assessment Average Frequency of procurement supervision missions proposed: One every 18 months (includes special procurement supervision for post-review/audits) - 75 - Disbursement Allocation of credit proceeds (Table C) Table C: Allocation of Credit Proceeds .Expend; Witure CMOW Amount n .inancini .reage Civil Works 51.63 75% Goods 0.29 100% of foreign Consultant Services, training and audit 7.40 80% fees ____________________ Unallocated 5.20 Total Project Costs 64.52 Total 64.52 Disbursement The IDA Credit would be disbursed against the categories of given in Table C on the basis of the schedule of disbursements shown below. Disbursements would be made against standard documentation. To facilitate payments from the Credit, a Special Account would be established and would be operated and maintained on terms and conditions satisfactory to IDA. The account would have an initial authorized allocation of US$3.0 million, and would be replenished following application for reimbursement by MOWHC together with appropriate supporting documentation. The amount of IDA replenishment would not exceed the authorized allocation. The Credit closing date would be June 30, 2006, with physical completion of works expected 6 months before that date. The Borrower will open and maintain a project account in Uganda Shillings in a commercial Bank will an initial deposit of US$ 3.0 million equivalent. Statements of Expenditures (SOEs): Disbursements for contracts of works and goods estimated to cost up to US$250,000 equivalent and consulting contracts with firms costing up to US$100,000 equivalent, and consulting services for individual consultants costing US$50,000 or less, would be made against statement of expenditures. Estimated IDA Disbursements (US$ m): IDA FY FYO1 FY02 FY03 FY04 FY05 FY06 Annual 0.0 12.0 22.0 16.0 10.0 4.52 Cumulative 0.0 12.0 34.0 50.0 60.0 64.52 - 76- Annex 7: Project Processing Schedule UGANDA: SECOND PHASE OF THE ROAD DEVELOPMENT PROGRAM Pr*it Sche4uI . ii. . . :- Ple.I : : . . . . Time taken to prepare the project (months) First Bank mission (identification) 03/13/2000 03/13/2000 Appraisal mission departure 02/15/2001 01/19/2001 Negoiations 04/23/2001 _ __ 04/25/2001 Planned Date of Effectiveness 11/30/2001 Prepared by: Ministry of Works, Housing and Communications Preparation assistance: Road Sector Institutional Support Technical Assistance Project (RSISTAP) (Cr. 2987-UG) for US$30 million Bank staff who worked on the proJect included: -e .i .- ; --- Sp*cIality Yitzhak Kamhi Team Leader and Senior Transport Engineer, Procurement John Riverson Senior Highway Engineer David Rudge Hfighway Engineer Satdev Kathuria Peer Reviewer/Highway Engineer, Procurement, Consultant Victor Labite Ocaya Civil Engineer Anthony Hegarty Senior Financial Management Specialist Joseph Kizito Financial Management Specialist Anil Bhandari Peer Reviewer, Highway Adviser / Economics Nina Chee Environmental Specialist Charlotte Jones Operations Analyst Nadege Thadey Program Assistant Aberra Zerabruk Senior Counsel Modupe Adebowale Senior Financial Management Specialist - 77 - Annex 8: Documents in the Project File* UGANDA: SECOND PHASE OF THE ROAD DEVELOPMENT PROGRAM A. Project Implementation Plan December 2000 B. Bank Staff Assessments C. Other 10-Year Road Sector Development Program, Government of Uganda, November 1996. Government of Uganda Proposal for Road Sector Program, February 1996. Consultants Reports: Final Feasibility and Design Studies for Karuma-Pakwach Road (May 2000) and Katunguru-Kasese-Fort Portal Road (April 20, 2000) included in the Program. Financial Management and Procurement Assessment of Implementing Agency, including Action Plan for improvements and five table for its implementation, December 1998. Aide-Memoire of October 2000 Pre- Appraisal Mission Progress Reports of Road Sector Program (Nos. 1, 2, 3 ,4, 5 and 6). Feasibility Studies, including Environmental impact Assessments and Social Impact Assessment, for Karuma-Pakwach and Katunguru-Kasese-Fort Portal roads. Report on the Ten Year Road Development Programme (RSDP) Update, April 1999. Environmental Policy and Management Assessment Study for RDP, April 1999. Detailed Designs and Bidding Documents for roads included in Phase 2 of the Program: Karuma-Pakwach (September 2000), Katunguru-Kasese- Fort Portal, Kilembe and Equator Roads. Road Safety Audit Final Report (October 2, 2000). TOR for the Pilot project for use of innovating technologies, and construction of MOWHC and RAFU H/Q. Draft GOU " White Paper " on policy and strategy for feeder, community and urban roads. TSIREP for 1999/2000-2003/2004 (October 5, 2000). Certificates of Approval of Environmental Impact Assessment from NEMA for Karuma-Pakwach-Arua (May 2000) and Katunguru-Kasese-Fort Portal Road (October 2000). *Including electronic files - 78 - Annex 9: Statement of Loans and Credits UGANDA: SECOND PHASE OF THE ROAD DEVELOPMENT PROGRAM Mar-2001 Diflerence between expected and actual Original Amount in US$ Millions disbursements Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Revd P072482 2001 HIVIAIDS Control Projet 0.00 47.50 0.00 0.00 48.54 0.00 0.00 P050439 2001 PRIVATIZATION & UTIUTY SECTOR REFORM 0.00 48.50 0.00 0.00 47.43 0.00 0.00 P002992 2000 LOCAL GOV DEVE.PROGRAM 0.00 80.90 0.00 0.00 65.06 -9.17 0.00 P044679 2000 Second Economic and Fin. MgmL Project 0.00 34.04 0.00 0.00 28.97 8.04 0.00 P059223 1999 NAKIVUSO CHANNEL REH 0.00 22.40 0.00 0.00 19.S9 1Z75 0.00 P059127 1999 AGRICRES & TRNG. It 0.00 26.00 0.00 0.00 22.46 5.09 0.00 P044213 1999 FIN MKrS ASSISTANCE 0.00 13.00 0.00 0.00 12.59 9.57 0.00 P002941 1999 ICB-PAMSU 0.00 12.40 2.00 0.00 5.22 220 0.00 P002970 1999 ROADS DEVT PROGRAM 0.00 90.98 0.00 0.00 83.39 9.02 0.00 P049543 1998 ROAD SECTANST.SUPP 0.00 30.00 0.00 0.00 22.93 24.55 0.00 P057007 1998 EL NINO EMERG RD REP 0.00 27.60 0.00 0.00 23.36 24A9 0.00 P040551 1998 NUTRIT.CHILD DEV 0.00 34.00 0.00 0.00 23.90 6.46 0.00 P046870 1997 LAKE VICTORIA ENV. 0.00 9.80 9.80 0.00 5.69 348 000 P046836 1997 LAKE VICTORIA ENV. 0.00 12.10 0.00 0.00 456 1.85 0.00 P002987 1997 SAC Itt 0.00 125.00 0.00 0.00 64.81 42.66 42.13 P035634 1996 PRIV. SECTOR COMPET1 0.00 12.30 0.00 2.18 2.41 5.63 000 P002978 1996 ENVIRONMENTALMGMT&CAPACITY BLDG 0.00 11.80 0.00 0.00 1.58 2.94 2.00 P002976 1995 INST. CAPACITY BLDG 0.00 36.40 0.00 0.00 3.13 5.45 0.00 P002971 1995 DISTRICT HEALTH 0.00 45.00 0.00 0.00 5.81 3.39 0.00 PW2957 1994 SMALLTOWNSWATER 0.00 42.30 0.00 0.00 6.13 7.01 0.00 P002963 1994 SEXUALTRANS.IN 0.00 50.00 0.00 0.00 4.70 5.45 0.00 P002977 1994 COTTON SECTOR DEVELO 0.00 14.00 0.00 0.00 0.41 0.60 -0.38 P002953 1993 PRIMARY EDUC. & TEAC 0.00 52.60 0.00 0.00 3.50 3.44 1.78 P002929 1991 POWER III 0.00 125.00 0.00 0.00 17.08 -11.15 223.15 Total: 0.00 1003.62 11.80 2.18 52323 163.75 268.69 - 79 - UGANDA STATEMENT OF IFC's Held and Disbursed Portfolio Mar-2001 In Millions US Dollars Committed Disbursed IFC IFC FY Approval Coanpany Loan Equity Quasi Partic Loan Equity Quasi Partic 2000 CelTel Uganda 4.00 0,70 0.00 0.00 2.40 0.70 0.00 0.00 1994 Celtel 0.43 0.64 0.80 0.00 0.43 0.64 0.80 0.00 1984/92 DFCU 0.00 0.60 0.00 0.00 0.00 0.60 0.00 0.00 1993 Jubilee 0.00 0.10 0.00 0.00 0.00 0.10 0.00 0.00 1996 Kasese Cobalt 12.00 3.60 0.00 0.00 12.00 3.60 0.00 0.00 1998 Tilda Rice 2.28 0.00 0.00 0.00 1.78 0.00 0.00 0.00 1995/96 Uganda Leasing 1.16 0.00 0.00 0.00 0.56 0.00 0.00 0.00 1983 Uganda Sugar 5.08 0.00 0.00 0.00 5.08 0.00 0.00 0.00 1996 AEFAgro Mgmt 0.60 0.40 0.00 0.00 0.55 0.40 0.00 0.00 1992 AEF Clovergem 0.84 0.00 0.00 0.00 0.84 0.00 0.00 0.00 1997 AEF Conrad Plaza 1.13 0.00 0.00 0.00 1.13 0.00 0.00 0.00 1998 AEF Exec. Invmnt 0.97 0.00 0.00 0.00 0.97 0.00 0.00 0.00 1999 AEF Gomba 1.40 0.00 0.00 0.00 1.40 0.00 0.00 0.00 2001 AEF Kaboja 0.35 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1998 AEF Kampala Flwr 0.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2000 AEF Kasambya 0.99 0.00 0.00 0.00 0.00 0.00 0.00 0.00 AEF Kiwa 11 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1997 AEF Ladoto 0.80 0.00 0.00 0.00 0.80 0.00 0.00 0.00 2000 AEF LongFreight 0.80 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2000 AEF Mosa Court 0.64 0.00 0.00 0.00 0.64 0.00 0.00 0.00 1998 AEF Nile Roses 0.16 0.00 0.00 0.00 0.16 0.00 0.00 0.00 1993 AEF Polypack 0.10 0.00 0.00 0.00 0.10 0.00 0.00 0.00 1994 AEF Rainbow 0.79 0.00 0.00 0.00 0.79 0.00 0.00 0.00 1995 AEF Rwenzori 0.35 0.00 0.00 0.00 0.35 0.00 0.00 0.00 1993 AEF Skay Electro 0.22 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1998 AEF Skyblue 0.51 0.00 0.00 0.00 0.51 0.00 0.00 0.00 1994 AEF White Nile 0.28 0.00 0.00 0.00 0.28 0.00 0.00 0.00 1998 AEF Wstern Hgh 0.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1999 Total Portfolio: 36.88 6.04 0.80 0.00 30.77 6.04 0.80 0.00 Approvals Pending Commitmnent FY Approval Company Loan Equity Quasi Partic 1998 AEF Rain Oil 1000.00 0.00 0.00 0.00 Total Pending Comnritment: 1000.00 0.00 0.00 0.00 -80 - Annex 10: Country at a Glance UGANDA: SECOND PHASE OF THE ROAD DEVELOPMENT PROGRAM Sub- POVERTY and SOCIAL Saharan Low- Vuanda Africa income Development diamond 1 999: PoDulation. mid-vear(mlWons) 21.5 642 2.417 Life expectancy GNP ter caDita (Attas mefhod. US$) 320 500 410 GiNP fAiA.S metheod USS lilionm8) RR 321 PtRR Averaos annual arowth. 1993-99 tda*i.i f!10 2.19 2.8 1.9 Lalir force (f4l 2.7 2.8 2.3 GNP Gress Most-recenttrnatr"tatltstaarava11abl 1993-991 prier prmary esene ..a.es. veer ava,.a~~~~~~~.,e. ~capita rnt,t Povertv tX4 of nonulation below national Dovehv line ) 44 Urban ocoulation 1% of total Donufationl 13 34 31 I exr ,sntannt; at. birth ivearsl 42 fif An Infant mortalitv -fer 1.0001ivehbirths) 97 92 77 Child manittirithrn (94 of chiidren under 51 2fi 32 43 Access to safe water Aress tn imnrovtd wtstfer sosurce (% of conulationi 41 43 84 liriteracv 1% of non tijtion ace 15+1 38 39 39 G.rnsr nrimarvy nrmiltment ( of school-noe nooul8fioni 122 78 9fi -Uganda Male 129 85 102 ----------Low-income group FpMamts 114 71 RR KEY ECONOMIC RATIOS arnd LONG-TERM tRENDS 1979 1989 1998 1999 Economic ratios (3139 tUSS bitt onsl 8¸ 3 . fi 8.R4 Gross domestic investmentlGDP 11 1 150 1 B4 Trade Fxnnrtsnfnond and servines/Gl7P 8.0 10.3 11. Gross domestic savinossGDP 1.0 5.6 4.9 ,rnAsA national RavinrsGflnP 1 9 13.4 10, Current account balancelGDP f-9 104 116 o nt Interest natvnment;st -np 0.8 0.8 SinInvestsent Tnfal dbhtnGOP Rif 32 53 fi 54.3 i - Total debi servicele)Dorts -. 25.5 23.1 Prerent vniiien(itehtlG1lP 35n. 27.3 Present value of debftleoorts 350.6 225.3 Indebtedness 1979-89 1989-99 1998 1999 1999-03 (averare annual orowthi GDP 3.4 7.1 56 7.4 8.3 Ugganda GNP oer cavita 0.9 4.1 2.8 4.3 3.3 --------- Low-income group Exoorts of noods and services 1.2 14.8 -14.g 33.0 6.4 STRUCTURE of the ECONOMY (94 of GDP) 1979 1989 1998 1999 Growth of investment and GOP (%) Anri,idtr,rA 8.i R 4.48 44 4 60 Industrv, 10.7 17.6 17.8 40 Mani,fa-.ftirinn r. . 8.q R.7 20 4_ Services 32.5 37.8 37.8 o' _ Private r-nnq.mntinn 972n 84 . R8.2 .20 996 97 Oa 99 General oovernment consumotion 7.0 9.6 9.9 G GDI --Do-GDP Imnnors nf nonsd Anti serviC A 18.1 1q.7 22.q (averac1e annual rowt9 198999 1998 1999 Growth of exports and Imports (%) Acriculture 2.7 3.7 1.9 6.9 60 lndustrv 6.4 12.1 11.5 9.1 40 Manufacturino 3.6 13.5 14.4 11.3 Services 3.2 8.1 6.6 7.2 20 Private consumDtion 3.4 6.3 8.6 0.8 0 General novernment consumotion 0.6 8.2 8.0 17.4 9. 9s 96 97 9 Gross domestic Investment 13.1 8.2 3.7 9.0 -20 ImDorts of noods and services 7.3 9.0 3.1 2.8 -Exports -Impnorts Gross national Droduct 3.5 7.3 5.8 7.3 Note: 1999 data are preliminary estimates. The diamonds show four kev indicalors in the countrv fin bold) comoared with its inCome-croUD averane. It data are missino, the diamond wili he inanmnleta. - 81 - Uganda PRICES and GOVERNMENT FINANCE 1979 1989 1998 1999 Inflation /Y) Domestic prices 30 (% change) Consumer prces 1310 5.8 -0.2 20 Implicit GDP deflator .. 115.4 10.7 4.4 Government finance (% of GDP, includes current grants) S 95 95 ST Current revenue 5.5 10.3 10.9 .10 Current budget balance .. -1.3 0.9 0.9 G OP deflator -CPI Overall surplus/deficit .. -4.8 -5.6 -5.9 TRADE 1979 1989 1998 1999 Export and import levels (US$ mill.) (US$ millions) Total exports (fob) 282 458 549 1.500 Coffee .. 276 269 307 Cotton .. ., 11 11 1.000 Manufaciures .. Total imports (cif) 562 1,411 1,376 Food ..0 Fuel and energy .. 76 84 65 Capital goods a .._ 93 94 95 90i 97 98 99 Exoort once index 11995-100. 92 74 67 Imnort rnceindex(1995=100) 79 106 101 e Expo7s *Imports Terms of trade (1995=100J .. 117 70 67 BALANCE of PAYMENTS i979 1989 1998 i999 Current account bsalnce to GDP (%) fUSS millions) Exports of goods and services 304 634 726 a Imports of goods and services .. 712 1,871 1,834 Resource balance .. -408 -1,237 -1,107 3 Net income 6 9 14 - Net current transfers 114 539 375 Current account balance . -360 -706 -746 Financing items (net) . 342 840 780 Changes in net reserves I a -34 -33 159 Memo: Reserves includino oold (USS millionsl .. 46 750 748 Conversion rate (DEC IOcalUSSI . 170.4 1.149.7 1362.0 EXTERNAL DEBT and RESOURCE FLOWS 1979 1989 1998 1999 fUSS mnilljonsl Composition of 1999 debt (US$ rmill.) Total debt outstanding and disbursed 1,903 3,631 3,480 IBRD 24 0 0 F: 58 IDA .. 605 1,971 2,042 E: 6 Total debt service .. .. 172 179 IBRD . 5 0 0 IDA .. 5 24 25 Composition of net resource flows Official grants 36 177 433 277 B:2,042 Official creditors . 220 188 Private creditors 0 1 4 Foreign direct investment 2 2 200 230 C: 351 Portfolio equity 0 0 0 World Bank program Commitments 0 141 172 267 A- IBRD E- Bilateral Disbursements 100 242 148 B - IDA D - Other mutilateral F - Private Principat repayments 4 10 10 C -IMF G -Short-term, Netflows 96 231 138 Interest payments . 6 14 15 Net transfers .. 90 217 123 Development Economics 9/9/00 - 82 - Additional Annex l1 LETTER OF DEVELOPMENT POLICY (As forwarded fonnally by GOU to the Country Director) 01/17/01 Ref. ED/C/1541/11 1. The following describes the Government of Uganda's medium term Strategy for the Transport Sector and is to serve as the agreed framework within which the Government intends to implement the Road Development Program (RDP) 1999 - 2006, which is a component of Govemment's 10-Year Road Sector Development Programme. General Principles 2. The Government's medium term transport strategy hinges on the promotion of cheaper, efficient and reliable transport services as the means of providing effective support to increased agricultural and industrial production, trade, tourism, social and administrative services. This would ensure an efficient transport sector and would play a critical role for the development of an integrated and self-sustaining economy to promote growth in line with Government's strategy of poverty eradication and the economic development throughout the country. 3. To implement this, emphasis will be placed on the provision of a technically sound, economically justified and financially sustainable infrastructure through the active participation of the private sector. 4. The Government will not, as a rule, directly participate in the provision of transport services, except in the case of strategic activities and investment in public goods. Its role with respect to the supply of transport services is to provide policy guidelines a clear legal framework and efficiently exercise its non-economic regulatory powers ensuring the establishing of a level playing field for the competitive provision of services. 5. In this context, the Government will continue the policy of de-facto free access to the transport sector market and of letting market forces determine tariffs. The Government will also continue to place emphasis on the implementation of Axle Load Control and transport safety measures for reduction of road damages and accidents respectively. These will be co-ordinated with neighbouring countries through the East African Co-operation Arrangement and the Northem Corridor Transit Agreement to ensure efficient and safe use of the road infrastructure. 6. However, the Government will continue to play a dominant role in the provision and cost-effective development of transport infrastructure. In order to sustain this effort, appropriate priority is given to the preservation of existing infrastructure assets. For roads, the implementation of Government strategy would also lead to an increased participation of the private sector in the preparation, execution and supervision of road works, in tandem with efforts to develop the domestic construction and consulting industry. - 83 - Issues and Actions Transport Planning 7. The Public Investment Plan (PIP) defines all Government sector investment priorities. The Plan is reviewed annually and inclusion of new projects is made after thorough analysis of the socio-economic, technical, and financial considerations taking into account safety precaution, environmental factors and gender issues. The selection criteria used in considering projects are biased towards their direct impact on poverty eradication. 8. PIP is linked to Government's Medium Term Expenditure Framework (MTEF) that ensures macroeconomic stability and the sectoral allocation or public expenditure with strategic priorities. MTEF gives the overall government budget strategy in the medium term with the objective of: * Promotion of rapid broad-based economic growth by enabling the private sector to play the role as engine of growth; and * Reduction of poverty by implementing the Poverty Eradication Action Plan. 9. MTEF has provided the budgetary framework in which to fund priority initiatives such as roads. Over the last two years, the Governmuent has been able to increase spending in three priority programmes namely; roads, primary education and primary health care. In line with the three year rolling MTEF, the Government will continue to select and prioritise transport sector investments and recurrent expenditure in a rational manner, within the available resource constraint to ensure that expenditures are within the sector budget ceiling. 10. Government has already commenced on the process of establishing a long-term multi-modal transport master plan to guide the rational and complementary development of all the transport modes, namely: road, rail, water and air transport. The process will examine the realistic complementarily and the appropriate maintenance and improvement measures of the various transport modes in terms of safety, efficiency, and cost effectiveness for the mobility of people and their goods. The Road Network 11. The key element in the implementation of the Government's Transport Sector Strategy is the 10-Year Road Sector Development Programme (RSDP) (1997 - 2006). The RSDP, is reviewed and updated on an annual basis, focuses on (i) providing an efficient, safe and sustainable road network in support of market integration and poverty alleviation over a 10-Year period from Fiscal Year 1996/97 - 2005/06; (ii) improving managerial and operational efficiency of road administration; and (iii) developing the domestic construction industry. The RSDP has been developed after a thorough optimisation and rationalisation process by viewing road network maintenance and improvement as a single process aimed at minimising total transport costs in the road sector. 12. Realistic and efficient implementation mechanisms have been developed to ensure maximum implementation efficiency of the programme's managerial and operational functions. The full RSDP for the national roads component is estimated to cost approximately US$1,500 million and its expenditure and financing programme reflects investment requirements and economic priorities in the context of the macro-economic constraints as expressed in terms of domestic counterpart funding and inflows of donor - 84 - assistance. The RSDP has the following three major components: i) National Road Maintenance and rehabilitation to optimise the investment in roads and to reinstate and preserve the road network to required level of services; ii) Improvement of parts of the National road network to meet traffic demand, safety and environmental requirements; and iii) Capacity building in road administration and the local construction industry. National Roads Maintenance 13. In order to optimise the investments made in roads and preserve the road network to the recquired level of service, Government has prioritised National road maintenance. The financing of national road maintenance is the responsibility of the Govemment. Government is committed to continue increasing funding for maintenance and will in principal finance all routine maintenance costs by 2001, and seek donor support in road rehabilitation and periodic maintenance operations. The table below indicates the financing plan of the RSDP National Roads Maintenance Component. Funding Commitment to National Roads Maintenance Programme In US$ million 1998/99 1999100 2000/01 2001/02 2002/03 2003/04 Actual Provisional Budget Projected Projected Projected GOU 20.79 32.00 36.00 40.00 44.00 44.00 Donor 9.55 25.26 14.94 12.02 2.72 1.22 TOTAL 30.34 57.26 50.94 52.02 46.72 45.22 14. Government will continue to release budgeted national roads maintenance funds through the budget. Feeder Roads Rehabilitation and Maintenance 15. It has been recognised that an efficient feeder road network is at the core of the poverty eradication strategy and of enhancing rural incomes. In this respect, the Govemment is pursuing in the first instance improvement of selected roads to all weather road surface standard, countrywide. Priority will be given to those roads which could first unlock areas with potentially high agricultural surplus and also enable the rural populace the access basic social services. 16. The responsibility for maintaining feeder roads is already vested in the respective districts. The Central Government will continue to provide financial resources for local feeder roads maintenance through conditional and unconditional grants to the districts. The strategy for feeder roads rehabilitation and - 85 - maintenance has been updated under the RSDP to bring it in line with the recent constitutional and legislative changes. A prioritised feeder and urban roads' investment plan will be developed based on the developed strategy. National Road Improvement Strategy 17. Under the RSDP, parts of the road network will be upgraded and improved as economically justified to standards commensurate with the projected traffic demand, safety and environmental protection requirements. The programme puts emphasis on drawing up of a feasible, integrated maintenance and improvement programme for the road network, which is consistence with the overall national development objectives. Under the programme the following measures will be undertaken: (i) Capacity improvement to ease congestion; (ii) Strengthening of weak pavements; (iii) Upgrading from gravel to bitumen standards; (iv) Upgrading of about 2000 km of priority feeder roads to the classified road network standards; (v) Strengthening of bridges; and (vi) Provision of road safety facilities. (vii) A new by-pass of Kampala will also be constructed. Institutional Arrangements 18. The role of the Government in the development and management of transport infrastructure is mostly discharged through MOWHC, and in the case of rural feeder and community roads, provides policy guidance in liaison with Ministry of Local Govemment (MOLG) to the districts. 19. In line with Government policy of rationalising the management of sector agencies and of reforming the civil service, the potential for the commercialisation of road administration, including the involvement of users and other stakeholders in road management and financing, is being assessed. As a result, the Government has already decided to establish an autonomous Road Agency/Authority in 2002. 20. The Agency will be responsible for the management, operation, development and maintenance of the road network in Uganda. However, as an immediate step towards the establishment of the Road Agency/Authority, the Government has established a Road Agency Formation Unit (RAFU). The RAFU is a transitional institutional set up until the establishment of the Road Agency. RAFU is established outside the present organisational set-up of the MOWHC but accountable to the MOWHC. Recruitment of staff into the unit is being carried out on a competitive basis and the staff salary pledged at market rates. In addition, the Unit is supported by commercially hired management consultant personnel. RAFU will finally transform itself into a fully-fledged autonomous Road Agency/Authority by 2002. Domestic Construction Industry 21. Efforts to develop the domestic construction industry include implementation of measures conducive to market creation through contracting out of road works including maintenance. Currently, all manual routine maintenance and 60% of mechanised maintenance and all periodic maintenance is by contract. 22. Targets for the share of contractor executed road maintenance works as contrasted to Force - 86 - Account Works are as tabulated below: Private Sector share of the total road maintenance operations budget 1999/2000 2000/01 2001/02 2002/03 2003/04 Actual Planned Projected Projection Projection 55% 75% 80% 85% 85% 23. To improve the domestic contractors access to equipment measures to facilitate equipment pooling on a commercial basis and plant acquisition through leasing arrangements will be implemented. Program Development Objectives Road Development Programme Purpose 24 Road Development Programme is in support of the RSDP, which reflects a strategy focussing on the preservation and selective upgrading of existing road network. At present, committed expenditures under the RSDP are estimated at US$ 610 million for GOU, the EDF would finance investments amounting to US$ 200 million; IDA US$ 380 million (of which $ 282 million is under the proposed Program and the remainder under the on-going Transport Rehabilitation Project (TRP), Road Sector Institutional Support Technical Assistance Project (RSlSTAP-G-2987-UG) and El Nino Emergency Road Repair Project (Cr. 3064-UG); and various bilateral donors the balance. 25. The on-going Road Sector Institutional Support Technical Assistance Project (RSISTAP-G-2987-UG) IDA, supports the institutional capacity building in the road sector by the creation of a professional dedicated Road Agency Formation Unit (RAFU) to manage and operate the road network until the establishment of a fully fledged Road Agency in 2002. In addition, the IDA-TRP completed in December 2000, supported capacity building of the local construction industry by conducting training of contractors and creating business opportunities for local participation. Program development objective and Program phasing 26. The Road Development Program was developed as an IDA-finance Adaptable Program Lending (APL) instrument. IDA Credit for Phase I Project (worth US$ 90.98 million) was approved by the Bank in June 1999 and the Development Credit Agreement between Government and IDA was signed in November 1999. 27. The primary objective of the Program is to improve access to rural and economically productive areas by removing major constraints to transport services on the country's road network. The Program would also support actions aimed at further strengthening of the road sector management. The Program supports the implementation of the RSDP by supporting the rehabilitation of priority links of the national trunk roads network and feeder roads to be upgraded or rehabilitated in selected districts. The Program's development objectives will be achieved with steady progress over a six-year period, and would include the following phases: - 87 - Phase 1: Upgrading of two priority national roads, Busunju-Kiboga-Hoima (143km) and (RDPP1) Karuma-Pakwach-Nebbi-Arua section: Pakwach-Arua (130km), and related construction supervision, Carrying out a number of sector policy and management studies, including analytical work for feeder roads policy and strategy, (November 1999-2004); Phase 2: Upgrading of national roads to paved standard: Karuma-Pakwach-Nebbi-Arua section: (RDPP2) Karuma-Pakwach (108km), and strengthening the national road Katunguru-Kasese-Fort Portal-Kilembe Road (155 km), and related construction and supervision. Implementation of phase I of the National Road Safety Action plan; Preparation of the National Transport Master Plan; and Pilot project on use of new materials for stabilization of low cost roads (July 2001-June 2006). Phase 3: Upgrading of national Roads to paved standard: (RDPP3) Kampala-Gayaza-Bugema-Zirobwe-Wobulenzi (72 km), and Kapchorwa-Suam (85 km); Upgrading of about 300 km of selected feeder roads to national roads standard; construction of new Road Agency headquarters; and rehabilitation/regravelling of Atiak-Moyo road (92 km) (March 2002 - June 2006); and Phase 4: Rehabilitation and maintenance of about 1,000 km of selected feeder roads to be (RDPP4) identified by the National Feeder Roads Study to be carried out under RSISTAP (June 2002 - December 2006). Project development objective 28. The objective of the Road Development Program, Phase 2 Project (the Project) is to improve access to rural areas and economically productive areas and to gradually continue to build up road sector planning, design and program management capability, as well as road safety management. The Project comprises (i) upgrading and strengthening of the two high priority national roads; (ii) improvement of safety at selected roads black spots, and the associated, road safety enforcement and management; and (iii) pilot studies of innovative technologies and non-conventional materials in construction of low-traffic volume roads, and consultancy services for the design and construction supervision of a future proposed Road Agency headquarters building. The Phase 2 Project objectives complement the objectives of the Phase I Project, in meeting the overall objectives of the Program. Key performance indicators 29. The key performance indicators include increased industrial and agricultural activity; reduced travel time; and reduced transport and vehicle operating costs over the national road network. Improvement and integration of the national road network under the Program is subject to an appraisal process aimed at evaluating its technical feasibility and economic viability, as well as to leam from previous phases. Trigger indicators will be used to assess readiness for integration, early identification of risks, and implementation of corrective measures before undertaking subsequent phases of the Program. Indicative Financing Plan 30. IDA would allocate an amount of US$ 282 million in support of the implementation of the four phases indicated above. The funds would be progressively committed under a succession of four Credits as determined by progress in the program implementation. The Credits would support the implementation of - 88 - each of the four phases indicated above. The corresponding indicative financing plan is shown in Table below. Indicative Financing Plan for the Road DeveloDment Phase IDA NDF GOU Total Estimate US$ m US$ US$ m US$ m Imolementatio Period Phase 1 90.98 - 28.96 119.94 1999-2004 Phase 2 64.55 8.90 23.55 97.00 2001-2006 Phase 3 100.40 - 33.45 133.55 2001-2006 Phase 4 26.25 - 8.75 35.00 2002-2006 Total 282.18 8.90 94.41 385.49 On 282 9 94 385 Note: Costs include physical and price contingencies Conclusion 31. The Governments medium term strategy hinges on the promotion of cheaper, efficient and reliable transport services as the means for providing effective support to increase agricultural and industrial production, trade, tourism, social and administrative services. This would ensure an efficient transport sector and would play a critical role for the development of an integrated and self-sustaining economy to promote growth in Government's strategy of poverty eradication and economic integration of the country as a whole. 32. In addition to the substantial support already provided through earlier programs, by supporting Government in the Road Development Program, the World Bank would be promoting the above Government's policy. - 89 - Additional Annex 12 Uganda - Road Development Program Project, Phase 2 Summaries of Environmental Impact & Socio Economic Assessment Reports Karuma-Pakwach-Arua Road, Karuma-Pakwach Road Section 1. Introduction An environmental impact assessment (EIA) has been undertaken in order to identify the likely beneficial and detrimental environmental and social consequences that may arise as a result of the upgrading of the existing gravel road from Karuma to Pakwach to Arua to bitumen paved standard. This EIA has been carried out with the primary aim of recommending appropriate actions to mitigate any adverse effects on the physical, biological and human environment Part of the project road passes through the northern part of the Murchison Falls National Park (MFNP) and as a consequence the project was classified as Category A for environmental and social impact analysis. Ugandan EIA guidelines for carrying out Category A studies as well as those contained in the World Bank Operational Directive 4.01: Environmental Assessment - October 1991, have been followed. In addition, a certificate of approval of the environmental assessment has been issued by the National Environment Management Authority (NEMA). The conditions for approval were integrated into the assessment and the management and monitoring plans. An environmental and social monitoring plan has been developed outlining the nature, location and methodology of monitoring that will take place during the construction and operation phases. An evaluation has also been made of the bodies/offices designated to supervise the monitoring tasks. 2. Project Description The aim of the project is to construct a high standard bitumen surfaced road to replace the existing gravel road connecting Karuma to Pakwach, Nebbi and Arua. The existing route is essentially well engineered and generally fits well into the undulating topography. As a result there is no engineering requirement to design any major road realignments. The Karuma to Pakwach section of road is approximately 107 km long. The first 42 km of the road lies just within the north-east boundary of the Murchison Falls National Park. The existing road surface is typically rough and deeply rutted in places. Road upgrading involves construction of a carriage-way 6m wide with paved shoulders 1.5 m wide Typically the existing road reserve is sufficiently wide to allow construction of the upgraded road without acquiring any additional land. The section through the MFNP is however, the narrowest section of the existing road and will require some additional land for upgrading. In general, the new road will follow the existing alignment as closely as possible, which will minimize the amount of cut and borrow material required to upgrade the road. The upgraded road will also incorporate greatly improved and deepened side drainage. Covered road drains will be constructed in settlements. The programmed start date for construction of the works is the beginning of the year 2001 (Phase 1). The road project will be constructed as four separate contracts. Phase 1 comprises of Pakwach to Nebbi (54km) - 90 - and Nebbi to Arua (76km). The Karuma to Olwiyo (53km) and Olwiyo to Pakwach (54km) sections wi1l be constructed during Phase 2. 3. Alternative Routes around Murchison Falls National Park A section of the project road between Karuma and Olwiya passes through the northern edge of the MFNP and separates approximately 4% of the area of the park, which has a total area of 3,860 sq. km. The area of the MFNP to the north of the existing road was until quite recently sparsely inhabited. Consequently there has been a very low density of game in the area of many years. This has been exacerbated recently by the presence of security forces (there are now less than 10 wild mammals per km2 according to a 1997 survey). The assessment of the impact of constructing a high standard bitumen road through a section of National Park is considered to be a key environmental issue associated with the upgrading works. The engineering and environmental studies have therefore reviewed the possibility of realigning the section of road in the Park outside the northern boundary. Two alternative alignments, which do not encroach on the MFNP, were selected for detailed consideration along with the existing alignment. The first alternative route runs along the line of the ridge to the north of the Adibu River and the second pursues a route through the valley immediately to the north of the river. The benefits and potential adverse impacts of realigning Karuma to Olwiyo road outside the MFNP boundary or along the existing alignment were examined. The studies concluded that the potential adverse impacts associated with the construction of new alignment (through predominantly undisturbed natural habitat) are significant, not least because it will encourage ribbon development along the Park boundary with possible poaching and firewood collection problems in the Park. it was recommended that the existing route through the Park is upgraded, but that well defined mitigation measures are implemented to control construction activities and vehicle speeds. These mitigation measures will be developed and agreed with the Uganda Wildlife Authority and MFNP authorities. Particular care will need to be given to controlling and restricting the extraction of construction materials, construction of camp development, and restoration of construction sites to natural habitat. A key mitigation activ:ity will also be control of vehicle speeds and road signing to limit the occurrence of wildlife kills as well as providing some support to UWA for monitoring impacts of project activites. 4. Socio-economic and Cultural Environment The main source of household livelihood in the project area is predominantly subsistence farming. An average of 80% of the total households grow various crops on small-holdings using rudimentary methods and relying on family labor especially women and children. Incomes from activities such as petty trading and formal employment typically are used to augment the assured income from subsistence fanning. The project area is potentially a highly productive agricultural region, which will greatly benefit from the upgraded road. Improvement to the project road will greatly improve access and trade to hitherto remote and less developed parts of the West Nile region. Improved access to markets will make it worthwhile for farmers to invest in traditional agriculture cash crops (cotton , tobacco etc). - 91 - At present visits to the best equipped health facilities is restricted by road transportation difficulties that will be alleviated through the road upgrading. Literacy levels in the three districts of the project area are low. Literacy is expected to increase as a result of the Government's Universal Primary Education (UPE) Program. With improved accessibility and increased literacy due to the UPE program, the number of unemployed youths is expected to decrease. As a special group, women will be affected in a number of ways, by the proposed road upgrading. The positive impacts include: improved mobility to health care facilities and markets; increased income from their produce; improved job opportunities; increased dealings with other areas of the country and their women's groups. Women, may experience some negative impacts such as a reduction in the availability of firewood. The project area supports a number of intemally displaced people and refugees from Sudan and the Congo. The upgrading of this road will greatly improve accessibility to the refugee camps and protected areas for relief agencies. The road has long been a problem to relief organizations dealing with refugees in northern Uganda. Investigations show that this project will not directly affect any known sites of archaeological or cultural importance. Also there are no resettlement works involved. 5. Environmental and Socio-economic Impacts and their Mitigation Bitumen sealing and upgrading the existing Karuma to Pakwach to Arua road will be associated with some minor adverse social and environmental impacts. However, implementing appropriate mitigation measures as summarized below will minimize these undesirable impacts: Land take and Material Sources: The upgrading of the project road, which will be almost entirely restricted to its existing alignment, will involve very little additional land take. The area traversed by the road is sparsely populated and there is not expected to be a need for any resettlement. The majority of the project lies within the road reserve (right of way), which will be sufficiently wide to construct the road without acquiring additional land. In places in the National Park, trees are to be found within the road reserve. Clearly the National Park landscape must remain as little affected by human intervention as possible, which will be best achieved by tree preservation. Therefore wherever possible trees within the reserve will be left intact. Elsewhere, outside the National Park, crop cultivation may have encroached into the road reserve. Adequate compensation will be paid for any crops affected by the road upgrading and borrow pit development. Borrow pits and quarries will be operated in accordance with a management plan that ensures environmentally sympathetic development, use and reinstatement of the land. Spoil materials generated during the upgrading works wi1l be placed in worked out borrow areas when possible swamps will not be filled in without consideration for the impact on the local wetland ecology. Proposals for the development of construction material sources in the MFNP were forwarded to Uganda Wildlife Authority (UWA) in August 1999 for their review. The UWA requested that an EIA be prepared for materials extraction in the MFNP. Site specific details of materials extraction proposals in the MFNP along with provisions for environmental protection and mitigation have been prepared and accepted. All material sources will be operated in accordance with a management plan to be agreed between the contractor and the resident engineer in advance. Each plan will include: - 92 - * arrangements for consultation with the farmer/land-user, and otier affected parties; * the extent of each pit/quarry should be marked on the ground; a compensation agreement must be signed with the farmer/land owner, access arrangements must be agreed; * a working plan must be agreed, giving an outline of the direction, timing and depth of works; * a reinstatement plan must be agreed, giving details of the final profile, method of achieving the final profile, drainage and sediment control, re-soiling and re-vegetation measures. Pollution of Water Courses and Drainage: The most likely source of water course pollution is from loose soil being washed into rivers and streams. This hazard is not thought to be serious, but appropriate precautions will be implemented to prevent soil, lime or fuel pollutants from entering water courses. For example, if there is a risk of serious pollution, the engineer will instruct the contractor to construct silt traps to address the problem. Erosion of Earthworks Slopes: Previous experience in the project area shows that climatic and other conditions are favorable for natural - re-vegetation of slopes. The contractor's responsibilities for re-vegetation should if possible, extend over two growing seasons to ensure full establishment Construction Camps: Though covering a relatively small area, contractor's camps can cause significant environmental damage for a considerable time if not controlled. The major causes are pollution (due to all forms of waste), indiscriminate fuel wood collection, soil erosion, spillage of oils and fuel, land take, dust noise of construction traffic. Many of the impacts can be prevented or mitigated. The contract documentation will make clear the contractor's responsibilities with respect to the operation and reinstatement of construction camps and workshops. In MFNP construction camps will be located on the site of the present army camps. The will help to reduce environmental damage and will provide additional security. Road Safety: Improvement of the road will encourage more traffic and higher vehicular speeds. A major part of the traffic will be long-distance haulage trucks to and from southem Sudan and eastern Congo. Increased traffic speed due to a better standard of road will have an effect on animals within the National Park and on road safety for pedestrians, cyclists, livestock and their owners. The existing road has a poor safety record therefore particular attention has been given to designing measures that will increase road safety along the rehabilitated road. The main safety improvements include: * road widening and improved junction lay-outs * provision of bitumen sealed shoulders, bus bays and parking spaces in settlements * improved road signs and road marking * all new bridges will be constructed with 1.5 meter wide raised footpaths on both sides of the carriage-way Proliferation of Disease: Spread of diseases such as AIDS and other infectious diseases along the project road could have a significant social impact. Strengthening the medical facilities and improving people's awareness based on current active programs, will help in reducing the rate of infection. The level of awareness in Uganda with regard to unproved health is now relatively high, therefore disease control is improving. - 93 - Scarcity of Fuelwood and Roadside Trees: In the vicinity of settlements fuelwood consumption along the project road is likely to increase when it is upgraded. The main reason being that new and enlarged Wrading centers are likely to develop along the road. Since electric power is not widely available, these communities will use fuelwood for most of their energy requirements. The end result will be that the now well-vegetated areas along the proposed road will be targeted for charcoal production. Strengthening afforestation programs and supporting the use of fuel saving cook owVe Owls #pOtfvWy oon*uw towmdv Xc mitissoi of ineeassed fulwood demand. It is proposed that a program of tree planting is implemented under the contract. Roadside tree planting will have the following objectives: mitigation for unavoidable removal of trees; to enhance the landscape and possibly mask construction activities such as quarry development; to enhance urban environments; and to prevent soil erosion on susceptible natural and cut slopes. Provision has been made for the planting of 2,000 trees between Karuma and Pakwach. Avenue planting will be inappropriate in the National Park. Tree planting will therefore be primarily restricted to borrow pit sites, where locally indigenous trees should be placed. The cost of planting, protection and maintenance of trees over the period of the construction contract is estimated at $ 12 per tree. 6. Environmental Management Plan Many of the recommended mitigation measures are simply good engineering practice and should not be considered as "extras to the construction cost. Areas of expenditure for mitigation and monitoring include: compensation for land take, loss of crops and resulting income; reinstatement of borrow pits and quarries; vegetation of earthworks slopes; establishment, management and reinstatement of contractor's camps; provision of road safety measures; road safety education; tree planting; and monitoring team fees, subsistence and transport costs. Mitigation measures that can be implemented as part of the construction contracts will be provided for under the Contracts. Where appropriate, clauses will be written into the contract documents that ensure that the contractor is aware of his responsibilities and enviromnental controls. The main "extra" contract cost will be for tree planting ($ 24,000) which is included as an ancillary work item in the breakdown of construction costs. It is expected that each contractor will need to allow up to about US $ 70,000 for material source reinstatement which he will include in his build up of construction rates. A significant cost will be associated with the monitoring of mitigation measures. There is a requirement for a full-time monitor who will be based in Kampala to liaise with a ful time environmental / social expert on each of the four contracts who will be part of the Resident Engineer's staff on site. It is recommended that this monitor is supported by three full-time district liaison officers. The environmental/social monitoring team will work closely with the engineer, the contractors, and members of the local communities that may be affected by the road rehabilitation works. The monitor will liaise with NEMA, UWA, MOWHC and all interested stakeholders. Assuming Phase 2 starts 12 months later than Phase 1, the full time expert should therefore serve a 5 year period on the phased construction. Table 1 summaries the costs associated with environmental monitoring during Phases 1 and 2. The monitoring costs for the two contracts forming Phase 2 (Karuma to Olwiyo and - 94 - Olwiyo to Pakwach) are considered to be 50% of the total cost. 7. Conclusion A comprehensive management plan has been proposed that is designed to enable effective environmental and social monitoring throughout the project cycle and to facilitate effective implementation of measures required to mitigate potential negative impacts. Consultations with local representatives, women's groups and youth groups has shown that upgrading to bitumen surfacing of the Karuma to Pakwach to Arua Road is very strongly supported. Indeed, it is thought to be long over due because the West Nile region has no good road connection to Kampala (unlike other regions). Undesirable impacts are considered to be of little significance by comparison to the major benefits expected to arise from upgrading the road. The environmental management/monitoring plan will be implemented and monitored in accordance with a certificate of approval issued by NEMA in May 2000. A cost estimate has been prepared for environmentalsocial monitoring (see Table 1 below) which totals US $ 981,000 for supervision of the 4 contracts over a project period of 5 years. This amounts to a cost per contract of approximately US $ 250,000. These costs should be included in the design and supervision item in the breakdown of construction costs. Complete details of the environmental and social management are included in the final environmental and social impact assessment study. Table 1 Estimated Costs for Environmental/Social Monitoring 1) Full-Time Expert US $ Full-Time Expert @ $6,000/month for 60 man-months 360,000 Accommodation in Kampala @ $3,000/month for 60 man-months 180,000 Transport and travel costs @ 50% 180,000 Sub-total 720,000 Contingency 15% 108,000 Full-Time Expert Total $ 828,000 2) Support for Full-Time Expert U Shs'000 4 Liaison Officers (one for each contract) @ 800,000/month for 36 115,200 man-months Transport and travel costs 50% for 36 man-months 57,600 Sub-total 172,800 Contingency 15% 25,920 Support Total UShs 198,720 Support Equivalent in US$ (1$ = 1,300 Ushs) $ 153,000 - 95 - Uganda - Road Development Program Project, Phase 2 Summaries of Environmental Impact & Socio Economic Assessment Reports Katunguru-Kasese-Fort Portal, Kasese-Kilembe & Equator Roads Section 1. Introduction The works under this project will comprise of on-line improvements focussed on the following activities from Katunguru to Fort Portal via Kasese, from Kasese to Kilembe, and Equator road: reconstructing, strengthening and sealing of existing carriageways, and shoulders; * localized widening of the carriageway within the current road reserve; * sealing of verges; * clearing of ditches; * replacement of three bridges; and * repair of existing, and construction of additional, drainage infrastructure. Construction is expected to extend over 2-3 years and employ 2-300 men. The works will be undertaken in three packages using a combination of manual labor and mechanized plant. Various sites have been identified for the sourcing of murrum and sand and for spoil disposal. Several work camps will be required as well as storage areas along the project roads. Temporary land take will also be required for working widths, diversions and parking/storage areas. In general these will be accommodated within the road reserve. An environmental and social monitoring plan has been developed outlining the nature, location and methodology of monitoring that should take place during the construction and operation phases. An evaluation has also been made of the bodies/offices designated to supervise the monitoring tasks. In addition, a certificate of approval of the environmental assessment has been issued by the National Environment Management Authority (NEMA) in October 2000. The conditions for approval were integrated into the assessment and the management and monitoring plans. 2. Summary of Findings Effects on the biological and physical environments: Since no realignments or new sections of road are proposed, the effects of the proposals on the physical and biological environments will be relatively minimal. However, the route does pass through the Queen Elizabeth National Park (QENP), which is a nationally designated area and is therefore particularly sensitive to environmental impacts during rehabilitation and subsequent use of the road. The engineering works associated with the rehabilitation of the three sections of road considered in this study are likely to comprise on-line improvements and localized widening within the current road reserve. In addition, for the largest section of improvements (Katunguru to Fort Portal) the rehabilitation is unlikely to increase the number of vehicle movements that would otherwise occur since it is not changing the nature of the road but rather mininiizing the need for ongoing intensive maintenance. Therefore, the environmental effects of such proposals will be relatively minimal. In addition, outside the Park there may be potential for some environmental impacts, particularly during the construction period. The key findings are summarized below. - 96 - Queen Elizabeth National Park: During construction, the main source of impacts are likely to be associated with the presence of a workforce, the results of which may include poaching, removal of firewood, increased fire risk, inappropriate waste disposal etc. In addition, there may be general disturbance to wildlife due to construction activities and the potential for spills etc. during work activities. The land take associated with the needs for a working width greater than the existing road pavement, local diversions, extraction of murram and disposal of spoil could also threaten the resources within the Park. In the longer term the main threat to the Park will arise from an increased risk of road kills as a result of the high speeds of cars traveling on the straight section of road through the Park. At night this problem would become compounded by the blinding effect of headlamps on animals. The potential for road kills is considered to be the single greatest threat presented by the current engineering proposals and the recommended mitigation measures (i.e. measures to reduce speed) are therefore the most important ones that will need to be incorporated into the design to make it environmentally acceptable. If these are not implemented it is considered that the scheme may have a considerable detrimental effect on the Parks resources and integrity. Other long term effects could result from interruption of views across the road as a result of the creation of embankments and spoil disposal, severance of crossing points through the creation of deep ditches and disturbance to visitors to the Park as a result of increased traffic movements and speeds. It is considered that such effects could be avoided or reduced to acceptable levels through the incorporation of appropriate measures. These have been discussed in the main body of the report but the key ones include: * accommodating the construction workforce away from the QENP; * ensuring adoption of appropriate work practices through their specification in a construction management plan, contract documentation and on-site monitoring; * no road widening where the road passes within the Park; no diversions, spoil disposal, extraction of murram or aggregate within the Park; * reinstatement of any temporary land take required for increased working width and adoption of appropriate slopes on shoulders to avoid erosion; * reduction of vehicle speeds within the Park through the introduction and maintenance of rumble strips and speed bumps and clear sign posting; and * construction of deceleration lanes at the three main intersections within QENP would also help reduce the risk of accidents in the Park. Effects on social, cultural and economic resources: Outside the Park area key impacts are likely to be associated with effects on local communities. While it is anticipated that any road widening or temporary requirement for working widths will be within the existing reserve, there could be a requirement for temporary land take at certain location for local diversions, working width for works, storage areas etc. It is important that appropriate planning is made for such land take and that commensurate compensation is made for any temporary land loss or loss of crops. In addition full reinstatement should be undertaken following completion of works. Although considered unlikely, if the need for any realignment of sections of road is identified, there is potential for detrimental environmental effects associated with permanent loss of agricultural land. In the longer termn, faster traveling vehicles could present a threat to other road users including bicycles and pedestrians. - 97 - Various mitigation measures have therefore been recommended and include: informing affected communities and farmers of nature and timing of works; identification and clear definition of any temporary land take required, assessment of environmental consequences of such land take, modification if appropriate to avoid affecting sensitive resources; agreement reached prior to commencement of works on levels of compensation, method of reinstatement and monitoring to ensure this is undertaken; environmental input in the selection of borrow pits, quarries and disposal sites, methods of extraction/disposal as well as in plans for their reinstatement and proposal of compensation and mitigation measures to be undertaken prior to completion of the detailed design; placement of speed bumps and signs at sensitive areas like towns, schools etc.; and reinstatement of access points to roadside properties. 3. Potential Beneficial Effects Although the rehabilitation works has potential, if inappropriately undertaken, to present a threat to the environment, there are also considerable benefits to be gained. These include: * reduced risk of erosion and risk of malaria as a result of improved road drainage; * sealing of verges in areas where traffic movements could pose a risk to cyclists; * reduction in frequency of maintenance activities and hence disturbance to flora and fauna within the QENP, to human communities adjacent to the road and road users; * opportunity to apply a consolidated approach to design of the highway and control of vehicle movements through the Park; for example, through the development of a strategy for placing and maintaining of signs and speed bumps and for designing new access roads to Park from the national road; e opportunity 'o introduce safety measures in the vicinity of towns and settlements e.g. speed controls, sealed verges, signs etc.; and * economic benefits through provision of an improved and reliable infrastructure to transport passengers and goods. This should encourage economic activity and also, in the longer term, may' result in additional community benefits e.g. improved access to schools, medical centers etc. 4. Environmental Management Plan An environmental management plan has becn prepared which itemizes the required mitigation measures and identifies the agencies responsible for implementing and monitoring these measures during design, construction and operation of the proposed works. The monitoring requirements have also been determined. Provisions for such measures will be included in tender documents and the construction management plan. An overview of the responsibilities, resources available, capacity of agencies involved for environmental management and monitoring is included. Areas for enhanced capacity, increased resources and interagency co-ordination are also identified. In particular, the implementation of an environmental liaison unit within the MOWHC, appointment of an environmental manager in RAFU and the establishment of a working relationship would benefit the environmental management for this operation as well as for future operations. - 98 - 5. Consultation Consultation has been undertaken with statutory bodies and specific interest groups. These included LIWA in order to determine specific practices during construction within the QENP, and to agree locations for speed bumps and signs and issue other restrictions within the QENP. In particular, early consultation was undertaken with the UWA regarding their proposed changes to the Park access from the national road. Consultation was also undertaken with representatives of local government to determine and agree proposals for compensation, signs and speed control measures in towns, etc. If land loss is likely to be an issue (which is only likely to be the case there are realignments) then public consultation may be necessary amongst affected communities. There is also ongoing liaison between engineering and environmental teams to ensure that issues continue to be identified and addressed as they occur. The adoption of such an iterative approach is ensuring an environmentally acceptable solution. 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