pemba-montepuez road rehabilitation project

SCCD: G.G.

AFRICAN DEVELOPMENT FUND

PROJECT COMPLETION REPORT

PEMBA-MONTEPUEZ ROAD REHABILITATION PROJECT

REPUBLIC OF MOZAMBIQUE

INFRASTRUCTURE DEPARTMENT ONINNORTH, SOUTH AND EAST REGIONS JANUARY 2005

EQUIVALENTS AND ABBREVIATIONSCURRENCY EQUIVALENTS

Appraisal (March1997): 1 UA = MZM 16,359.7PCR (December 2004): 1 UA = MZM 30,696.6

WEIGHTS AND MEASURES

1.00 meter (m) = 3.281 ft.1.00 kilometre (km) = 0.621 mile1.00 square kilometre (km2) = 0.386 square mile (mi2)1.00 hectare (ha) = 2.471 acres1.00 kilogram (kg) = 2.205 lbs.

FISCAL YEAR : 1st April - 31st March

ABBREVIATIONS

ADB = African Development BankADF = African Development FundADM = Aeroportos de Mozambique (Mozambique Airport Authority)AADT = Average Annul Daily TrafficBPD = Banco Popular de DesenvolvimentoCFM = Caminhos de Ferro de Mozambique (Mozambique Railways)DNEP = Direccao Nacional de Estradas e Pontes (National

Directorate of Roads and Bridges)DNPCF = Direccao Nacional dos Portos e Cominhos de Ferro (National

Directorate of Ports and Railways)DNTR = Direccao Nacional de Transportes Rodoviarios (National

Directorate of Road Transport)ECMEP = Empresa de Construcao e Manutenacao de Estradas e Pontes

(Provincial Road and Bridge Construction and MaintenanceMaintenance)

ERP = Economic Rehabilitation ProgrammeESRP = Economic and Social Rehabilitation ProgrammeGOM = Government of MozambiqueICAO = International Civil Aviation OrganisationICB = International Competitive BiddingIDA = International Development AssociationLAM = Linhas Aereas de Mozambique (Mozambique Airlines)MICOA = Ministry of Coordination of Environmental AffairsMOPWH = Ministry of Public Works and HousingMTC = Ministry of Transport and CommunicationsNRZ = National Railways of ZimbabwePOL = Petroleum, Oil and LubricantsROCS = Roads and Coastal Shipping ProjectRSA = Republic of South AfricaUNDP = United Nations Development ProgrammeWB = World Bank

TABLE OF CONTENTSPage

Project Matrix, Basic Project Data, Executive Summary, (i-vii)

1. INTRODUCTION 1

2. PROJECT OBJECTIVE AND FORMULATION 2

2.1 Project Objective 22.2 Description of the ADF Component 22.3 Formulation, Evaluation and Approval 2

3. PROJECT EXECUTION 3

3.1 Effectiveness and Start-up 33.2 Modifications 33.3 Implementation Schedule 43.4 Reporting 43.5 Procurement 43.6 Financing Sources and Disbursement 5

4. PROJECT PERFORMANCE AND RESULTS 7

4.1 Overall Assessment 74.2 Operating Results 74.3 Training 74.4 Performance of Consultants, Contractors and Executive Agency 74.5 Conditions/Covenants 84.6 Economic Performance 8

5. SOCIAL AND ENVIRONMENTAL IMPACT 10

5.1 Social Impact 105.2 Environmental Impact 11

6. PROJECT SUSTAINABILITY 11

7. PERFORMANCE OF THE BORROWER AND BANK 12

8. OVERALL PERFORMANCE AND RATING 13

9. CONCLUSIONS, LESSONS AND RECOMMENDATIONS 13

9.1 Conclusions 139.2 Lessons Learned 139.3 Recommendations 14

This report was prepared by Messrs. H. Nyame-Mensah, Chief Transport Economist, ONIN.3, E.R. Lwason, ConsultantTransport; Engineer and K.S.H. Rao, Consultant Transport Economist, following their mission to Mozambique from 19th

November to 12th December 2004. Any inquiries relating to this report may be referred to either the authors or to Mr. J.RWAMABUGA, Division Manager, ONIN.3, Extension 2181.

LIST OF ANNEXES

Titles

1. Project Location Map

2 Modifications

3. Summary Comparison of Appraisal and Actual Implementation Schedules

4. Status of Implementation of Loan Conditions

5. Traffic Forecasts

6. Economic Benefit-Cost Analysis

7. Status of implementation Environmental Mitigation Measures

8. Performance Evaluation and Rating

9. Recommendations and Follow-up Matrix

10. Sources of Information

11. Borrower PCR

12. Executing agency Comments on the Bank’s PCR

MOZAMBIQUEPEMBA-MONTEPUEZ ROAD PROJECT

PROJECT COMPLETION REPORT: PROJECT MATRIXDESIGN TEAM:

Narrative Summary (NS)Verifiable Indicators (OVI)

Means of Verification AssumptionsAppraisal (1997) PCR (2004)

Sector Goal:

1 To improve the existingnational road network,thereby integrating the ruralpopulation living in remoteareas into the mainstream ofthe country’s social andeconomic life.

Increase in the total lengthof rehabilitated / bitumen ruralroads in the country.

Overall growth in traffic.

1.1 At the completion of therehabilitation of the projectroad, the length ofrehabilitated/bitumen rural roadincreased by 939 km.1.2 The overall traffic growthon the primary road network isabout 6% per year.

1.1 Annual roadconstruction statisticsfrom DNEP Roads.

1.2 Traffic statistics1.3 National IncomeStatistics.

(Goal to super goal)1.1 Adequate GovernmentCommitment.

Project Objective:

1. To improve road transportservice in the area served bythe road and the reduction ofmaintenance and vehicleoperating costs.

1. Traffic counts.

2. Socio-economic welfareimproved in the project area.

3. VOC to be reduced by 10 –50%.

4. Maintenance Budgets.

1. In 2003, the actual traffic onthe project road (550 VPD)exceeded the appraisalexpectation of 438 VPD.2 About 60-70 small shopscame up at two places along theroad, creating employmentopportunities to about 200 ruralpeople, especially women.3..Average reduction in VOC isabout 25%.4. Maintenance expenditureincreased from MZM 323billion in 2001 to MZM 592billion in 2004.

1. Regular traffic countsto be taken subsequentto the project’scompletion.

2. Review of annualstatistics from MOPWH.

3. Annual DNEPBudgets.

4. VOC surveys.

Project objective to Goal1. Maintenance carried out.

Outputs

1. Completely rehabilitatedroad between Pemba andMontepuez (210 km).

1. Actual length of completedroad.

1. Main road from Pemba toMontepuez is 204 km andincluding Pemba streets 210km of road rehabilitated.

1. Progress Reports fromBorrower and ADFSupervision Missions.

2. Borrower’s PCR

(Output to Project Objective)

1. Availability ofCounterpart Funds.

Activities

1.1 Award and commenceconsultancies and constructioncontracts.

2. Construct civil works.

Input/ResourcesInput (in UA millions)

COST ESTIMATES

Works 23.27SupervisionConsultant 1.66Audit 0.05Contingency 3.76Total 28.74

FINANCING PLAN

ADF 25.86GOM 2.88

28.74EIRR (%) = 13.20

Input/ResourcesInput (UA million)

Actual Cost *Works 23.87SupervisionConsultant 1.23

Total 25.10

Financing Plan

ADF 22.59GOM 2.51

Total 25.10

EIRR (%) = 17.51

1. ADF disbursementledger.

2. Progress Reports andTechnical SupervisionReports.

3. Annual Audit Reports.

4. Borrower’s PCR

.

(Activity to Output)

1. No costs overruns.

2. Competent consultantsand contractor selected.

* The World Bank financed project Audit cost as part of Roads and Coastal Shipping (ROCS) project.

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BASIC PROJECT DATA

1. Country : Mozambique2. Project : Pemba-Montepuez Road Rehabilitation Project3. Loan Number : 21001500007284. Borrower : Government of Mozambique5. Beneficiary : Government of Mozambique6. Executing Agency : DNEP (Ministry of Public Works and Housing)

A. Loan Details

Description Appraisal Actual

1. Loan Amount(UA million)

ADF – 26.00 ADF – 22.59

2. Service Charge 0.75% per year on amount disbursed and outstanding.3. Commitment Fee 0.50% per year on un-disbursed portion balance beginning

120 days after signature of loan agreement.4. Repayment Period ADF: 40 years

5. Grace Period ADF: 10 years

6. Repayment 1% of the principal each year from the eleventh to twentiethyear inclusive and 3% each year thereafter.

7.Loan Negotiation Date 2-3 June 1997

8. Loan Approval Date 25-06-19979. Loan Signature Date 25-09-1997

10.Date of Entry into Force 08-01-1998

B. Project Data

1. Project Cost

Item of CostProject Cost (in UA million)

Appraisal ActualForeign Exchange Component 25.09 18.26Local Cost Component 3.65 6.84Total Cost 28.74 25.10

2. Source of Finance

Source ofFinance

In UA MillionAppraisal Actual

F.E. L.C. Total % F.E. L.C. Total %ADF 25.09 0.77 25.86 90 18.26 4.33 22.59 90GOM - 2.88 2.88 10 - 2.51 2.51 10Total 25.09 3.65 28.74 100.0 18.26 6.84 25.10 100

Appraisal Actual

3. Effective Date of First Disbursement: August 1998 15th September 20004. Effective Date of Last Disbursement: July 2002 1st July 20035. Commencement of Project: December 1998 April 20006. Completion of Project June 2001 July 2002

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C. Performance Indicators

1. Cost Under-run : 12.7%2. Time Overrun :

* Slippage on Effectiveness (%) : Nil* Slippage on Completion Date : 13 months* Slippage on Last Disbursement : 12 months* Number of Extensions of Loan Validity Period : Nil

3. Project Implementation Status : Completed

4. List of Verifiable Indicators and Levels of Achievement :

Evaluation CriterionScore

Maximum Actual1. Time Overruns2. Cost Under run3. Adherence to Contractual Conditions4. Adequacy of Supervision and Reports5. Operational Performance

Total Score

44444

20

2433315

5. Implementation Performance* Institutional Performance : Satisfactory* Consultant’s Performance : Satisfactory* Contractor’s Performance : Satisfactory

6. Economic Internal Rate of Return (EIRR):

Appraisal : 13.20%Actual : 17.51%

D. Missions

Project Cycle M/YNumbers of

Persons Composition ManDays

1. Identification 03/1992 2 T.E., T.En 72. Preparation 10/1996 2 T.E., T.En 143. Appraisal 03/1997 3 T.E., T.En, Environmentalist 424. Launching 12/1997 2 T.E., T.En 145. Supervision 11/1998 2 T.E., T.En 14

05/1999 2 T.E., T.En 1408/1999 2 T.E., T.En 1408/2000 2 T.E., T.En 14

12/2001 2 T.E., T.En 1403/2002 2 T.E., T.En 14

6.PCR 11-12/04 3 T.E., T.En 21T.E: Transport Economist, T. En: Transport Engineer

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E. Bank Loan/Grant –Disbursements (UA million)

YearAs at Appraisal Actual

Amount Cum. (%) Amount Cum. (%)199819992000200120022003

0.1410.3110.743.381.29

-

0.640.481.995.0

100.0-

--

2.138.05

10.342.07

--

9.445.090.8

100.0Total 25.86 22.59

Balance Cancelled 3.27

F. CONTRACTOR

Name : CMC di Ravena (Italy)Contract Description : The Rehabilitation of the Road between

Pemba and Montepuez in the Cabo DelgadoProvince in Northern Mozambique

Date Contract Signed : March 2000Date Contract Terminated : July 2003Contract Duration : 40 monthsAmount : MZM 482,838,875,810.00

G. CONSULTANT

Name : BKS Global Ltd, PD Naidoo & Associates,ETENG Lda – Joint VentureWith BKS as lead consultant

Contract Description : SupervisionDate Contract Signed : September 1999Date Contract Terminated : July 2002Contract Duration : 34 monthsAmount : US$ 1,424,789.00

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EXECUTIVE SUMMARY

1. INTRODUCTION

1.1 In June 1991, the Government of Mozambique (GOM) organized a donor conferencein Brussels, Belgium under the patronage of the European Economic Community (EEC) tomobilize financial support for the implementation of the Roads and Coastal Shipping (ROCS)project. The World Bank played a major role in assisting the GOM in the preparation of theproject. The ADB was represented at the donors meeting and in 1992 and participated inROCS-1 by financing studies for the Pemba – Montepuez and Vanduzi – Changara roads.The feasibility and detailed engineering design reports completed in 1995, had recommendedthe rehabilitation of Pemba-Montepuez Road. The project was appraised in March 1997 by ateam of three experts comprising a Transport Economist, a Transport Engineer (consultant)and an Environmentalist. The loan conditions were negotiated and there were no issues ofdisagreement raised by the Bank or the Borrower concerning the project. The loan amountsof ADF: UA 26.00 million was approved on 25th June 1997, and signed on 25 September1997.

1.2 This PCR is based on the appraisal report, project files in the Bank, Borrower’s progressreports, supervision consultant’s Final Construction Report (FCR) and the Borrower’s PCR,interviews and site inspection conducted during an ADB mission to Mozambique in November-December 2004. The Borrower's PCR is on the file with ONIN 3.

Project Objective and Description

1.3 The objective of the project was to improve road transport services in the project areaas well as to reduce road maintenance and vehicle operating costs. The project, as designedat appraisal, comprised a) Construction works for rehabilitating 210 km of the Pemba-Montepuez Road comprising a 6.0 m wide bitumen standard carriageway with 1.5 m bitumensurfaced shoulders except for 8 km into Pemba township where the carriageway was to be 7.0m with 2.5 m bitumen surface shoulders, b) Consultancy services for pre-constructionservices and supervision of the works in item (a) above, and c) Audit services.

Project Execution and Implementation Schedule

1.4 The Ministry of Public Works and Housing was responsible for the execution of the roadrehabilitation works. Consulting firm provided supervision of civil works for the roadrehabilitation.

1.5 Completion of the road rehabilitation works was delayed 13 months compared to theappraisal forecast. The delay was due to slippage in loan effectiveness, delay in procuring thesupervision consultant, pre-contract services including design review, finalization of contractdocuments and the actual procurement process.

Project Costs and Financial Resources

1.6 The total project cost at appraisal was UA 28.74 million including contingencies, netof taxes of which UA 25.09 million was in foreign exchange. The actual cost of thecompleted Project was UA25.10 million, which is 12.7% less than the appraisal estimate.Though provision was made for project audit in the cost estimate, the World Bank underRoads and Coastal Shipping (ROCS) project financed the project audit.

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1.7 The project was jointly financed by ADF and GOM. The Bank was to contribute 100%of the foreign exchange cost (UA25.09 million) and 21% (UA0.77 million) of local cost. TheGOM was to contribute 79% (UA2.88 million) of the local costs. Overall, the ADF was tocontribute 90% and GOM 10% of the total project cost. Total disbursements under the loanamounted to UA 22.59 million, 87% of the approved loan amount and GOM disbursed UA 2.51million, which was 13 % less than the appraisal estimate.

Overall Assessment

1.8 In spite of the delays in project implementation – 13months delay for the completion ofroad rehabilitation objectives, well-designed 2-lane bitumen between Pemba and Montepuez hasfacilitated significant reduction in vehicle operating cost, travel time and road accidents.

Economic Performance

1.9 The traffic projection at appraisal has been revised duly reflecting current (2003) trafficcount of the MPWH. The current traffic on the project road has exceeded the appraisalprojection by about 25%. The recalculated EIRR is 17.51 % (Annex 6) is higher than the13.20% EIRR estimated at appraisal. This increase in EIRR is mainly due to the higher trafficlevels on the project road. This EIRR of 16.90% confirms economic viability of the investmentas compared to the opportunity cost of capital of 12%.

2. CONCLUSIONS, LESSONS AND RECOMMENDATIONS

2.1 Conclusions

2.1.1 Overall objective of the project has been achieved. The project has significantlyreduced road transport costs and passenger travel time on the Pemba – Montepuez road. Theroad is environmentally friendly and encourage safer driving habits and hence reduction inserious accidents. Though the increase in the scope of the work caused an increase in theoriginal contract amount, the final cost was within the overall appraisal estimate and hasgreatly enhanced the value and quality of the project.

2.1.2 The performance of the contractor depends amongst other things on adequate cash flow.Inadequate cash flow could lead to poor quality of work and the contractor abandoning theworks. In this case, the contractor gave formal notice to the Employer in accordance with theConditions of Contract to reduce his rate of work when his interim certificates were not paid for7 months. Executing this notice could have lead to claims for damages, interest on delayedpayment and extension of time for completion. However, the notice was not executed and theissue was amicably resolved (without any claims and interest payments) when the ANE agreedto a request by the Contractor for further Advance Payment and release of retention (uponlodging of the necessary sureties) to offset the accrued interest.

2.1.3 Delays in the Bank’s disbursements, which could form potential grounds for interestclaims by the contractors and consultants, should be avoided.

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2.2 Lessons Learned

2.2.1 Lessons from the project are:

a) During implementation of this project, late payments of the Contractor’s certifiedInterim Payment Certificates might have been avoided if the Bank had beenmonitoring the dates the Borrower made payments to the contractor. The lesson isthat the Bank as the major financial contributor of the project has the right know asand when a consultant or contractor is paid.

b) The Bank should take a proactive role in resolving disbursement issues so as toensure timely payments for future projects.

2.3 Recommendations

2.3.1 It is recommended that:

To the Bank

The Bank should sanction the Borrower if contractors, consultants and suppliers are notpaid on time as specified in the signed contract. Supervision missions and thedisbursement division should demand evidence of payments through monthlystatements.

The Bank should ensure timely processing and disbursement of invoices received fromthe Borrower.

To the Borrower

Regular routine and periodic maintenance should be carried out in order to protect theperformance of the pavement. Of particular attention is smoothing due to bleeding and /orleakage of diesel or molasses from tankers along the slow moving traffic lane next to theshoulder that may not visible. There is a possibility that molasses or diesel leakage mightoccur, which would cause the asphalt to soften and squeeze up above the aggregates. Thiswill result in a smooth shinny surface that would cause loss of skid resistance. Such areasshould be monitored continuously and damage repaired immediately.

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1. INTRODUCTION

1.1 The Republic of Mozambique is located on the east coast of Africa and has 2,515 km of shore line. Ithas a land area of 799,380 km2, of which 13,000 km2 are under Lake Niassa (Malawi). The country hasland borders with Tanzania on the North, Zambia, Malawi, Zimbabwe and Swaziland on the East and theRepublic of South Africa on the South. Total population of the country as per 2004 estimates was 18.96million and growing at an average annual rate of 2.4%. The country is generally made of coastal plain thatrises to the East (highest point Monte Binga – 2,436 m) near the border with Zimbabwe. Of the totalestimated 36 million hectares of cultivable land, only 10% is being actually cultivated. Mozambique seawaters are rich in fish and exports of fish and shells constitute about 35% of the country’s total exportearnings.

1.2 Priority rehabilitation of crucial transport infrastructure was one of the major focus areas ofGovernment of Mozambique’s (GOM) Economic Rehabilitation Programme (ERP) that was launched in1987 to revitalise the economy and correct its structural distortions. To this end, rehabilitation of rail-roadcorridors which would restore the foreign exchange earning capacity of the GOM was accorded very highpriority.

1.3 The transport system of Mozambique comprises four modes namely i) 25,340 km of classifiedroads, of which about 70% are in fair to good condition, ii) 3000 km of railway network of which 50% arein operation, iii) five international airports (Maputo, Beira, Nampula, Pemba and Vilankulos) and 14secondary airports, and one national airline (Linhas Aereas de Mocambique – LAM) and iv) three majorseaports (Maputo, Beira and Nacala) and 15 secondary and tertiary ports dotted along the 2,515 km coastline. During 2003, transport and communications sector contributed about 9 % to the country’s GrossDomestic Product (GDP).

1.4 The Pemba-Montepuez Road (210 km) links the port of Pemba on the coast with the town ofMontepuez. (Annex 1). Further, the eastern sections of this road connect Pemba port with its hinterlandwhich includes Namapa in Namupla province and Chiure, Ancuabe, Macomva, Quissanga, Meluco,Muidumba, Mocimboa da Praia and Mueda in Cabo Delgao province. Due to the civil war and insurgentactivities, the road was not properly maintained after 1975 resulting in deterioration of the pavement. Toassess the type and extent of rehabilitation measures required, the associated cost and economic viability,the GOM, in 1994-95, undertook (through a consultant) a detailed design (including update of feasibility)study financed by a grant from the African Development Fund (ADF) as part of Transport Programmeapproved in December 1992.

1.5 Since 1977, when the Bank started its operations in Mozambique, the Bank has approved (as ofJune 2004) 66 operations comprising 50 projects, 11 studies and 5 policy-based loans (PBL). The Bank’stotal commitments in Mozambique have aggregated to UA 837.71 million (net of cancellations as at 30th

June 2004). Major share of the Bank group’s commitments in Mozambique is accounted by theagriculture sector (33%), followed by multi-sector (23%), public utilities (19%) transport (16%), socialsector (8%) and industry (1%).

1.6 In 1997 (at project appraisal) the national road network consisted of 26,000 km comprising 5,000km of asphalted roads, 6,900 km constructed gravel roads and 13,800 km of earth roads. About 18% ofthe road network was good condition and about more than 33% was in a poor condition due to mainlyneglect of maintenance and the previous security situation.

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1.7 This PCR is based on the appraisal report, project files in the Bank, Borrower’s progress reportsand the Borrower’s PCR, interviews and site inspection conducted during an ADB mission toMozambique in November-December 2004.

2. PROJECT OBJECTIVES AND FORMULATION

2.1 Project Objective

2.1.1 The objective of the project was to improve road transport services in the project area as well asto reduce road maintenance and vehicle operating costs

2.2 Project Description

2.2.1 The project, as designed at appraisal, comprised the following components:

(i) Construction works for rehabilitating 210 km of the Pemba-Montepuez Road comprisinga 6.0 m wide bitumen standard carriageway with 1.5 m bitumen surfaced shoulders exceptfor 8 km into Pemba township where the carriageway was to be 7.0 m with 2.5 m bitumensurface shoulders.

(ii) Consultancy services for pre-construction services and supervision of the works in item(i) above, and

(iii) Audit services.

2.3 Formulation, Evaluation and Approval

2.3.1 In June 1991, the Government of Mozambique organized a donor conference in Brussels,Belgium under the patronage of the European Economic Community (EEC) to mobilize financialsupport for the implementation of the Roads and Coastal Shipping (ROCS) project. The World Bankplayed a major role in assisting the GOM in the preparation of the project. The ADB was representedat the donors meeting and in 1992 and participated in ROCS-1 by financing studies for the Pemba –Montepuez and Vanduzi – Changara roads, and rehabilitation of the Beira – Machipanda Road. Thefeasibility and detailed engineering design reports completed in 1995, had recommended rehabilitationof the Pemba-Montepuez Road.

2.3.2 The project was appraised in March 1997 by a team of three experts comprising a TransportEconomist, a Transport Engineer (consultant) and an Environmentalist. The loan conditions werenegotiated and there were no issues of disagreement raised by the Bank or the Borrower concerning theproject. The loan amounts of ADF: UA 26.00 million was approved on 25th June 1997, and signed on25 September 1997.

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3. PROJECT EXECUTION

3.1 Effectiveness and Start-up

3.1.1 The loan for the project was approved in June 1997 and the loan agreement was signed inSeptember 1997. Thus, there was no slippage in loan signature as compared to the normal limit of 180days for loan signature after Board approval. The loan was made effective in January 1998 with noslippage.

3.1.2 The project commenced on 14 April 2000 for the road rehabilitation works. There was a delayof 16 months when compared to the Appraisal forecast date of December 1998. The delay in the start ofconstruction works was due to the design review carried out by the new consultant appointed forsupervising the execution of the civil works. The original design was reviewed and a Design ReviewReport submitted during August 1999. The report recommended allocation of more of the total availablefunds to the eastern section (EN106) due to the substantially higher traffic volumes and less to the westernsection (EN242).

3.2 Modifications

3.2.1 During the project implementation, a new law was published by the GOM and gazetted in June1999, which required quality assurance, by an independent company for all de-mining operations. Thislaw (2 Suplemento ao Boletim da Republica, l Serie, Numero 23, de 10 Junho 10 Junho 199) had beenpublished after the bidding process; therefore the related cost was additional to the contract sum. G.B. De-mining Consultants were subsequently appointed for the quality assurance and commenced theiroperations in October 2000. The demining of the road continued until completion in June 2001.Thereafter only a skeleton team was retained on site for the clearing of further borrow pits and deviations.The sub-contractors were formally demobilized from site at the end of April 2002.

3.2.2 Two weigh bridges were constructed - one at the Pemba traffic control point and the other atSunate at approximately km 23. These sites consisted of an off-ramp and on-ramp to the main roadwith a 22 m long by 6.5 m wide concrete slab, offset to the main road, in between. The contract did notmake provision for the procurement and installation of the scales. These components were, however,procured and installed towards the end of 2002 after a request by the GOM.

3.2.3 Roads signs were specified to the standards of the SADC specification for an 80-km/h-designspeed. Sheet steel road signboards with steel tube supports were used throughout. Steel supports wereopted for in lieu of the specified timber due to the damage that may be caused by fires to timbersupports during the dry season if side slopes are not regularly mowed and maintained.

3.2.4 The following additional streets were constructed:

(i) The road from Pemba Airport to Nautilus Hotel(ii) The road from Nautilus Hotel to Freedom Square

(iii) The Montepuez main internal street

3.2.5 Due to the substantial deterioration since the design review of the condition of the existing roadfrom km 2 to km 43 (Western Section), an amended process was adopted for this section. The existingbase was down graded to a new sub-base and a new stabilized base constructed on top of the existing

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base. Light scarifying broke the existing surfacing and the existing shoulders reworked as new sub-base to effect the necessary road widening. A summary of modifications is presented in Annex 2.

3.3 Implementation Schedule

3.3.1 The appraisal forecast was that the project would be completed over a period of 42 monthsbeginning from December 1998 and terminating June 2002. Construction period anticipated was 30months. The project was however, completed over a period of 39 months commencing April 2000 andending July 2003, end of the defects liability period. Original contract period was 730 days but therewas an extension of the contract period of 90 days because of additional work and abnormal rain. Theimplementation schedule at appraisal and completion is shown in Annex 3.

3.3.2 The project was implemented by DNEP (Direccao Nacional de Estradas e Pontes) of theMinistry of Public Works and Housing which had the sufficient experience and capacity to manage theproject. The general consultants hired under the ROCS project financed by the World Bank and otherdonors further enhanced DNEP capacity. An engineer with the requisite qualifications and experiencewas appointed as full time coordinator for the project in order to ensure proper coordination.

3.4 Reporting

3.4.1 Pursuant to the provisions of the General Conditions of the Loan Agreement on submission ofreports, the GOM submitted a total of 24 monthly progress reports during the execution of the project.The project reports were a part of the project documents, which comprised: original detailed design,the design review report, all volumes of the contract documents, evaluation of claims submitted, thecontract addenda, Quality Assurance Plan, the Completion Report dated December 2002 (in 6Volumes) prepared by the supervisory consultant and the Borrower’s Project Completion Report datedOctober 2004 prepared by the executing agency. These reports were satisfactory in content and detail.

3.4.2 The Completion Report covered all the relevant sections of the contract documents and theBorrower’s PCR followed the Bank’s Operation’s Manual Format for the Preparation PCR to besubmitted by the Borrower. Annual audit reports were also submitted.

3.4.3 The purpose of the Quality Assurance Plan (QAP) was to create a site-based document with theaim of integrating the Contract and Engineer’s procedural systems into one common system, whichformed the basis and set guidelines for Quality Assurance processes on this Contract.

3.5 Procurement

General

3.5.1 The Bank’s procurement rules and guidelines did not create any problems for the GOM. Therules did not conflict with the national laws and procedures of the GOM and did not have any impacton start-up of the project. The GOM did not have any difficulty following the Bank’s rules ofprocurement nor did any problems occur during project implementation that related to procurementand suppliers.

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Consultancy Services

3.5.2 The supervision consultant was procured in accordance with the Bank’s Rules of Procedure forthe Use of Consultants. Prequalification was used to shortlist consultants. The selection procedure wasbased on a combination of technical quality with price consideration.

3.5.3 The consulting service for supervision was adjudicated to BKS Global Ltd., PD Naidoo andAssociates (Pty) Ltd. and Eteng Lda, Joint Venture, with BKS as the lead consultant in an amount ofUSD 1,104,260 for supervision and design review. The final amount was USD 1,424,789.00.

Audit Services

3.5.4 Audit services were to be procured following the Bank’s Rules of Procedure for the Use ofConsultants. The value of the contract being less than UA 350,000, the publication of theannouncement was to be limited to national and regional newspapers. The World Bank under theROCS project financed these services.

Works Contract

3.5.5 The civil works contractor was procured through International Competitive Bidding (ICB) withprequalification and the contract for the road rehabilitation was awarded to CMC DI Ravenna in theamount of MZM 363,670,079,790 which included a Value Added Tax (IVA) provision of 17%. Thefinal revised contract value was MZM 482, 838, 875, 810.

3.6 Financial Sources and Disbursement

3.6.1 Project Costs: The total project cost at appraisal was UA 28.74 million including contingencies,net of taxes of which UA 25.09 million was in foreign exchange. The actual cost of the completed projectwas UA25.10 million, which is 12.7% less than the appraisal estimate. Though provision was made forproject audit in the cost estimate, the World Bank under Roads and Coastal Shipping (ROCS) projectfinanced the project audit. A comparative analysis of the project costs as appraised and actual is shown inTable 3.1. The cost under-run for road rehabilitation work was mainly attributable to the competitiveprices obtained in procurement.

Table 3.1: Summary - Appraisal versus Actual Costs (UA Million)

ItemAppraisal Actual Actual - Appraisal

F.E. L.C. Total F.E. L.C. Total F.E. L.C. TotalRoad Rehabilitation 25.09 3.58 28.67 18.26 6.84 25.10 -6.83 +3.26 -3.57

Audit - 0.07 0.07 - - - - -0.07 -0.07

Total 25.09 3.65 28.74 18.26 6.84 25.10 -6.83 +3.19 -.3.64

3.6.2 Financial Resources: The estimated and actual expenditures (in UA terms) by source of financeare presented in Table 3.2. Though actual project cost was less by UA 3.64 million as compared to theappraisal estimates, the contribution of ADF (90%) and GOM (10%) as envisaged at appraisal,remained unchanged at project completion. The GOM had utilised 87% of the ADF loan amount Thebalance of ADF loan of UA 3.27 million (see table 3.2) has been cancelled. At completion, the overallproject cost was about UA 3.64 million less than the appraisal estimate (12.7%). The completed roadhowever, is well-designed and is adequate to cater to the current and anticipated traffic.

6

Table 3.2: Financing Plan - Appraisal versus Actual (UA million)Source of Finance Appraisal Actual Actual - Appraisal

F.E. L.C. Total % F.E. L.C. Total % F.E. L.C. TotalADF 25.09 0.77 25.86 90 18.26 4.33 22.59 90 -6.83 +3.56 -3.27GOM - 2.88 2.88 10 - 2.51 2.51 10 - -0.37 -0.37Total 25.09 3.65 28.74 100.0 18.26 6.84 25.10 100 -6.83 +3.19 -3.64

3.6.3 Disbursement: The loan funds were disbursed by direct method to the contractors and consultants.The slippage in the actual loan disbursement is broadly in line with the delay in project implementation.The loan amount, as per the appraisal schedule, was to be fully disbursed during 1998-2002. But due tothe delay in project implementation, the actual disbursement on ADF loan commenced in September 2000instead of August 1998 (as planned at appraisal). Table 3.3 presents a summary comparison between theappraisal and actual disbursement profiles.

Table 3.3: Appraisal Versus. Actual Bank Disbursement Profile (UA Million)

YearAs at Appraisal Actual

Amount Cum. (%) Amount Cum. (%)199819992000200120022003

0.1410.3110.743.381.29

-

0.640.481.995.0

100.0-

--

2.138.05

10.342.07

--

9.445.090.8100.0

Total 25.86 22.59Balance Cancelled 3.27

3.6.4 During the project implementation, the average disbursement time per application at the Bank was49 days (Table 3.4). This high average disbursement time was mainly due to huge delay in loanadministration that occurred for 12 applications received during the 2nd half of 2002. Slowness on the partof the GOM and some system problem encountered during shifting of treasury operations from Abidjan toTunis mainly contributed to these delays. In all 61 disbursement applications were received. Of this, 22applications (36%) were disbursed within 14 days of receipt of the application at the Bank, 37 applications(61%) were disbursed within 21 days, 42 applications (69%) were disbursed within 28 days and 49applications (80%) disbursed in less than 85 days. Disbursement time of the remaining 12 applicationshad spanned between 111and 226 days; resulting in an average disbursement time of 164 days for these 12applications. Average disbursement time excluding this aberration works out to be 20 days perapplication.

Table 3.4: ADF Actual Disbursement Time Profile

Time Taken for Disbursement at the Bank (x=Days) No. of Applications % Cum. %

X ≤ 14 22 36 36

15 ≤x≤ 21 15 25 61

22≤x≤ 28 5 8 69

40 ≤x≤ 85 7 11 80

100 ≤ X ≤ 226* 12 20 100

Total 61

Average No. of days/Application:a) Excluding the delays due to system problems: 20 daysb) Including the delays due to system problems: 49 days

* Delay due to SAP system problemSource: ADB Disbursement Ledgers

7

3.6.5 It can be seen from the above analysis that the Bank’s performance in terms of timelydisbursement was less than satisfactory. In fact the disbursement delays in certain cases were so huge itcould have provided a potential ground for the contractor for claiming interest charges from the GOM.

4. PROJECT PERFORMANCE AND RESULTS

4.1 Overall Assessment

4.1.1 The loan covenants /conditions were appropriate and valuable to the execution of the project.The success of the project itself is evidence that the loan conditions were prudent and no moreadditional conditions were necessary.

4.2 Operating Results

4.2.1 The Project road was successfully rehabilitated within the budget and contract schedule to anacceptable standard. The pavement, shoulders, paved footpaths, street lighting, traffic signs andsignals, drainage structures, service roads and other miscellaneous facilities provided were in goodcondition at the time of the mission’s visit. However, the importance of an effective road maintenanceprogramme cannot be overstressed. Appropriate and regular maintenance is recommended in order toextend the service life of the pavement and ensure sustenance of the improved road transport service inthe area served by the road and the reduction of maintenance and vehicle operating costs.

4.3 Training

4.3.1 Training is administered by ANE through its Training Division. Technical assistanceconsultants through workshops and seminars conduct upgrading of senior staff and mangers. Trainingof supervisors, foremen and general technicians is conducted partly at the Road Technical TrainingCentre in Chimoio and partly in the field.

4.3.2 In addition to the many courses on going, ANE have a reasonably well-staffed and functionalTraining Division together with an effective and credible Training Center at Chimoio. Training iscarried out within a framework of an overall 5-year rolling plan that incorporates training at theChimoio Training Centre, formal external scholarships for degree courses, short courses and studytours, technical assistance, etc.

4.4 Performance of Consultants, Contractors and Executing Agency

Consultants and Contractor

4.4.1 The contractor submitted the necessary sureties and insurance policies as required in terms ofthe contract, without undue delay and proceeded with mobilisation of his resources. Even though forthe greater part of 2001 the contractor had to deal with consistent late payment of his Interim PaymentCertificates but continued working normally without reducing his rate of work. Considering some ofthe other problems faced by the contractor such as; abnormal rainfall, breakdown of fuel offloadinginstallation in Nacala during July 2001 and the erosion of the spillway at Chipembe Dam, about 60 kmnorth-west of Montepuez, the Contractor achieved a high standard in the completed work within thetime restriction.

8

4.4.2 The Consultant was competent and performed well to the satisfaction of the Government andthe Bank.

Executing Agency(EA)

4.4.3 The technical performance of ANE was satisfactory as supported by the high quality ofcompleted road. However the financial management of the project was not satisfactory considering thecontractor had to endure 7 months with consistent late payment of his Interim Payment Certificates.This situation deteriorated to the extent that the contractor formally gave notice towards the end of2001 of reducing his rate of work as provided for under the contract. The notice was not executed as asolution was found.

4.5 Conditions/Covenants

4.5.1 The GOM fulfilled all the conditions precedent to the entry into force of the Loan Agreement withno time slippage. There were two conditions prior to entry into force of the Loan Agreement and two‘Other Conditions’ (Annex 4). These conditions though simple were important to the successful out comeof the project and included DNEP designating an engineer to act as the coordinator for the project and anundertaking that the measures for the protection of the protection and enhancement will be carried outduring the implementation of the project.

4.6 Economic Performance

Appraisal Expectations

4.6.1 At appraisal, the investment on rehabilitating the project road was evaluated using a “with” and“without” project scenario approach. The assessment of economic viability was based on EconomicInternal Rate of Return (EIRR). The vehicle operating costs (VOC) and various road maintenanceinterventions underlying the economic analysis were calculated using Highway Design and Maintenancemodel (HDM-III). The analysis was conducted using 1997 prices, assuming a 3-year construction period(1994-96) followed by 12-month defects liability period. A 15-year analysis period (2001-2015) wasassumed. For the project road, the base year (1994) traffic level was 260 vehicles per day (VPD), with60% cars/pickups, 40% medium & heavy vehicles. Based on the base year traffic levels, observed growthtrends population, agriculture production etc., the traffic projections were made for each year of the 15-year design period. The projected traffic was estimated to reach 385 VPD by 2001 (year of completion ofrehabilitation) and 1054 VPD by 2015 (last year of the design period).

4.6.2 The cost of rehabilitation included capital cost (excluding price contingency and transferpayments) and road maintenance (periodic and routine) cost. The benefits for the project consisted ofsaving in vehicle operating cost (VOC) and road maintenance cost resulting from the improved surfacecondition. Based on the comparison of economic costs and user benefits under “with” and “without”project scenarios, Economic Internal Rate of Return (EIRR) for the rehabilitated project road was 13.20%.With this level of EIRR, the investment was considered economically viable.

9

Recalculation of Economic Internal Rate of Return (EIRR)

4.6.3 According to the latest traffic count data of ANE, the annual average daily traffic (AADT) onproject road for 2003 was 550 VPD comprising 64% light vehicles, 36% medium heavy vehicles. Thecurrent traffic level has exceeded the expected traffic levels for the year 2003 as at appraisal (438VPD) by about 25%, which is mainly due to developments in tourism, trade and industry facilitated bythe rehabilitated road.

4.6.4 Available traffic count data since the completion of the rehabilitation of the road, thoughfluctuating over a wide range, has indicated an increasing trend, the average annual growth being12.8% as brought out in Table 4.1. This is a high growth rate and cannot be sustained over long-termhorizon of 15 years. A recent analysis of traffic growth on primary road network of Mozambique (July2002) has indicated an average annual growth of 6%, which is expected to reduce to 4.5% per year upto 2005 and thereafter stabilise around 3.5% per year. For the current exercise, annual growth rates of4.5% up to 2005 and 3.5% from 2006 onwards have been adopted for projecting the future trafficlevels (Annex 5). Based on these assumed growth rates the 2003 traffic level of 550 VPD has beenprojected to reach 876 VPD by 2016 (i.e. last year of the design life of the project road).

Table 4.1: Actual Traffic on Pemba-Montepuez Road(Number of Vehicles per Day)

YearCar/

Pick UpMDV HDV BUS Total

AnnualGrowth

2000 233 79 51 30 392

2001 312 116 59 27 514 31%

2002 330 102 39 32 502 -2%

2003 334 120 58 38 550 9%

Average Annual Growth Rate 12.8%

4.6.5 For recalculation of EIRR, the economic costs have been revised in the light of actualconstruction costs and economic benefits have been updated in line with the observed growth in trafficsince the completion of the project roads. The economic analysis was carried out in July 2002 prices byconverting the financial costs into economic terms. The actual construction and supervision economiccosts as well as the benefits emanating from the revised traffic forecasts formed the basis for reworkingthe EIRR. The HDM-III model has been used to calculate VOC and estimates of VOC are presented inTable 4.2. All the cost and benefit streams over the 15-year life of the project have been expressed in 2002prices and discounted to work out the EIRR.

Table 4.2: Vehicle Operating Cost – Economic(US$ per Vehicle Km – 2002 Price level)

Type of Vehicle Rehabilitated Road Existing RoadCar/ Pick Up 0.22 0.27MGV 0.43 0.60HGV 0.58 0.80Bus 0.38 0.56

4.6.6 Based on the above, the revised EIRR for the project road, which works out to 17.51%, confirmsthe economic viability of the completed project (Annex 6). The revised EIRR is higher than the appraisalEIRR (13.20%) mainly because of higher levels of traffic obtaining on the road vis-à-vis the appraisalforecasts.

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5. SOCIAL AND ENVIRONMENTAL IMPACT

5.1 Social Impact

5.1.1 Besides linking the Pemba port with Montepuez town, the Pemba-Montepuez Road connectsPemba port with its hinterland which includes Namapa in Namupla province and Chiure, Ancuabe,Macomva, Quissanga, Meluco, Muidumba, Mocimboa da Praia and Mueda in Cabo Delgao province.Discussions, during the site visit, with a cross-section of beneficiaries conclusively brought out thepositive impact of the rehabilitated road. Better road conditions coupled with the improved politicaland economic situation in the country contributed to increased levels of traffic on the project road.During 2003, average traffic level on the road was 550 VPD as compared to the projected traffic level(at appraisal) of 438 VPD; indicating about 25% additional traffic. The current travel time from Pembato Montepuez is 2hrs 30 minutes to 3 hours as against 5-6 hours prior to rehabilitation i.e. about 50%reduction in travel time. The total vehicle operating cost during 2004 (for a traffic level of 550 VPD)reduced from US$ 18.56 million (without rehabilitation) to US$ 13.86 million (with rehabilitation) i.e.reduction of US$ 4.70 million - about 25% reduction (Annex 6). With the assumed periodic androutine maintenance activities, this level of reduction will continue till the end of the useful life of theproject.

5.1.2 The direct positive impact of reduction in VOC is that the frequency of public transport hasincreased significantly. Prior to the rehabilitation, according to the project beneficiaries, there used tobe one or two buses/mini-buses per day. Now the frequency of minibuses has increased to almost oneevery hour between Pemba and Montepuez.

5.1.3 The rehabilitated road has also facilitated in the economic development of its area of influence.During the period 2001-2004, the annual increase in agriculture production ranged between 2% and34%. The production of maize, one of the major crops, increased from 12.651 tonnes (2001) to 20,519(2004). The rice production increased from 1067 tonnes (2001) to 1350 tonnes (2004). Other crops(beans, cassava and peanuts) have registered production increases from 5671 tonnes (2001) to 8177tonnes (2004). Production of cotton which was negligible prior to 2002, reached a level of 10,102tonnes in 2003 and then increased to 12,799 tonnes during 2004. The increased production levels have,in turn, given the needed boost to trade and transport. For instance, according to one of the enterprisesdealing in cotton, the total traffic on their account had never exceeded 20,000 tonnes per year prior torehabilitation. Currently the traffic is about 55,000-60,000 tonnes per year. This includes 20,000 tonnesof cotton export and 35,000 to 40,000 tonnes of imports (Petroleum, Oil and Lubricants - POL,equipment and other inputs) through Pemba port.

5.1.4 The improved road has also contributed to considerable increase in small/petty trade along theroad which is essentially managed by rural poor/women. This activity has created additional employmentfor rural poor. At Mieze (23 km from Pemba), prior to rehabilitation, there used to be a couple of shopsselling vegetables. Now there are about 25-30 shops doing business in fruits, vegetables, grocery,readymade dresses and other daily necessities and is providing income generating opportunities to about100 persons; the most beneficiaries being women. Similar situation is found near Nanlia (52 km fromPemba), though the scale is rather big with 35-40 shops. The impact is also seen at Pemba port where thetraffic handled per year increased from 54,183 tonnes in 2002 to 60,498 tonnes in 2003.

11

5.1.5 With Quirimbas archipelago and other tourist attractions around Pemba City, Cabo Delgadoprovince has great potential for tourism, which, till recently, could not be fully exploited, due, amongother things, to lack of good road infrastructure. With the completion of the rehabilitation of Pemba-Montepuez road, significant developments are visible in the tourist industry in Cabo Delgado province.An excellent tourist hotel (Pemba Beach Hotel) has come up in Pemba in 2002. As a result of all thesedevelopments, the tourist traffic in the area has increased from 6,111 persons in 2002 to 11,449 in2003.

5.1.6 As part of the civil works contract, a clinic was established in the construction camp andoperated with a full-time male nurse through out the construction period. AIDS awareness talks werearranged for the benefit of employees, in small groups, on a monthly basis. In addition, film showswere organized in various centers within the construction area. During these shows, two full-lengthfilms on AIDS information were screened and AIDS leaflets and condoms distributed.

5.1.7 Besides the above project specific efforts, a number of Non-governmental Organisations (NGOs),churches and public institutions are carrying out HIV/AIDS awareness programmes in the project roadcorridor. These programmes, which are financed by the GOM, World Bank and ADB, are broad-basedtargeting both individuals and groups. These programmes consist of: a) information posters in publicplaces, b) availability of socially marketed Jeito condoms for purchase, c) training of Peer Educatorsdrawn from the local communities and labours in HIV/AIDS issues for discussion with colleagues, d)small focus groups for effective transmission of information, e) Theatre Groups and Video presentation, f)promotional bill boards to raise awareness of the integration of road construction and HIV/AIDS activitiesand g) inclusion of HIV/AIDS activities in all the villages along the road.

5.2 Environmental Impact

5.2.1 The project road is situated in an environmentally sensitive area and the provisions of thepublication “Environmental Guidelines for Road Works in Mozambique” were implemented andadhered to. The works consisted of the rehabilitation of an existing road therefore; the environmentalissues in general, consisted of improvements to the existing situation. The recommendations of thepublication were incorporated in the contract documents and implemented during construction of theproject as presented in Annex 7.

6. PROJECT SUSTAINABILITY

6.1 The Mozambique Roads and Bridges Management and Maintenance Programme (Roads 3) is aten year (2001 – 2011) programme to be implemented in three phases. The proposed Roads 3 wouldsignificantly improve the condition of the country’s existing network of roads and bridges. This wouldbe accomplished through better maintenance of the road network and through a prioritized programmeof rehabilitation. To support these goals, substantial investments would be made to strengthen publicsector capacity to manage road sector activities and to establish, effective, efficient and sustainableinstitutional arrangements for the sector. In particular, the programme would address the need toestablish sustainable mechanisms for financing road maintenance. Other elements of the programmefocus on promoting the local private sector for roads construction and maintenance, increased attentionto road and highway safety matters, and support for efforts to reduce the spread of HIV/AIDS. IDAand other donors including the ADF and the Road Fund would finance the ten-year programme.

12

6.2 The first phase of the Programme to be implemented over four years (2002 – 2006), wouldfocus on one hundred percent routine maintenance of the “maintainable” network funded exclusivelyby the Road Fund, periodic maintenance and urgent rehabilitation of paved and unpaved roads,implementing institutional and policy reforms, and completing preparations for the long terminvestment programme.

6.3 Financing of periodic maintenance is, in principle, the responsibility of Road Fund but in themedium term, several donors, including IDA will continue to provide support for periodicmaintenance. During Phase 1 donors will finance approximately 75% of periodic maintenance. Thisshare will decline during Phases II and III respectively, with goal of increasing the Road Fund share to100% by the end of Roads III.

6.4 Fuel levies have been significantly eroded since 1997 (from average of US12.1c to US 7.5c perlitre in 2001), the last time the fuel levy was statutorily changed. The Government policy is to returnthe fuel levies (which make up the largest portion of Road Revenues) to their 1997 level by graduallyincreasing the levy rates from US 9.0c per litre in 2002, US 10.5c per litre in 2005.

6.5 The restructuring of the ANE and the Road Fund in 2003 has improved financial management.The Road Fund has separated from ANE and became an autonomous and independent entity withclearly separate financing and road works execution functions in the roads administration, therebyincreasing accountability and transparency.

6.6 Initially, the Road Fund will be responsible for financing routine and periodic maintenancethrough road user charges that will be collected by the Ministry of Planning and Finance andtransferred to the Road Fund. Roads 3 addresses this issue by ensuring that financing is adequate tofund the maintenance-first strategy by focusing on road user charges as the means of providing thenecessary resources for this activity. Road user charges channeled to the Road Fund will finance 100%of routine maintenance and 75 % of periodic maintenance in Phase I, rising to 85% of periodicmaintenance requirements in Phase III. Donors, already identified to meet the need in Phase I, willmeet the remaining periodic maintenance requirements.

7. PERFORMANCE OF THE BANK AND THE BORROWER

7.1 The rehabilitation of the project reduced road transport costs over the project corridor and alsoenhanced safer driving. The present condition of the road is good and it is expected that the Borrowerwould evaluate the road pavement every 5-years and carryout the required re-sealing. The technicalmanagement of the project was good as is evident in the completed facility.

7.2 During project implementation, the Bank supervised the project through 6 missions in whichtechnical and disbursement issues were discussed and problems solved. The Bank responded withinreasonable time to the problems arising from project execution. Overall the performance of theBorrower and the Bank was satisfactory but the performance was poor in terms of the Borrower’sslowness in submitting Interim Payment Certificates thereby, affecting the cash flow of the contractor.

13

8. OVERALL PERFORMANCE AND RATING

8.1 Overall project completion was delayed by some 13 months when compared to appraisalforecast. This delay in completion was due to the delay in fulfillment of the loan conditions foreffectiveness. However, when the project commenced it was completed within the contract period andbudget.

8.2 In accordance with the implementation performance indicators (Annex 8), the overallassessment of implementation performance and project outcome are highly satisfactory with a rating of3 out of 4 maximum. The rating for the Bank's performance is 3 out of 4 maximum indicating highsatisfactory level of performance.

9. CONCLUSIONS, LESSONS AND RECOMMENDATIONS

9.1 Conclusions

9.1.1 Overall objective of the project has been achieved. The project has significantly reduced roadtransport costs and passenger travel time on the Pemba – Montepuez road. The road is environmentallyfriendly and encourage safer driving habits and hence reduction in serious accidents. Though theincrease in the scope of the work caused an increase in the original contract amount, the final cost waswithin the overall appraisal estimate and has greatly enhanced the value and quality of the project.

9.1.2 The performance of the contractor depends amongst other things on adequate cash flow.Inadequate cash flow could lead to poor quality of work and the contractor abandoning the works. In thiscase, the contractor gave formal notice to the Employer in accordance with the Conditions of Contract toreduce his rate of work when his interim certificates were not paid for 7 months. Executing this noticecould have lead to claims for damages, interest on delayed payment and extension of time for completion.However, the notice was not executed and the issue was amicably resolved (without any claims andinterest payments) when the ANE agreed to a request by the Contractor for further Advance Payment andrelease of retention (upon lodging of the necessary sureties) to offset the accrued interest.

9.1.3 Delays in the Bank’s disbursement, which could form potential grounds for interest claims by thecontractors, should be avoided.

9.2 Lessons Learned

9.2.1 Lessons from the project are:

b) During implementation of this project, late payments of the Contractor’s certified InterimPayment Certificates might have been avoided if the Bank had been monitoring the dates theBorrower made payments to the contractor. The lesson is that the Bank as the major financialcontributor of the project has the right know as and when a consultant or contractor is paid.

b) The Bank should take a proactive role in resolving disbursement issues so as to ensure timelypayments for future projects.

14

9.3 Recommendations

9.3.1 It is recommended that:

To the Bank

The Bank should sanction the Borrower if contractors, consultants and suppliers are not paid ontime as specified in the signed contract. Supervision missions and the disbursement divisionshould demand evidence of payments through monthly statements.

The Bank should ensure timely processing and disbursement of invoices received from theBorrower.

To the Borrower

Regular routine and periodic maintenance should be carried out in order to protect the performance ofthe pavement. Of particular attention is smoothing due to bleeding and /or leakage of diesel ormolasses from tankers along the slow moving traffic lane next to the shoulder that may not visible sofar. There is a possibility that molasses or diesel leakage might occur, which would cause the asphalt tosoften and squeeze up above the aggregates. This will result in a smooth shinny surface that wouldcause loss of skid resistance. Such areas should be monitored continuously and damage repairedimmediately.

A matrix of recommendations is presented in Annex 9.

Annex 1REPUBLIC OF MOZAMBIQUE

PEMBA-MONTEPUEZ ROAD REHABILITATION PROJECTPROJECT LOCATION MAP


This map was provided by the African Development Bank exclusively for the use of the readers of the report to whichit is attached. The names used and the borders shown do not imply on the part of the Bank and its members anyjudgement concerning the legal status of a territory nor any approval or acceptance of these borders.


PEMBA - MONTEPUEZ ROAD REHABILITATION PROJECTPROJECT COMPLETION REPORT

MODIFICATIONS IN THE SCOPE OF WORK

Appraisal Original Contract Modifications210 km rehabilitatedbitumen standardroad with a 6.0mwide carriageway and1.5 m wide bitumensurfaced shoulders. 8km in Pemba thecarriageway was7.0m with 2.5 m widebitumen surfacedshoulders.

The establishment of camps, offices,workshops, stores and plant on site andtheir removal on completion of theWorks and the provision of housing,transport, communications, offices andlaboratories for supervisory staff.

Construction of a permanent housingcomplex.

De-mining of the road reserve, borrowareas and deviation routes.Clearing of the road and drainage prismarea.Survey of the existing road withcompilation of a DTM, horizontal andvertical alignment designs, setting out ofthe Works and calculation of quantities.

Rehabilitation of the road pavement tovarious specified procedures, whichcomprised earth, and the construction ofselected sub-grade, sub-base and baselayers.

Construction of a double seal surfacingto the entire road.

Repair and renovation of drainageculverts and bridges including clearingand de-silting of waterways andconstruction of limited additionaldrainage structures.

Ancillary works such as the constructionof diversions for the accommodation oftraffic, the erection of road signs andguardrails, construction of concrete edgebeams, kerbing and down chutes,painting of road markings, andlandscaping and rehabilitation of borrowareas.

The maintenance of the Works inaccordance with requirements specifiedin the Contract Documents.

In Pemba

The street from theintersection with theEN106 (at the Globe) toIndependence Square onthe beach.

The marginal roadrunning fromIndependence Squarealong the coast to theharbour.The street from theharbour to theGovernment offices andfurther through the citycenter back to the globe.

The harbour loop road.

The road from PembaAirport to Nautilus Hotelon Wimbe Beach whichwas new construction.The road from NautilusHotel to IndependenceSquare.

In MontepuezThe main internal dualcarriageway street.This street in Montepuezas well as the two lastmentioned roads inPemba were added to theScope of Works withAddendum No. 1 to theContract. Also includedmechanical installationof two weigh-bridges.

Addendum No. 1 wasfinanced by re-allocatingfunds from theUnallocated Category ofthe loan Agreement tothe Civil WorksContract.

Annex 3

REPUBLIC OF MOZAMBIQUEPEMBA – MONTEPUEZ REHABILITATION PROJECT


PROJECT IMPLEMENTATION SCHEDULE: APPRAISAL AND ACTUAL

Activity 1998 1999 2000 2001 2002 20031q

2q

3q

4q

1q

2q

3q

4q

1q

2q

3q

4q

1q

2q

3q

4q

1q

2q

3q

4q

1q

2q

3q

4q

1.1Consultancy Services

- At Appraisal

- Actual

1.2 Construction

- At Appraisal

- Actual

Note: Broken bars denote defects liability period.

Annex 4

REPUBLIC OF MOZAMBIQUE: PEMBA-MONTEPUEZ REHABILITATIONPROJECT

PROJECT COMPLETION REPORTSTATUS OF COMPLIANCE WITH LOAN CONDITIONS

The following were the covenants included in the Loan Agreement to be monitoredduring project implementation:

Referencein Loan

AgreementCovenant

Status ofCompliance

A. Conditions Precedent to Entry into Force of the Loan Agreement: TheBorrower shall have:

A.1 Appointed a project coordinator whose qualifications andexperience are acceptable to the Fund.

Compliedwith

A.2 Provide evidence satisfactory to the Bank and the Fund thatall members of the RSC and Executive Committee have beenappointed (notably in accordance with the Road safety ActNo. 10 of 1983).

Compliedwith

B. Other Conditions: The Borrower shall to the satisfaction of the Fund:B.1 Give an undertaking to the Fund that the funds available for

road maintenance are sufficient and increases in the surchargefor diesel have been made (Para. 3.4.5)

BeingComplied

withB.2 Prior to signing the civil works contract, give evidence to the

Fund of having incorporated adequate measures for theprotection of the environment along the project road.Particular attention shall be given to borrow pits, spoil,pollution of water courses, erosion of earth works slopes andconstruction camps pursuant to the relevant clauses in thecivil works contract and recommendation of theenvironmental impact studies (Para. 4.7.4).

Compliedwith

Annex 5

REPUBLIC OFMOZAMBIQUEPEMBA-MONTEPUEZ ROAD REHABILITATION PROJECT

PROJECT COMPLETION REPORTActual and Projected Traffic on Pemba-Montepuez Road

(Number of Vehicles per Day)

YearCar/

Pick UpMDV HDV BUS Total

A. Actual Traffic (2000 to 2003)

2000 233 79 51 30 392

2001 312 116 59 27 514

2002 330 102 39 32 502

2003 334 120 58 38 550

B. Projected (Traffic (2004 to 2016)

2004 349 125 61 39 574

2005 365 131 63 41 600

2006 378 135 65 43 621

2007 391 140 68 44 643

2008 405 145 70 46 666

2009 419 150 73 47 689

2010 434 155 75 49 713

2011 449 161 78 51 738

2012 464 166 80 52 764

2013 481 172 83 54 790

2014 498 178 86 56 818

2015 515 185 89 58 847

2016 533 191 92 60 876

Annex 6


PROJECT COMPLETION REPORT(In US$ in Million – 2002 Price Level)

Year

With the Project (With Rehabilitation) Without the Project(Without Rehabilitation) Net

BenefitsCapital

Costa

Maintenance CostVOC

dTotal

RoutineMaintenance

Coste

VOCd

TotalPeriodic

bRoutine

c

(1) (2) (3) (4) (5=1+2+3+4) (6) (7) (8=6+7) (9=8-5)

2000 2.83 2.83 0 -2.83

2001 10.71 10.71 0 -10.71

2002 13.76 0.06 5.79 19.61 0.77 7.70 8.48 -11.13

2003 2.76 0.12 13.26 16.14 1.55 17.76 19.31 3.17

2004 0.12 13.86 13.98 1.55 18.56 20.11 6.13

2005 0.12 14.48 14.60 1.55 19.40 20.94 6.34

2006 0.12 14.99 15.11 1.55 20.07 21.62 6.51

2007 0.12 15.51 15.63 1.55 20.78 22.33 6.69

2008 11.62 0.12 16.05 27.80 1.55 21.50 23.05 -4.75

2009 0.12 16.61 16.74 1.55 22.26 23.81 7.07

2010 0.12 17.20 17.32 1.55 23.04 24.58 7.27

2011 0.12 17.80 17.92 1.55 23.84 25.39 7.47

2012 0.12 18.42 18.54 1.55 24.68 26.23 7.68

2013 0.12 19.07 19.19 1.55 25.54 27.09 7.90

2014 0.12 19.73 19.86 1.55 26.43 27.98 8.13

2015 11.62 0.12 20.42 32.17 1.55 27.36 28.91 -3.26

2016 -13.53 0.12 21.14 7.73 1.55 28.32 29.87 22.13

Economic Internal Rate of Return (EIRR) 17.51%

Net Present Value at 12% (US$ million) 7.49

Note:a. Capital Costs includes cost of civil works and supervision (excluding price escalation) net of taxes and

other transfer payments.b. Periodic maintenance on the rehabilitated road has been assumed to be undertaken every seven

years and estimated to cost US$ 61,500 per km (2002 prices).c. Routine maintenance on the rehabilitated road includes normal routine maintenance works and

estimated to cost US$ 650 per km/year (2002prices).d. Vehicle Operating Cost (VOC)e. Routine maintenance activities under “without rehabilitation” situation are broadly the same as under

“with rehabilitation” but more patching would be required under “without rehabilitation” situation.Routine maintenance under this situation is estimated to cost US$ 8,192 per km/year (2002 prices).

f. Salvage Value (45% of initial investment).


PEMBA - MONTEPUEZ ROAD REHABILITATION PROJECTPROJECT COMPLETION REPORT

Implementation of the Recommendations of the Environmental Guidelines

Item ActionDeviations, Vegetation andLandscaping

Deviations were located within the existing road reserve wherever possibleand clearing operations were restricted to an absolute minimum. Vegetationand trees removed during the clearing operations were left in place and notremoved or burned as specified. No employees of the contractor werepermitted to gather firewood from bush clearing operation.

The project is located within the African grasslands; the indigenous grassesestablished themselves very quickly following the topsoil operation. Thisgrowth was promoted during the dry periods by occasional watering of thebatter slopes. This process was so effective that hydro seeding was deemedunnecessary.

Following the completion of the pavement the side slopes were top-soiledthroughout. Topsoil material was removed and stockpiled from existing sideslopes prior to the commencement of the rehabilitation works andsubsequently replaced with a bear minimum of imported material.

A total of 210 potential sources of borrowpit material were identified in thecontract documentation. Of these, only 33 were exploited which reduced theimpact on the environment. Many of these borrow pits were un-rehabilitatedsources. All exploited borrow pits were landscaped and top-soiled.

Measures in Relation to Erosion To limit erosion all batter slopes were finished off to a flatter grade that theexisting. Liberal use was mad of concrete lining to steep side drains, mitredrains and kerbing with downchutes to limit erosion.

In urban areas private entrances were constructed as required across concretelined side drains.

Measures in Relation to Noise The choice of aggregate and slurry seal surfacing to the Pemba internal roadswas dictated, amongst other things, to reduce traffic noise in denselypopulated areas.

Measures in Relation to SoilContamination and Air Pollution

At the two campsites, in Pemba and Metoro, diesel tanks were enclosed withcement brick walls to contain day-to-day contamination, and as apreventative measure to contain large-scale spillage. In addition the effluentat the engine-washing bay was contained.

Measures in Relation to AnimalWelfare

Employees were not allowed to kill any wild animals found during theconstruction operations. One baby antelope found during clearing operationswas raised by one of the Engineer’s personnel and resettled back into thebush, after consultation with conservation authorities.

Measures in Relation to CommunityIssues

A safety officer was appointed with responsibility for all issues related tosafety on site. He attended to signage at deviations and enforced the safetyrequirements such as the use of rotating lights on all vehicles and speedingtraffic.

Safety awareness talks were presented at all schools along the route. Thesetalks were scheduled to precede the construction the construction operationswith the specific aim of informing and educating the local population to thesafety hazards of the construction process and the completed road.

ANNEX 8Page 1 of 4

REPUBLIC OF MOZAMBIQUEPEMBA-MONTEPUEZ ROAD PROJECT


Performance Rating Scale and Evaluation Criteria

1. Rating Scale

X > 3 Highly satisfactory

2 < X < 3 Satisfactory

1 < X < 2 Unsatisfactory

X < 1 Highly unsatisfactory

Where X is the value assigned to a performance variable.

Classification: Implementation performance is considered satisfactory if the averagevalue of X is > 2.

2. Evaluation Results

Component Indicators Score(1-4)

Remarks

1. Adherence to time schedule 2 Delay on account of initialslippage of about 30 months inloan effectiveness was overcometo a large extent and the projectwas completed with a time over-run of 13 months.

2. Adherence to cost schedule 4 Project was completed wellwithin the budget.

3. Compliance with covenants 3 Except reinstating of borrow pitsand quarry site

4. Adequacy of monitoring & evaluation andreporting

3 Complied with submission of allthe relevant reports.

5. Satisfactory Operations (if applicable) 3 VOC, travel time and accidentsdecreased, traffic flow higherthan the projection.

TOTAL 15

Overall Assessment of ImplementationPerformance

3 Highly Satisfactory

ANNEX 8Page 2 of 4



FORM BP 1

BANK PERFORMANCE

Component Indicators Score(1 to 4)

Remarks

1. At Identification 3 The project was a component of the TransportProgramme funded by ADF in 1992.

2. At preparation of project-

3. At appraisal 3All the relevant issues were addressed and awell-designed viable project was formulated.

4. At supervision 2 Most of the problems were resolved in timeexcept for delays in resolving disbursementissues.

Overall assessment of BankPerformance

2.67 Satisfactory

ANNEX 8Page 3 of 4


PROJECT COMPLETION REPORTFORM PO 1

PROJECT OUTCOME

No. Component IndicatorsScore

(1 to 4) Remarks1 Relevance and Achievement of

Objectives*

i) Macro-economic policy 3

ii) Sector Policy 3Creation of ANE and RoadFund

iii) Physical (incl. Production) 3Well designed 210 km two-lane bitumen road sndfscilities.

iv) Financial 2Late submission ofCertificates by Borrower toBank for payment.

v) Poverty alleviation, social &gender

2

vi) Environment 3All the provisions of theEnvironmental Guidelineswere implemented.

vii) Private sector development 3Development of smallbusiness and tourist hotels,guest houses, etc. in andaround Pemba.

viii) Other (Specify)

2 Institutional Development (ID)i) Institutional framework incl.

Restructuring 3Creation of ANE and RoadFund

ii) Financial and ManagementInformation Systems includingAudit Systems

3There is a computerizedFinancial and MIS installedat ANE. Annual auditing ofthe project was done.

iii) Transfer of Technology

iv)Staffing by qualified persons(incl. Turnover), training &counter-part staff

Annex 8Page 4 of 4


PROJECT COMPLETION REPORTFORM PO 1

PROJECT OUTCOME

3 Sustainability Score Remarks

i) Continued BorrowerCommitment

3Borrower has showncommitment to roadmaintenance by increasingits annual budgets andestablishing a dedicatedRoad Fund as well as Roads3

ii) Environmental Policy 3The National Directorate forEnvironment ImpactAssessment is staffed withqualified and experiencedenvironmentalists. ThePolicy is appropriatelyfollowed.

iii) Institutional Framework

iv) Technical Viability and Staffing

v)Financial viability including costrecovery systems -

vi) Economic Viability 3 Indicates viable rate ofreturn.

vii) Environmental Viability 3 All projects are wellmonitored to ensurecompliance withenvironmental policies andrequirements.

viii) O&M facilitation (availability ofrecurrent funding, foreignexchange, spare parts, workshopfacilities etc.)

-

4 Economic Internal Rate of Return 3

TOTAL 40

Overall Assessment of Outcome 2.8 Satisfactory

ANNEX 9

REPUBLIC OFMOZAMBIQUEPEMBA-MONTEPUEZ ROAD REHABILITATION PROJECT PROJECT COMPLETION REPORT

RECOMMENDATIONS AND FOLLOW-UP MATRIXMain Findings & Conclusions Lessons Learned/ Recommendations Follow-up Actions ResponsibilityFormulation & Project Rational:The project was a component of the tworoad studies financed by the Bank in1992 as part of the Transport Programmeprogramme.

The scope of project appraisal could have included theadditional length of roads that were rehabilitated inPemba town under revision of scope of works.

The GOM should ensure proper initialplanning which is a pre-requisite for effectiveand efficient implementation of projects.

GOM

Project Implementation:

1. Time overrun mainly due to delay inloan effectiveness, procurement anddemining.

GOM should endeavour to expedite the process offulfillment of loan conditions and procurement so as toavoid implementation delays.

Minimize start-up delays in projectimplementation.

GOM / ADB

Compliance with Loan Conditions &Covenants:

1. All reports submitted.--------

--------------------

Performance Evaluation & ProjectOutcome:The overall project performance ratingwas satisfactory and the project objectivewas substantially achieved.

Though the project outcome is a well-designed 2-lanebitumen road, the value of the project would havefurther enhanced (in terms of cost and time) if thishad been completed as per appraisal schedule.

The GOM should be committed to adhere toimplementation schedules.

GOM

Sustainability:There is a risk that the routine andperiodic maintenance budget allocationmay not be adequate.

GOM have established a Road Fund and TollingPlazas and instituted fiscal policies to facilitate thegeneration of adequate resources for roadconstruction/rehabilitation and maintenance.

GOM should ensure availability of adequateand regular funds to the Road Fund toimplement the planned road maintenanceprogramme (routine and periodic).

GOM

ANNEX 10



SOURCES OF INFORMATION

1. Borrower's Project Completion Report on Transport Sector Project, MPWT,October 2004. (The Borrower's PCR is on the file with ONIN 3.)

2. Engineer’s Final Construction Report, Vol I, BKS Global Ltd, PNDA, ETENGLda. J.V., December 2002.

3. Appraisal Report on Transport Sector Project, June1997.

4. Contract Document, MPWH.

5. Consultants Services Contract, MPWH

6. Project Files.

7. Project Implementation Plan – Phase 1 of the Mozambique Roads and BridgesManagement and Maintenance Programme (Roads III) – Draft Updated FinalVersion (January 2003)

8. Mozambique Transport Sector Review – Final Report (July 2002)

ANNEX 11


BORROWER’S PCR

The Borrower’s PCR is on the project file with ONIN.

ANNEX 12


EXECUTING AGENCY COMMENTS ON THE BANK’S PCR

No comments were received from the executing Agency