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Document of

The World Bank

FOR OFFJCLAL USE ONLY

Report No. 13082

PROJECT COMPLETION REPORT

JORDAN

MULTI-MODE TRANSPORT PROJECT(LOAN 2463-JO)

MAY 24, 1994

Infrastructure Operations DivisionCountry Department IIMiddle East and North Africa Regional Office

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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Currency EguivalentsCurrency Unit = Jordanian Dinar (JD)

(Jordanian Dinars per US Dollar)

Period End of Period Period Average

1983 0.3630 0.36301984 0.3841 0.38401985 0.3940 0.39501986 0.3499 0.35001987 0.3387 0.33801988 0.3715 0.37151989 0.5704 0.57051990 0.6636 0.66361991 0.6808 0.68071992 0.6797 0.6798

Fiscal YearJanuary 1- December 31

Weights and Measures1 meter (m) 3.281 feet (ft)1 kilometer (km) = 0.621 mile (mi)I kilogram (kg) = 2.205 pounds (Ibs)1 metric ton (m ton) = 0.984 long ton

Principal Abbreviations and Acronyms UsedAASHTO - American Association of State Highways and Transportation

OfficialsARC - Aqaba Railway CorporationBPR - Bureau of Public Roads (USA)CIF - Cost, Insurance and FreightER - Economic ReturnFYBR - First Year Benefit RatioFYP - Five Year PlanGE - General ElectricHJR - Hejaz-Jordan RailwayICB - International Competitive BiddingJFI - Jordan Fertilizer IndustriesJPMC - Jordan Phosphate Mining CompanyKfW - Kreditanstalt fur WeideraufbauMOF - Ministry of FinanceMOI - Ministry of InteriorMOT - Ministry of TransportMPWH - Ministry of Public Works and HousingNPC - National Planning CouncilNTS - National Transport StudyTPC - The Ports Corporation

FOR OFFICIAL USE ONLY

THE WORLD BANKWashington, D.C. 20433

U.S.A

Office of Director-GeneralOperations Evaluation

May 24, 1994

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on Jordan -Multi-Mode Transport Project (Loan 2463-JO)

Attached is the 'Project Completion Report on Jordan Multi-Mode Transport Project (Loan 2463-JO)". The US$30 million Loan was approved in July 1984 and closed on December 31, 1992, two anda half years behind schedule. The undisbursed amount of US$221 thousand was canceled. The PCR wasprepared by the Middle East and North Africa Regional Office and Part II contains the Borrower'sobservations.

Jordanian transport was strained in the early 1980s. Road pavements were being destroyed byoverloaded trucks many of which served transit traffic. The Aqaba Railway Corporation was finding ithard to move phosphate exports. Thanks to the Iran-Iraq War, the Port of Aqaba doubled its traffic from10 to 20 million tons per year but paid a high price in terms of inefficiency, congestion andenvironmental pollution. The need for physical improvements was matched by the need for bettersectoral planning and performance monitoring, and for a stronger institutional and policy environment.The Government, the Bank, the Saudi Fund and the Islamic Development Bank agreed to undertake aUS$132.8 million project that would facilitate transit traffic, strengthen institutional development, improveroad maintenance, enforce axle load limits, improve railway operations and financial performance, andtrain port personnel. The US$30 million Bank Loan was split between highways (20%) and the railway(80%), with the port receiving a token sum for staff training.

The PCR contains an adequate description of project preparation and results. All physical workswere satisfactorily completed which undoubtedly generated substantial benefits. However, policy,organizational and institutional improvements did not materialize. The railway has been technicallybankrupt since 1991. Overloaded trucks continue to destroy road pavements because axle load limits arestill not being enforced. Little staff training has taken place and it has been mostly ineffective. Sectoralmonitoring leaves much to be desired. Even the most basic data are missing. For example, the PCR wasunable to give the final project cost and the economic re-evaluation cannot be considered reliable. Takingaccount of the beneficial reconstruction role of the project, the overall outcome is rated as marginallyunsatisfactory, the sustainability of benefits as unlikely, and the institutional impact as negligible.

The project will be audited.

This document has a restricted distribution and may be used by recipients onLy in the performance oftheir official duties. Its contents may not otherwise be disclosed without WorLd Bank authorization.

FOR OFFICIAL USE ONLYPROJECT COMPLETION REPORT

JORDAN


TABLE OF CONTENTSPage No.

Preface .......................................................Evaluation Summary ..............................................

PART ONE: PROJECT REVIEW FROM BANK'S PERSPECTIVE

Basic Information ............................................ 1Background ................................................ 1Project Objectives and Description ................................. 4Project Design and Organization ................................... 5Project Implementation ......................................... 5Project Results .............................................. 9Economic Reevaluation ........................................ 10Aqaba Railway Corporation's Financial Performance ...................... 13Bank-Borrower Performance and Relationship .......................... 15Project Documentation and Data ................................... 15Status of Covenants ........................................... 16Lessons Learned ............................................. 16

PART TWO: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE

Aqaba Railway Corporation ...................................... 18Azraq-Iraqi Border Highway Project, Section D ......................... 19

PART THREE: STATISTICAL INFORMATION

Tables1. Related Bank Loans ........................................... 202. Project Timetable ............................................ 203. Project Description ........................................... 214. Loan Categories, and Actual Disbursements ............... ............. 225. Cumulative Estimated and Actual Disbursements ......................... 226. Economic Impact ............................................ 227. Aqaba Back Road ............................................ 238. Azraq-Iraqi Border Highway ..................................... 249. Return on ARC Investment ...................................... 2410. Income Statement ............................................. 2511. Sources and Application of Funds .................................. 2612. Balance Sheet .............................................. 2713. Use of Bank Resources ......................................... 2814. Status of Covenants (as of January 1993) ............................. 30

This document has a restricted distribution and may be used by recipients only in the performance of theirXofficial duties. Its contents may not otherwise be disclosed without World Bank authorization. I

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JORDAN


PREFACE

1. This is the Project Completion Report (PCR) for the Multi-Mode Transport Project forwhich Loan 2463-JO, in the amount of US$30.0 million, was approved on 10th July, 1984. The loanwas closed on December 31, 1992, two and a half years behind schedule. The loan account wasclosed on April 30, 1993; US$221,046 remained undisbursed and was cancelled.

2. This PCR was jointly prepared by the Infrastructure Division of Country Department II,Middle East and North Africa Region of the World Bank (WB), and the Borrower (Part II).Preparation of the PCR was started during the WB mission to Jordan in December, 1992 and islargely based on the Staff Appraisal Report, the Loan Agreement, supervision reports, correspondencebetween the WB and the Borrower, progress reports and internal WB documents.

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JORDAN


EVALUATION SUMMARY

OBJECTIVES

1. The project, the second World Bank transport sector lending operation in Jordan, wasdesigned to support the Government's macroeconomic policy of: (i) encouraging foreign currencyearning activities, especially phosphate exports and transit traffic; (ii) reducing the domestic transportcost of imports; and, (iii) reducing demands from the sector on the public budget through increasingefficiency and productivity.

2. The loan, which became effective February 20, 1985, was in the amount of US$30.0million. The proceeds were to finance: (i) road works and maintenance equipment; (ii) railway trackrenewal; and, (iii) technical assistance and training. The project was cofinanced by the Saudi Fund,the Kuwait Fund for Arab Economic Development, the Islamic Development Bank and suppliers'credits. The Japanese Government financed associated major road rehabilitation components.

INIPLEMENTATION EXPERIENCES

3. The project was substantially completed in early 1993. The loan was closed onDecember 31, 1992, some two and a half years late. The loan account was closed on theApril 30, 1993 with US$221,046 that was undisbursed and cancelled. Most of the delay wasoccasioned in the process of reaching agreement with the Borrower on adopting procedures consistentwith the Bank Guidelines on civil works procurement. However, the day-to-day pressure placed onthe transport agencies in coping with the large increase in traffic associated with the Iran-Iraq warand, subsequently, the disruption of the Gulf war and its aftermath, also contributed significantly tothe delay.

RESULTS

4. In physical terms, (road construction and strengthening, railway permanent-way renewaland workshop improvement), the project was successful and contributed to the project objective ofsupporting the Government's macroeconomic strategy. However, the fundamental need forinstitutional and policy reform, to take advantage of infrastructure and equipment improvements wasonly partly met. This was primarily due to an unwillingness on the part of the authorities to use loanfunds to finance critical technical assistance and training and the strength of the road transport lobby,which resisted important policy reforms related to cost recovery. These included policies to requirethe trucking industry to pay their share of the cost of road maintenance and improvement tocompensate for the damage done by heavy lorries and the implementation of more appropriate axle

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load limits. Both are now being addressed under the Third Transport Project (Loan 3568-JO, July1993).

SUSTAINABILITY

5. The physical project achievements in the road sector are sustainable, provided that timelymaintenance is carried out. This is largely being achieved; however, more can be done to improvedurability of the pavements that are constructed and the quality of the maintenance methods. Bothissues are being addressed adequately under the Third Transport Project.

6. The TA component for MPWH did not produce a lasting effect on efficiency and did notchange the planning and budgeting system as intended. In order to achieve these changes the roadagency may have to be restructured or reorganized with adoption of modern management techniques.Increasing operational and financial autonomy, supported by a carefully structured training program,may be essential in this process. This is being tackled in the Third Transport Project.

7. In 1990, the Aqaba Railway Corporation had accumulated losses that were higher than itscapital and was and remains technically bankrupt. A sustainable railway operation can now only beachieved through financial restructuring, a major increase in tariffs and strengthening of the ARCmanagement. These efforts would have to be viewed in light of the fact that the mines at Al Abyadand El Hassa are depleting and that production is gradually being transferred to another mine at ElShidiya. This new mine is not yet connected to the railway, although there are proposals to do this.The Third Transport Project is addressing these issues through a phased reduction in the illegaloverloading of trucks affecting the cost of phosphate transport by road, and through the preparation ofa corporate plan, development of restructuring options and the appointment, under technicalassistance, of a management team.

FINDINGS AND LESSONS LEARNED

8. Three important lessons were learned: (i) Projects should not proceed to negotiation andBoard presentation until formal agreement has been reached on all aspects of procurement includingconsistency with World Bank Guidelines, bidding procedures and contract documentation. (ii) In thetransport sector, which is essentially a service industry, the development and implementation of astrategy for improving productivity can only be developed successfully if all those affected are fullycommitted to the project's objectives and participate in its preparation. This was not the case for therailway component. The need to integrate the operations of the Aqaba Railway Corporation with theJordan Phosphate Mining Company and the Port Corporation was not given the necessary weightduring preparation and appraisal and, consequently, not adequately reflected in project strategy.(iii) The considerable amount of time needed to achieve institutional changes and policy reform undercivil service constraint is often underestimated. It requires understanding and commitment at the topmanagement level in order to be successful, and if that is not present it will have to be developedbefore institutional change and policy reforms can be phased in correctly with training and associatedinvestments.


JORDAN


PART ONEPROJECT REVIEW FROM BANK'S PERSPECTVE

1. Basic Information

Project Name: Multi-Mode Transport ProjectLoan Number: 2463-JORegional Vice Presidential Unit: MENACountry: Hashemite Kingdom of JordanSector: MN2IN - TransportationLoan Amount: US$30 millionLoan Cancellations: US$221,046

Cofinancing (parallel):Saudi Development Fund US$11.4 millionKuwait Fund for ArabEconomic Development Kuwaiti dinar 5.4 millionIslamic Development Bank US$9.3 million

2. Background

2.1 Introduction. Based on a National Transport Sector Study (NTS), carried out in1982/83, and supplemented by World Bank sector work, a number of key issues were identified inJordan's transport sector. The Government, with World Bank support, decided to address thesewithin the framework of a Multi-Mode Transport Project, which was financed under Loan 2463-JOtogether with parallel cofinancing from the Saudi Development Fund (SF) and the IslamicDevelopment Bank (IB) and, eventually, the Kuwait Fund for Arab Economic Development (KFD).The project was designed to focus upon highway and railway rehabilitation, institutional reform andtraining. The training component included the Ministry of Public Works and Housing (MPWH), theAqaba Railway Corporation (ARC) and The Port Corporation (TPC) at Aqaba. The latter was toself-finance a World Bank agreed program.

2.2 This was the World Bank's second transport operation in Jordan, the first being an IDAcredit (Cr. 262-JO) in 1971, which was primarily concerned with building the multi-lane Amman-Zarqa Road and urban transport studies. This earlier project was completed satisfactorily but with adelay of about two years, due mainly to contractual problems regarding civil works and delays inrelocating public utilities (Table 1). Procurement issues, especially concerning compliance with BankGuidelines, were not addressed and resolved at the time but were left to be addressed undersubsequent projects.

2.3 Project preparation was actively supported by the authorities, including the Ministry ofPlanning (MP). An appraisal mission visited Jordan in November/December 1983, and negotiationswere held in Washington in May, 1984. The Loan was approved by the Board on July 10, 1984,signed on August 17, 1984 and became effective on February 20, 1985 (Table 2). The total estimatedproject cost, including contingencies, was US$132.8 million, with a foreign component of US$80.3million. The loan amount was US$30.0 million, of which US$20.0 million was relent to ARC on thesame terms of the loan with ARC bearing the foreign exchange risk. The latter was to have asignificant negative impact upon ARC finances due to (a) the decline in the value of the Jordaniandinar (JD) following the economic crisis in the Gulf oil producing states in the latter part of the1980's caused by the fall in oil prices, and (b) the Gulf War and its aftermath. Hindsight has taughtus that such a commitment should be examined more carefully before being entered into, particularly,for entities having all revenues in local currency. Repayment was to be over a 15-year period,including a 3-year grace period, at the standard variable interest rate.

2.4 Sector Development Objectives. Jordan's main transport system is import/exportoriented, supported by an extensive secondary and tertiary network providing access to towns,villages and agricultural areas. At the time of project preparation and appraisal, the Governmentattached the highest priority to the improvement of international trade routes, especially those carryingphosphate, potash, fertilizer and cement exports: this policy continues today. Also, Jordan's role as atransit route, especially for Iraq during the Iran-Iraq war, was particularly important in providingemployment and foreign exchange earnings - during this period traffic through Aqaba increased froman average level of about 10 million tons to about 20 million tons p.a. Should international relationswith Iraq be normalized, transit traffic levels will undoubtedly increase again.

2.5 Although improvements were made to the transport system over the period 1970 to 1985,including the construction of the Aqaba Railway to transport phosphate from the mines at El Hassaand Al Abiad to Aqaba port and a new section of the Amman-Aqaba road (the Ras El NaqabEscarpment), these were not enough to meet demand. Furthermore, much of the infrastructure haddeteriorated, and, due especially to the troubles in Lebanon, the pattern of traffic had changedsignificantly. Consequently, the Government's primary objective was to develop the transportinfrastructure to meet the growing and changing needs of the economy, stressing in particular foreign-currency-earning activities. In parallel, the authorities recognized the importance of improving theoperational efficiency of key agencies such as ARC, TPC and MPWH, which would require theintroduction of modern methods and technologies, training and manpower planning. An importantgoal, strongly supported by the World Bank and the International Monetary Fund (IMF), has been tolimit demands from the sector on the public budget. However, although this latter objective wasrecognized to be important, government actions to achieve it have been weak: road construction tounnecessarily high standards has continued, and the failure to implement agreed legislation regardingvehicle axle loads has contributed to increased road deterioration and, consequently, increasedexpenditures. These failings are being addressed under the recently approved Third Transport Project(Loan 3568-JO, July 1993).

2.6 Policy Context. The NTS, in addition to specifying investment actions needed to upgradeand protect the transport infrastructure, identified several key policy issues that needed to beaddressed.

Highways: - Subsidies on petrol and diesel needed to be phased out and prices setto reflect resource consumption.

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- Although road users, overall, paid sufficient road-user charges tocover the maintenance of primary roads, fees were insufficient topreserve and protect from deterioration the entire highway system:consequently, road user charges required revision and increases inorder to fund both recurrent and capital highway cost fully.

- Road users, especially heavy trucks, should be charged according tothe wear and tear and damage that they cause to the highway system.

- A national 13-ton axle load limit should be strictly enforced to preventan accelerated deterioration of the highway system.

Railways: - The capacity and reliability of ARC to transport phosphate should beimproved in order to reduce pressure on road capacity and to improvethe financial viability of ARC, thus reducing the burden on publicexpenditure.

- Modern management and operations systems, including improvementsto the accounting system were needed.

- Although ARC possessed some very competent staff, especially on theengineering side, much of the workforce was poorly trained, and therewere no structured career prospects: there was clearly a need tointroduce a human resources development strategy supported bytraining programs planned and executed by professionals.

Port: - Although the transit trade with Iraq had been very valuable, it wouldbe unreasonable to expect it to continue forever, and the tradeembargo on Iraq showed just how sensitive port earnings were to anyinterruptions: therefore, there was a desire to develop a strategy todiversify port activities either by seeking new markets or developingnew operations, such as duty free zones.

If the port were to adopt a policy of expansion in a competitiveindustry, modern technologies and operational methods were essential:thus, port personnel needed to be introduced to modern operationssystems and to receive the necessary skills training.

2.7 Linkages Between the Project and Macroeconomic Objectives. Towards the mid-1980s, Jordan, like other countries in the area, was beginning to experience a sharp slow-down ineconomic activity and a decline in export earnings and financial aid grants. This was largely theresult of falling oil incomes in Jordan's traditional Middle East markets and sources of remittanceincome. During 1983-89, the economy grew at an annual rate of only 1.7 percent, which led to amarked decline in per capita income and increases in unemployment. The population growth rate wasestimated at 3.5 percent. Slow growth was reflected in a rising budget deficit, a deteriorating balanceof payments and a high incidence of external debt.

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2.8 The initial response of the authorities was fragmented and ad hoc. There was no clearoverall strategy for the economy in general or for the transport sector in particular. One particularproblem, which still results in weak resource management, was the lack of insistence by theGovernment on rigorous project evaluation in the roads sector. Adopting policies based on poorevaluations led to investment in unnecessary facilities, too high technical standards and inadequatefunds for maintenance. Consequently, the project, in addition to its primary macroeconomic objectiveof supporting export-earning activities and reducing public expenditure, sought to strengthen theoperating and planning standards of the transport institutions. A reduction in public expenditure wasadopted as a key planning criterion, but some spending ministries frequently ignored the precept.

3. Project Objectives and Description

3.1 Project Objectives. The main objectives of the project were: (i) easing critical transportbottlenecks on principal import/export routes; (ii) building upon the institutional development startedunder the First Highway Project (Cr 262-JO); (iii) raising the efficiency of highway sectormanagement, especially improving road maintenance and vehicle axle load control; (iv) upgradingARC operations and financial performance; and, (v) developing the work skills of TPC personnel.

3.2 Project Components. The project, at appraisal, consisted of the following components:(i) road maintenance operations; (ii) civil works covering new construction and pavementstrengthening; (iii) the extension and modernization of the ARC Aqaba workshop, permanent wayrenewal and the procurement and rehabilitation of railway equipment; and (iv) technical assistance andtraining for MPWH, ARC and TPC (see Table 3).

3.3 The highway maintenance component included (i) routine and periodic maintenance(patching, resealing, shoulder repairs, road marking and traffic signs); (ii) the procurement of roadmaintenance and materials testing equipment; and (iii) the strengthening of selected sections of theroad network, including the 320-km Juwaidah-Iraq Border road. At the time it was thought that thiscomponent would lead to savings by limiting expensive reconstruction, but a combination of weakinitial construction, neglected maintenance and the high axle loads of vehicles during the Iran-Iraqwar resulted in full reconstruction being required.

3.4 The civil works component focussed on improving road links with the new port andexport industry development south of Aqaba at Wadi 2 - the "Aqaba Back Road." The links consistedof a 30-km, two-lane road bypassing the city of Aqaba and a 6-km spur road to serve the containerport. Not only would this lead to improvements in port productivity and transport cost savings, but itwould also improve the environment in Aqaba by diverting heavy traffic away from the city;however, no environmental impact assessment was carried out as this was not mandatory at the timethe project was prepared.

3.5 Assistance to ARC consisted of (i) the expansion and modernization of the Aqabaworkshop to improve locomotive availability; (ii) the procurement of phosphate wagons and therehabilitation of locomotives to increase phosphate transport capacity; (iii) the renewal of about 100km of railway track with heavier rail and alignment improvements to permit heavier axle loads andhigher operating speeds and, at the same time, reduce derailments; and (iv) the procurement of aheavy duty mobile breakdown crane. This component was directed towards facilitating the transportof phosphate, increasing the productivity of the loading equipment at Aqaba, reducing dust pollution

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and improving ARC financial operations. It was also designed to reduce the demands on the roadtransport route, which was under considerable stress from transit traffic with Iraq.

3.6 The technical assistance and training included provisions: (i) to strengthen the capabilityof MPWH to manage and plan periodic and routine (recurrent) highway maintenance operations; (ii)to modernize the ARC accounting system and implement a training program for ARC staff, includingtraining equipment and materials; (iii) to assist in the preparation and operation of training programs,including project analysis, for MPWH staff; and (iv) to provide advice and support for a portstraining program, financed by TPC, to improve efficiency in container, general cargo and phosphatehandling and shipping operations.

4. Project Design and Organization

4.1 The Project was designed to contribute to Jordan's strategy to optimize the use of itslimited resources for earning foreign currency, for providing career opportunities and employment inthe transport industry and for reducing the financing burden on the budget.

4.2 Project management and administration were undertaken by the ministries and agenciesdirectly concerned, under the overall direction of the Ministry of Planning. Generally, this workedsatisfactorily, but the Government's refusal to use loan funds, or to identify alternative sources, tofinance technical assistance led to some major skills gaps at MPWH, which resulted in delays inproject implementation and the failure to achieve some project objectives.

4.3 The build-up of transport capacity in ARC was planned and carried out without thenecessary coordination and cooperation with ARC's only customer the Jordan Phosphate MiningCompany (JPMC) and there was no long term transport contract with transport rates sufficient tocover loan servicing and operating costs. The phosphate railway also had to compete with low "back-haul" rates of road traffic serving the port. This was aggravated by the Government allowingoverloading of trucks by as much as 50 percent to keep rates down and increase capacity resulting ina more rapid deterioration of the roads. Indeed, this lack of an integrated policy extended to TPCwhere phosphate storage facilities were inadequate to store enough of the grades of phosphaterequired, with the result that transport demand became very peaked and difficult to meet by railtransport, making road transport necessary for JPMC to move enough phosphate to Aqaba in periodswith fluctuating demands. The overall effect of this lack of coordination and cooperation within thetransport sector was inefficient use of ARC's capabilities and an increasing reliance by JPMC on roadtransport to the extent that they started purchasing their own phosphate trucks.

4.4 In brief, although the project officers, appointed by MPWH, ARC and TPC, andcoordinated by the MP, eventually improved project operation, the lack of an integrated transportpolicy resulted in a distinctly ad hoc approach, which was less than efficient. Nonetheless, the actualperformance of the three main agencies - against the background of vastly increased transport demandoccasioned by the Iran-Iraq War and economic and political problems resulting from the Gulf War -must be commended.

5. Project Implementation

5.1 Although there were no special conditions of loan effectiveness, it took six months fromloan agreement signing to loan effectiveness on February 20, 1985 after ratification by the Jordan

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parliament. The original closing date of June 30, 1990 was extended three times toDecember 31, 1992: although this was certainly affected by the political events in the region, theprimary reason for slow implementation concerned design standards and the procurement of civilworks. During implementation, there was a reallocation of funds among the different categories, butthis did not affect project design substantially. Also, as part of a Bank policy to mitigate the impactof the Gulf war and its aftermath on the economy, the civil works disbursement rate was raised from60 percent to 75 percent in February 1991 (see Tables 4 and 5).

5.2 Highway Component. Once the Government and the World Bank had agreed on theroad standards and the section to be financed, it took three years to ensure that the Jordanian biddocumentation met the requirements of the World Bank Guidelines for Procurement and StandardBidding Documents for Civil Works. T he principal differences in the bidding documents, which werefinally resolved in May 1988, after a special World Bank mission for that purpose, were:

- the use of prequalified foreign contractors- mandatory employment of Jordanian staff- mandatory joint ventures- length of bidding period- local representation of foreign bidders- governing language of contract- bid bond, performance and security restrictions- bid opening procedure- reasons for bid rejection- price adjustment- use of local material- restrictions on the use of foreign labor

5.3 An original proposal for the World Bank to finance the Aqaba Back Road and spur roadwas eventually turned down by the World Bank on the grounds that the standards proposed wereunjustified. The road was finally financed under two contracts (JD 9.2 million and JD 6.5 million)by the Saudi Development Fund and the Kuwait Fund for Arab Economic Development. Afterconsiderable redesign and realignment to adjust for power cable clearance, the road was completed inlate 1992 at final contract prices of JD 9,419,927 and JD 6,435,720, respectively. Supervision by alocal/foreign consultancy joint venture amounted to JD 459,099. However, the road has not yet beenopened to traffic because (i) the truck refuelling and other support facilities have not been built; and(ii) the traffic passing through Aqaba has significantly decreased with the cessation of hostilities andthe United Nations' embargo of Iraq.

5.4 Of the 435-km of road proposed for strengthening at appraisal, 175-km were not procuredin accordance with World Bank Guidelines, nor were they subject to economic analysis and,consequently, they were not financed under the loan. The remaining sections, including 240 km fromAzraq to the Iraq Border, were subject to feasibility studies and shown to be economically viable.However, due to the light original construction and the damage caused by heavy traffic during theIran-Iraq War, it became clear that the cost would be much greater than estimated at the time ofappraisal, although still economically justified. As a result, the work was broken down into fourcontracts with the World Bank financing Contract "D" of about 70 km adjacent to the Iraq border.The remainder was financed under Japanese aid. Following the resolution of design and procurementproblems (para. 5.2) contract "D" was signed with a Taiwanese contractor in October 1988. The

contract sum was JD 5,574,774 plus US$4,854,776. The contract period was 725 days, but this wasextended by 636 days, initially due to problems in obtaining suitable aggregates, especially forbituminous mixes, and more work than anticipated on building adequate diversions. The outbreak ofthe Gulf Crisis in August 1990 led to a cessation of work for some time and a sic Xing down ofoperations due to the refugee traffic and financial constraints associated with Jor..an's economic crisisand restrictions. There were three variation orders (partly occasioned by a reduction in pavementthickness), which gave a saving of JD 115,000. The contract was satisfactorily completed on August15, 1992 for a total cost of JD 5,253,853 plus US$4,379,590: this was slightly less than the amountestimated in the feasibility study. The design and supervising consultant was Jordanian and theseduties were carried out effectively.

5.5 MPWH, complying with MP policy, did not use loan funds for technical assistancepurposes. Assistance to strengthen its management, planning and operation of the highway system, tohelp in the preparation and implementation of periodic and routine maintenance programs, and toformulate and implement training programs for MPWH staff was undertaken by a consultant financedby USAID. A computer-based maintenance planning and budgeting system was developed, and stafftrained in its use. However, cutbacks in US assistance in 1988 led to the withdrawal of theconsultants, and this, coupled with a lack of support for road maintenance by senior MPWHpersonnel, resulted in reduced effectiveness of the system. This issue remains important and is beingaddressed under the ongoing Third Transport Project.

5.6 Success in tackling the sector issues described in para. 2.6 was mixed. The transportindustry lobby in Jordan is particularly strong. However, the Government managed to removesubsidies from fuel during the course of the project, and the price of fuel is now above the borderprice, although there is probably still scope for revenue enhancement to recover road user costs morefully. Increasing road-user revenues, especially from those users who cause most damage to roadsand stimulate the need for major investments, has proved more difficult. However, the ThirdTransport Project includes a covenanted component which requires this issue to be studied in depthand action to be taken on the recommendations made. The enforcement of axle-load legislation wasalso a problem. Axle load legislation exists, and a program for its enforcement over two years wasprepared. Implementation, however, did not take place, due first to the very heavy transport demandoccasioned by the Iraq transit traffic and the political and material need to support this traffic; and,second, to strong pressure from vested transport interests when another attempt was made after theGulf crisis. Agreement on this issue was made a condition of appraisal of the Third TransportProject, and the details of the regulations and a strategy for their implementation have now beenagreed and the ordinance passed.

5.7 Railway Component. As with the Highway Component, procurement problems forrailways were the main cause of delay in physical implementation. This was not so much due toconflict with World Bank Guidelines as to inexperience on the part of ARC staff in bid documentpreparation. In the case of permanent-way renewal, there were added difficulties: a shipment of railwas impounded in an Italian port; there was damage to the butt welding machine; and locally madeconcrete sleepers were of poor quality and limited supply. However, the component, as envisaged atappraisal, was substantially completed to a satisfactory standard. The Aqaba workshop wascompleted in December 1988 and the World Bank agreed to reallocate US$2 million of unused loanfunds to finance the purchase of locomotive spares. Technical assistance in locomotive rehabilitationwas to be provided by a specialist from an international manufacturer of locomotives, but, because ofthe Gulf crisis, this did not take place. Although ARC appears to have made some progress in

carrying out the locomotive rehabilitation program without technical assistance, the availability oflocomotives, critical to ARC operation, remains unsatisfactory. The 111 km of track renewalbetween Ma'an and Aqaba was completed by June 1989 mainly using ARC resources. Approximately10 km between Ma'an and the northern mines was also renewed and improved. As regards rollingstock, an earlier purchase of lightweight phosphate wagons was unsatisfactory as 60 of thesedeveloped severe cracks due to design deficiencies and, although these were repaired, could not beused to their quoted capacity. Consequently, an additional 90 phosphate wagons have been procuredusing Islamic Development Bank financing.

5.8 At appraisal, ARC was diagnosed as having a serious manning problem - much of whichwas due to difficult working conditions and unattractive locations. Whilst some of these issues havebeen addressed through, for example, workshop improvements, high turnover remained a problem.The project contained a training component that was refined following a study by the technicalassistance consultants in 1985: the consultants' terms of reference also highlighted their responsibilityfor skills transfer. The World Bank also reviewed the training program in 1986 and maderecommendationls. The training was to be a mixture of on-the-job training, local (at the Ma'antraining centre) and overseas training. The program never received the detailed planning or resourcesit required to be successful. In particular, counterpart staff were not often available; there was onlylimited "skills transfer", and the turnover rate of trained personnel remained high - reaching 80percent in some cases.

5.9 Technical assistance, financed bv ARC, addressed two main issues:

- Railway Operation, which was an extension of a program started in 1980 with theconsultant RITES continued until 1988. Its main success was the high standard ofwork achieved on track renewal. Although, during the period that the consultantswere working at ARC, traffic declined steadily, this was not a function of theirperformance. The decline was probably due to the original poor track condition, theunsatisfactory locomotive maintenance facilities, the rapid turnover in staff and thelack of coordination between ARC and JPMC. Nonetheless, the component appearsto have made little contribution to upgrading operations on a sustainable basis andmanagement remains weak.

- Cost Accounting, was undertaken by a Jordanian firm of accountants. Whilstaccounting procedures improved as a result of this component, the system was notreally appropriate for railway management and a modern management informationsystem.

An independent study by Austria Rail, financed under the Austrian Consultant Trust Fund, produced areport analyzing these problems, and, based on this report and other findings, the Third TransportProject will address the subsector issues.

5.10 Port Component. The port component was limited to training and was financed by TPCusing a combination of in-house training in the Aqaba TPC training centre and overseas study tours.As the traffic through Aqaba port grew during the Iran-Iraq war, the amount of effort allocated totraining declined. However, the performance of TPC under difficult circumstances was impressive,implying an acceptable level of staff skills and application. Nonetheless, in the future training must

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receive greater attention if new market opportunities are to be developed and new technologies are tobe absorbed.

6. Project Results

6.1 Despite the tremendous pressure that the Iran-Iraq war placed upon the transportinfrastructure, the hiatus on construction activity during the Gulf crisis, the impact of the efforts toabsorb thousands of refugees and the severe economic downturn, the physical components of theproject were completed satisfactorily.

6.2 ARC operation was the one area of less than satisfactory performance. Over much of theproject period, phosphate transported by rail showed a steady decline, as opposed to the estimates atappraisal.

Phosphate Transport by ARC ('000 tons)

1984 1985 1986 1987 1988

Appraisal 2700 3000 3700 4000 4400Actual 3153 2473 2784 2584 2249

This decline and failure to meet appraisal estimates was due to a number of factors, in particular:

- The appraisal estimates assumed an immediate improvement in ARC performance, andthis was unrealistic as it was clear that institutional, physical and operationalimprovements would take several years to put in place and to have an impact onoperations.

- The limited port storage facilities were adversely affected by the increase in thenumber of grades of phosphate being exported via Aqaba, effectively reducing storagecapacity and limiting the railway capacity.

- Continued decline in the original infrastructure leading to derailments and reducedoperating speeds.

- The absence of a transport agreement between ARC and JPMC led to a lack ofcoordination and a failure, on occasion, to use fully the available ARC capacity. Weshould point out, however, that the relatively low road-user charges did not influencemodal choice: ARC capacity was the limiting factor.

6.3 However, in the years since the substantial completion of the engineering works, traffichas begun to recover.

1989 1990 1991 1992 (est)

Million Tons 2.2 2.6 2.9 3.0

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Having said this, it must still be emphasized, especially regarding operating standards, modernmanagement techniques, skills levels and locomotive availability that the project was less thansuccessful, and much remains to be done. Management remains deficient in most areas and, with fewexceptions, lacks the necessary skills to run what is basically a simple transport operation. This hasbeen emphasized in several reports submitted to the Government and in Bank supervision missions butno action has been taken. It is clear that, until the corporation is restructured along commercial linesand suitably trained, experienced and motivated management staff are employed, ARC will continueto operate below capacity and with an unsatisfactory reliability record.

6.4 Equally, institutional reforms in MPWH were not fully achieved, and management andplanning remain slow, with considerable operational inefficiency. Furthermore, the Ministry needs tobe more receptive to new ideas at the technical and planning levels. This includes rigorous projectevaluation and compliance with strict investment criteria. This is a serious issue, bearing in mind thecentral position of this Ministry and the size of its budget. Had the Government been able to identifyand arrange acceptable financing for technical assistance, management would have been improved.This entire issue including using loan proceeds for technical assistance is one that should be addressedat the country level.

7. Economic Reevaluation

7.1 The SAR best estimate gave an overall economic rate of return (ERR) of 18 percent, withlow and high estimates of 15 percent and 22 percent. The highway component was estimated to yieldan overall ERR of 16 percent and the ARC component, 20 percent. No ERR was calculated fortechnical assistance, training or institutional components. The primary beneficiaries were thetransport companies operating between the port of Aqaba and Iraq who gained from the improvementof the Azraq-Iraqi Border Highway. However, it is estimated that about 25 percent of this is non-Jordanian transit traffic, and, thus, not all the vehicle operating cost saving benefits accrue to Jordan.Traffic statistics are not comprehensive, and it has not been possible to obtain information on specialfinancial arrangements that may have existed between the two countries - for example, the provisionof cheap oil to Jordan in return for transit rights. As secondary benefits from road improvement, theport of Aqaba has probably retained more transit traffic because of the improved road link, again,these benefits cannot be quantified due to the lack of data. The project as eventually implementedwas somewhat modified from that originally evaluated, and an exact economic reevaluation is notpossible but the overall ERR is estimated at 24 percent (see Table 6). However, the variouscomponents have been reexamined, as described in the following paragraphs.

7.2 Aqaba Back Road. This comprises 30 km from Wadi Yutum to Wadi 2 and a 6 km spurto Aqaba container port. At appraisal this component was estimated to have an ERR of 20 percentbased on a cost of JD 13.4 million. The actual contract price, including major design changes, was17 percent higher at JD 15.7 million; the sensitivity analysis at appraisal indicated that a rise in priceof 15 percent would still yield an ERR of 16 percent based on distance savings for vehicles.However, although this road has been completed it was not opened until recently and no traffic countsare available and the economic re-evaluation must be hypothetical. Although, in the short-term,traffic is likely to be less than originally estimated, the cost of vehicle operation (based on a recentstudy for the Third Transport Project) has increased - the operating cost of heavy lorries, whichwould comprise most of the traffic, has risen by 134 percent compared with appraisal. The economicviability of this component is closely linked to the future level of traffic and this depends on a numberof factors, including the political situation in the region especially as it affects Iraqi transit traffic.

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Furthernore, the vertical geometry of about 3 km of the road is not good with gradients up to 7percent over quite long sections, and rest and recreational facilities for drivers are very limited.Although climbing lanes exist on steep sections, the potential for accidents is considerable. Thesefactors, including the drivers' preference to stay in Aqaba, raise doubts over hov much traffic willvoluntarily divert to the road. In consequence, it may be necessary, especially to reduce pollutionand traffic congestion in Aqaba, to place special restrictions on certain truck traffic using the roadthrough Aqaba.

7.3 In the absence of a resumption of large-scale Iraqi transit traffic, most traffic on the newroad would be generated by the fertilizer complex at Wadi 2 (especially phosphate inputs) and thecontainer terminal. The basic traffic, with origins and destinations in Jordan, is estimated at about700 heavy vehicles a day or 255,500 p.a. The 1992 estimated typical economic vehicle operating cost(voc) for these vehicles was 563 fils/km and the average distance saving is estimated at 20 km. Onthis basis, and assuming a 2 percent p.a. traffic growth and a bituminous concrete overlay in year six,the voc saving would yield an ERR of 11 percent over a 10-year period (Table 7). In addition, ofcourse, there would be environmental benefits due to reduced traffic passing through Aqaba and vocbenefits due to reduced traffic congestion, but there must still be reservations about the road'seconomic viability.

7.4 Azraq-Iraqi Border Highway Section D. This road was not specifically included in theproject at appraisal but was substituted in Bank financing for the Aqaba "Back Road" and pavementstrengthening. The original 1987 feasibility study included benefits from road maintenance savings,vehicle operating cost (voc) savings and road accident savings. These, with a construction costestimate of about JD 6.8 million, yielded an estimated ERR of 68 percent. The road was completedin August 1992 at a cost of JD 6.887 million, which was very close to the feasibility study estimate.However, traffic counts have shown that actual traffic, with the exception of cars, was lower than thefeasibility study estimate. This was not unexpected: although the estimate had predicted a declinewith the end of the Iran-Iraq war, it had not allowed for the Gulf crisis and the ensuing embargo ofIraq.

Azraq-iraqi Border Highway: Estimated and Actual Average Daily Traffic

AppraisalEstimated Actual Dec. 1992

Cars 154 435Pick-ups/Light Commn. 164 60Heavy Freight 1,673 635Buses 49 12

7.5 Nonetheless, this lower-than-forecast traffic was partly balanced by the significant rise intypical vehicle operating costs (see Aqaba Back Road above). Furthermore, the road had deterioratedto such an extent that the voc savings were higher than anticipated: cars, 20 percent; lightcommercial, 18 percent; heavy freight, 27.5 percent; and buses, 15 percent. As a result, despite thelower traffic, the project, analyzed over a 10-year period (traffic growing at an estimated 2 percentand allowing for a bituminous concrete overlay in year six), yields an ERR of about 26 percent.

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Gross benefits have been reduced by 25 percent to account for non-Jordanian vehicles (Table 8).Data on maintenance and road accident savings are not available and have not been included in thereevaluation.

7.6 Aqaba Railway Corporation. During the course of project implementation, theperformance of ARC did not reflect the considerable resources allocated to it. Over much of theperiod, the transport of phosphate declined; locomotive availability declined; and reliability declined.This was, understandable as the age and light standard of the infrastructure and much of theequipment led to frequent breakdowns, derailments and speed restriction. It was unrealistic in theappraisal report to expect the investment and technical assistance program to show immediate benefitsduring a period of major infrastructure renewal and structural change. The economic evaluationshould have been carried out over a much longer time horizon than the one used in the SAR.Consequently, although since 1989 ARC has shown signs of recovery, with traffic beginning to growagain and the financial situation, as measured by Net Operating Results, reflecting a slightimprovement in operations, a direct comparison with the appraisal economic evaluation of thecomponent would be of limited value. It is recommended that economic reevaluation should bereviewed during the course of implementing the Third Transport Project once a clear trend can bedetected and analyzed. However, although transport cost data are not readily available and sometimesunreliable, an attempt to assess economic benefits has been made. This is based on the realisticassumption that without the project investment programme ARC's operations would have ceased by1990: an already weak infrastructure would have deteriorated rapidly and rolling stock and motivepower would have become inadequate and unreliable. Consequently, all phosphate would have to betransported by road. In addition to the increased pressure on the road system, a need for extrainvestment in Aqaba port and environmental damage to Aqaba town, significant incremental economictransport costs would be incurred.

7.7 Based on vehicle operating data obtained during preparation of the Third HighwayProject, it is estimated that the economic cost of a "typical" truck carrying phosphate would beJDO.56 km but due to the high incidence of difficult operating conditions on the Ras El Naqabescarpment JDO.65 km would be more likely. Assuming compliance with axle load regulations, theeconomic cost of transporting one tonne of phosphate from the El Hassa/Al Abiad mines to Aqabaport would range between JD4.26 and JD8.52 depending on load factor: the actual average costwould lie between these two figures. In arriving at these figures a cost component of 1.7 fils t/km(updated from a 1986 study by Canadian Pacific Consulting Services), reflecting incremental roadmaintenance expenditures attributed by heavy vehicles, has been included: this represents an increasein transport cost per tonne of between 4 percent and 8 percent. This indicates that transport pricesnegotiated between JPMC and road transporters do not fully cover costs although perceived runningcosts were covered. Where capacity of empty returning vehicles was used, this would represent aneconomic use of resources. However, an increasing amount of road vehicles are "flat-beds" forcontainer transport and cannot be used for bulk phosphate movement. Moreover, many truckoperators were not willing to participate in this traffic as it could lead to increased costs and loss ofbusiness due to cleaning, higher voc of heavily loaded vehicles and loading and unloading times.Transport according to this system is unreliable. In one case where a large transporter convertedsurplus vehicles to carry phosphate, the company quickly realized that the rate paid by JPMC wasfinancially unviable; the renegotiated rate was higher than the prevailing ARC tariff.

7.8 An examination of ARC's 1991 traffic and financial results shows operating costs(including depreciation) of transporting one tonne of phosphate at JD3.03. This does not include debt

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service but, equally, road transport costs do not include an item for past road investment. Theeconomic cost would be slightly lower.

7.9 Using the above information and assuming a constant level of phosphate rail traffic of 3million tons per annum (1991 figure), the transport cost savings stemming from the project's railwayinvestment programme range from JD3.27 million to JD15.63 million per annum, again depending onload factor assumptions. For the purpose of this reevaluation we have assumed that vehicles, onaverage, would have a 75 percent load factor and that the average load would be 30 tons. (In orderto arrive at a more precise estimate it would be necessary to undertake a special study of phosphatetransport by road which is beyond the scope of PCR preparation). This would lead to economictransport cost savings of JD3.3 per tonne by using the rail option, or approximately JD 10 millionp.a. The economic rate of return over a 10 year period would be 31.5 percent (see Table 9). Thedecline of traffic on ARC during the construction period was largely due to the progressivedeterioration of the system, and only marginally due to the construction works. Consequently, wehave not considered the transfer of phosphate traffic to road transport during this period as a projectcost. However, this reevaluation assumes the continuation of phosphate being transported from thenorthern mines of El Hassa and Al Abiad to Aqaba. Should these mines be phased out (to bereplaced by El Shidiya) before 2003 the ERR would fall. However, even a five year period ofoperation would yield an ERR in excess of 20 percent. The future of ARC would be strongereconomically and financially if the proposed spur line linking Batn el Ghul were to be built: capacitywould increase with the shorter distance, and the removal of the need to operate over and to maintainthe low standard line between Ma'an and the northern mines would lead to significant savings.

7.10 This tentative re-evaluation indicates that, despite the many problems duringimplementation, the ARC sub-component of the project was economically viable and justified.However, it is important to emphasize that this will only remain the case if ARC is effectivelyrestructured, improved operations and management systems are introduced, a carefully designedpersonnel policy is put in place and, above all, the management cadre is strengthened by recruitmentof skilled and experienced personnel. These critical issues, which are examined in detail in TheAustria Rail Engineering Report (para. 5.9), will be addressed under the Third Transport Project.However, it is also important to point out that currently Jordan's phosphate export markets areseverely constrained. This has come about primarily due to the loss of markets in Poland, Yugoslaviaand elsewhere in Eastern Europe and reduced demand from India. Early recovery is not expected anddevelopment of El Shidiya may be slower than planned.

8. Aqaba Railway Corporation's Financial Performance

8.1 Investment and the technical assistance strategy in ARC were predicated on four premises:

(a) The international phosphate market would grow, and Jordan would capture ashare of the growth.

(b) ARC would be able to increase its share of the market (it had carried 3.2million tons in 1984). It was believed, rather unrealistically, that suchincreases (4.4 million tons in 1988) and increased productivity would improveprofitability so that fixed costs and debt service would eventually be fullycovered. Full financial viability by 1988 was the target.

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(c) The technical assistance program in planning and operations would take rootand enable ARC, on a sustainable basis, to develop into an efficient operation.

(d) Jordan would, thus, be able to borrow from bilateral and multilateral sourcesand use suppliers' credits to carry out this program (under the assumption thatthe Jordanian dinar would maintain its strength for the foreseeable future).

As described in para. 7.6, this was an unrealistic scenario, bearing in mind that economic warningsigns were already visible and that considerable time would be needed to put all the physical andinstitutional improvements in place. Above all, efficient operational practices were critical. In thiscontext, ARC did not fully benefit from the technical assistance program's skills transfer as theexperts were so preoccupied with line management that little time was available for training.

8.2 ARC financial statements (income, sources and applications of funds and balance sheet)pertaining to the project implementation period 1985 to 1992 are given in Tables 10, 11 and 12. Ascan be seen, the actual financial performance was well below the forecasts at appraisal. At appraisal,operating profits between 1985 and 1990 were expected to rise from JDI.34 million to JD4.044million. In the event, there was a loss in all but 1986 and 1987. In fact, if phosphate freight revenueis compared with operating expenses an operating profit was made only in 1987. And, again, ifphosphate freight revenues alone are considered the return on net fixed assets was negative or veryminuscule (1986 = 0.1 percent; 1987 = 1.1 percent). By 1990 ARC accumulated losses were higherthan ARC capital; in other words, ARC was and is technically bankrupt. Of course, this was notentirely the fault of ARC. The high cost of servicing the ARC foreign debt increased out of allexpectation due, primarily, to the radical devaluation of the Jordanian dinar as a result of theeconomic crisis and the loss of confidence following the Gulf crisis. Although the net operatingresults were almost in balance in 1991, cumulative interest, plus currency adjustments in 1991,amounted to nearly 40 percent more than total operating revenue and rose about 10 times after projectstart-up.

8.3 Since 1989, when the programme was largely complete, phosphate freight revenue hasrisen by 72.3 percent and operating expenses by 45.3 percent, but, it must be remembered that duringthis period tariffs were raised by 37 percent. To establish levels of productivity, operating expensesshould be compared with the amount of traffic and this shows traffic increasing by 32 percent andoperating expenses by 45.3 percent. In other words operating expenses appear to be growing fasterthan traffic: productivity is declining. In the absence of compensating tariff increases or productivityimprovements the medium-term financial picture remains bleak.

8.4 It is important to emphasize the need for ARC to increase its traffic, productivity and itstariffs if it is to become financially viable and this will best be achieved through effectivecorporatization and commercialization. Currently, the tariff is at a level where operating expenses,including depreciation, are just about covered. To cover debt service of about JD 2 million p.a.,given the recently JPMC guaranteed 3.5 million tons of traffic annually, rates would have to beincreased by around 20 percent. If traffic increased to 4 million tons, the 20 percent rate increasewould lead to a profit of about JD 300,000 and clearly this is inadequate. In order to obtain a yieldof 10 percent, rates would have to be raised by a further 22 percent. Finally, in order to tackle theaccumulated deficit over a 10-year period, an additional, overall increase of about 10 percent wouldbe required. Taking account of the estimates of voc (para. 7.7) such increases should be possiblewithout impacting upon ARC's competitive position. However, many road transporters, especially

_~~~~~- - - - - - - - - - - -- - - - , _ .- - . .......

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small operators, perceive only short-term operating costs and base their pricing policies on these.The fact that such policy eventually leads to business failure does not stop the process from beingrepeated. A contributory factor, permitting undercutting by road transport, is the ability of truckowners to overload their vehicles although this inevitably leads to economic costs which are metthrough public spending. In this context it is most important for the country's economic benefit andARC's financial health that axle load regulations are rigorously enforced and that heavy vehicles payuser charges in relation to the damage they cause to the road network. This is being addressed underthe Third Transport Project.

9. Bank-Borrower Performnance and Relationship

9.1 During the course of project implementation there were frequent changes of personnel inthe various agencies, which led to delays. These were particularly noticeable regarding procurement,with issues being apparently resolved and then reasserting themselves. It should be stressed thatduring the entire implementation process, Jordan was faced with a wide range of major economic andpolitical problems that impacted upon the different agencies. Nonetheless, the agencies met thesechallenges in a generally effective way and cooperated to the best of their ability with the WorldBank.

9.2 The Ministry of Planning, although suffering from personnel changes, performed well atall levels and cooperated closely with the World Bank. The MPWH performed adequately inoverseeing civil works contracts. However, recent technical studies, carried out by a specialistresearch organization, have shown that road design and engineering procedures need to be revised andupdated. There is also a clear need to review road maintenance procedures if these are to be mademore cost effective: potential benefits of privatization of certain maintenance operations should beexamined. These matters, together with organization reforms and training, are being addressed underthe Third Transport Project. For much of the time, the Ministry of Transport (MT) management didnot actively participate in the project, and this, combined with a limited commitment to the project,resulted in implementation problems and lack of support for ARC. This should have been addressedmore closely during appraisal. In particular greater emphasis, supported by loan covenants, shouldhave been placed on appointing suitably skilled, experienced and motivated management personnel toARC. Technical assistance is no substitute for this. It was fortunate that the Permanent WayDepartment was headed by a competent and dynamic engineer who assumed a wide range ofresponsibilities and carried them out efficiently.

9.3 More technical assistance would probably have eased implementation and would certainlyhave strengthened the MT. However, it was most important that the technical assistance staff not beabsorbed in line management positions and not assume the duties of Jordanian staff in order to have asustainable impact through skills transfer. Unfortunately, in the case of ARC, the technical assistancestaff did not escape these pitfalls, which severely impacted upon the success of the technical assistanceto ARC.

10. Project Documentation and Data

10.1 Generally, the SAR and legal documents and amendments provided a satisfactoryframework for project implementation. The most significant deficiency was the absence of even anoutline for economic evaluation in the SAR: this also had an effect on economic reevaluation.

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Bearing in mind that the absence of detailed planning and an economic evaluation of investments wereseen as major weaknesses in most sectors, these lacunae were an important gap in the documentation.

10.2 The data availability for the preparation of the PCR was patchy. In particular, (i)information on the achievements of the ARC and TPC training programs was lacking; (ii) traffic datarelating to project roads was limited and based on surveys of short duration; (iii) there was no systemof progress reporting for the project as a whole (although World Bank supervision reports to someextent plugged this gap, progress reports seen from the MP perspective would have been useful andmay have assisted in project management); and (iv) progress reports on the implementation ofcofinanced components and training were almost completely lacking. Field enquiries would havefacilitated preparation of the PCR, especially regarding economic re-evaluation, but this was notpossible.

11. Status of Covenants

11.1 The Borrower complied with all the covenants (Table 14) with the exception of therequirement that ARC cash generation be sufficient to cover (i) operating expenses and (ii)depreciation or debt servicing, whichever is higher. This covenant was not complied with due tofalling traffic, a delay in the tariff increase until 1990 and, above all, the exceptional increase in debtservice requirements following the devaluation of the Jordanian dinar. Although great emphasisappears to have been placed at appraisal on the enforcement of axle load legislation, this was notcovenanted.

12. Lessons Learned

12. 1 Project implementation highlighted a number of areas that should be focussed on in futuretransport projects:

(a) The Bank should reach agreement at the highest level with the differentBorrowers on the acceptance of the World Bank Procurement Guidelines, andStandard Bidding Document for Works which has now been made obligatoryon Bank-financed projects. This would do more than anything else to speedup project implementation and loan disbursement. The implications of thispolicy need to be explained to Borrowers during project preparation andagreed to before appraisal takes place.

(b) Similarly, technical and economic feasibility studies should be updated andagreed to before appraisal takes place. Failure to do this may lead tomisunderstanding: in the case of the Aqaba Back Road, it led to considerabledelay and a waste of staff time.

(c) Care should be taken in estimating the time required and the phasing ofdifferent operations in achieving institutional and policy reform. The ARCcomponent is a case in point: almost instant improvement in operations wasassumed when improvements to the operating facilities and improvement instaff skills would clearly take several years. As a result, the ARCmanagement did not receive the technical assistance support when it wasneeded, and unrealistic performance targets were set.

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(d) Greater care should be taken in designing and preparing training components.They should be agreed to in detail at appraisal, and adequate resources shouldbe allocated to their supervision. There was a tendency with this project totreat training as an add-on although it was central to achieving some of theproject objectives.

(e) Transport is essentially a service industry, and, consequently, its performanceand plans for improving its performance should be prepared with the customerin mind. This is especially so where, as in the case of ARC, a company hasonly one major client. Some form of long-term cooperation agreement shouldbe arranged, and, an interface established with other transport modes (in thiscase, port facilities, especially storage), which can present a major constrainton practical capacity.

(f) Technical assistance needs should be agreed and financed beforeimplementation begins. And, they should, in the case of managementtechnical assistance, be implemented within an agreed programme ofrestructuring.

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HASHEMITE KINGDOM OF JORDANMULTI-MODE TRANSPORT PROJECT, LOAN 2463-JO


PART TWOPROJECT REVIEW FROM BORROWER'S PERSPECTIVE

1. Aqaba Railway Corporation

1 .1 Since 1980, there was an urgent need to improve the ARC railway track between Ma'anand Aqaba in order to improve the operations and financial standing. Without the rehabilitation of thetrack, all ARC's operations would probably have stopped due to the high number of accidents.

1.2 ARC had finished the rehabilitation of the track between Ma'an and Aqaba, consequentlythe turnaround of the wagon was reduced, and led to the increase in the efficiency and to the decreaseof the operation cost.

1.3 Many of the measures which can increase the capacity and improve the efficiency of arailway system in developing countries are of an organizational nature, and can usually beimplemented at low cost. In many cases, the reserves are indeed available, but remain under-utilizedand unrecognized due to deficiencies in operation, management and planning.

1.4 The mission helped ARC personnel to tackle the problems in a different manner. Weappreciate the World Bank stand on the necessity to make management, maintenance and operationstudies for the ARC.

1.5 There is an urgent need at the present time to find financiers for the Shidiya Railway Linkproject. This project could have been included in the World Bank Third Transport Project but due tothe delayed response of ARC it was cancelled. This was a good lesson to be learned.

1.6 The analysis of the issues related to the project shows that in addition to the projecteconomic and financial benefits to ARC, there were other types of benefits which did not materialize,such as:

- New ways in looking at the operation and management of the system

- New experience and knowledge were earned while dealing with the World Bankmissions

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- It is thought that the project was successful and if there were some small deficiencieshere and there, the World Bank was not to be blame.

2. Azraq-Iraqi Border Highway Project, Section D

2.1 The project was satisfactorily completed with cooperation between the Ministry and WorldBank personnel. Such cooperation and mutual consultation between the concerned agencies led to asatisfactory completion of the project.

2.2 Cooperation and advice from the World Bank staff added considerable encouragement tothe proper progress of work and the solution of all problems met during construction. Variationorders where needed, were analyzed and approved by the World Bank in due time.

2.3 This project was a good example of economic development for Jordan and facilitatedtransit traffic between Jordan (Aqaba) and Iraq. Recent traffic counts on the road and informationabout axle loads using the road are provided.

2.4 The final report about the project prepared by the supervising consultant is available in tlieMENA information center. The consultant carried out his duties, properly acting in a fair mannerbetween the employer and the contractor.

2.5 The execution of the project encountered conditions and circumstances beyo,sd i'. -:ntroland resulted in extension of the project execution period.

2.6 Furthermore, this project requires before commencement of the main highway works, toprepare, improve and maintain the old existing road or construct a new road to serve as detours forthe heavy traffic between Jordan and Iraq during the construction period.

2.7 The project site and camps became the scene of operations for the evacuation of hundredsof thousand of different nationalities from Kuwait and Iraq to their countries. The JordanGovernment built camps at the site of our project to shelter tens of thousands of the evacuees. Theirpresence disrupted work and delay the project completion time.

2.8 The Ministry had granted an extension of time because of such difficulties, economicfluctuation, climatic conditions, and some difficulties to find good materials according to thespecifications.

2.9 The contractor was able to construct the works in accordance with specifications andstandards of the project. The project was completed without delay on August 15, 1992.

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HASHEMITE KINGDOM OF JORDAN

MULTI-MODE TRANSPORT PROJECT, LOAN 2463-JO


PART THREESTATISTICAL INFORMATION

Table 1: Related Bank Loans

Reference Purpose Approved Status

Credit 262-JO Civil works and June 1971 Completedtechnical assist. December 1974

Table 2: Project Timetable

Item Planned Revised Actual

Identification (PB) May 1983 - May 1983Preparation Aug. 1983 - Aug. 1983Appraisal Mission Nov./Dec. 1983 - Nov./Dec. 1983Negotiations May 1984 - May 1984Board Approval July 1984 - July 1984Loan Signature Aug. 1984 - Aug. 1984Effectiveness Nov. 1984 - Feb. 1985Disb. % Amendment Feb. 1991Loan Closed June 30, 1990 thrice Dec. 31, 1992Loan Account Closed Oct. 1990 - April 30, 1993

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Table 3: Project Description

The objectives of the project are to ease critical transport bottlenecks on Jordan's principal trade routes inorder to facilitate the movement of key commnodities and to strengthen the technical, financial and managerialcapabilities of the operating entities responsible for the transport sector in Jordan.

The project consists of:

Part A: Highways

(a) A maintenance program for strengthening, through asphalt overlay, sections of the highway network, tosatisfy the evaluation criteria referred to in Section 3.03 of this Agreement; the following sections shall be thefirst to be so evaluated:

(i) Azraq-Saudi border (about 50 km)(ii) Juwaidah-Azraq-lraqi border (about 320 km)(iii) Access roads to the International Airport (about 35 km)(iv) Al Hashimiyah-Rihab (about 30 km)

(b) The construction of a highway of about 30 km connecting Wadi Yutum to Wadi 2 and of a spur of about 6km connecting said highway to the container Port of Aqaba.

(c) The provision of highway maintenance and testing equipment.

(d) Technical assistance (a) to strengthen the management, planning and operational capabilities of MPWH inhighway maintenance, and to assist in the preparation of a program for periodic and routine highwaymaintenance; and (b) to assist in the preparation and implementation of a training program for MPWH staff.

Part B: Railways

(a) The expansion of the ARC workshop for locomotive maintenance at Aqaba.

(b) Track renewal, including the provision of necessary materials, of the following priority railway sections:

(i) Rum-Aqaba (about 31 km)(ii) Batn El Ghul-Disi (about 40 km)(iii) El Hassa-Jerouf-Maan (about 30 kni)

(c) The provision of: (a) machinery for track renewal; (b) a breakdown crane; (c) about 90 freight wagons; and(d) locomotive spare parts.

(d) Improving the ARC accounting system and implementing a training program for ARC staff, including theprovision of training equipment and materials.

Part C: Port:

A training program designed to ensure the effective handling by TPC of its transport operations, which areinterdependent with other transport modes. The program includes the training of TPC staff in container, generalcargo and shipping operations; phosphate handling and storage; equipment maintenance; project planning; andfinance and administration.

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Table 4: Loan Categories and Actual Disbursements (US$ million)

Category Original %Disb Revised % Disb Act. Disb.

Part A of Project

I) Civil Works (1) 8.3 60 9.3 75 8.092) Equipment (3) 0.5 100 for. 0.4 90 0.43) Training 0.2 100 for. 0.17 100 for. 0

Part B of Project

4) Materials for 18.4 100 for. 18.2 100 for. 19.36Track Renewal (2) 100 loc. 100 loc.

ex. Fact. ex. Fact.

5) Consultants 0.2 100 for. 0.26 65 0.2776) Locomotive Spares - - 1.64 100 for. 1.645

(3) new item7) Unallocated 2.4

Total 30.00 30.00 29.779

Table 5: Cumulative Estimated and Actual Disbursements(US$ million)

1985 1986 1987 1988 1989 1990 1991 1992 1993

Planned (SAR) 1.6 8.9 22.6 26.9 29.6 30.0 - -

Actual - 0.9 7.6 12.9 15.4 18.1 21.2 25.7 29.78

Actual % Planned 0 10 33 48 52 60 71 86 99.3

Table 6: Economic Impact

Appraisal Estimate ReevaluatedHighway Component:

Total 16% 15%

Aqaba Back Road 20% 11%

Azraq-lraqi Border Highway (68%)* 26%

Railway Component: 20% 31.5%

Overall: 18% 24%

* not included in appraisal estimate: result of 1987 feasibility study

- 23 -

Table 7: Aqaba Back Road

Year Cost (JD mill) Benefits (JD mill)

0 15.70

1 2.70

2 2.75

3 2.81

4 2.86

5 2.92

6 1.08 2.97

7 3.04

8 3.10

9 3.16

10 3.22

Economic Rate of Return 11. 1 %

Note: Routine road maintenance of about JD40,000 p.a. has been included in the calculation but is notshown in the table.

- 24 -

Table 8: Azrag-Iragi Border Highwav

Year Cost (JD mill) Benefits (JD mill)

0 6.887

1 2.11

2 2.16

3 2.20

4 2.24

5 2.29

6 2.100 2.33

7 2.38

8 2.43

9 2.48

10 2.53

Economic Rate of Return 26.4%

Note: Routine road maintenance of about JD70,000 p.a. has been included in the calculation but is notshown in the table.

Table 9: Return on ARC Investment

YEAR INVESTMENT (JD Million) Est Transport Cost Savings (JD Million)

1990 29.661* 10.0

1991 - 1999 1O.Op.a.

*Adjusted at 15% p.a. to take account of 4 year implementation.

Rate of Return: 10 year analysis period 31.5%5 year analysis period 20.4%

Table 10: Aqaba Railway Corporation (ARC) - Income Statement (JD '000)

For Year Ending December 1985 1986 1987 1988 1989 1990 1991

SAR ACTUAL SAR ACTUAL SAR ACTU AL SAR ACTUAL SAR ACTUAL SAR ACTUAL ACTUAL

Phosphate Freight ('000 tons) 3.0 2.5 3.7 2.8 4 0 2.6 4 4 2.3 4.4 2.2 4.4 2.6 2.9

OPERATING PREVENUES

Phosphate Freight 6,360 5,168 7,844 5,827 8,480 5,435 9.328 4,717 9,328 4,605 9,328 5,704 7,935Others 190 355 200 148 210 349 220 108 230 107 240 471 700Proposed Tariff Adjustments 652 - 1,236 1,827 - 2,577 - 3,172 - 3,797Total 7,202 5,523 9,280 5,975 10,517 5,784 12,125 4,825 12,730 4,712 13,365 6,175 8,635

OPERATING EXPENSES

PersonnelCosts andBenefits 1780 1,690 2,007 1,678 2,137 1,633 2,244 1,722 2,403 1,683 2,567 1,897 2,366ConsultancyServices 470 354 490 331 510 190 - 116 - - - 24 21

Fuel and Lubricants 762 719 902 851 1,014 743 1,107 812 1,107 774 1,107 889 1,037Maintenance 660 678 726 977 799 972 878 1,373 966 1,192 1,063 1,433 1,239Miscellaneous 440 708 460 501 480 11 500 591 520 649 540 554 409Depreciationand Write-offs 1,750 1,511 2,694 1,534 3,200 1,582 3,662 1,544 3,845 1,757 4,044 2,100 3,724Total 5862 5,660 7,279 5,872 8,140 5,130 8,391 6,158 8,841 6,055 9,321 6,897 8,796

Net OperatingIncome/<loss> 1,340 <153> 2,011 103 2,378 654 3,734 <1,333> 3,889 <1,343> 4,044 <722> <161>

NONOPERATING ITEMS

Interest Expense 1,418 861 1,917 1,593 2,119 1,895 2,055 2,689 1,924 6,190 1,546 4,856 2,091Currency Adjustmnent - 158 - 199 312 1,139 1,070 142 997.Prior Year Adjustmnents 1,418 1019 1.792 2,207 3,828 7,260 4,998 8,200Total 11.787

Net Income/ <loss> <78> < 1,156> 84 < 1,689 > 259 < 1,553 > 1,679 <5,161 > 1,965 <8,603 > 2,499 <5,720 > < 11,948

R-ATIOS

OperatingRatio % 81 102 78 98 77 89 69 128 69 228 70 112 102

Net Fixed Assets Base 43,777 34,449 55,429 33,596 63,968 28,942 68,487 24,481 68,675 24,779 68,897 30,126 38,739Return on Net Fixed Assets % 3.1 <0.4> 3.6 0.3 3.7 2.3 5.5 <5.4> 5.7 <5.4> 5.9 <2.4> <0.4>

'Iable 11: Aqaba Railvay Corporation (ARC) - Sources and Application of Funds" (JD'OOO)

For Year Eoidiiig Decenber 31 1985 1986 19487 1988 1989 990 199i

SAR ACTUAL SAR ACTUAL SAR ACTUAL SAR ACTUAL SAR ACTUAL. SAR ACTUAL ACTUAL

SOURCES

INTERNALLY GENERATEDNet Operating hicome/< Loss> 1,340 2,001 2,378 3.734 < 1,333 > 3.889 < 1,343 > 4,045 < 722 > < 161 >Add. Depreciatioiand Write offs 1,750 2,694 3,2(K) 3,662 1,544 3,845 1.757 4.044 2,100 3,724

Other Items <39> <5> 14 < 7,066 >

Subtotal 3,090 4.695 5,578 7,396 172 7,734 409 8,089 1,392 3.503

GOVERNMENT GRANTS:

FinancingProposedProject 2,570 2,760 1,430 2,289 1.212 9,641 1,413

Fiitancing Othcr Invcstmetits 5,020 640

Debt Service Support 750Sublotal 8,290 3,400 1,430 9.641

BORROWINGS.Proposed Project -IBRD 1,750 4,450 1,100 14,919

Proposed Project - IDB 3,100Proposed Projet - Other 1,532 377 96

Other Borrowings 6,382

Subtotal 4,827 1,196 14.919

TOTALSOURCES 17,762 12,922 8.204 7,396 2,461 7,734 1,621 8,089 11.033 12,829

APPLICATIONS

INVESTMENTS:Proposed Project 10,090 6,440 2,060 4.241 5,514 10,847 3,020

Othcr 5,020 640

Subtotal 15,110 7,080 2.060

DEBT SERVICE:Repaymentof Principal 2,030 2.758 2,758 3.391 674 3.161 1.015 2,653 985

Interest Payments 1,418 1,917 2,119 2,055 2,689 1,924 6.190 1,546 4,856 2,091

Others - Foreign Exchange Differenices 14,709

Subtotal 3,448 4,675 4,877 5,446 5,085 7,205 4.199 5.841 16.800

WORKING CAPITAL REQUIREMENTS

ExcludingCash - Increase/ < Decrease > <217> 266 448 235 < 5,390 > 204 < 10,978 > 261 < 8.141 >

TOTAL APPLICATIONS 18.341 12.021 7.385 5.681 2,214 5.289 1,741 4,460 10,999 11,679

CASH POSITION

AnnualSurplus/<Deficit> <579> 901 819 1,715 247 2.445 <120> 3.628 34 1,150

Opening Balance-Beginningof Year 720 141 1,042 1,861 3.576 6.021 201 34

Closing Balance at Year End 141 1,042 1,861 3,576 6,021 201 9,649 235 1 184

DEBT SERVICE COVERAGE - TIMES D 0.9 I.O 11 >4 1 5 1 9

NOTESI/ Annual Audited Financial Statements started including Sources and Applicatioits of Funids only trout 1988 oniward 2/ Iistalliiierits on toreigl loatls are paid by the Ninfistry of Finance The Ministry chiarges these installments toARC accuu n as showni in ARC Balaice Sheet as liabilities arsiiig to the Nlinistry It is, therelwret suggesiei1 thit octut cri cc covcicge r ilo he applicd

Table 12: Aqaba Railway Corporation (ARC) - Balance Sheet (JD '000)

For Year Ending December 31 1985 1986 1987 1988 1989 1990 1991

SAR Actual SAR Actual SAR Actual SAR Actual SAR I Actual SAR Actual Actual

ASSETS

CURRENT ASSETS

Cost 141 1,153 1,042 206 1,861 74 3,576 321 6,021 201 9,649 235 1,384

Accounts Receivable 616 2,029 793 1,720 899 3,700 1,036 4,378 1,088 1,678 1,142 311 786

Stores 1,763 4,587 1,853 2,841 1,945 6,884 2,042 4,503 2,144 4,202 2,252 5,204 4,709

Other 1,000 100 1,000 100 1,000 100 1,000 100 1,000 100 1,000 460 137

Subtotal 3,520 7,869 4,688 4,867 5,705 10,758 7,654 9,302 10,253 6,181 14,043 6,210 7,016

FIXED ASSETS

Land 35 191 35 191 35 167 35 167 35 167 35 167 177

Permanent Way 34,754 22,566 39,212 22,566 48,843 17,303 50,064 17,303 51,316 17,303 52,599 27,998 38,335

Buildings 1,473 3,599 5,923 3,662 6,367 3,806 6,845 3,808 7,358 4,939 7,910 4,939 6,817

Locomotives 7,878 5,363 8,479 5,023 9,115 6.259 9,799 6,000 10,534 6,000 11,324 6,000 6,665

Wagons 9,363 5,111 10,065 4,943 10,820 4,862 11,637 4,804 12,504 6,100 13,442 6,100 7,807

Communication Systems 2,060 657 2.215 663 2,381 1,179 2,560 633 2,752 1,770 2,958 1,619 1,619

Plant Machinery and Equipment 3,448 2,374 3,847 2,487 4,136 2,765 4,446 3,073 4,779 3,048 5,137 3,206 3,330

Vehicles and Furniture 635 414 682 428 733 272 788 272 847 232 910 194 182

Subtotal 59,646 40,275 70,458 39,963 82,430 36,613 86,169 36,060 90,125 39,559 94,315 50,223 65,932

Less: Accumulated Depreciation 8,323 5,826 10,923 7,220 14,029 11,472 17,597 12,240 21,348 13,821 25,298 15,708 21,969 t

Net Fixed Assets 51,323 34,449 59,535 32,743 68,401 25,141 68,572 23,820 68,777 25,738 69,017 34,514 42,963

Add: Work-in-progress 7,950 751 6,771 4,600 - 5,444 - 9,461 - 11,301 - 1,631 218

Sub-Total 59,273 35,200 66,306 37,343 68,401 30,585 68,572 33,281 68,777 37,039 69,017 36,145 43,181

DEF. LiABiLiTIES: TA and Training 110 - 196 - 282 - 188 - 94 - - - -

TOTAL ASSETS 62,903 43,069 71,190 42,210 74,388 41,343 76,414 42,583 79,124 43,220 83,060 42,355 50,197

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Accounts payable 1,200 3,076 1,200 3,121 950 4, 381 950 6,489 900 12,583 800 21,594 26,392

Current portion of LTD 2,7758 2.374 2,758 2,603 3,391 3,621 3,161 6,339 2,653 9,292 2,553 5,350 5,330

Subtotal 3,958 5,450 3,958 5,724 4,341 8,002 4,111 12,828 3,553 21,875 3,353 26,944 31,722

NON-CURRENT LiABILITIES

Long-Term Debt (LTD) 24,816 17,805 26,885 16,689 24,690 18,001 21,529 17,327 18,876 16,312 16,323 15,307 30,246

(Provision for Staff Termination Benefits 307 315 286 246 241 254 347

EOUITY

Capital 32,176 21,008 35,576 22,951 37,006 20,076 37,006 22,365 37,006 23,577 37,006 23,577 23,577

Revaluation Reserve 4,774 - 7,507 - 10,828 - 14,567 - 18,523 - 22,713 - -

Retained Earnings <Accumulated> <2,821 > 1,501 <2,736 > < 3,469 > < 2,477 > < 5,022 > < 799 > < 10,183 > 1,166 < 18,785 > 3,665 < 23,748 > < 35,695 >

Subtotal . 34,129 19,507 40,347 19,482 45,357 15,054 50,774 12,182 56,695 4,792 63,384 < 170> < 12,118 >

TOTAL LIABiLITIES AND EQUITY 62,903 43,069 71,190 42,210 74,388 41,343 76,414 42,583 79,124 43,220 83,060 42,355 50,197

Debt/Equity Ratio 41/59 48/52 40/60 46/54 34/66 56/44 29/71 59/41 25/75 77/23 21/79 101/<01> 167/<67>

Current Ratio 0.9 1.4 1.2 0 9 1.3 1 3 1 9 07 2.9 0.3 4 2 0 2 0 2

- 28 -

Table 13: Use of Bank Resources

A. Staffing Inputs by Task

Task FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90 FY91 FY92 FY93 Totalswks swks swks swks swks swks swks swks swks swks swks swks

LENA 20.5 38.3 58.8

LENN 9.8 5.8 .5 16.0

LENP 59.9 39.4 99.4

LOP 1.3 6.0 .3 7.6

Sub-total 91.5 89.5 .8 181.8

PAD .8 .3 .4 1.4

PCR .6 .6

SPN 9.3 32.5 20.8 16.0 12.7 9.6 8.6 19.0 9.0 137.5

Sub-

total 10.1 32.8 21.1 16.0 1 2.7 9.6 8.6 19.0 9.7 1 39.6

B. Supervision

Monthly/ No. of Staff Weeks Specialization Overall Rating of MainYear Persons in Field Represented Rating Problem Areas

Status

03/85 2 3 Highway Engineer 2 Managerial, FinancialRailway Engineer

08/85 1 1 Financial Analyst 2 Managerial, Financial

10/85 3 3 Highway Engineer 2 Managerial, FinancialTransport Economist

12/85 1 1 Railway Engineer 2 Managerial, Financial

12/85 1 I Pollution Specialist Phosphate dust control at AqabaPort satisfactory

04/86 1 1 Education Specialist The Port Corp. training proposals

04/86 1 1 Financial Analyst Financial problems

05/86 2 2 Highway Engineer 2 ManagerialTransport Economist Financial

07/86 2 4 Railway Engineer 2 Project Management 2Education Specialist Dev. Impact 2

- 29 -

B. Sunervision cont.

Monthly/ No. of Staff Weeks Specialization Overall Rating of MainYear Persons in Field Represented Rating Problem Areas

Status09/86 1 2 Highway Engineer Project Management and

Procurement

11/86 1 1 Education Specialist 2 Project Management 2Dev. Impact 2

03/87 1 1 Highway Engineer 2 Project Management 2Dev. Impact 2

10/87 2 2 Highway Engineer 2 Project Management 2Transport Economist Dev. Impact

02/88 2 2 Highway Engineer 2 Project Management 2Transport Economist Dev. Impact 2

05/88 3 3 Transport Economist Resolution of procurement issuesProcurement Specialist re civil works, bidding documentsLegal Specialist

10/88 2 5 Highway Engineer 2 Project Management 2Transport Economist Dev. Impact 2

02/89 2 4 Highway Engineer 2 Project Management 2Dev. Impact 2

03/89 1 1 Financial Analyst Combined deterioration offinancial performance

05/89 2 3 Highway Engineer 2 Financial 4Transport Economist Training 2

Procurement 2, TA 2

10/89 2 3 Highway Engineer 2 Financial 3, Training 2,Transport Economist Procurement 2, TA 2

02/90 2 5 Highway Engineer 2 Financial 3, Training 2,Transport Economist Procurement 2, TA 2

10/91 2 2 Civil Engineer 2 Financial 2, Training 2Transport Economist TA 2

06/92 3 9 Highway Engineer 2 Financial 2Pavement Specialist Training 2Institutional Specialist

12/92 2 2 Highway Engineer 2 Financial 2Transport Economist Training 3

TA = Technical Assistance

- 30 -

Table 14: Status of Covenants (as of January 1993)

LN/CR: 2463-JO TYPE: 0

DOC: LA SEC: 3.04(a) DUE DATE: 12/89 ACT. DATE: NA

DESCRIPTION: MPWH to prepare highway maintenance program.

REMINDER:/

REMARKS: Complied with annually: 1992 program under preparation.

LN/CR: 2463-JO TYPE: 0

DOC: LA SEC: 3.04(b) DUE DATE: 06/85 ACT. DATE: 09/85

DESCRIPTION: MPWH to prepare with consultants highway maintenance system.

REMINDER: /REMARKS: Completed. Maintenance Planning Department recently reformed.

LN/CR: 2463-JO TYPE: G

DOC: LA SEC: 3.07(c) DUE DATE: 03/89 ACT. DATE:

DESCRIPTION: Project entities to furnish quarterly progress reports.

REMINDER:/

REMARKS: Final progress report received from MPWH-.

LN/CR: 2463-JO TYPE: S

DOC: LA SEC: 3.09 DUE DATE: 12/85 ACT. DATE: 03/87

DESCRIPTION: TPC to investigate phosphate loading berth.

REMINDER:/

REMARKS: Complied with.

LN/CR: 2463-JO TYPE: F

DOC: PA SEC: 4.03 DUE DATE: 01/86 ACT. DATE:

DESCRIPTION: ARC to introduce commercial cost accounting.

REMINDER: /REMARKS: Progressive since 01/84 but should be reexamined and possibly

modified following the Austria Rail Engineering report.

LN/CR: 2463-JO TYPE: F

DOC: PA SEC: 4.04 DUE DATE: 01/86 ACT. DATE:

DESCRIPTION: ARC to adjust tariffs.

REMINDER: /REMARKS: Tariff increases August 1990 and March 1991 totalling 37%.