world bank document...performance was generally satisfactory, while the borrowe-'es performance...

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 16592

IMPLEMENTATION COMPLETION REPOIAT

REPUBLIC OF GIINIA-BISSA-!

INFRASTRUCTURE REHABILITATION PRO.JECT(Cr. 2074-(GtUB)

MVay 20, 1997

Water, Urban and Energy 2Africa Region

This document has a restricted distribution and may be used by recipients only in theperforrnance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

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CURRENCY EQlUIVAILFNTS

C'(rrencxl Inil1 v (,13 IPCe) (GBIP)

US$1 (,131' 2 o()(J (at appraisal, l)ecembCr 1989)

Us[5$] 1 [I(,1' 28212 ' (at closilo. [)cceintbre- * 1, I Q)96)

WEIGHTS AND MFASlRES

M/ltric S\stiClil

ABBREVIATIONS ANI) A( RONYMS

AlI)3 Ati-icani Developmilt BlailkAGEI:OPPE Public Works lF.xecutiue> Aenlc\BC(:' l'uF1.op1eanl ('Co0 tin 1.itxD)GEII (jenieral Directorate ot Roads anid B3ridciesi ND [National Developinieict lUnd(il'lPORT Private corinpainy t'or n1iaacemiielim ol'Bissau PortICR lilmplemeneltationl C'orilpletion Repo rtIDA International [)evelopmi eut Ax ,soc atioIRP InlrastrLicture Reliabil iation Pro jlct.IAPPC) Port Autliorityl.l-.(il!l N atolial l-,uiieeriin, LIaboratorxMFl-S Ministr\ of Social IltfriaStRtiCiiirC

MOPC lJ Miiistr ot0 'ublic WNorks. ( onsiniction anli t r1aii AFi'Fai rsMNi1'C Miilisti-N o0 l'ranlspolrt and (Comnminl icationsPl(IJ/lRP IRI' Coordiniation I'niit in M(O)PC IPCU)/PC T I1R C'oordination Unit in NiMistmr oi'Tr-anisport and ('orimmillUicatiosRODO[IUVIAI. [APUblic trucking and ri\e l traillspl(it corinpaln>SAR Stall Appraisal ReportSDR Special D)rawing RieohtSIL-() DIA'A PuLblic hus compal\n'I'A GB National Airline of Gincica-B3issaaI'l)lP ITransport anid U.rbali tii;ntfrsCttiruc PolojecCI IGREP Management I lilit for the Ref Orin o' Public FInterpriscs

FISCAI, Y A zlR

.Janlarl\ I - Dcceilh1cr I

Vice Presidenit: Jean- l.ou_is Sarhih. AFIR('ouLIntr\ [)ircctor: \'1Mah n od A. A tub, AFI' I4

sechnica Mariade-r Is Ic Pulan.-Vidal. A[ TU 21 askx Ieanli L eader . I .~i Pe . 'an, A l ''l'J

FOR OFFICIAL USE ONLY

IMPLEMENTATION COMPLETION REPORT

REPUBLIC OF GUINEA-BISSAU

INFRASTRUCTURE REHABILITATION PROJECT

(Cr. 2074-GUB)

TABLE OF CONTENTS

PREFACE ............................................................... iEVALUATION SUMMARY ............................................................. ii

PART I-IMPLEMENTATION ASSESSMENT .............................................................. 1A. PROJECT IDENTITY ............................................................... 1B. BACKGROUND .............................................................. 1IC. STATEMENT/EVALUATION OF PROJECT OBJECTIVES ............................................2D. ACHIEVEMENT OF PROJECT OBJECTIVES ..............................................................3E. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT .......4F. PROJECT SUSTAINABILITY .............................................................. 5G. BANK PERFORMANCE ............................................................... 5H. BORROWER PERFORMANCE .............................................................. 61. ASSESSMENT OF OUTCOME .............................................................. 6J. FUTURE OPERATION .............................................................. 6K. KEY LESSONS LEARNED .............................................................. 6

PART II. STATISTICAL ANNEXES .............................................................. 7TABLE 1 - SUMMARY OF ASSESSMENTS .............................................................. 7TABLE 2 - RELATED BANK LOANS/CREDITS .............................................................9TABLE 3 - PROJECT TIMETABLE ............................................................... 9TABLE 4 - LOAN/CREDIT DISBURSEMENTS ............................................................. 10TABLE 5 - KEY INDICATORS ............................................................. 10TABLE 6 - STUDIES .............................................................. 1.1TABLE 7A - PROJECT COSTS .............................................................. 12TABLE 7B - PROJECT FINANCING .............................................................. 12TABLE 8 - ECONOMIC EVALUATION ......... ..................................................... 12TABLE 9 - ECONOMIC RATE OF RETURN ............................... 13TABLE 10 - STATUS OF LEGAL COVENANTS ............................. 13TABLE 11 - IDA RESOURCES: STAFF INPUTS. ...................................... 14TABLE 12. BANK RESOURCES: MISSIONS ............................. 15

LIST OF ANNEXES

ANNEX I - BORROWER CONTRIBUTION TO THE ICRANNEX 2 - LAST MISSION'S AIDE-MEMOIREMAP - IBRD 21464

This document hag a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not odierwise be disclosed withoutWorld Bank authorization.




(Cr. 2074-GUB)

PREFACE

This is the Implementation Completion Report (ICR) for the Infrastructure RehabilitationProject (IRP) in Guinea-Bissau, for which Credit 2074-GUB in the amount of SDR 18.5 million(US$23.6 million equivalent) was approved on December 14, 1989, and made effective on June 5,1990.

The credit was closed on December 31, 1996, a year later than originally planned. It wasfully disbursed and the last disbursement made on April 11, 1997. No cofinancing was involved.

The ICR was prepared by Leslie R. Pean, Task Manager, AFTU2, in the Africa Region,reviewed by Mr. Mahmood A. Ayub, Country Director (CD14), and edited by Mrs. Pushpa N.Schwartz.

Preparation of this ICR began during the Bank's final supervision/completion mission ofJune 1996. The ICR is based on the Staff Appraisal Report, the Credit Agreement, supervisionreports, field visits, discussions with the project staff, and materials in the implementing agency files,and the project file. The Borrower contributed to preparation of the ICR providing information forthe statistical tables, and commenting on the draft ICR. These comments have been incorporated.




(Cr. 2074-GUB)

EVALUATION SUMMARY

Introduction

1. IDA assisted the transport and infrastructure sectors in Guinea-Bissau through six previouscredits: the First and Second Roads Projects (Cr. 878 and 1473/F0l 8-GUB), the Port of BissauProject (Cr. 1392-GUB), the First and Second Reconstruction Import Credits (Cr. 1531 and A 14-GUB), and the Social and Infrastructure Relief Project (Cr. 2020-GUB). The operations supportedby these credits sought to modernize the Port of Bissau, strengthen road management, provide spareparts and equipment, and rehabilitate road and water transport, improve basic services andcommunity facilities, and generate employment. The Infrastructure Rehabilitation Project (IRP) wasdesigned to meet the country's needs and was in line with the Bank's Country Assistance Strategywhich sought to create conditions for long-term economic development and remedy financialimbalances by limiting new investments to the most essential needs. The transport sector, whichcould have required 30% of public investment over the coming five years, was a critical area wherefailure to achieve balanced development could have implied heavy losses in other sectors and a slowdown in the impetus for liberalization under the Government's Structural Adjustment Program(SAP).

Project Objectives

2. The main objectives of the IRP were to (a) strengthen Government institutions involved inthe transport sectors in the management of maintenance and operations; planning and coordination ofsector activities; and financial management of public transport companies; (b) contribute to a greaterequilibrium between road and river transport; (c) remove bottlenecks to increased agriculturalproduction; (d) improve municipal management and services in Bissau and other centers andprovide serviced plots and construct low-cost demonstration houses; and (e) support acomprehensive training program to increase capacity in Government agencies, municipalities, andthe private sector to operate, maintain, and manage urban and transport infrastructure and services.

Implementation Experience and Results

3. In spite of the many difficulties arising from the shortfalls in the availability of counterpartfunds and cofinancing by other donors. project objectives were substantially achieved. The majorand significant factors that affected implemenitationi were: (a) resistance to the restructuring andprivate participation in the public transport companies, and (b) chironic delays in the availability ofcounterpart funds and unwillingness of other donors to participate as co-financiers.

4. The institutional capacity of the MOPCU and MTC was significantly improved throughtechnical assistance (TA) and the training provided that benefited 1012 people through some 51courses. The private sector institutions benefited as well. IRP brought about participation of theprivate sector in the transport sector in a transparent and impartial manner. The bus company, SILODIATA, was dissolved and a mixed public-private company, TRANSTER, was established in itsplace. A privatization study on RODOFLUVIAL, the public trucking and river transport companydealing with the transport of merchandise, was completed, based on which its privatization isunderway. The privatization of trucking transport component is already completed and theprivatization of river transport component is nlow under coordinationi of the Managemenit Unit for theReform of Public Enterprises (UGREP). Managemenit of the Port of Bissau was privatized and theport's operational efficiency has improved markedly. TAGB, the national airline company,benefited from TA and provision of equipment and traininig provided for its repair shops;privatization of the TAGB is also underway and is being carried out under UGREP.

5. Only 50 kms of the planned 180 kms of paved roads, including the Bissau-Nhacra and theSafim-Joao Landim roads, were rehabilitated and the rest were to be upgraded through cofinancingthat did not materialize. Anothier II kms of paved roads and 4.5 kms of unpaved (earth) roads inBissau were rehabilitated. Some 130 kms of rural feeder roads in the eastern part of the countrywere improved with financing from the European Community (EC); another 60 kms of rural roadsthat were to be rehabilitated with labor-intenisive methods were not because of the absence of donorfinancing. About 244 kms of roads were maintainied in the southerin and northern regions of thecountry. With respect to the construction and rehabilitationi of ferry ramps nothing wasaccomplished because of inadequate finanicing; however, the ferry ramps at Sao Vincente and JoaoLandim were rehabilitated, even though this had not been originally planned. Two new rafts wereacquired for Joao Landim and Sao Vincente with Europeani Community financing. Equipment, spareparts, and materials for road and waterway maintenance and logistical support were provided to theGeneral Directorate of Roads and Bridges (DGEP). A road mainteniance program for 1990-95 wasdeveloped for the rehabilitation of 1,615 kms of roads, or about 320 kms each year. A Road Fundwas established to finance the future maintenance and rehabilitation of the road network.

6. Under the urban program: (i) low-cost houses were constructed on urban lots in Bissau,Bafata, Bissora, and Buba to test their viability; however, only forty or about 50% of the plannednumber were built, as the remaining funds were diverted to the urgent rehabilitation of urban roadsand the drainage system in Bissau; (ii) studies were completed that analyzed the mechanisms forreorganization of the municipality of Bissau and suggested ways to improve its revenues; and (iii)vehicles and equipment to be procured for garbage collection in Bissau could not be purchasedbecause the necessary financing from the French did not materialize. Because of shortfall in IRPfinancing, the urban program was reduced in size and some funds were transferred to implementother IRP components.

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7. The project finances had to be reallocated on four different occasions because of shortfallsin financing. The project suffered from delays in counterpart financing and deficiencies in financialmanagement; three audits were qualified. The closing date was extended by one year to December31, 1996.

8. With the on-going reorganization of the Road Fund, the results achieved under the IRP arelikely to be sustainable. The training and upgrading of skills had beneficial effects in increasingmanagement capacity in both the public and private sectors. The success of the training argues forits continuation to assure better maintenance and operation of the couLntry's infrastructure. IRPcontributed to the creation of small- and medium-size companies in civil architecture, roadmaintenance, and other technical areas and led to the consolidationi of existing companies. Bankperformance was generally satisfactory, while the Borrowe-'es performance was deficient inimplementation, particularly witlh respect to counterpart finaniciing, lack of financial accounting, anddelays in allowing the participation of the private sector in lie transport companies.

Summary of Findings, Future Operations, and Key Lessons Learned

9. The implementation of IRP and its outcome can be judged as partially successful. Theexperience gained was useful in designing the ongoing Transport and Urban Infrastructure Project aswell as the preparation of the Water and Energy Project. These follow-up projects can be expectedto further strengthen institutional capacity and sustainahility of infrastructure maintenance inGuinea-Bissau.

10. The key lessons learned from the IRP are: (a) Project activities and their related costs needto be carefully analyzed and take into account the further deterioration of infrastructure that canoccur between project preparation and implementation. (b) Cofinancing should not be counted uponunless the co-financiers give their firm assurances. Reliance on a substantial amount of cofinancingthat did not materialize led to implementation delays, chaniginig priorities, scaling down of theproject, demoralized staff, and a revision in the Project Agreement. (c) The Borrower should beasked to make a firm commitment for the funding of maintenanice and operations of theinfrastructure through a mechanism such as the Road Fund. A Special Account should be consideredand established in accordance with the norms of the Bank's Special Accounit.




(Cr. 2074-GUB)

PART I-IMPLEMENTATION ASSESSMENT

A. PROJECT IDENTITY

Name I Infrastructure Rehabilitation ProjectCredit Number: : Cr. 2074-GUBRVP Unit : AFRICA RegionCountry : Guinea BissauSector : Transportation

B. BACKGROUND

I. Since independence in 1974, Guinea-Bissau has faced the major task of rebuilding itseconomy which was heavily damaged during the war of indepenldence. The Government embarkedon a comprehensive Structural Adjustment Program (SAP) in 1987 to liberalize trade, restrai-. publicexpenditures, and introduce production incentives and other market-oriented measures. Theinfrastructure sector had a key role in the SAP. Improved transportation was essential to broadeningthe market and freeing productive forces, especially in agriculture. Road infrastructure, partiallyimproved under the IDA-supported First and Second Highway Projects, needed further improvementto provide adequate access to agricultural production areas. The Government's strategy, as presentedin its Transport Policy, focused on strengthening the operations and financial management of allpublic transport companies and on training skilled and semi-skilled personnel essential formanagement and operations of the sector. In the urban sector, housing and sanitary conditionsneeded to be upgraded urgently to enhance the productivity of and reduce the health risks for thelabor force.

2. The country's transport sector comprised 2,630 kilometers (km) of roads, 75% of whichwere in poor condition; a deep-water port, managed by the port authority, JAPG, and 27 smallcoastal and river ports; and an international airport and 1 7 landing strips for domestic traffic, underthe Department of Civil Aviation. Road and river transport had an equal share of the domesticfreight traffic. The national airline, TAGB, carried about 25% of international passenger traffic andall domestic traffic. RODOFLUVIAL, the Public Trucking and River Transport Company, took overfreight transport from two earlier public trading companies and passenger river transport from thenational shipping agency, GUINEMAR. The bus company, SILO DIATA, was severely constrainedby the lack of workshop equipment and spare parts. All transport modes suffered from debtproblems, poor financial management, and inadequate operational revenues. Despite the presence ofthese parastatals, the private sector had a significant share of the transport market, particularly roadtransport, but its productivity was low because it, too, lacked adequate repair facilities and spareparts supply.

3. IDA involvemenit in the linfrastiuctujre Rehabilitation Project (IRP) was based on the criticalimportance of transport for the long-term developmenit of the economy and to remedy financialimbalances and limit new transport investmenits to the most essenitial needs and improve municipalmanagement and housinig programiis to alleviate the very poor living conditions in the urban areas.

C. STATENIENT/EVAXI.jVI10N OF PROJECT OBJEC TI ES

4. The major- objectiv\es of I RP were to

(a) establishi a sounid and etfficient infrastructire mainiteniance capacity,

(b) reniioxe hottlenecks to increased agricultural productivity, particularly in the South,by implrox \Hig parts of the existing feeder- road netvork;

(c) address cakncsses in roa(d maniagement, transport planning, and financialrianagememnt of the public transport companies, and further encourage privateparticipat ion i1 transpoll:

(d) contribute to a more econ:olmical balanicc between the road and river transport modes;

(e) inplement a comprehenisive training programi lor maniagers and skilled and semi-skilled personal Ineeded for thc infIrastrLIctuel- sectors;

(t) improve ilunicipal seCvices in Bissau anid other urban centers; and

(g) expanid on the sites and services operation initiated under the Social andInlfrastiuctuire Relief l'roject (Cr 2(020-GUB13). as well as build low-costdemronstration houises to help address the need for more housinig.

5. The project comprised the following components: (a) institutional support to the Ministry ofSocial Infrastructure (MIES) and its State Secretariat for Transport (SET) to strengthen planning andmanagement of transport and url-ban projects and monitoring of transport companiies, includingtraining programs and sector stuldies.: (b) assistance to tilc public transport companies--SILO DIATA,RODOF.UVIAL. .AP( , and I ,AGB--bv providing equipimienit and spare parts, tools, and technicalassistance (TA) to strcngthen their managemnenit and mainitciance capabilities and facilitate privatesector involvemeint in th.ci operations: (c) ioad infrastriuc-tire rehabilitation and maintenance,including improvement ol feeder roads and training of domestic contractors in labor-based roadworks; and (d) urban development, including preparatiotn of a Hlousing Policy, establishing systemsfor housing finan-ce, eNpais,on of sold-waste collectiorn, distributioll of plots and houses, anddeveloping municipal ser-vices in 13issau and other cities.

6. The objectives of the IRP werc clear and appropriate given the urgent need for theGovernment to restructure its policies to the realities of the market place, reduce its fiscalimbalances, increase the participation of the private sector. and provide adequate investment andmaintenance resources and skills for essential inftastructuLe in both the urban and rural areas. Theywere in liie with the Bank's ('ountrv Assistance Strategy that sought to create conditions for long-term development of thc cconomiy and remedy the financial imbalances by limiting new investmentsto the most essential neecds. espicciallv in a sector that would have required about 30% of publicinvestment over the ncxt five years, 1989-94. But given the critical institutional weaknesses and thevery poor condition of the existing, infrastructure and inadequate repair facilities, equipment, andmaterials, the ob jectives xcrc too dcmanding and ambitious, especially as the hoped for cofinancing

did not materialize. Pro'ect implemncitationi delaN s \ycre caused by the chronic shortfalls in

3

counterpart funding, delays in work done by contractors because thev were paid lite, ancd the lack ofcofinancing, which led to shiftling priorities and frequenit reallocation of available fhinds.

D. ACHIEVEMENT OF PROJECT OBJECTIVES

7. In spite of the many difficulties arising fiom the shortlills in IRI' iRIlancing, the projectobjectives were substantially achieved.

8. At the completioni of the IDA-assisted Seconid Roads Projfect in 1 988 the couinitry had noprivate companies engaged in road constructioni, rehabilitation, or maintenance. I RIP entcouraged thecreation and participation of private companies in the transpori sector in a transparent anid imilpartialmanner. Jobs were created and the qualifications and skill, ol pesoninlel in thec Ministry of PublicWorks, Construction and Urban Affairs (MOPCUI. which relaiced MlFS) and the MNinistrv ofTransport and Communications (MTC) were implroved. Iicrciascd emiplo'ment and theemployability of people througi tr-ainiilng and enhanced skills n Wshlionied th-e ilmlpact of structuraladjustment and privatization. Many of the employees of M(JPU anid N/1i . xNho were laid-off as aresult of institutional streamlininig, found employment in Ih'e I a "tiel comiiparic> engaged in roadconstruction and rehabilitation.

9. Institutional support and training, were highil\ satisfa( tor\, attend(led h\ I () I2 people with alevel of success higher thani 90%, provided throughi 51 separaie courses. [hc tr.aininl0 programn hadincluded people coming from MOPCU (33%). MTC (23,o,) aid 44%' wit\ otIsl)c origilns, icilidingprivate companies. The program helped to improve the technical and proftssioinal capacily of thenational staff. The operational capacity of the Coordination I nts inl( il(1 and Ml ' wasstrengthened. Several individuals who benefited 1ronit 1A and r . are io w upt tii" otherdevelopment projects in the country, some are filling respons lHe technical posit ions in variousministries, while others have established their own privatt conlsulltilng hbuInesses

10. As for the reforms of transport companies, at credit et l ctiveles>. thc lour transportcompanies (Silo Diata, Rodofluvial, JAPG, TAGE3 antd CGiincinar) eNre notl\ in a delicient or evenunrecoverable, operational and technical situation. Ihe hus conipaiy - Sl( I I) IATA. had onily onebus, operating on the lile Bissau-Dakar without any securit\ .:ondilt in. Matleivlliallce,administrative and financinig services were not operating. There \ere no accontling registrations orcapacity to pay the debts of the enterprise, namely wvagcs Klr,ical k wh\n ic\cliding some taxis,there were no urban transportation in Bissau. As for ROI)OIl 1 'ViAl. in lost the market in thefluvial and road transport of merchanidising due to several factors such a>: dcrgadat ion of leiries andinfrastructures to support to the fluvial and maritimlle nla igatio;ll triansfer the use ol fluvial tranisportof merchandising to the road ones, due to the noni existenice t i centers for agriculture pr-oducts whiclwould justify the transport of large quantities and the terinim,tion ol the credit flacilities given by thegovernment, tihrough a special credit line, for the acquisition ot truckisC. AP( hlad sionificantdifficulties in the managemenit of the port of Bissau. no ol oii iin adn inisirative and financial areas,but also in operational and security matters. Becausc of its dfIhcienlt cxpniaitaiilom. IPG wasdraining resources from t'he national budget whille not offering a miniul iniii service e.g. lack ofloading facilities, to the port users. TAGB, the nationial airliOe pr esenied la-re dilficulties in termsof management and operations. It did not have its ow\n plaiws to uralllntce intercontinentalconnections, and decided to associate with EAS; this association only brouglit problemis to bothenterprises because, as they never made an ob jective coFItraLt. he'\ wlert mi con,stat discussion. Asfor GUINEMAR, it presented several managemilenit irregilar (tIes and (didi tom n.lamatCc the mlillimumagency services to the ships coming alongside the Port of bivSau

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11. In this context, actions conducting to the launching of a liquidation and privatization processof these companies were favored instead of technical assistance to improve their competitiveness atthe operational level. Among the public transport companies, the bus company--SILO DIATA. wasdissolved and a new company, TRANSTER, with over 60% private ownership was created il itsplace. GUINEMAR was dissolved and several private maritime companies were created withtechnical assistance from the project. A privatization study on RODOFLUVIAL, the publicmerchandise trucking and river transport company which liad steadily been loosing market share,was completed and private participation in its ownership is underway: the privatization of truckingtransport component is already concluded and the privatization of river transport component is nowunder the coordination of UGREP. IRP finaniced the repair of three of RODOFLUVIAL's boats.Traffic signs and the buoy systems for river transport were also improved. Management of the Portof Bissau was privatized, a mixed company, GUIPOR, with 7 0% private ownership, was created inthe place of JAPG; the port's operational efficiency has improved to handle increased traffic. TAwas provided to TAGB, the nationial airline, for its repair shops; and privatization of TAGB is alsounderway under the coordinationi of UGREP.

12. About 50 kms of the planned 180 kms of paved roads, including the Bissau - Nhacra andSafim-Joao Landim roads, were rehabilitated and the rest were to be upgraded through cofinancingthat failed to materialize. Another I I kms of covered roads and 4.5 kms of urban roads in Bissauwere rehabilitated. Some 130 kms of rural feeder roads in the eastern part of the country wereimproved with financing from the CE; another 60 kms of rural roads that were to be rehabilitatedwith labor-intensive methods could not be, again because donor financing did not materialize; theTA needed for this purpose was, therefore, not required. The construction and rehabilitation of ferryramps was not accomplished because of inadequate financing; however, the docks at Sao Vincenteand Joao Landin were rehabilitated, even thoughi this had not been originally planned. Two newrafts were acquired for Joao Landim and Sao Vicente with EC financing. Equipment, spare parts,and materials for road and waterway maintenanice as well as logistical support were provided to theGeneral Directorate of Roads and Bridges (DGEP). A road maintenance program for 1990-95 wasdeveloped for the rehabilitation of 1,61 5 kms of roads, or about 320 knis each year. About 244 kmsof roads were maintained in the northern and southiern regions of the country. A Road Fund wasestablished for the orderly maintenance and rehabilitation of roads. TA was provided to the NationalEngineering Laboratory (LEGUI) and its facilities were rehabilitated.

13. Under the urban program, (i) low-cost houses were constructed on urban lots in Bissau,BafatA, Bissora, and Buba to test their viability; however, only 50% of the planned number werebuilt, as the remaining funds were diverted to the rehabilitation of urban roads and the drainagesystem in Bissau; (ii) studies were completed that analyzed the mechanisms for reorganization of themunicipality of Bissau as well as the ways to improve its revenues; and (iii) vehicles and equipmentthat were to be procured for garbage collection in Bissau could not be purchased because thefinancing from the French was not forthcoming.

E. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT

14. Implementation of the IRP was affected by several factors. A major one was the lack ofcofinancing. During project preparation, several donors active in Guinea Bissau's developmentshowed interest in cofinancing for the IRP, among them the African Development Bank (AfDB), EC,and the French, German, and Portuguese aid agencies. In the end, despite sustained efforts to obtaincofinancing, besides IDA none of the other donors provided any support. About half way into theimplementation the EC came in to support rehabilitationi of the rural feeder roads in the eastern part

5

of the country. Because of the shortfall in financing, IRP targets had to be scaled down and fundsreallocated for the most urgent tasks as described on this report.

Factors Subject to Government Control

15. Local counterpart finanicing. It was anticipated that the Government would providefinancing for IRP through the National Fund for Development (FND) and the Road Fund. Itscontribution from FND was less than $100,00, in contrast with its obligation to provide US$1.4million equivalent. Some additional resources came from the Road Fund, but these fell far short ofthe level originally programmed under the IDA Credit Agreemenit. IRP resources thus fell short byUS$4.2 million. A Special Account for IRP was established abroad and managed by the CentralBank of Guinea Bissau; but serious difficulties arose with account reconciliation and inadequatefunding of the account, which in turn delayed payment of invoices to contractors by the IRPCoordination Units. These problems were overcome after an agreement was reached between theGovernment and IDA that led to the establishment of a Special Project Account with theInternational Bank of Guinea-Bissau that was managed directly by the Project Coordination Unit(PCU) in MOPCU.

16. Institutiolal factors: MES was responsible for IRP durlilng the preparation phase, but duringthe implementation phase responsibility was devolved to MOPCU and the MTC, after MES ceasedto exist. Coordination between these two m inistries was inieffective at times because of their failureto resolve differences on key issues whichI resulted in implemiienitationl delays.

F. PROJECT SUSTAINABILITY

17. Project sustainability is rated likely. The reorganization of institutional structures tocontinue the activities carried out under IRP make its achievements sustainable. The reorganizationof the Road Fund under the new Transport Policy and, in particular, under the Transport and UrbanInfrastructure Project (TUIP). provides some assurance that the road infrastructure will bemaintained. A new decree was signed by the Government detailing specific resources to be providedto the Road Fund from customs duties, gasoline taxes, and port taxes. Also a new management hasbeen put in place for the Road Fund and relationships and convenltions have been designed for theRoad Fund to transfer the funds collected to AGEOPPE to carry out road maintenance. With theRoad Fund reorganization, the system for carrying out road infrastructure maintenance will be put inplace and be sustainable.

G. BANK PERFORMANCE

18. Overall, Bank performance in identification, preparation, and appraisal of IRP wassatisfactory. The Staff Appraisal Report (SAR) correctly identified the risks that might be facedduring implementation, i.e.. noii-compliance witlh the agreed transport policy, Governmentreluctance to facilitate private sector participation in works and transportationi, and delays in projectimplementation because of conistrainlts in institutionial and management capacity. However, stafffailed to consider adequately the risk of cofinanicinig not becoming available. This was a majorshortcoming, as the lack of cofinancing affected the project outcome in a major way. Also animportant constraint on the project supervision was the discontinuity affecting the project team. Fourtask managers supervised the project during the first four years of project implementation.

19. Project supervision was satisfactory and helped to resolve problems quickly; for example,the changes required in the Credit Agreement and reallocation of finances in the face of resourceshortfalls. The project was extended for one year to complete some road works.

6

H. BORROWER PERFORMANCE

20. The Borrower's performance in project preparation was satisfactory. However, there weresome deficiencies in the provision of counterpart funds, reestructuration of the Road Fund, andmanagement of the Special Account. Therefore, the Covenanit Compliance in respect to counterpartfunds is rated deficient. Chronic delays in counterpart funding in turn led to delays in projectexecution. Also restrictions on Government expenditures imposed by the SAP, caused delays inexecution. Financial management of the public transport companies was weak. Three of the projectaudits were qualified.

I. ASSESSMENT OF OUTCOME

21. The outcome of IRP is partially satisfactory. IRP promoted the private sector andcontributed to the creation of small- and medium-size companies in civil architecture, roadmaintenance, and other technical areas and led to the consolidation of some existing companies. Italso led to the reform of public sector enterprises in the transport sector.

22. IRP contributed to capacity building in the ministr-ies by helping to improve the technicalcapacity and skills of personnel in the MOPCUJ and MTC and the privatized companies throughtraining and technical assistance. Finally, IRP rehabilitated physical infrastructure, therebypromoting trade and improving the transport of goods and movement of persons in the country.

J. FUTURE OPERATION

23. The experience gained in execution of the IRP was useful in designing of the Transport andUrban Infrastructure Project (TUIP--Cr. 2748-GUB), and is also being built upon in the preparationof the Water and Energy Project. These follow-up projects should serve to strengthen institutionalcapacity and sustainability of operation and maintenianice of the country's infrastructure.

K. KEY LESSONS LEARNED

24. The key lessons learned from implementationi of the IRP are:

(a) Project activities and their related costs must be carefully analyzed during projectpreparation and due account taken of the possible further deterioration ininfrastructure facilities that can occur between the preparation and implementationstages. The road, air, and marine transport infrastructure deteriorated furtherbetween the appraisal and implementation and led to additional finalicilig needs forwhich adequate provision had not beeni made.

(b) Cofinancing should not be counted upon unless the co-financiers give their firmassurances. The scope of IRP was formulated in a way that relied on a substantialamount of cofinancing. When it failed to materialize, the project had to be scaleddown, which demoralized staff in the implementing agencies, led to a revision of theCredit Agreement, and left some urgent needs unmet.

(c) The Borrower should be asked for firim asSuranices of funding maintenance andoperations through a mechaniism such as the Road Fund. A Special Account shouldbe considered and established in accordance with the norms of the Bank's SpecialAccount for project financinig.

7




(Cr. 2074-GUB)

PART II. STATISTICAL ANNEXES

TABLE 1 - SUMMARY OF ASSESSMENTS

A. Achievement of Objectives Substantial Partial Negligible Not applicable(1/) (S1 ()

Macro policies LI EI J 7

Sector policies m EJ LII FIIFinancial objectives EII L] L IInstitutional development LII ] L-I ElPhysical objectives El [7 EL IPoverty reduction LI LI ] [Gender issues El LI EL [KOther social objectives L LI [

Environmental objectives 1 L L WPublic sector management L]I ELPrivate sector development FL ELOther (capacity building) LI [I] LI LI

B. Project sustainability Likely Unlikely Uncertain(/) (/) (E)

z~ L LIC

8

C. Bank erfarmtan Highlysatisfactory Satisfactory Deficient

(1) (1) (1)

Identification 11111

Preparation assistance E E0

Appraisal FI E ESupervision El EF l

D. Borrower performance Highlysatisfactorv Satisfactoy Ueficient

() (1) (a )

Preparation E[ El

Implementation El [

Covenant compliance(counterpart funds) D I L

Operation (if applicable) El E] El]

E. Assessment of Outcome Highly Highsatisfactory Satisfactor Unsatisfactorv unsatisfactory

(El E El) ([)

En m Eo

9

TABLE 2 - RELATED BANK LOANS/CREDITS

Loanlcredit fitie l'urposc I*igr of approval Stabts

Preceding Onerations

2020-GUB Social and Rehabilitate and maintain basic urban and 1989 Concluded onInfrastructure Relief social infrastructure by improving the roads

and drainage network, and repairing and 0630/96 and rtedconstructing health and education facilities satisfactoryand markets

Following operations

2748-GUB Transport and Urban Improve management of public sector 1995 Project was effective inInfrastructure resources; rehabilitate transport and urban January 1995 and is now

infrastructure and improve competitiveness of rated unsatisfactoryconstruction industry

Water, Energy and Urban Under PreparationEnvironment Management

TABLE 3 - PROJECT TIMETABLE

Identification (Executive Project Summary) 05/87

Preparation 10/87

Pre-Appraisal 09/23/88

Appraisal 11/7-1 1/18/88 11/7-11/18/88

Negotiations 10/89 10/89

Board Presentation 11/89 11/89

Signing 02/08/90 02/08/90

Effectiveness 02/10/ 06/06/90

Project Completion 08/10/95 06/30/96

Conclusion 08/10/95 12/31/95

Closing 08/10/95 12/31/96

10

TABLE 4 - LOAN/CREDIT DISBURSEMENTS

(in US$ thousand)

FVk'90 IFIV91 Ft 92 1 U93 F'. 94 *:..: ....

Appraisal estimate 3,500 5,300 5,300 4,000 3,000 1.800 700

Actual 1,661.74 3,529.60 6,891.10 7,659.40 2,983.10 1,742.44 1,649.29

Actual as % of estimate 45% 66% 130% 192% 100% 94% 228%

Appraisal estimate cumulative 3,500 8.800 14,100 18.100 21,100 22.900 23,600

Actual cumulative 1.661.74 5,191.34 12,082.44 19,741.84 22,724.94 24,46738 26,116.67

Actual as % of est. cumulative 45% 59% 85% 108% 107% 106% 110i/a

The last disbursement was made on 04/11/97.

TABLE 5 - KEY INDICATORS

Estimated = = iual achiie_.nt

Institutional Support 4,30000 6,90(.00

Public Companies Reformed 5 3

Road Infrastructure

Rehabilitation of paved roads 182 Kms 50 Kms

Travel roads 175 Kms 253 Kiiis

Urban roads 9 Kms 6 Kms

Other Infrastructure

Construction and rehabilitation of ferry 5 ramps 2 ramps

ramps

Replacement of ferry i

Low-cost houses 100 40

7,733.10 8,835.64

Urban Program 1,972.40 1,260.80

Road Maintenance 9,501.10 6,345.18

Total 28,357.00 26,609.25

Source: PR] Coordination Unit (UCP/PRI)

11

TABLE 6 - STUDIES

Purpose as defined at appraisal | Status -- Itwpaet f-t -Studl!l

Demand and Supply of Public Fleet measure, routes definition and Completed TRANSFER creation, privateTransports to the Town of Bissau timetable to urban public transports company concessionaire of the

to the SILO DIATA urban public transportsprivatization/extinction

Demand and Supply of Interurban Localization and measure of the Completed Fleet topology identification andTransports interurban transports future terminal interurban transports demand

between the Capital and theCountry. future Terminal measurcand localization

Study to the Creation of a Not expected C'ompleted Gathering, treatment and analysisManagement Information System of informatization of companiesPublic and Participated Companies in productivity, and financial indicatorsthe Sector

Study About the Valuation of the Clarification of the State (Completed Decision of the State joint stock inJAPG immovable transferred to the participation of port services by the the (itIlIPORTGt IIPORI' concession of the same to the

GUIPORT

Informatization of the MTC Budgetary. patrimonial and staff Completed Informatized treatment of theseAdministrative Proceedings management services, becoming more

operational

Study About the Tariffary Policy' and Definition of a cost structure Completed Definition of a tariffar3' policy'Structure of Transports Operation available to public and privateCosts goods and passengers transports

operators

Study to the RODOFLUJVIAL Diagnosis of the company situation Completed It was used as principal element inprivatization and decision of stages, as well as the running privatization process

the value of this company in theincomes and assets view

Statistic Yearly Publication of the Completed Gathering, treatment and synthesisTransports and the Communications of all sector activity as well as the

investment and employmcnt level toeach subsector tutored by the M']'C

Yearly Accessories to Transports Accessory to Companies Accounts Completed It made possible with accuracy' thePublic Companies diagnosis ror the better choice

between the same companiesprivatization or extinction

Studies of Diagnosis and Technical Identification and quantification of Completed Improvement of work conditionsIntervention in the Marine and Ports material and logistics lacks; and increase of the technicalGeneral Management. National detinition if intervention strategies intervention capacity of thoseMeteorology, Civil Aviation, to exceed technical insufficiencies services and results with betterTerrestrial Transports and Central and limitations performance.Organs of the MTC

Study to an informatized basis Informatization of these services ('ompleted Easy identification andcreation to driving licenses and allowing basis efficient and quick quantification of the operational carvehicles registration consultations park, and decision of collection of

incomes capacities by the RoadFund

Management of a Documentation Pedagogical and formation 'on-.job' Completed It made possible the sudden start ofCenter nature the actual MTC Documentation

Center

12

TABLE 7A - PROJECTI COSTS

4raI ite(USThsad)AutS$hoa,)

Institutional Support 247.5(0 7.564.50) 7,812.00 19.98 9.842.31 9,862.29

Public Companies 13.00 1,325.40 1,338.40 0.63 304.70 305.33

Road Infrastructure 1,105.00 6.628.1( 7733. 1 0 72.35 8,763.29 8,835.64

Urban Program 27.30 1.945.10 1.972.40 29.70 1,231.10) 1,260.80

Road Maintenance 3,363.60 6,137.50 9.50(1.10 369.86 5,975.33 6,345.19

Total 4.756.40 23.600.60 28.357.0(0 492.52 26,116.73 26,609.80

TABLE 7B - PROJECT FINANCING

--|; -0 ; -0 f;f 7 -0A-- raital sd m te ( S f Th thsafl )4 * a :U S Th5: w ut~~~~~~~~~~~~~~~~~~~~~~~A _W = f, AM:.. ff

Siurce Lo~~~~~~~~~~~al Foreign Total' Loaqoeg oal

IDA 2,487.5(0 21.116.80) 23.6001 .70 492.52 26,1 16.73 26.609.25

RGB 4,756.30 )0 ( 4( 4756.40 413.00) ().() 413.00(

Others 1,766.60 13.176.20) 14.939.200 ().00 (.00

'Total 9,011 04(0 34,293.0)0) 13.296.3(0 905.00 26, 116.73 27,022.1)0

TABLE 8 - ECONOMIC EVALIJATION

199D 1991 1992 :1993 :994, 99 i9 1997

I. Roads

Social Benefits 10)64 2298 3663 1831 1689 1922 2188

Social Cost of Investment 348 3608 2823 19X 19 21) 21

Net Present Value (I 5%O) 8036

Economic Rate of Return 40

0

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14

TABLE 11 - IDA RESOURCES: STAFF INPUTS

Actui.

Stgie af PrjectCycle . . . .Weks .:

Through Appraisal 37.8 64.3

Appraisal-Board 45.1 91.6

Board-Effectiveness 14.3 27.0

Supervision 78.8 166.0

Completion 7.9 17.5

Total 183.9 369.7

15

TABLE 12. BANK RESOURCES: MISSIONS

StagLe of l'riject (Cycle Month/ Number Days ill Specialized Rating Rating oIfvi,p ol. . ~~~~~Year orl'Prsonis F;ihld slJr Yhll 1ml. DeIvelop. I' btns |S.xff Skills Statun; Impact Pr_ _ -_-

Preparation 01/88 5 10 TTL, CON, PA.uP, rTs

Pre-Appraisal 09/88 2 I EC. CON

Appraisal 11/88 4 I J TTL, CON. I'A

Follow-up Appraisal 8/89 I 10 TTL I

Supervision 02/90 2 12 'TL, UP

Supervision (part of Sup 06/90 3 4 TTL, IJP. CON ICR-2020-GUB)

Supervision 10/90 2 7 TTL. AR I

Supervision 02/91 4 10 TTL, TS. UP, ICON

Supervision 11/91 5 17 TTL, UP, CON, 2Res. Rep

Supervision 05/92 4 18 TTL, TS, UP. 2 2CON, Res. Rep.

Supervision (New TTL) 11/92 5 12 TTL, TS, UP, 2 2CON

Supervision 04/93 4 14 TTL, UJP, CON 2 2

Supervision (New TTL) 02/94 5 16 DC, TTL., UP, S SCON

Supervision (part of Sup. 07/94 4 14 LJP, CON S Sof CR-2020-GUB andIdent. of CR-2748-GUB)

Supervision (part of prep. 02/95 1 20 CON S Sof CR-2748-GUB)

Supervision (part of Sup. 07/95 3 17 TTL, C'ON, PO S Sof CR-2748-GUB)

Supervision (part of Sup. 10/95 2 22 TTLI CON S Sof CR-2748-GUB,CR-2020-GUB and Prep.of Proposed Water andSan. Project)

Supervision (part of Sup. 02/96 2 18 TTL, CON S Sof CR-2748-GUB)

Supervision (part of Sup. 06/96 2 1 1 TTL., CON S Sof CR-2748-GUB)

AR - Architect PO - Project Officer HS - Highly SatisfactoryCON - Consultant TTL - Task Team Leader S - SatisfactoryDC - Division Chief TS - Training Specialist NS - Not SatisfactoryEC - Economist UP - Urban Planner I - Minor ProblemPA - Project Adviser 2 - Moderate Problem

3 - Major Problem

Annex IPage 1 of 7




(Cr. 2074-GUB)

PROJECT IMPLEMENTATION ASSESSMENT BY THE GOVERNMENT

Introduction/Background

In November 1988, an IDA mission consisting of specialists in the infrastructure fieldjoined forces with the Guinea-Bissau authorities to appraise a proposed InfrastructureRehabilitation Project. In the process, the following were identified as the key objectives of theoperation:

(1) to strengthen the institutions involved in the urban and transportation sectors(Ministry of Social Infrastructure and State Secretariat for Transport) in:

(a) management of maintenance and operations(b) planning and coordination of sector activities(c) financial management of public transport companies;

(2) to contribute to a better balance between road and river transport;

(3) to remove bottlenecks to increased agricultural production, especially in theSouth, by improving parts of the feeder road network;

(4) to improve the management of municipal services in Bissau and other centers, andto expand on the sites and services operation initiated under the Social andInfrastructure Relief Project as a means of addressing the need for low-costhousing;

(5) to support a comprehensive training program to provide government agencies,municipalities and the private sector with personnel equipped to operate, maintainand manage urban and transport infrastructure and services.

The total cost of accomplishing these objectives was estimated at US$37 million. Giventhat IDA credit proceeds were estimated at US$18 million and local counterpart funding at US$2million, it became obvious that potential cofinancers would have to be identified and meansfound of increasing the revenues of the Road Fund, the main source of counterpart resources.

Annex_1Page 2 of 7

Cofinancing

The following agencies and organizations indicated their willingness to participate in oneway or another in financing the project: African Development Bank (AfDB), United NationsCapital Development Fund (UNCDF), European Union (EU), Swedish IntemationalDevelopment Agency (SIDA), Arab Bank for Economic Development in Africa (ABEDA), andKfW of Germany.

Local Counterpart Financing

Under the terms of the original Credit Agreement, national counterpart contributions tolocal currency expenditures, particularly on road maintenance. were to be as follows:

10% of overall cost in 199010% of overall cost in 199120% of overall cost in 199240% of overall cost in 199340% of overall cost in 1994

In order to meet these obligations, the Government proposed to rely mainly on substantialchanges in Road Fund revenue-collection powers, and inclusion/adjustment of other revenuesources as follows:

(1) gasoline tax (from 5% to 20% of c.i.f. value);

(2) annual vehicle tax (from PG 5,000 to PG 8,000 on light vehicles, and from PG10,000 to PG 16,000 on heavy vehicles);

(3) tax on import of vehicles and spare parts (5% and 10% of c.i.f. value,respectively).

At the same time, the toll system would be abolished, given the well-documenteddifficulties affecting its operation and management.

Organization and Implementation

In order to facilitate implementation of the project, a Coordination Unit had been set upwith a mandate to supervise execution of all its components and to assist the institutions whosecapabilities and jurisdictions it was focused on, namely the then Ministry of Social Infrastructureand State Secretariat for Transport. In the case of the Ministry, supervision was to be effectedby technical units attached to and coordinated by its General Directorates. The State Secretariatfor Transport was guaranteed technical assistance for LEGUI (National Engineering Laboratory)and DGEP (General Directorate of Roads and Bridges) through UCT (Transport ConsultingUnit), and for DGHU under a contract with the consulting firms CESC and BCEOM.

Annex 1Page 3 of 7

Project implementation began in 1990 and was completed in 1994, although, for reasonsthat had to do with the final disbursement, the actual project closing date was deferred until mid1996. Consequently, and given the goals and objectives set out in the Appraisal Report in 1989,it is considered important to enumerate the lessons to be drawn from the project as a whole, aswell as to make a special assessment of certain issues raised by its implementation history.

Assessment of Project Outcome

Despite the difficulties encountered in executing this project, it is the considered opinionof the Guinea-Bissau authorities that its effects are readily apparent and that it must be regardedas having proved a very positive undertaking, a conclusion borne out by the following results:

(1) Rehabilitation and/or upgrading of both paved and earth roads in the interior,especially in the southern region of the country, which has led to a significantreduction in transport costs and to the expected degree of stimulus for theagriculture sector. Building of ferry docking facilities on major rivers.

(2) Development of serviced building sites and construction of low-cost housing inboth the capital and the interior, and the logistical support provided for the BissauCity Council, have set the foundations for a policy of cost recovery in the housingsector

(3) The Ministry of Public Works, Construction and Urban Affairs and the Ministryof Transport and Communications have been equipped with minimum operationalstructures and with comprehensive data on the national infrastructure network andhousing stock, basic requirements for their respective roles. With establishment ofthe technical units attached to the General Directorates, the essential conditionshave been created for a gradual transfer of technical capabilities through technicalassistance. Evidence of this can be seen in the fact that during the last years of theproject its technical management was entirely in the hands of Guinea-Bissaunationals.

(4) Creation of a stock of local capabilities through a lange of project-financedtraining programs.

(5) Gradual transfer of management responsibilities to the private sector from suchpublic transport enterprises as SILO DIATA, the Autonomous Port Authority, andGUINE-MAR.

(6) Creation of private enterprises in the sector, with an associated increase inemployment opportunities, mainly for individuals let go from the civil service.

The preceding factual and realistic statement of project achievements needs to beaccompanied by a short catalogue of those aspects of project organization that contributed to thisgeneral outcome:

Annex 1Page 4 of 7

(1) Existence of a simple, functional organizational structure based on carefuldefinition of the duties and responsibilities of all parties involved - pluscompliance with/acceptance of these provisions.

(2) Guarantee of an operational environment compatibl. \vith the importance of theobjectives in view - or, in other words, the logistics and equipment in placecovered the essential requirements of the structural organization created.

(3) Appointment of stable work teams which took part in all phases of the project(design, negotiations, execution). Selected on a basis of competence, capacity forinitiative, and contractual ties to the project, they were assured of remuneration atthe levels Guinea-Bissau professionals considered "acceptable minimums."

(4) Careful formulation of, and the most scrupulous adherence possible to, a timetablefor physical and financial execution of the project. Continuous evaluation ofproject work team performance through quarterly progress reports.

Bottlenecks and Remedial Measures

During the project implementation process, which began in June 1990, various problemsarose. In some cases they were satisfactorily resolved but in others were simply kept as much aspossible to a minimum:

Special Account: (Memorandum on problems encountered during implementation ofthe Infrastructure Rehabilitation Project and the steps taken to solve them.)

At project commencement, an account was opened abroad with Crecdito PredialPortugues (Banco Comercial), to be managed by Guinea-Bissau's Central Bank. This invariablyinvolved a long bureaucratic process which led not only to delays in settling accounts but also todifficulties in obtaining bank statements for purposes of Special Account reconciliation with theWorld Bank's Disbursements Division in Washington.

Remedy: The problem was resolved in late 1992 when the Government decided to placedirect management of the Special Account in the hands of the Project Coordination UJnit.

Cofinancing:

There can be no doubt that the initial involvement of [potential] cofinancers in the project[followed by their later failure to provide support] became the major source of difficulties. Inaddition to the Bank, the only other contributor ultimately was the European Community, whichparticipated in specific rural road rehabilitation and maintenance programs. The AfricanDevelopment Bank had already shown interest in cofinancing the project at the time the StaffAppraisal Report was being written, but because of penalties imposed on Guinea-Bissau for non-payment of arrears to this financial institution no sums were ever actually forthcoming.

Annex IPage 5 of 7

Local counterpart financing:

The Government was to participate in project financing through: (i) the Road Fund,whose articles of incorporation were amended to enable it to support the Road MaintenanceProgram; and (ii) the National Development Fund, which was to cover the cost of other local-currency expenditures, specifically institutional civil works and operations. The Road Fund,with great difficulty, covered 10% of the cost of road maintenance works, as follows:

1990 US$54,0001991 US$68,1501992 US$74,5501994 US$111,320

National Development Fund performance was less satisfactory, since it contributed no more thanUS$45,000, in the first year of the project (1990). In the circumstances, the Credit Agreementhad to be amended several times in order to avert suspension of the project. Notwithstanding, anumber of difficulties arose during the final phase of the project, when disbursements tocontractors scheduled to be made before the project closing date looked as if they might becomepart of the public debt.

Lessons

The Government believes the foregoing material warrants the following observations onissues arising from the implementation history of the project:

1. In future, a fundamental concern should be to foster discussion of existing views as anessential step toward formulation of a truly comprehensive sector policy which not onlyestablishes the mechanisms for project or program implementation but also lays out a nationalmaintenance strategy, independently of the provider of financing. In the Government's view, thiswould assist greatly either in reducing the major obstacles to the mobilization of cofinancing, or,should this prove impossible, in keeping project scope on a scale commensurate with basicassured funding.

2. The technical capabilities created by the project and vested in the special units attached togovernment departments are essential functional elements that need to be preserved from the"obliteration" that will otherwise be their lot. This dilemma, like the "abrupt" insistence onprivatization of the many work teams (brigadas) created through World Bank projects, raisesquestions regarding the coherence and consistency of the policies applied under the differentprojects, namely Road Projects I and II, SAL I, the Infrastructure RehabilitationProject (IRP) under review here, and the Transport and Urban Infrastructure Project (TUIP). Theproject under review (IRP) provides a textbook example: the technical assistance provided toensure successful project implementation, while indispensable, absorbed 60% of the fundingearmarked for strengthening the institutional capabilities of the executing agency, a figure almostdouble the volume of local counterpart funding.

Annex 1Page 6 of 7

3. Failure to heed the two preceding lessons can lead only to a situation where, while theachievements of a project are verified by explicit data and values as the results of specificinterventions, the same objectives elsewhere may require new but vir.ually similar interventions.This is tantamount to saying that the country benefits from the physical outcome of a particularoperation, but without any assurances that there has been a transfer of the skills and capabilitiesthat would ensure self-sustainability in the field in question.

4. There appears to be a need to review the concept of "local counterpart funding" forprojects. When it is expected in fixed amounts that quantify governmental participation in orcommitment to financing a particular operation, it can seriously jeopardize importantundertakings. Guinea-Bissau believes it should be regarded instead as an assurance of the effortthe authorities are prepared to make in the future to ensure that wealth created by an initialinvestment of capital is maintained. In other words, external financing is sought because acountry recognizes its financial and institutional inability to meet the needs on which theprogram focuses. But such financing goes hand in hand with requirements for counterpartfunding which the sector is not yet in a position to generate. precisely because of the extent towhich the resources or services it supplies or performs have deteriorated. When this type ofsituation is exacerbated by the accompaniments to acceptance of external assistance, the house ofcards collapses -the project or program closes down without having solved the problem, aheavy debt has been created, and there is the added aggravation of finding that the same needpersists.

5.. As far as cofinancing is concerned, experience shows clearly that few donor agencies arewilling to surrender control over their funds to others. Each and every one of these institutionshas its own project implementation policy and criteria, besides its interest in appearing as theprime mover in the actions to be carried out. The proposed arrangements to finance sites andservices programs under SAL I by UNCDF/UNDP. and under the present project by theEuropean Union and AfDB, are clear warnings not to have high expectations of the concept ofcofinancing, and in the future to insist on commitments being confirmed before loan agreementsare signed, or otherwise to scale projects to the volume of guaranteed funding.

Conclusion

Analysis and evaluation of the extent to which project objectives wereaccomplished, and the experience gained through the project implementation process itself, leadthe Government of Guinea-Bissau to the following conclusions:

(1) The outcome of the project was sufficiently positive in terms of its physicalcomponents, namely road construction and maintenance, rehabilitation of urbaninfrastructure, and construction of pilot housing.

(2) The same can be said of withdrawal by the state from the management oftransport operations (SILO DIATA, Port Authority, and GUINE-MAR).

Annex 1Page 7 of 7

(3) Support for private sector promotion was also satisfactory, in the sense that newlycreated enterprises were strengthened by the award of public works contracts.

(4) Especially positive was the institutional support made available to the Ministry ofPublic Works, Construction and Urban Affairs and the Ministry of Transport andCommunications, which made possible the achievement of fundamental sectorobjectives.

Annex2Page 1 of 5


INFRASTRUCTURE REHABILITATION PROJECT (IRP)

AIDE-MEMOIRE FROM THE WORLD BANK'sSUPERVISION MISSION

(June 29-July 9, 1996)

Introduction

1. An IDA supervision mission comprising Mr. Leslie Pean, mission chief and project officer,and Mario Antao, consultant, visited Guinea-Bissau from July I to 9, 1996 to supervise and preparefor closure of the Infrastructure Rehabilitation Project (IRP).

2. The mission met with the following government representatives: Armando Ant6nioNapoco, Minister of Public Works, Construction and Urban Development (MOPCU), andAnsumane Mane, Minister of Transport and Communications. The mission maintained regularcontact and held working meetings with Domingos S. Pereira, Director General of Infrastructureand Transport, Agostinho Fernandes, Director General of Housing and Urban Development, ErnestT. Menezes d'Alva, IRP Coordinator, Joao Pess6a de Magalhaes, expatriate coordinator, andDomingos F. Gomes, managing director of AGEOPPE.

3. At the first meeting with the mission, the Minister of Social Infrastructure took theopportunity to give a status report on the IRP project. Although the project was in its final phase, anumber of related financial issues still remained unsettled.

Roads program

Rehabilitation of roads network

4. Road maintenance contracts for 1995 were cut down to less than 20% of those for earlieryears, and are still six months behind schedule. Of the 1,050 km of priority network roads, only142 km of the paved system and 50 km of earth roads have received any current maintenance.Public invitations to tender were issued in May of last year, and the contracts were signed at the endof June that same year.

5. SAO VICENTE-M'PACK ROAD, BULA-CANCHUNGO-CACHEU ROAD (ContractNo. 206/UCP/PRI awarded to NO CUMPU, for US$57,328.50, signed June 27, 1995). The works

Annex 2Page 2 of 5

under this contract have been completed and accepted. With respect to payment, the performanceguarantee has yet to be released.

6. SAO DOMINGOS-VARELA ROAD (Contract No. 217/UCP/PRI awarded toGUINCONSTROI L.da, for US$112,000, signed June 27, 1995). This contract included not onlynormal maintenance, but also a general upgrading of the road and heavy work between Pk 0 and Pk12, including scraping [escarificacdo], upgrading and construction of the wearing course in lateritegravel. The work has been completed and accepted.

Operation of Chuvas Dam

7. EASTERN AND SOUTHERN HIGHWAY (Contract No. 209/UPC/PRI awarded toSADU GUINE, for US$17,995. signed June 27, 1995). Contract performance and billingcomp!eted.

8. NORTHERN HIGHWAY (Contract No. 208/UCP/PRI awarded to NO CUMPU, forUS$4,740, signed June 27, 1995). Contract performance and billing completed.

Rehabilitation of urban roads

9. BAIRRO MILITAR ROAD, 2nd segment (Contract No. 214/UCP/PRI awarded toCONSORCIO NO CUMPU-SENARCO, for US$150,826.90, signed November 3, 1995). Thecontract provided for rehabilitation of 690 m of roads and construction of 980 m of ditches [valetas]and 18 m of water mains. The road component was completed last January, and the defects thatprevented provisional acceptance of this part of the project have now been corrected. Provisionalacceptance is now scheduled for the end of July.

10. The drainage component is still in progress, owing mainly to the delays in the moving of alarge section of the water supply network within the work area. Some 200 m of ditches still remainto be completed by the agreed deadline of July 20 of this year, provisional acceptance beingscheduled for the end of July.

Pluba road

11. DRAINAGE COMPONENT (Contract No. 231/UCP/PRI awarded to URTEC-N, forUS$54,650, signed May 6, 1996). The contract provides for the construction of 480 m of ditches[valetas] and 26 m of I x I water mains. About 50% of the works have been completed. No billinghas taken place. The works should be completed by the end of this month.

12. ROAD COMPONENT (Contract No. 230/UCP/PRI awarded to EMPRESAGUICONSTROI, L.da, for US$17,350). Work on this component has not yet started, pendingcompletion of the water mains. The works should be completed by the end of this month.

Annex2Page 3 of 5

ADB COFINANCING

13. REHABILITATION OF ROADS (Jugudul-Bambadinca, Jugudul-Mansoa-BissorA,Bambadinca-Xime, Cati6-Rio Cumbija, Buba-Cati6). The program to be financed by the ADF isstill not ready to be launched since the Ministry of Cooperation has still not informed MOPCU ofits actual cost.

14. In May of last year, the Minister of Public Works, Construction and Urban Developmentsent a letter to the ADB requesting that the program be launched again. One the actual cost of theprogram has been deterrnined, its component projects will have to be brought up to date.

Urban Program

Construction of 40 serviced lots and houses

Subdivisions in the interior (Buba. Bafata and Bissora)

15. With respect to the construction of demonstration houses on serviced lots in the cities ofBuba (Contract No. 220/UCP/PRI awarded to the Thomas Nartey company), the work is somewhatbehind schedule because the company lacks capital, alleging that its bills have not been paid.UCP informed the mission that there is only one outstanding invoice owing to that company,pending the upcoming replenishment of the Special Account; since the amount involved is lowerthan US$20,000, the minimum required for bill payment by direct disbursement, this invoicecannot be sent to the World Bank for settlement.

16. Bafata (Contract No. 221 awarded to the Mamadiu Djal6 company). These works are alsobehind schedule, but in this case UCP has not yet received any bill for payment, owing to thevirtual absence of supervision on the part of the Ministry. The fact is that after the allocations forthe domestic brigades assigned to this component were used up, the Ministry lost most of them, andsupervisory responsibility passed to MOPCU's regional agents, who draw governnent wages anddo not have the logistical equipment to enable them to adequately monitor works in progress.

17. Bissora (Contract No. 222 awarded to URTEC-N). The work is in its final phase andprovisional acceptance is scheduled for the end of July.

18. Having reviewed the available documentation concerning the contracts mentioned inparagraphs 15, 16 and 17 above, the mission did not find sufficient evidence to justify the delays. Ittherefore asked the Government to take all necessary steps to bring the respective works back ontrack as soon as possible.

Annex 2Page 4 of 5

Audit

19. The mission received confirmation of the request for funding for the upcoming ProjectAudit, covering the activities of the current fiscal year, which in this case runs until all paymentshave been made, probably up to September or October. The finn of Ernst and Young, which hasaudited the project for the past three years, has submitted a proposal of US$15,000 to audit the IRPonly, and the mission has no objection to this being financed by AGEOPPE.

Financial situation of the IRP

Status of requests for payment

20. Given that the IRP project closed on June 30, 1996, the mission asked the UCP/IRPFinancial Department for an exhaustive survey of the status of all outstanding contracts, invoices,and payment requests. As a result of this survey a number of documents were voided, eitherbecause they had been drawn up without regard for the proper procedures or because it was foundthat they were not eligible for payment. A list of those documents appears in Annex 1, "Paymentrequests voided." Annex 2, "Payments outstanding at July 4, 1996," also reflects the findings ofthe survey and contains a list of eligible invoices on which payment is currently being made.

Status of contracts

21. During the process of the survey the effective costs of certain contracts were corrected so asto objectively identify the commitments given by the IRP.

22. Given that it was not possible by June 28. 1996 to achieve consensus between theGovernment and CESO - Consultores Internacionais on the matter of the addenda to contracts nos.14 (UCP/IRP), 15 (GT/IRP), 17 (UCT) and 19 (DGHIJ/CMB), the Government asked the missionfor a statement of no objection to signature of a contract with AGEOPPE whereby the latter wouldprovide MOPCU with support in aspects related to supervision of the road and urban works inprogress under the IRP, support in closing the IRP project, and all necessary technical assistance.Having checked the terns of reference, the mission issued a statement of no objection to signatureof the contract. The mission also reminded the Government that it would not be possible to signany contract related to the IRP project after its closure on June 30, 1996.

23. To monitor the status of the contracts, a table headed "Financial Monitoring of CreditAgreement 2074-GUB" was drawn up. This table, shown in Annex 3, lists all of the IRP contracts,broken down into disbursements and commitments, in US dollars and SDRs, through July 4, 1996.

Annex 2Page 5 of 5

Balance available under Credit Agreement 2074-GUB

24. Annex 4, "Estimated financial implementation of the IRP at July 4, 1996," contains anoverview of the IRP's financial situation. The annex also shows the costs assigned to eachcategory, amounts already disbursed, amounts committed, and the balance available.

25. The mission reminded the Government that the undisbursed balances available in anycategory on the date of project closure cannot be subsequently withdrawn, which means that afterthat date only those payment commitments made by June 30, 1996 can be honored. Annex 5,"Commitment of IRP allocations (works, urban plots, and road maintenance)," contains a list ofactive IRP contracts, and gives in column "Dif' the amounts to be billed and for which no requesthas been received to date.

(Signed) (Signed)Leslie Pean Armando A. NapocoHead of Supervision Mission Minister of Public Works, Construction and

Urban Development

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IMAGING

Report No.: 4592Type: ICR

world bank document...performance was generally satisfactory, while the borrowe-'es performance...

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