Public Disclosure Authorized

Document of
The World Bank

FOR OFFICIAL USE ONLY

Report No. 11249-ET

Public Disclosure Authorized

STAFF AFPRAISAL REPORT

ETHIOPIA
Public Disclosure Authorized

ROAD REHABILITATION PROJECT

OCTOBER 29, 1992

Public Disclosure Authorized

Infrastructure Operations Division

Eastern Africa Department

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

Currency Unit Ethiopian Birr (Birr)

USS 1.00 Birr 5.0
Birr 1.00 USS 0.20

FISCAL YEAR

July 8 - July 7

WEIGHTS AND MEASURES

Metric System

ABBREVIATIONS AND ACRONYMS

AADT - Average Annual Daily Traffic

ADC - Animal Drawn Cart
ADT - Average Daily Traffic
AfDB - African Development Bank
BATCODA - Building and Transport Construction Design Authority
BNCE - Blue Nile Construction Enterprise
EASC - Ethiopian Audit Services Corporation
EEC - European Economic Community
ERA - Ethiopian Road Authority
ERR - Economic Rate of Return
ERRP - Emergency Recovery and Reconstruction Project
ESA - Ethiopian Standardization Authority
ETCA - Ethiopian Transport Construction Authority
ICB - International Competitive Bidding
LLT - Local Level Transport
MOTAC - Ministry of Transport and Communications
MOPW&UD - Ministry of Public Works & Urban Development
ONCCP - Office of the National Committee for Central Planning
PMS - Pavement Management System
pTA - Preferencial Trade Agreement
RRD - Rural Roads Department
RRP - Road Rehabilitation Project
RTA - Road Transport Authority
TCDE - Transport Construction Design Enterprise
TGE - Transitionsl Government of Ethiopia
UNCTAD - United Nations Conference for Trade and Development
UNDP - United Nations Development Program

This report is based on the findings of a Bank appraisal mission which visited Ethiopia in September/October 1990,
comprising Mr. E. Irgens, Sr. Highway Engineer and mission leader, Mr. D. Jovanovic, Sr. Economist, Mrs. 1. Holt, Sr. Financial Analyst,
Mr. J. Howe (Consultant-Intermediate Means of Transport) and Mr. O.K. Sylte (Consultant-Highway Engineer) who reviewed the design for the
civil works in the project. Mr. J. Brown, Division Chief, joined the mission for its final discussion with the Government. The processing of the
Project was delayed as s result of the change of government in March 1991. The report was updated in March 1992. Ms. V. Neric-Nyberg,
Mr. Aviraj Chakranarayan, Janine Littleford and Erlinda Maliksi provided secretarial suppon in the preparation of the report. Mr. S. Weissman
and Mr. Francis Colago are the managing Division Chief and Department Director respectively for the operation.
 FOROMCIAL USE ONLY

ETHIOPIA

ROAD REHABILrrATION PROJECT

Table of Contents

Page

Project Summary. i

I. The Transport Sector

A. Country Background.1
B. The TransportSystem. 2
C. Role of Transport in the Economy. 3
D. TransportInfrastructureand OperatingEntities. 4
E. TransportSector Issues and GovermnentPolicy. 8
F. Past Bank Group Operationsin the Sector.11
G. Bank Strategy.12
H. Rationalefor the Bank's Involvement.12

II. The HighwavSubsector

A. The Road Network .. 14

B. Traffic .15
C. Vehicleand Axle Load Regulations .. 15
D. Road Safety .. 17
E. Road Administration.17
F. Planningand Financing.19
G. Road Engineeringand ConstructionSupervision . .19
H. Road Construction .. 20
1. Road Maintenance.20
J. Training ......................................... 21
K. Accountingand Auditing.22

Ell. Project Conceptand Composition

A. Project Origin and Preparation .. 23

B. Project Objectives .. 23
C. Project Description .. 24
D. Cost Estimates .. 27
E. Financing.28
F. Implementation.30
G. Procurement .. 30
H. Disbursements .. 32
I. Reportingand Auditing .35
J. EnvironmentalImpact .35

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

A. General........................... 37
B. Traffic on Addis Ababa - Asab Road ....................... 37
C. EconomicAnalysis..................... 38
D. Risks ......... ............ 40

V. Agreementsand Recommendation

A. Actions AlreadyTaken .................... 41

B. AgreementsReached .......... .......... 41
C. Conditionsof Effectiveness.......... .......... 42
D. Recommendation.......... .......... 42

ANNEXES:

1 VehicleFleet
2 Consumptionof PetroleumProducts
3 Volumeof Cargo Transportedby Road
4 Actual Recurrent Expenditureon Road Maintenance
5 CapitalExpenditureon Roads
6 Revenuefrom Road User Charges
7 Structureof Fuel Prices
8 OrganizationCharts: ERA, MOHUD&C
9 PMS - Terms of Reference
10 ImplementationSchedule
1I Timetablefor Implementationof New Axle Load Loegation
12 Summaryof EconomicAnalyses
13 Project Progress ReportingRequirementsand SupervisionPlan
14 Road MaintenanceEquipment
15 Training Program

MAP IBRD 22830

 - L -

ROAD REAIITTO PRaE

CREDIT AND POETSUMMARY

Borower, The Gowernmentof Ethiopia

CreditAmouxt: SDR 66.4 mUlion(USS 96.0 million equivalent)

Crdit Terms: StandardIDA terms with a marity of 40 years

anLtD rWgot The Project consistsof:

(a) Road Rehabilitation: wideningand strengtheningof 196 Am of

the main road betwwenMilk and Asa4b.

(b) PavementManagementSystem. Design and implementationof

a pavement managementsystem indudingprovision of
technicalassistance, trainingand equipment.

(c) Training, sector related studies and technicalassistanceto

MOTACfor the introductionof an efficientaxle load control
system and to MOPW&UDfor the detailed engineeringfor
civil worksto be included in the next highwaysectorproject,
andfor instftutionaldevelopment.

The main benefitsfrom the road rehabfitation componentwill be

saWingin vehicle operatingcosts, maintenancecost savings, and an
increasein transportcapacity. The GovermnentwUlalso benefitby
avoidingotherwisecostly road reconstructionIn thefuture. The direct
beneficiariesof reducedtransportcosts and improvedroad safety will
be truck and bus owners/operatorsandpassenger car users on the
project assistedpart of the country's transportltfdlne, the Addis
Ababa-Assab road LI Thepavement managementsystem will enable
the Ethopia Roads Authority to better monitor and plan road
maintenanceof its paved road systenL

Securityremains a problem In Ethiopiaand there Is a possibility that

implementadonof the civUworksmight be offectd. Otherwise,there
is only limited risk connectedwith thdeimlementation of the civil
workscomponentof the Project, since the wor, wiUbe carried out by
contractsawardedunder ICB. Wth dth support of consultantsfor

LI Anodhr Jecwiou 010 Adl Ababa-Asab

road Li bein relkabed wit de asaaw 0' aboutUS$42 mU
equivwknafrcmse Ajkai Dewlppme Bank
 - ii -

procurementand saqerWisionthe ERA should have no dffWlculyIn

managingtheproject. Withrespectto extendingthe lffc of the entire
road and the Project's objective of rehabUitatingsectons In need of
urgent repairs, there is a risk that secions not Includedin the Project
mightfaU and require investmentsooner than antdicpated(MiUle-
Awash). This risk, howewer,is reducedby the inclusionin the Project
of the PMS with appropriatetechnicalassistanceduring the itiW
stage. Also, the Project ncludesa componentfor the procurementof
road maintenanceequipmentwhich will inprove ERA's capacityto
carry out routineand periodic maintenance.

Anotherrisk to the Project relatesto the Implementationof a new

Axle Load ControlSystem. The Axle Load Control System, khfch
aims at reducingoverloadingandpreventingprematuredeterioration
of the reconstructedroads (as well as other sectionsof the paved road
system), may not be successfuldue to possible waknesses of RTA to
enforcefilly theproposed system, or due to generalsoclo-behavioral
factors. Some risk is associatedwith the PavementManagement
System wich may not be successfully Implementedbecauseof
possible organizationalwaknesses. These risks are reducedby the
fact that technicalassistancewill be provided under the Project. In
additon, Governmenthas already in place the basic ifrastruaure for
vehicleaxieload control-even if results arepresently only used to
gather statistcal data.

US$milions
*awQmonUnts Lacal Foreiagn La

avil Works 20.3 68.1 88.4

TechnicalAssitance and
Training 1.9 8.4 10.3
Equwpment 0.3 10.3 10.6

Total (net of taxes & duties) 22.5 86.8 109.3

Government 13.3 - 13.3

IDA 9.2 86.8 96.0

Total 22.5 86.8 109.3

 - iii -

Economic Rate of Return: 21.7%

sdmatd IDA Disbursemet

IDA FISCAL YEAR (VS$ Mllon)

LM 11 199S 1:292z.

Annual 2.0 17.0 19.0 30.0 22.0 6.0

Cumulative 2.0 19.0 38.0 68.0 90.0 96.0
 A. C

1.01 Ethiopia, with an areaof about 1.22 millionkm2, is one of the largest
countries in Africa. The topographyof the country is rugged with the altitude rangingfrom
below sea level to 4,600 m. About 90 percent of the populationlives in the rural areas, the
majorityderiving their liveliboodfrom settled peasantagriculture. Large parts of the country
are not suitable for cultivationandlor are vulnerableto drought. Under-exploitedresources,
inappropriateeconomicpolicies anddecadesof disorder and civil war resulted in Ethiopia
being one of the poorest countriesin the world with a per capita income of only S115in
1990.

1.02 Annual GDP gowth averagedbelow 2 percent in the 1980s,comparedwith a

populationgrowth rate of 2.9 percent p.a.; thus per capita income has been decliing. Slow
growth was primarily a result of droughts(1981/82, 1984/85and 1987/88), nd an
intensifyingcivil war and increasingmilitary expenditure. At the end of May 1991, the
political situation withinEthiopiachangedwith the overthrow of the Mengisturegime and the
installationof the TransitionalGovenment. The end of the civil war provides the opporunity
to rebuild the devatated esonomican social structuresbut has also fundamentallyaltered
Ethiopia's external transportsystemswith the de facto separationof Eritrea/ .

1.03 The agriculturalsector dominatesthe economythrough its size and its

influenceon most other sectors. The sector has shown no growth in real value added during
the 1980's: cultivatedarea andyieldshave stagnatedand output, even in years with normal
rainfall, has failed to mootgrowingdomestic deman. Food imports have sharply increased,
mainly transportedthrough Assab, and food security has become a major issue. An important
factor in the poor performanceof the mral sector has been the inadequatecoverageand
quality of the road infrastructureuanthe generaddependenceon traditional meansof transport
- walking and horses for personal mobUiity, headloadingand pack animals for freight
transport. Heatloading is one of the most burdensomechores affectingwomen in the rural
areas and the time that ha to be devoted to transport is a critical constraint to increased
production.

1.04 While the Meagisturegime adoptedan economicreform package in 1989/90

with the objectiveof developinga market orientated,mixed economy, little was actually
achieved. The new Trasitional Governmentaims to bring about a major restructuringof the
economy. Its now economicpolicy stament calls for a significantreduction in the role of
the state in productionandtrd, the developmentof the private sector and a progressiveshift
from adminitative regulationto marikt-determineddecisions. The new government,having
inheritedthe insdtutions,struc ad regulationsof a centrally plannd economy,laces
major tasks. Th3 hUg st ctorhu suppressedthe developmentof the private sector ad
has failed in many areas to respondto the priority developmentneeds of the country.

1.05 The Bank's overal objectve is to asist the Governmentto restructurethe

economy, accelerateeconomicgrowth and improveliving conditions. In the short-term

iqowjqjw ,4'5g4W uji hpem.ow it A.oAwimdvininu

byk A.6um
%*hk S9. gum ii. ry.ewIAI.giI.*MO kg
ad so&-& __ __ >_<
 -2-

howeverthere is the urgent need to help the countryrestart essentialeconomicactivities,

rebuild vital social services and repair the infrastructureand facilitiesupon which they
depend. The Bank, together with other donors, has, therefore, respondedwith an Emergency
Recoveryand ReconstructionProject (ERRP, Cr. 2351-ET). This, it is hoped, will provide
sufficientsupport to economicreactivationto allow the Governmentto take the next steps
necessaryfor the major restructuringof the economythrough an adjustmentprogram.

B. The Transport System

1.06 Recent political developmentshave introducedconsiderableuncertaintyover

the comingyears into Ethiopia's overall transport system with the effectiveloss of control
over the Red Sea ports of Assab and Massawa. At present, therefore, Ethiopiahas become,
de facto, a landlockedcountry and is only now developingthe necessarylegal and
administrativeagreementswith Eritrea which are essentialfor the developmentof an efficient
transit system. As with other landlockedcountries in Africa, it is unlikelythat EthiopiawIll
be preparedto accepttotal reliance on a singletransit route or transit country and thus
increaseduse of other outlets to the sea, such as Djiboutibut also possibly Port Sudan,
Berbera and for Mombasa,must be expected.

1.07 The Ethiopianroad network is characterizedby three features: i) the existing

network is old, ii) there is lack of low volume roads iii) traffic volume is low on about 80
percent of the network. Even before the recent disruptionto traditionalroutes and facilities,
Ethiopia's transportsystem was inadequateto support efficientproductionor distribution and
representeda serious obstacle to the country's economicand social development. The
highway network is underdeveloped;with 19,020km of classifiedroads (of which only 4,100
km are paved) and an additional 15,000 km lower standardrural road, roads average only 0.3
km per 1,000 people, virtuallythe lowest in Africa. Moreover, most of the existing primary
road network is old and needs rehabilitationor upgrading. Vehicleoperating costs are high
and traffic flows are low. Other problems contributingto the inadequacyof the transport
system include:a shortage of road transport; insufficientport, rail and customs' capacity,
inappropriategovernmentpoliciesthat have supportedparastatalsrather than the private sector
in road transport, freight forwardingand trade facilitation;and operationaland managerial
problemswithin a number of transportentities themselves.

1.08 In addition to its highwaynetwork, Ethiopia's transport system includes road

accessto two ports (Assab and Massawa,both in Eritrea) and road and rail accessto the Port
of Djibouti, a small maritime shippingoperations, some incidentalriver and lake transport,
and air transportoperations at three internationalairports (Addis Ababa, Dire Dawa and
Asmara which is now in Eritrea) and approximately30 scatteredairfieldsand airstrips.
Transportoperating entitiesin the sector include a road transport regulatoryauthority, a road
freight transportparastatal, a passengertransportparastatal, a jointly owned (with Djibouti)
railway, a port authority which has no longer an effectivefunction, a freight forwarding
parastatal, a nationalshipping line and a nationalairline.
 -3 -

C. Role of TransportIn the Economy

1.09 Developmentof surfacetransport in Ethiopiahas been seriously limited by

wide topographicalvariations,extremelyrugged terrain, severeclimatic conditionsand a
widely-dispersedpopulation,factors which make constructionof transport infrastructurenot
only physicallydifficultbut also extremelycostly. The primary highway network consistsof
radial extensionsfrom AddisAbaba, there are few interconnectinglinks between adjacent
regions and the feeder road networkis grossly insufficient. Large parts of Ethiopia remain
isolated and dependentirelyupon pack animals or humancarriers for transport. Nearly three-
quartersof all farms are more than a half-day walk from an all-weatherroad. Road
developmenthas been especiallydeficient in the agriculturallyrich west of the country. Since
about 89 percent of the total populationis rural and 85 percent employed in agriculture,the
lack of roads, particularlyrural and feeder roads, is a significanteconomicand social
constraint.

1.10 As mentionedpreviously,an increasinglylarge proportionof the road

network needs rehabilitationor upgrading. The conditionof the country's main route, the
861 km road which connectsthe capital of Addis Ababa with the Port of Assab on the Red
Sea, gives rise to the greatest concern. Due to age, overloadingand inadequatemaintenance,
sections are now deterioratingand the road has become a serious bottleneckto economic
recovery. Sinceabout 2.6 milliontons, including82 percent of Ethiopia's total exports and
imports, are transportedannuallyon the road, its importancecannotbe over-emphasized.
UInlessaction is taken in the very near future, continuingdeteriorationwill substantially
increase vehicleoperating costs and the cost of eventualroad reconstruction. Further
deteriorationin the road conditionwould exacerbatethe present chronic shortageof transport
which already constrainsthe movementof petroleum,food relief and other criticallyneeded
imports. Rehabilitationof this vital transport link is thus urgently neededand is the focus of
the proposedProiect.

1.11 Traffic volumesare low on all but the busiest trunk roads, reflectingthe poor
extent of market integrationof rural Ethiopia, the lack of feeder roads, and most particularly,
chronic shortagesof road transport, a problem which has become increasinglyserious.
Ethiopia's vehicle fleet is insufficientto meet demand and the import of new vehiclehas not
even matchednormalreplacementneeds. The present shortageis the consequenceof: (i)
past Governmentpolicies that favoredpublic trucking over the private sector; (ii) a centralized
transport allocationsystemthat led to rigiditiesin the supplyof transport services,lowered
utilizationof vehicles and roads and discouragednew investment;(iii) control of tariffs and
failure to update tariffs to ensure cost recovery by truck operators; (iv) very limitedallocation
of foreign exchange,particularlyfor the private sector, for spares and for new vehicles;and,
more recently, (v) the destructionof trucks during the war.

1.12 The shortageof truck transport has contributedvery substantiallyto the very
severe cargo congestionat the Port of Assab where port operationsare criticallyconstrained
by the lack of availablespace in the port and the shortageof port handlingequipment.
Increasingthe effectivecapacityof the trucking sector, through the provisionof additional
vehicles, spares and tires, is a major objectiveof both the TransportProject (CR 2002-ET)
and the ERRP.
 -4 -

1.13 The extensionof the road system and access to motorizedtransportwill be a

slow process and it is likely the majorityof the rural populationwill remain dependentupon
non-motorizedtransport for many years to come. The human and economiccosts of
dependenceupon these traditionalforms of transport is high. An average Ethiopianrural
household is estimatedto spend about2600 hours per year on transport, 60 percent for fuel
and water. More than 70 percent of this transport is undertakenby women. Time spent on
transport is a major factor limitingthe effectivenessof efforts to expand agricultureand
establish a market economy. As populationexpandsand sources of firewood and water
become more scarce, rural transport will become an even greater developmentconstraint.
Animal transport in Ethiopia could be vastly more productive if trails were improved,carts
better designed, skills of local producers enhanced, and the supply of parts and raw materials
for the manufactureand repair of carts and other intermediatemeans of transport, expanded.
Governmentis adressingthese issues in their Policy paper on Rural Roads and Transport,
presentlyunder preparation.

1.14 The transport sector only contributesabout six percent to GDP and its
inadequacyis very costly to the country. This receivedworld wide attentionduring the
droughts when food aid put enormousstrains on the port and inland transport resultingin
significantdelays in distribution. The economicrepercussionsfrom the inadequate
infrastructureand reliance on inefficientparastatalsare not, however, limitedto periods of
drought; they representan enormousobstacleto economicdevelopment,integrationof
markets, export developmentand the efficientuse of imports.

D. Transport Infrastructure and Oerating Entities

1.15 Roads. The highwaysector is discussedin detail in ChapterII.

1.16 Road transport on the main corridor and throughoutthe countrywas, for
many years, tightly regulated and controlledby the Govermnent. Tariffs were set and
enforcedby the Road Transport Authority(RTA), under the Ministry of Transportand
Communications(MOTAC). This situationis now changingand control, under the
TransitionalGovernment,has been relaxed if not eliminated. Road transport is in a
transitionalstage toward market-orientated,private sector industry. RTA also determines
routes, approves vehiclelicenses, promulgatesand enforcessafety and axle load regulations.

1.17 Freight Transport by Road. Commercialfreight transport (there are also truck
fleets operatedby relief agencies, carrying food aid) is undertakenby a government-owned
trucking parastatal,the EthiopianFreight TransportCorporation(EFTC) and by a fairly large
number of private owner-operators,called "Associates' (about 4,500). Together, public and
private trucks transportedabout 5.0 milliontons in 1990/91, 91 percent of all inland
transport in the country (Annex3). In an effort to prevent abuses related to the shortageof
vehicles in the country, the previous Governrnentestablisheda cargo allocationsystem by
which EFTC controlledthe allocationof commercialroad transport in Ethiopia. The country
was divided into six zones, or 'ketanas." EFTC allocatedtrucks, both its own and those of
the private sector, to each of those zones and withinthose zones, allocatedloads and routes to
individualtrucks. EFTC was paid 5 percent of the Associates' contract price for this
brokerage role. While well-intentionedperhaps, the rigid system led to significanteconomic
distortionsand discouragedentry of new capacityinto the sector.
 -5-

1.18 This centralcontrol of the private sectorhas weakenedin recent months and
in its draft economicstatementthe TransitionalGovernmenthas stated that it will no longer
be compulsoryfor private truckersto be membersof ketanas. Increasinglyspecific contracts
for the movementof cargo are being negotiatedbetweenshipper and transporter, although
EFTC often acts as the intermediaryand still collectsits commission. Although de facto
deregulationof road transport has taken place for some traffics it is not yet universal and
further action by Governmentis necessary(para 1.43).

1.19 In terms of capacity, the combinedfleet of EFTC and the private sector is
inadequatefor the size of Ethiopia's populationand does not meet Ethiopia's present transport
needs (Annex 1.) The problem is compoundedby the age of the private sector fleet (average
age over 18 years), and the shortageof spares and tires which all lead to low rates of vehicle
availabilityand limited vehicleutilization. EFTC itself operatesa fleet of over 1,000
vehicles, standardizedto 3 - 4 makes, with an averageage of 8 years but with a vehicle
availabilityof less than 50 percent. The privately-ownedAssociatefleet totals 6,400 trucks of
assortedmakes. Replacementof private sector vehicles, in particular, has been extremely
limiteddue to lack of foreign exchangeand to the fact that earningsare insufficientto cover
investmentcosts.

1.20 Lack of foreign exchangehas preventedboth EFTC and the private sector
from being able to renew its fleet, much less expandit. EFTC has budgetedthe purchaseof
300 vehiclesper year in each of the last five years but has only been able to acquire a total of
214. Only 30 tankers out of proposedpurchases of 400 have been bought in the sameperiod.
Meanwhileattrition and loss of vehiclesto hostilitieshave reduced the vehiclefleet. Lack of
foreignexchangefor spare parts has also harnperedoperations. Actualpurchases for spares
totalledBirr 10.7 million in the last three years versus planned average annual expendituresof
Birr 32.0 million. The private sector has importedvirtuallyno vehicles as the importtariffs
were, until recently, Birr 300,000 or US$ 140,000per vehicle. Due to the shortageof
effectivetrucking capacity,there is an enormousbacklogof registered freight waitingto be
moved.

1.21 The Bank is assistingGovernmentin its efforts to increasetrucking capacity

through the ongoingTransport Project Cr. 2002 - ET and the ERRP. It is now agreed by
Governmentthat trucking is most effectivelyundertakenby the private sector. Most of the
additionalcapacityis targetedat growth in the private sector and the Governmenthas
announcedthat it intendsto restructureand privatize at least part of EFTC. Investmentby the
private trucking industry will be very limited if operatorscannot earn enoughto continue
operating. Currently, in the remainingcontrolledsector, truck operators are transporting
goods on a ten year old tariff that was consideredinsufficientto cover total costs in 1986. To
cover costs, truckers operate in the deregulatedsector or overload. The overloadingof
vehicleshas contributedsignificantlyto the prematuredeteriorationof the Addis Ababa -
Assab road as well as other sectionsin the network, addingsignificantlyto the cost of road
maintenance. On paved roads it has been estimatedthat the officialtariff would need to be
doubledto reflect full vehicle costs in the present operatingevnironmentand even higher
tariffs wouldbe necessaryon unpavedroads. In conjunctionwith the ERRP the Government
raised tariffs by 70 percent on main road and agreed to completederegulationof tariffs by 31
December1992.
 -6-

1.22 PassengerTransDortby Road. Bus service is by far the most importantmeans

of motorizedpassengertransport in Ethiopia. Otherwise, in urban areas, travel is done by
foot, taxi or car; in rural areas, where roads are few, trips are made on foot or by horse or
donkey. Rail and air passengertravel is small comparedto the number of passenger trips
made by bus. Commercialbus transport is undertakenby both public and private sectors but
all services are controlledby the Ethiopia PassengerTransport Corporation(EPTC). The
majorityof services are providedby private operators; long distance bus transport is 70 - 75
percent private sector, over 90 percent on the Addis Ababa-Assabroad. EPTC establishes
bus routes and schedulesand dispatchesbuses owned and operated by independentbus owners
and by the Governrnent. Commercialbus transportin the private sector consists of about 160
owners with approximately2,600 buses of various sizes; about 300 large buses are for long
distance routes. EPTC owns a fleet of about400 buses providingcity transportin Addis
Ababa, Jimma and Asmara as well as some intercityservices.

Other Transport Modes

1.23 Railway. An old and rather rundownrailway supplementsroad capacityto

the Red Sea, connectingAddis Ababa with Djibouti, about 150 Ikmsouth of Assab. Jointly
owned by Ethiopiaand Djibouti, the Cheminde Fer Djibouti-Ethiopia(CDE) is operated
under the provisionsof a 1981treaty. The 781 km, meter gauge, singleline has almost no
ballastingand is characterizedby sharp curves, steep gradientsand low embankments. Rail
capacity is limitedby track conditions,operatingdifficultiesand managerialproblems.
Imports carried include fertilizer, iron and steel, and containerswhile exports include
molasses and sugar and some containersof textiles and hides and skins. The CDE operates
with a smalldeficit and has been trying to improveoperationswith the help of a limited
rehabilitationprogram financedby the EEC and France. Without additionalinvestmentand,
more important,changesin the treaty that wouldpermit better management,it is doubtful
whethertraffic on the rail route could increase muchbeyond the present level of 300,000
tons. The ERRP is providinglimitedassistanceto CDE to maintainexisting capacityuntil
longer-termplans and assistanceare agreed.

1.24 Pr. Ethiopiais served by three major ports: Assab, Massawaand Djibouti.
In the late 1980's approximately85 percent of Ethiopia's foreign trade was handled by Assab,
8 percent by Massawaand 7 percent by Djibouti. The port of Assab and the main road
inland to AddisAbaba, therefore, representsEthiopia's most importantoutlet to the sea.
Gradualextensionof the Assab port started under the Port Engineeringand Construction
Project (Cr. 1676-ET)in 1986. By early 1989, when the constructionof the tug berth under
the Credit was completed,Assab had seven berths availablefor commercialshippingwith an
annual capacityof about 1.6 milliontons of dry cargo. To handle general traffic growth and
drought relief cargo, major expansionof the port was assessedto have high priority and,
under the on-goingTransport Project (Cr. 2002-ET),African DevelopmentBank (AfDB)was
providingfunds to constructtwo multipurposeberths which would increase capacityto about
3 milliontons per year. The berths were expectedto be completedin late 1992. The
assumptionof power by the ProvisionalGovernmentin Eritrea and their controlof Assab and
Massawahas brought constructionto a halt and this project has now been terminated.
 -7 -

1.25 The Ethiopianparastatal, MarineTransport Authority(MTA), used to be

responsiblefor the operation, managementand developmentof Assab and Massawa. MTA
was well managedand operatedwith considerableadministrativeautonomy. The port of
Assab is now managed by an Eritrean parastatal, createdafter the de facto separationof
Eritrea. A port agreementhas been made betweenthe Provisionaland Transitional
Governmentsbut unfortunatelythe port has no internationallegal persona and this may
continue to deter the conferenceline from callingat Assab. In recent months the Transitional
Governmenthas organized a major effort to clear the back log of cargo from the Port and
congestionhas been substantiallyreduced. Port capacityat Assab remains, however, a weak
link in Ethiopia's internationaltransport network. The new top managementis not
experiencedin port operationsand many of the decisionsare centralizedin Asmara. The
essentialancillaryservices necessaryfor port operations,such as banking and
communications,are still being created. Labor productivityin the port of Assab continues,
however, to be better than average for East African ports.

1.26 In view of the legal and operationalproblemsat Assab it is probablethat

greater use will be made of the Port of Djibouti. The port is efficientand, even before the
present expansion,had excess capacity. The port is also served by the major shippinglines
which have ceasedoperating to Assab. Use of Djiboutihas, in the past, been restrictedby
the limited capacityof the railway and regulationseffectivelypreventingthe use of road
transport. It is unlikely that there will be major expansionin rail capacity, at least in the
immediatefuture, but efforts are being made to facilitatethe use of road transport. The track
from Dire Dawa to Dewale on the Ethiopia/Djiboutiborder has been improvedby the
EthiopianRoads Authority(ERA) and is under constantmaintenanceas there are no
permanentstructures. A second link via Dubi on the Mille-Assabroad is paved but would
need strengtheningif heavy commercialtraffic increased. Inside Djiboutithe roads are good
and well maintained. Restrictionson the use of trucks are being lifted and road transit
formalitiesstreamlined. As soon as the security problemswithinboth Ethiopia and Djibouti
are settled a rapid increase in the use of Djibouti, especiallyfor non-bulk cargo, can be
expected.

1.27 The Maritimeand Transit ServicesCorporation(MTSC), a parastatal

companyoperated under the responsibilityof MOTAC, is presentlythe sole shippingand
transit agency in Ethiopia. An amalgamationof more than 30 forwardingagenciesthat
originallyoperated in the private sector, MTSC was put in place after the revolutionand has
proved to be a significantbottleneckto the efficientmovementof goods. The situationhas
further deterioratedwith the creationof an 'Eritrean MTSC' in Assab which handlesthe
clearanceof cargo while 5 employeesfrom "EthiopianMTSC' operate from a hotel playinga
coordinatingrole. The Bank's Transport Corridor Analysis(ReportNo. 6554-ET), published
June 1987, detailedthe inadequaciesof the previous system and equipmentand technical
assistancewere to be providedunder Transport Project (CR 2002-ET)to assist in reform.
Under the new circumstancesin the ports there is the urgent need to allowprivate clearing
and forwardingagentsto provideservices in the ports and within Ethiopia. The endingof
MTSC's monopolywas recommendedin previous studies and this reform has now been
agreed by the TransitionalGovernment.

1.28 The TransportProject (CR 2002-ET)also includesassistanceto streamline

procedureswithinthe EthiopianCustoms and Excise Administration(ECEA). Fortunately
customs clearancehas not been very significantlyaffected by the change in circumstancesat
 -8-

Assab. AlthoughECEA no longer has an office in the port, it is permittedto clear cargo at
the same time that it is being examinedby Eritrean customs officials. Improvementto
customsproceduresare still necessary,however, and there is also now the need to establish
an efficienttransit arrangementfor the use of the Red Sea ports.

1.29 InlandWaterways. Some minor inland water transport (there are three lakes
and two navigablerivers) supplementsroad and rail transport in the countrybut tonnage
carried by water is relatively insignificant.

1.30 Air Transport. Air transport is fairly well-developedand the best performing
transport mode. EthiopianAirlinesand a numberof foreign carriers serve two of the
internationalairports (AddisAbaba and Dire Dawa) and EthiopianAirlinesalso provides an
extensivedomesticservice. Managementof the airports and airfields is undertakenby the
Civil AviationAuthority,under the aegis of MOTAC. EthiopianAirlines, a parastatal
companyunder MOTAC, has been in service for over 40 years, provides scheduledservices
to abouttwenty countriesand is currently in the process of expanding,particularlyin freight
operations. Excellentmanagementcombinedwith financial and managerialautonomyhas
resulted in the companyoperatingprofitably and earning its reputationas one of the best
airlines in Africa.

1.31 EthiopianShippineLines. EthiopianShippingLines Corporation,a parastatal

companyunder MOTAC, was establishedin 1964, began operations in 1966and currently
owns 11vessels with a capacityof about 80,000 dwt. Operatingat a profit, it transported
about 500,000 tons in 1989/90,or 20 percent of Ethiopianexternal trade.

E. Transport Sector Issues and Government Policy

1.32 GovernmentStrategy. Both the present and previous Governmentshave

recognizedthe importancetransportcan and should play in developingthe economyand have
placed high priority on transportinvestments. In its last public investmentprogram, the
previous Governmentgave transport investmentthe highestpriority and road
maintenance/rehabilitation and increasedtransportcapacity are two of the major components
of the ERRP. Despitethe emphasisgiven to transport-the total length of the road network
doubledbetween 1970to 1986-inadequateinfrastructureand transport operatingcapacity
remain major constraintsto economicand socialdevelopment.

1.33 While the TransitionalGovernmnent continuesto place great emphasison the

transport sector there has been a significantshift in policy toward greater reliance on the
private sector for the provision of road transport services. The previousregime was slowly
movingtoward liberalizationof the sector but had achievedrelatively little change. The
TransitionalGovernmenthas not yet developeda full strategy for the sector and is primarily
concerned, at present, with the repair of the existinginfrastructureand increasingtrucking
capacityto meet emergencyneeds. Sector work, such as that proposedfor a Rural Road
Strategy, is continuing. Many major policy decisionstaken within the contextof the overall
strategiccommitmentto reduce the role of the state in the provision of transport and related
ancillaryserviceshave yet to be fully implemented.
 -9 -

1.34 Capital Expenditures. During recent discussionswith IDA, Government

indicatedthat its road investmentpolicy will continueto give high priority to (i) the
rehabilitationof the road network, particularlyof the Addis-Assabroad; (ii) improving
intermediatemeansof transport for the rural population;(iii) judiciously increasingthe trunk
road network;and (iv) developingthe rural and feeder road network.

1.35 Actual investmentsin the sector in the 5 year period (1984/85 - 1988/89were
aboutBirr 950 million (US$459million); investmentin roads (includingperiodic maintenance
and rehabilitation)was about 61 percent; the balancewas spent on air transport,
ports/shipping,trucking and the CDE railway. Investmentin new road constructionwas only
Birr 225.5 million (US$109million)relativelylittle in view of the low densityof the road
network. A new road program is being preparedby ERA and will be reviewedwith
Ethiopianauthoritiesin conjunctionwith the preparationof a Third Road Sector Project. An
increase in the rural road program is of critical importanceto achievingagricultural
developmentobjectives.

RecurrentExpenditures.Pricing and Cost Recovery

1.36 Rod. Despitethe Government'scommitmentto the funding and carrying

out of road maintenance,the actual resourcesallocatedhave been insufficientto maintainthe
network. Road maintenanceexpenditurein 1989/90 was about Biff 51 millionor US$25.0
million, about US$1,315/km. This expenditureis within the range of needs for 'normal'
maintenance,but the age of the network and past neglectcreate much greater needs.
Unfortunately,the problems of underfundingis compoundedby the allocationof the funds:
the ERA is overstaffedand too much is spent on salaries and too little on equipmentand
materials. ERA recognizesthe inadequacyof maintenanceand has asked Governmentto
increase substantiallythe allocationfor maintenance(para. 2.16).

1.37 In terms of cost recovery, the revenuesfrom road users are greater than total
annualexpenditureson roads includinginvestments. Revenuesfrom road users have been on
the rise and in 1990/91 reached Biff 230.3 million (Annex6). The increase in revenueswas
due to Government'sefforts to mobilizeadditionalresources. Total road expenditures,both
capital and recurrent, have also increasedto about Biff 93.5 millionin 1989/90. While total
road user revenuesare sufficientto meet total road expendituresit would appear that more
specific road user charge revenue (revenuein excess of the level that wouldbe generatedby
applyingthe average rate of import duties and other taxes to vehicleoperating cost inputs) are
neither sufficientto meet total road costs nor to meet the attributablecosts of specificvehicle
categories. User charges are thus lowest on commercialvehicles which imposeby far the
greatest road costs. The issue of appropriateroad user taxationpolicies will be raised within
the context of on-goingtransport strategydiscussions.

1.38 Road Transport. Pricingof road transport has not been cost based and the
existing road tariffs go back to 1981. Under the Transport Project (CR-2002-ET)the
Governmentagreed to introduceby mid-1990new commnercially based tariffs in transport.
By the beginningof 1992, the new tariffs had, however, been neither introducednor agreed.
Therefore, during negotiationsof the ERRP, it was agreedthat, in view of the size of the
tariff increasesrequired, the intrinsicshortcomingsof administeredtariffs and the fact that
market-setprices in the deregulatedsectors reflect operatingcosts, deregulationof all road
tariffs was a much better policy than raisingthe officialtariffs (see para 1.21).
 - 10-

1.39 In the road transport sector, scarcity of foreign exchangeand insufficient

earningshave resulted in inadequateexpenditureon spares. Private truckers earnings are
not sufficientand EFTC's trucking operationshave been operating at a substantialloss.
EFTC managedto remain financiallysolventonly becausetrucking operationswere cross-
subsidizedby revenuesassociatedwith operationsof the ketana system and from the sales of
fuel and spare parts to the private sector. For the fiscal year ended July 7, 1990, EFTC lost
about Birr 17 million(US$8.5 million)on revenuesof Birr 76 million (US$38 million). The
loss reflects the facts that its tariffs were too low and its labor costs were too high (Birr 25
million). The TransitionalGovernmenthas announcedits intentionto privatizeall or part of
EFTC's operations,but no decisionshave been taken on the form that such privatizationwill
take.

1.40 Fue. Government'spolicy is not to subsidizefuel and currently fuel prices

are based on a price of about US$30 per barrel. Fuel taxes, however, are relatively low, 20
percent of the sale price (Annex7).

1.41 Axle Load Control. Heavy overloadingcontributedsubstantiallyto pavement

deteriorationespeciallyon the Addis Ababa - Assab road. Ethiopiadoes not have an axle
load control system fully operating despite such a requirementhaving been a covenant in the
ongoing Second HighwayProject. New axle load legislationwhich set more appropriateaxle
load limits was passed in 1990 and Governmentmust now begin enforcingit. Procurementof
needed weizhbridgeequipmentis a componentof the proposed Proiect.

1.42 FunctionalClassificationSystem. Ethiopiadoes not have a functional

classificationsystem for the road network and, as a result, there is confusionregarding
maintenancestandardsand responsibilities. The establishmentof such a system has been
agreed under the pronosedProiect.

1.43 Need To Increase Supportof the Private Sector. Past support of publicly
owned parastatalsrather than private sector companieshas inhibitedthe growth of efficient
transportin Ethiopia. In particular, there is a need to open up freight forwardingand to
increase competitionin the transport sector. Additionally,private sector involvementin road
constructionand periodic maintenanceshould now be encouraged. Developmentof Ethiopia's
domesticconstructionindustry was an objectiveof the ongoingSecond HighwaySector
Project but lack of accessto foreignexchange, inabilityto open a foreign accountoverseas,
lack of autonomyover its staff and hiring, have handicappedprivate sector performanceand
hurt its abilityto survive over the long term. Additionally,the extent of Government's
continueduse of force account units within the Ministry of Constructionand Urban
Developmentfor highwaysand other civil works projects reflects a lack of commitmentto
private sector development. In view of the Government'snew commitmentto private sector
development,it is hoped that serious efforts will be made to privatise firms such as Blue Nile
ConstructionEnterprise or, at the very least, give them real autonomyand open the sector to
competition. Provisionsare made in the Proiect to financetechnical assistanceto carry out
related studies.
 - 11 -

F. Past Bank Group Operationsin the Sector

1.44 In the transport sector, the Bank Group has committedabout US$282 million
for eight road projects, one port project and one transport project. In addition, support for
road maintenancealso forms an importantcomponentof ERRP. The first three road projects
concentratedon main roads, while the subsequentones emphasizedinstitutionbuilding and
constructionof secondaryand rural roads and road rehabilitationand maintenance. The last
two road projectshave been sector projects supportingthe government'soverall road sector
programs. Bank Group lendingin the roads sub-sectorhas been generally successful,
particularlyin achievingphysicaltargets. The First Road Sector Project (Cr. 708-ET
approvedin 1977)was carried out over the 1977-84period. The main componentswere:
strengthening/upgradingof selectedsectionsof the road network (650 kIm),constructionof
rural roads (1,350 km), assistanceto domesticconstructionindustry and technical assistance
and training. While the road constructiontargets were generally met, the Project did not meet
its objectivesof increasingroad maintenanceand improvingsector policy in regard to vehicle
weightregulationand adjustmentsin road user charges. The on-goingSecond Road Sector
Project (Cr. 1404-ETapprovedin 1983)includesa sizeableprogram for roads to be
constructedor strengthened;however, the program targets were revised to respond better to
new priorities and needs arising from the drought and to take accountof reduced Government
and external resources availablefor the Project. With regard to policy issues addressed in the
Project, the Governmenthas compliedwith the majorityof covenantsagreed upon. However,
the axle load legislationwas enactedlate in 1990 and is just being applied;and a new road
classificationsystem is still under review. The Project is four years behind SAR estimates,
due to initiallyslow implementationon the main civil works component,the Nekempte-Bure
road which is now nearly completed. The quality of work is good and valuabletransfer of
know-howhas taken place during project execution. The Project will be completedby
mid-1993.

1.45 The Port Project (Cr. 1676-ETapprovedin 1986),which included

constructionof a tug berth in Assab, procurementof equipmentand studies, was considered
to be an emergencyoperation as port congestionwas so severe during the drought of 1985
that it was necessaryto make more room for ships. By constructinga new tug berth (1989)
and by implementingother project componentsaimed at reducingtransportbottlenecksand
improvingthe flow of goods alongthe main transport corridor in Ethiopiathe congestionwas
somewhatreduced.

1.46 The Transport Project (Cr. 2002-ETapproved in 1989)was designedto take a

comprehensivesectoral approachto addressingthe most urgent needs in the port, in road
transport, in freight forwardingand in customsand trade facilitation. To this end, the
project includedport expansion,provisionof additionaltrucks for EFTC and the private
owner-operators,measuresto improveEFTC and a multi-modaltransport facilitationprogram
to be implementedby UNCTAD. Implementationof the project has been interruptedby the
recent political changes. Some restructuringof the project has taken place to meet
emergencyneeds in conjunctionwith the ERRP and to reflect changesin the sector and
further restructuringis now under discussionwith the Governmentto bring the project into
line with its emerging private sector oriented policies for transport.
 - 12 -

1.47 The ERRP incude support for the periodic maintenanceof the priority road
network (IJS$50million),the replacementof civil aviationcommunicationsand safety
equipmentdestroyedin the war (USSSmillion)and limitedassistanceto road passenger
transport (US$4 million).

G. Au's Stratea

1.48 The Bank's overall countrystrategy is to assist in 'jump-starting'the economy

whilediscussionstake place on a major economicadjustmentprogram. The Bank's strategy
in the transportsector, withinthis program, is to maintainand strengthena functioningbasic
transport network with the capacityto meet the transportdemandswhich will be generatedby
a reviving economyand to improvethe overall transport system withinthe rural areas of
Ethiopia.

1.49 To this end, the Bank has been supportingrehabilitationand improvementof

criticallyneededinvestmentsin highway and port infrastructure,promotingmore efficient
operationswithin Ethiopia's transportoperatingcompaniesboth through institutional
developmentmeasures(such a technical assistance,training, developmentof cost accounting
and tariff systems)and provisionof equipment(such as cargo handlingfor the port and trucks
for road transport). At the same time the Bank has promoted implementationof policy
measuresthat would enhance transportoperationsincluding:(i) tariff reform to ensure cost
recoveryof port, road transportand freight forwardingoperations; (ii) measuresto improve
road maintenanceand establishan axle load controlsystem so as to preserve investmentsin
the road sector; (iii) intermodaland trade facilitationmeasuresto reduce paperworkand
cumbersomeproceduresin customs and cargo handling in general; and (iv) following
Government'srecent major decisionson economicpolicy, support for deregulationof road
transportand developmentof private sector operationsin road transport and freight
forwarding.

1.50 In addition to rebabilitatinga critical elementof Ethiopia's road network, the

proposed Project is designedto build upon some institutionalmeasuresin the on-goingSecond
Road Sector Project (Cr. 1404-ET). Implementationof a Pavement ManagementSystem
should enable ERA to optimizethe use of limited road maintenancefunds by improvingits
overall road maintenanceplanning. Provisionof technical assistanceand training to assist in
implementationof an axle load control system should reduceprematuredeteriorationof this
and other roads in the country.

H. Ratdile For lb. Bank's Involvement

1.51 The primary purpose of the Project is to financeurgently needed rehabilitation

on Ethiopia's main transportlifelineto ensure that it remainsopen and functional. Arresting
deteriorationof the Mille-Assabroad and upgradingselectedportions where capacityis a
constraintis essentialto Ethiopia's economicrecovery. Timelyrehabilitationalso will avert
the need to make investmentsin more costly reconstructionat a later date.
 - 13 -

1.52 The need to repair this road is crucW becaue there is lite doubt that the
route will remain a primary link betweenAddis Ababaand the Red Sea. Though trffic on
routes to Djiboud will probablyincreae, AsuabIs likely to continueas Ethiopia's main port
for bulk traffic. Rehabilitationof some sections of the Addis Ababa - Ausb road wu
includedin the on-goingSecondHighwaySector Project but funds were insufficientto
undertake more than a small section.
 - 14 -

II. THE HIGHWAY SUB-SECTOR

A. The Road Network

2.01 In terms of surface standard,the classifiedroad network in Ethiopiaconsistsof

19,020km of all weatherroads, of which 4115 km are paved, 8,943 km are graveled, and the
balance5,962 km are unsurfacedroads. With a total land area of 1.22 sq.km., this road networkhas
one of the lowest density in Africa(15.2/1000 sq.km). A large proportionof these roads was built in
the 1930sand 1940sand it is remarkablethat these roads have been able to serve the increasingly
heavy traffic for such a long period. The functionalroad classificationsystem (which shouldhave
been revisedunder the on-goingSecond Road Sector Project), dividesthe network into Primary (1000
km), Feeder (4000 km) and Rural Roads (5000 km). "Rural Roads' refers to the lowest class of the
classifiednetwork. In addition there are some 20,000 km non-classifiedrural roads - mainly farm-to-
market roads 1/. There is in the presentsystem some confusionbetweenthe classificationof roads
and the type/geometricstandard of the road. A proper functionalclassificationsystem will enable
Governmentto define responsibilities,maintenancestandards and developmentstrategies for the
various classes of roads. The types of road shouldbe definedin the Design Manualand reflect the
geometricdesign and the bearing capacitygovernedby the AverageDaily Traffic (ADT) and the
vehicledistribution. At negotiationsit was agreed that ERA will adopta new road classification
system by December31. 1993 (Para 5.2).

2.02 Road transport is the dominantform of moden transport in Ethiopia, but due to the
low densityof modernroads, large parts of Ethiopia remain isolatedand dependentupon pack
animals or humancarriers for transport. Road developmenthas been especiallydeficientin the
agriculturallyrich areas in the West. In terms of ton/km and passenger/km,the bulk of the transport
is carried outsidethe formal road system.

2.03 As a result of age, overloadingand deficientroad maintenance,both routine and

periodic, over many years, a large backlogof periodic maintenancework has accumulatedand the
road network is now approachingthe stage where a large proportionwill need rehabilitationor
strengtheningin the next three to five years if costly reconstructionwork is to be avoided.
Table 2.1: CLASSIFIEDROAD NETWORK BY SURFACE CATEGORY

Year Bitumen Gravel Earth TotaL Change

Km Km Km Km x

1982/83 3768 8790 3609 16167 -

1983/84 3821 8903 4162 1688& 4.4
1984/85 3977 8455 4079 16511 -2.2
1985/86 3957 8524 4539 17020 3.1
1986/87 4072 8715 5266 18053 6.1
1987/88 4095 8849 5712 18656 3.3
1988/89 4115 8943 5962 19020 2.0
1989/90 4115 8943 5962 19020 0.0

SOURCE: ERA, Addis Ababa, 1991

LI 77Teterms Rural Roads tends to be used in at least 3 different senses:

OT) The lowest class of classified roads.

fii) As a Standard of road in terms of geometry.
(iii) The general &sefor describing all non-classif/ed; farm-to-market roads.
 - 15 -

B. Trafri

2.04 Regular traffic surveyshave been carried out since 1957. Counts are carried out by
ERA (previouslyETCA) at designatedcounting stationson a regular basis; they are taken about three
times a year for seven consecutivedays coveringabout 80 percent of the all weather road network.
Relativelyhigh traffic volumeshave been observed alongmost of the road sectionsradiatingfrom the
capital especiallyalong the import/exportcorridor. The vehiclefleet (Annex1) in 1989/91amounted
to 58,738 vehicles; that is about 1.15 vehicles per 1,000 people - the lowest in Africa. Due to old
age of the fleet and virtually no replacement,its size has been decliningover the last five years.

2.05 The most traffickedroad in the countryis the Addis Ababa - Assab road with sections
between AddisAbaba and Nazreth carrying over 2,000 vehicles per day (Table 2.2). The unusually
high proportionof heavyvehicles on the road betweenAddis Ababa and Assab on the Red Sea is due
to the fact that about 85 percent of the total export/importtrade is carried on this route, and few
private cars use the road for securityreasons. BetweenMille and Assab the ADT is about 500
v.p.d.. Here, truck-trailer combinationsis significantand constituteabout60 percent of the ADT.

Tabe 2.2: TRAFFIC ON ADDIS-ASSA8ROAD

(ADT) *
- --- 1988 1989-
ROAD SECTION LENGTH CA BUSES TRUCKS T/T TOTAL CARS S TRUCK$ T TOTAE

Addis-Nazareth 98 668 394 679 263 2004 795 482 911 427 2615

Nazareth-Awash 125 86 75 217 312 690 89 77 228 328 722

Awash-Mille 308 32 14 97 282 425 51 19 108 396 515

Mitle-Assab 368 22 11 162 278 473 23 11 170 292 496

SOURCE: ERA, Addis Ababa, 1990

* - Average daily traffic.

C. Vehicleand Axle LoadRegulations

2.06 The RTA is responsiblefor enforcingaxle load regulationsas well as vehicle

dimensionsand overall weightrestrictions. Axle load weighingequipmenthas been in use at various
locationson the paved network, but due to inadequatelegislationin the past, overloadingdid not
result in prosecution. New axle load legislationwas introducedthrough the Councilof Ministers
RegulationNo. 11/1990,dated September4, 1990. These regulationgenerally conformsto the PTA
(PreferentialTrade Agreement)recommendations,and allowsup to 10 tons loads on axles with twin
tires, and 8 tons on axles with singletires. It should be notedthat implementationof the new
regulationswill take time and that drastic reductionsin the overloadingproblem cannotbe expectedin
the short term. Enforcementof these new regulationswill become even more importantas the
Governmentproceeds with deregulatingthe road transportsector. An implementationschedulefor
the introductionof the new regulationhas been agreed upon (Annex 11). Priority will be givento
stationsalongthe Assab-AddisAbaba road where most of the overloadingis taking place. Iuring
negotiationsit was agreed that startingJanuary 1. 1994. Governmentwill submitto IDA for review,
annualprozress reports on the implementationof the new axle load legislation(para. 5.02).

2.07 Table 2.3 shows the axle load distributionat the Assab weighingstation where 61
percentof axle loads are more than 10 tons and 30 percent are more than 12 tons. This demonstrates
 - 16 -
clearly the need for stronger measuresby Governmentin curbing the overloadingthat is currently
taking place. The proposedpavementmanagementsystem (PMS) - consultancywill include
assistanceto Governmentin its efforts to implementthe new axle load legislation.

Table 2.3: RRP-MILLEASSABROADAXLE LOAD DISTRIBUTION

RRP MILLE-ASSAB ROAD

AXLELOADDISTRIBUTION
% OFALLAXLES

10---- - - -

LgoIi it

0--I

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

AXLELOADINTONS
61%OFAXLES
OVER10 TONS
 - 17 -

D. Road Safet

2.08 The RTA is responsiblefor road transport servicesregulations and road safety. Road
accidentsare recorded and analyzedby RTA and the police. The fatality rate per 10,000 inhabitants
is only 0.3 or 1/7thof the rate in the UnitedStates, whereasEthiopiahas one of the highest fatality
rates in relationto its vehiclespopulation,about 60 times higher than the US and more than twice the
averagerate in Africa. This indicatesthat the conditionof the roads and the vehicles using the roads,
as well as the general driver behavior, is such that should a larger proportionof the populationcome
in contactwith the modem transport system, road safetycould become a much larger problemthan is
recognizedtoday. The Bank is supportingroad safety measuresthrough the on-goingSecond Road
SectorProject. The rehabilitationof the Mille-Assabroad will, through geometric improvements
contributesignificantlyto improvethe road safetysituation. Additionalinitiativessuch as general
educationof the public, better vehicle inspectionsystems and driver training schemes, will also be
neededas the traffic developsand may be consideredunder a follow-upproject. Accidentstatistics
are shown in Table 2.4.

Table 2.4: ROAD ACCIDENTS

Totat of Rate per 100 mitlionveh./bns

accidents Numter of Number of
Year involvins lnlor Persons persons
iniury to Iniured K_iled Accidents Injured Kil
persons

1984 2595 1796 799 3.6 2.5 1.1

i985 5334 4119 1215 2.5 1.9 0.6
1986 5643 4385 1258 2.4 1.8 0.5
1987 5996 4795 1201 2.7 2.1 0.5
1988 3985 3075 910 1.7 1.3 0.4
1989 4045 2993 1052 0.7 0.2 0.4
1990 4578 3909 1169 - -

SOURCE: RTA, Addis Ababa, 1990/1991

E. Road Administration

2.09 The highway administrationin Ethiopiawas organizedwith assistancefrom the United

StatesFederal HighwayAdministrationin the early 1950s. The organizationwas graduallybuilt up
to a standardwhich comparedfavorablywith sister organizations,both in Africa and elsewhere.
With minor changes, this organization,under the Ministry of Transport and Communications,
continuedto functionuntil 1980 when the EthiopianTransportConstructionAuthority(ETCA) was
establishedunder the Ministry of Construction. At that time, the legal frameworkfor the highway
administrationin Ethiopiawas changedby a Governmentproclamationthat declaredthe Ministry of
Transportand Communication(MOTAC)as the body responsiblefor the highway network. The
same proclamationstated that MOTACwas responsiblefor road planning and for 'causing the road
networkto be constructedand maintained". Consequentdy,ETCA in theory, was reducedto a
constructionenterpriseonly. ETCA, however, maintainedits position as the de facto highway
authorityfor the country, despite the change in the legal framework.

2.10 In 1987, Governmentdecided to divide ETCA's responsibilitiesbetweenthe newly

establishedBuildingand Transport ConstructionDesignAuthority(BATCODA)and ETCA. Design
and constructionsupervisionof new roads were transferredto BATCODA,which also became
responsiblefor developingspecificationsand design standards. BATCODAwas divided into two
departmnents:the Transport ConstructionDesign Enterprise (TCDE) dealing with roads, ports, airports
 - 18 -

and railways, and the BuildingConstructionDesignEnterprise (BCDE)dealing with buildings. The

reorganizationresulted in unclear definitionsof duties and legal responsibilities,especiallyin the road
sector. Urgentlyneeded maintenancework on bridges was neglectedsince no single institutionwas
fully in charge of design and executionof the work. Since 1987, Governmentand IDA have
continueddiscussionsabout the legal frameworkfor the highwayadministration. In November 1990,
Govermnentissueda new proclamationestablishinga unified highwayauthority under the Ministry of
Public Works & Urban Development(MOPW&UD). The new organization,the EthiopianRoad
Authority(ERA), has now taken over the role of ETCA, and is responsiblefor all planning, design,
constructionadministrationand maintenanceof roads, includingrural roads.

This responsibilityhas been recognizedby ERA in principle, but the actual transfer of TCDE
to ERA has not yet taken place. At negotiations.it was agreed that the design departmentin ERA
will be re-established,by March 31. 1993at the latest. either as a new departmnent
or as a transfer of
TCDE (Para 5.02).

2.11 To date, there has been little coordinationof Government'sefforts to develop and
maintain the rural roads network. Constructionhas taken place under a numberof different umbrella
agencies, the Ministryof Constructionthrough ERA, the Rural InfrastructureMain Departmentof the
Ministry of Agriculture,the Ministry of Coffeeand Tea Developmentand the Relief and
RehabilitationCommission. There is no one agencyto determinewhich roads are built, where, in
what order of priority, and to what standard. Nor is there a consensuson how much of the total
expenditureon roads should be spent for maintenanceand how much for expansionof the network.
Moreover, since design standards and constructionmethodshave varied, many roads have never been
officiallyhandedover to ERA for maintenanceor includedin the classifiednetwork. Even when
ERA's standardshave been met, since recurrent sources of financingfor maintenancewere not
identifiedor developedby those doing the construction,ERA has not been in a positionto accept
responsibilityfor these roads. When there has been no handover,or the road has been built to an
"unacceptable"standard, the responsibilityfor maintenanceis unclear; as a result, many rural roads
have become impassable. A Bank missionvisited Ethiopia in May 1992to assist Governmentin
developingpolicies for the rural roads sector and a comprehensivestrategy is now being prepared.

2.12 The organizationalstructure for ERA is shown in Annex 8. Under the General
Manager, there are a number of technical and administrativedivisions. The Chief Engineer is
responsiblefor both the Rural Roads Division and the OperationsDivision. The Rural Roads
Division uses both machineintensiveand labour intensivetechniquesfor constructionand
maintenanceof the rural roads. The OperationsManageris responsiblefor maintenanceand
constructionof main roads mainly through force account and for contractadministration.

2.13 The Road ConstructionSection under the OperationsManagerundertakesconstruction

by force account. The quality of work is generallygood, but the force accountoperationsare
vulnerableto shortagesof spare parts and constructionmaterials. At present there are 10 brigades
comprisingof five gravel brigades, four asphalt brigadesand one bridge brigade. Each brigade is
headedby a project manager, and is a self containedconstructionunit consistingof engineers,
technicians,operators, and clerks, skilled and unskilledlaborers, equipment,workshop/stores,
laboratoryand office facilitiesnecessaryto functionefficientlyin the field. The Road Maintenance
Departmentsupervisesall maintenanceoperationsimplementedby the eightdistricts, headed by the
District Managers. The RRD is responsiblefor constructionand maintenanceof low cost, low
standard,unclassifiedroads. The Rural Road Departmentshould be the key institutionfor promoting
the rural roads sub-sector.

_~~~~~~~~~ - - - - - - - -_-
 - 19 -

F. Planning and Financing

2.14 The Planningand ProgrammingDivision (PPD) in ERA is responsiblefor road

planning. PPD is staffedby professionalstaff with adequateexperience,training and skills. The
PPD is also responsiblefor the preparationof budgets and road sector programs. When the programs
are finalized,the proposals and budgetsare reviewedby the Board of ERA and after approval,
submittedby the Ministry of Public Works & Urban Development(MOPW&UD)to the Government
for its approval.

2.15 Expenditureson road maintenanceare financed from the recurrent budget. Capital
expendituresfor road constructionare financed mainly from externalsources (Annex4 and 5). In the
1988/89fiscal year, an increase in the budget for maintenancebrought the allocationup to a level
which would enable the Governmentto keep its total road network in a reasonable condition. This
was maintainedin 1989/90but declinedsomewhatin 1990/91. The lack of foreign exchangeto
purchase new equipmentand spare parts for the aging equipmentfleet, representsa more serious
problem. Other donors (AfDB, Japan, EEC and Finland)are assistingGovernmentwith equipment
and spares, IDA funded some equipmentunder the SecondRoad Sector Project and additional
equipmentwill be includedin the ERRP.

2.16 The revenuegeneratedfrom road user charges(Annex6) increasedfrom Birr 85.3

million in 1982/83to Birr 230.3 millionin 1990/91 with an average annual growth rate of 6.6
percent. The annual amountof total revenuesfrom road user chargesis sufficientto cover funding of
road maintenance. If, however, road use revenue is adjustedfor the average level of import duty,
attributableto general revenuegeneration, it is not clear whetherspecific road use charge revenue is
sufficientto meet the total needs of the roads sector. The share of taxes on petroleumwas 50 percent
of total road user revenues. In the same year, i.e. 1990/91total Governmentexpenditureson roads
were about Birr 77.1 million-Birr 48.0 millionfor road maintenanceand Birr 42.5 millionfor road
construction(Annexes4 and 5); the share of rural road constructionwas about 32 percent of all
investmentsin roads. While the revenuesgenerated are sufficient, it is important, that an appropriate
allocationof funds for road maintenanceis made. It was agreed at negotiationsthat starting with
FY93 ERA will submityearly to IDA for review and commentits draft annual road maintenance
program and budget(para. 5,02).

G. Road Engineering and ConstructionSupervision

2.17 Sincethe reorganizationof the roads administration,ERA has been responsiblefor all
detailedengineeringand contractadministrationfor new road construction. ERA has its own
ContractsAdministrationDepartment. Detailed engineeringis still performedby TCDE despite the
transfer of responsibilityfor design and supervisionwork back to ERA (Para 2.10). The re-
establishmentof ERA's own design capacityis a conditionof the proposedcredit (Para 2.10).

2.18 AlthoughERA has qualifiedtechnical staff, it has little experiencein dealingwith

contracts awardedunder InternationalCompetitiveBidding(ICB). For that reason, that the designof
the main civil works componentof the Project has been reviewedby experiencedinternational
consultants,and consultantswill be used also for the constructionsupervision. Actual contract
administrationwill be carried out by ERA itself.
 - 20 -

H. Road Co

2.19 Prior to the 1974change of government,most major road constructionwas carried

out by internationalcontractors. The domesticcontractors were at that time also expandingtheir
participation. Since 1974, very little interest has been shown by internationalcontractors in road
works in Ethiopia. Presently, most of the road constructionactivities in the countryare undertaken
by MOPW&UDown forces. Some of the old private contractorshave been taken over by
Governmentand transformedinto public enterprises, and Governmenthas assisted in strengthening
their capacitythrough the transfer of equipmentto enable them to carry out major road construction
contracts. These are Blue Nile ConstructionEnterprise (BNCE), Berta ConstructionEnterprise and
Batu ConstructionEnterprise. BNCE is presently in the process of finalizingthe constructionof a
250 km long feeder road betweenNekempteand Bure on a contractwhich was awardedthrough
internationalcompetitivebiddingin 1985 (SecondRoad Sector Project, Cr. 1404-ET).

2.20 The TGE has as one of its statedobjectivesto encourageprivate participationin the
constructionindustry. Bank's experiencewith BNCE on the Nekempte- Bure project indicatethat
the Enterprise is technicallywell qualifiedto take on large and complexcontracts. However, the
financialand managerialautonomyrequired by Bank guidelinesfor qualificationmay be lacking at
present.

1. RoadMintennce

2.21 The day-to-dayroad maintenanceoperationfor all classifiedroads is handled by ERA

through the Road MaintenanceDepartment. Most of the road network suffersfrom neglectin routine
and periodic maintenance(about 80 percent of the paved roads are characterizedas poor). This is
particularly noticeableon the paved roads that are subjectedto high traffic volumeand heavy loading.
Potholesoccur frequentlyand are left unattendedfor long periods of time, resealingwork is delayed
and shouldersand side-drainsare not maintained. In addition, the roads, especiallyin the northern
districts, were badly damagedduring the civil war that ended in 1991. In total, a backlogof about
7500 km of periodic maintenancework (resealingand regraveling)has accumulated. The ERRP will
address this issue but will only cover 20% of roads in need of periodic maintenancework.

2.22 Under the First Road SectorProject (Cr. 708-ETof 1977), financed by IDA, ERA
introduceda road maintenancemanagementsystem to enable it to plan and schedule its maintenance
operationbetter. Lack of equipment,managementskills and the effects of the civil war in the
country, have resultedin a situationwhere the maintenancemanagementsystem, has not operated as
expected. ERA should update and modifythe system in view of recent developmentsin computerand
systems technology,such as geographicinformationsystems. Furthermore,the managementsystem
must be improvedto give sufficientearly warningthrough a monitoringand evaluationsystem. The
introductionof a pavementmanagementsystem (PMS)that will alert ERA to take the necessary
countermeasuresin time and thereby reduce the risk of prematureroad failures, is part of the
proposed Project.
 -21 -

2.23 The major constraintsencounteredin carrying out both routine and periodic
maintenanceon the road network are three-fold: (i) shortageof foreign exchange effecting
replacementof equipmentas well as supply of spare parts and materials; (ii) institutional
shortcomings;and (iii) the fact that ERA is responsiblefor airports as well as roads. This is reflected
in the aging and inadequatefleet of road maintenanceequipment,the lack of spare parts including
tires and the shortageof road maintenancematerialsincludingbitumen, cement and steel.

2.24 The proposedpavementmanagementsystem (PMS) will enable the Governmentto

monitorthe entire paved road network (and if considerednecessary,portions of the non-pavedroads
as well) on a continuousbasis so that deteriorationof the scale that is now taking place on portions of
the Addis Ababa-Assabroad would not be allowed to occur in the future, assuming that the physical
capacityis re-established. ERA will be able to alert itself in time and properly program its road
maintenanceoperations. The PMS will supplementother managementsystems already in place and
under preparation (supplies, construction,equipment,etc.)

2.25 The Supply and EquipmentDepartment(SED) provides centralizedsupport to ERA's

operationaldivisions. Due to budgetaryconstraintsand lack of foreign exchangeto purchasespare
parts, the SED has been unable to meet the demandsfrom the various districts. The result is a low
rate of availabilityof equipment(40 percent). The AfDB Road Maintenanceand Rehabilitation
Project, signed in 1989, includesnew equipmentand spares for rehabilitationof old equipment. The
on-goingFinnish aid program is assistingroad maintenanceoperationswith new equipmentand
technicalassistancein the AlemgenaDistrict. Prior to negotiationsERA submittedto IDA for review
a detailedlist of specializedeguipmentneeded for maintenanceunits on the Addis Ababa - Assab
road(nra. 5. After analyzingthe results of the ERRP, IDA's next highway sector operation
should reviewthe overall equipmentsituation and assess the need for renewals, rehabilitationand
scrapping.

J. Trainine

2.26 ERA's personnelat various levels have participatedin on-the-jobtraining as well as

formal training through its training center at Alemgenaand through both short and long term training
overseas. AlemgenaTraining Center began its operationin 1956. Since then, the Center has
providedtraining courses and trade tests for about 40,000 people. The training staff at Alemgena
Training Center include 28 instructors.

2.27 Under the Second Road Sector Project (Cr. 1404-EI) consultantswere employedto
revise, update and prepare new training courses, and train the trainers. Workshopand engineering
equipment,tools and instrumentswere also providedthrough the Credit. The training providedat
Alemgenais now satisfactory. An acceptabledetailedtrainingprogramnfor ERA was-submittedtQ
IDA at negotiations(Annex 15).

2.28 In additionto the classroominstructionat Alemgena,the center operates a training

productionunit (TPU) for highway maintenanceand construction. The training facility at Ginchiis
responsiblefor training rural roads constructionand maintenancepersonnel,especiallyin labour based
methods. Generallythe training of staff at foreman and technicianlevel is adequateboth in quantity
and quality. Additionaltraining to professionalstaff for special purposes, such as the proposedPMS,
etc., is providedfor in the Project.
 - 22 -

K. Accounting and Auditing

2.29 The financialand accountingresponsibilitiesin ERA are entrustedto the Fiscal

ServicesDivision. The Divisionhas four branches: General Accounting,Cost Accounting,Property
Records, and Pre-Auditand Data Control. There are about 55employeesworking in the Division;
however, only seven haveuniversity level degrees in accounting. The Divisionfunctionsadequately,
but should make an effortto attract more universitygraduates in accountingand also by providing
further training in accountingand finance to existingstaff. The Universityof Addis Ababa offers
suitable training opportunity,and ERA has includedsuch training in the proposed training program.
(Annex 15).

2.30 Accountingrecords are maintainedin accordancewith generallyaccepted accounting

principles, legal requirementsand Governmentguidelines. These are detailed in ERA's Fiscal
InformationSystem AccountingManualwhich was preparedby a consultant(under the Second Road
Sector Project) in cooperationwith the Fiscal ServicesDivision and has been in effect since June
1984. Accountsare closed yearly and three financialstatements,namely, a balance sheet, a source
and applicationof funds and a revenuestatementare prepared and submittedto the EthiopianAudit
ServicesCorporationfor auditing. Despite difficultieswith computerhardware, ERA has been able
to eliminatethe backlogof Project audit reports that had been built up over the last three to five
years. To improveERA's accountingcapacity,the present computer system in ERA is being
replacedwith a higher capacityand recent generationcomputer with a numberof terminals installed
in the Fiscal ServicesDivision for direct access by accountantsof the Division. The installationof
the new computersystemwill require the servicesof a consultantfor a short time to train the
Division's employeesin the use of the system. The cost of this service is includedin the on-going
Second Road SectorProject (Cr. 1404-EI).
 - 23 -

III. PROJrECTCONCEPT AND COMPOSMON

A. Project Origin and Prenaration

3.01 The original route from the port of Assab to Addis Ababa went via Combolchain the
Welo Region. Under the Fourth Road Project, 1976, the link between Mille and Awash was
constructed(280 kIm),and the Nazarethto Awash section (125 kIm),was paved (see Table 3.1 and the
attachedmap). The upgradingof the sectionbetween MUleand Assab was to be included in the on-
going Second Road SectorProject (Cr. 1404-ET). In 1985,however, the Governmentexperienceda
severe shortageof counterpartfunds and requestedIDA to increasethe disbursementpercentageon
other componentsin the Project, (mainlythe Nekempte-BureRoad), and consequentlythe upgrading
of the Mille-Assabsection-except for the Mille-Logiasegment-had to be deleted. Deteriorationof
the road, however, has continued,and Governmenthas obtained a loan/credit from the African
DevelopmentBank to rehabilitateabout 134 km betweenSemera and Elidar (total cost US$42
million). Work on this section is now beginning. Governmentis also concernedabout other sections
of the road betweenAddis Ababa and MUleand is carrying out detailedpavementsurveys, especially
betweenNazreth and Awash and betweenAwash and Mille.

3.02 The TCDE finalizedthe design for the rehabilitationof the Mille-Assabsection in
1989and prepared contractdocumentsand cost estimateshave been prepared. Since TCDE lacked
experiencein preparing completebiddingdocumentssuitable for projectsto be carried out through
internationalcompetitivebidding (ICB)in accordancewith Bank guidelines, Governmentengageda
consultantto reviewthe design and assist in the preparationof biddingdocumentsand to update costs.
This was completedin April 1992.

B. Poect Objectives

3.03 The primary purposeof the proposedProject is to finance urgentlyneeded repairs and
upgradingon a section of Ethiopia's main transport artery, so that it remains open to traffic and
functional,and to extend the service life of the road for a period of 15 years. In addition, the Project
seeks to assist Governmentin putting into place institutionalmeasuresaiming at preventingsuch
emergenciesfrom arising in the future through the introductionof better road monitoringand
managementtools and better axle load control.

3.04 The specific objectivesof the proposed Project are:

(i) To improvethe bearing capacity,geometry, safety and riding quality on sections

betweenMille and Assab on the Addis Ababa-Assabroad;

(ii) To improve Governmentmaintenancecapacity on the road betweenAddisAbaba and

Mille, not includedfor rehabilitationin the Project, and to financethe reviewof the
detailed engineeringfor the eventualfull rehabilitationof this sectionat a later date;
 - 24 -

(iii) To institutea pavementmanagementsystem to enable ERA to better assess potential

problemsand plan future road maintenanceand reconstructionneeds in a timely
fashion;

C. Pro3ed Description

3.05 The Project for which an IDA credit of SDR 66.4 million(US$ 96.0 million)
is proposed, includes:

(i) road rehabilitationof sectionsof the road between Mille and the Port of
Assab, includingconstructionsupervision;

(ii) design and implementationof a pavementmanagementsystem including

provision of technicalassistance,equipmentand other consultancyservices;

(iii) consultingservicesfor sector related studies;

(iv) training and technical assistance;and

(vi) road maintenanceequipment.

The Project componentsare discussedin more detailbelow.

Road Rehabilitation

3.06 Mille-AssabRoad Rehabilitation. The main componentof the proposed Project will
be the rehabilitationof sectionsof the Mille to Assab road, part of the Addis Ababa-Assabroad (see
Table 3.1). The Bure-Assabsectionlies withinEritrea. The TransitionalGovernmentof Ethiopia
and the ProvisionalGovernmentof Eritrea have providedthe Bank with assurancethat there will be
unhinderedaccessto the constructionsites. The AfricanDevelopmentBank has agreed to finance the
rehabilitationof 134 km between Semeraand Elidar section, and IDA is financingrehabilitationof 25
km betweenMille and Logia under the on-going SecondRoad SectorProject (Cr. 1404-ET). This
section is scheduledfor completionby mid-1993. Both sectionswill be constructedthrough force
account by ERA. Under the Project, the balanceof the Mille-Assabroad will be rehabilitated,
totalling 196 km. Governmenthas also carried out deflectionmeasurementsto identifythe residual
life of the Addis Ababa - Mille road to define where and what measuresare required to extend the
useful life of the road. The Project includesassistanceto ERA to increase its maintenancecapacity
on this road to enable Governmentto keepthe road in a reasonableconditionuntil funds can be
mobilizedfor rehabilitation.

3.07 Overall, the Project is designedto rehabilitateall damaged sectionsand to widen

substandardsectionsso that the residual life of the entire road becomes 15 years as measured in
equivalentstandardaxles (ESA 80). The pavementwidth is presently6 to 6.5 m and the shoulders
are 0.5 m, either side. The surfaceitself shows various types of surfacefailure: cracking,
depressions,potholes,unevenpatching and other types of repair works carried out over the years.
Rutting is not pronounced,indicatingthat the overall bearing capacityof the subbase and subgrade is
generallysufficient. The visual failures can broadlybe associatedwith base and surface failures
causedby overloading. The general increasein tire pressure on the heavy goods vehicles using the
 -25 -

roadhas mostlikelycontributed to the failureof the basecourse.Tire pressuresthatused to be 70 to

80 KN/cmlarenow reachingup to 120 KN/cm 2 . This makesa significantdifferencein imposed
stresses,espociallyin the upperpartof the pavementstructure.

Tabhle
3.1: ETHIOPIA
ROADREHABILITATION
PROJECTDATASUMMARY

COMBOLCHA N ASS
MILLE

Logia D ;ure

AWASH ' DJIBOUTI

MILLE- LOGIA- SEMERA- ELIDAR- BURE -

LOGIA SEMERA ELIDAR BURE ASSAB

LENGTHKM 25 41 134 80 75

COST 8.0 24.9 41.4 42.6 37.4

US $M ILL _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

DONOR IDA IDA AfDB IDA IDA

PROJECT RSII RRP RRP RRP

COMMENTS Force
COMMENTS
Account ICB Force
OBAccountlB CB ICB
B
 - 26 -

3.08 To improve the geometricstandard and rectify the pavementfailures, the following
works are proposed: (a) reconstructionof sectionswhere the pavementstructure is especiallyweak;
(b) wideningof the carriageway,base and sub-base from the present 6 or 6.5 m. to 7 m. and
providing1.5 m. shoulders either side; (c) strengtheningthe existingpavementby adding a granular
basecourselayer; (d) relocatingthe road where the horizontalalignmentis substandard(this would
applyto about6.5 km in total); (e) constructinga new wearing course of 40 to 50 mm asphaltic
concreteon the entire length of road, 7 m. wide; (f) improvingdrainage, both longitudinaland across
the road, includingculverts and structures; and (g) constructingparking/servicelanes through built-up
areas.

3.09 A design life of ten years was originallyproposedby ERA apparentlyto reduce the
cost of rehabilitation. A fifteen years design life involvesa stronger and more costlypavement
construction(to cater for 15 mill. ESA as opposedto 9 mill ESA for ten years). The presentpattern
of overloadinghas been taken into account in the pavementdesign. From the statisticalmaterial it
appears that the risk of extreme axle loads in excess of 20 ton that might cause the road to fail is
minimal. The pattern of overloadingis not likely to changeadversely in the future. In fact it should
be expectedthat improvedaxle weightenforcementin the future would improve the situation. It can
be concludedthat the risk representedby overloadedvehicles, is taken care of in the pavement
design.

3.10 The choice of design life should also take accountof the reliabilityof future
maintenance. The risk that fully adequateroutine and periodic maintenancewill not be provided
favors a longer design life. Factors such as traffic level, percentageof heavy traffic, and the discount
rate used will determine the optimumdesign life. Given the data from the Mille - Assab road, with
ADT of about 850 projected for the year 2000, about 90 percent heavy vehicles and at a discountrate
of 12 percent, a 15 years design life wouldbe economicallyjustified.

Design and Implementationof a PavementManagementSystem

3.11 To enable ERA to monitor its paved road system, so that road deteriorationof the
scale taking place today on the Project road betweenAddis Ababa-Assabis not allowedto continue
withoutadequateprovision for repair or reconstructionand to assist the Governmentin better
programmingits road maintenanceoperations,the Project will financethe establishmentof a
pavementmanagementsystem (PMS)for the whole bitumenizednetwork in Ethiopia (para. 3.13).
The system will be designedand implementedwith technicalassistanceto the extent required, in
accordancewith the outlined terms of reference containedin Annex 9. Such technicalassistance
might be providedthrough a twinningarrangementwith a road organizationfamniliarwith such
techniques,through a reputableconsultingfirm or a combinationof both. The Project component
will include the cost of training staff to operate the pavementmanagementsystem, includingcomputer
training.

3.12 The Project will also provide equipmentsufficientto equip the pavementmanagement
unit that will be established. Such equipmentwill consist of vehicles, Benkelmanbeam, Dynamic
conepenetrometer(DCP), computer equipment,etc. During negotiationsit was agreed that ERA will
establishby June 30. 1994 and thereaftermaintaina PavementManagementSystem to programthe
maintenanceof the paved road network (para. 5.02).
 - 27 -

Technical Assistanceand Training

3.13 The domesticconstructionindustry is weakand for large civil works contracts, there
is virtuallyno capacityin the countryapart from a few parastatals. The Project will cover the cost of
sector related studies and training.

3.14 The Project also includesprovisionfor technicalassistanceto GOE for specialized

supportduring the implementationof the Axle Load Control system. Such assistancecould take the
form of consultancyservices, through twinningwith sister institutionsfamiliar with the techniques
requiredor through an overseas training program. Details will be agreedupon between GOE and
IDA during the implementationof the enforcementof the new regulations as set out in Annex 11.

Equipment

3.15 Under the Project, ERA wouldprocure specializedroad maintenanceequipment

suitable for patching and resealingwork alongthe whole stretch of road from AddisAbaba to Mille
(Annex 14)and improvementof the Awash sectionmaintenancedepot. In addition, the Project will
finance equipmentneeded for the implementationof the PMS and the Axle Load ControlSystem
followingthe consultantsrecommendationsand MOTAC's reviewof the weigh-bridgestationsand
their need for replacementsand spares.

Other ConsultineServices

3.16 It is anticipatedthat during Project execution,preparationwork for the next road

sector project will start, and the Projectprovides for funds to cover consultancyservices to review
Governmentdesigns for componentsto be includedin such a new sector project. Consultantswill
also be engagedto prepare a new Design Manualand a new StandardSpecificationsfor roads as well
as to assist in other sector related studies.

D. Cost Estimates

3.17 The total Project cost, includingphysicaland price contingencies,but net of taxes and
duties, is estimatedat USS109.3millionwith a foreign exchangecomponentof USS86.8millionas
shown in Table 3.2.

3.18 The estimatesare based on 1991 prices. For the main civil works component,the
cost estimatesare based upon ERA's estimateas reviewedand agreedupon with consultantsin April
1992. As there have been no ICB contractsawardedin Ethiopiaon roads for many years, unit rates
from similar work in neighbouringcountrieshave been analyzedand used to assist in establishing
rates in the estimates. Estimatesfor equipmentand technical assistanceare based on price experience
in Ethiopia. For consultancies,the estimatesinclude cost of accommodation,transportand field
allowancesfor local staff. Cost estimatesfor the technicalassistancecomponentsare based on recent
ERA man-monthrates. The estimatesincludecost of accommodation,transport and allowancesfor
local staff. To determinethe price contingencyallowancefor foreign costs estimatedin US Dollars,
an expectedprice increase of 2.8 percent for 1992, 3.9 percent for 1993, 3.9 for 1994, and 3.8
percent for 1995to 1998has been used. These rate have also been used for local costs on the
assumptionthat the differencebetween domesticand internationalprice inflationwDIbe offset by
equivalentadjustmentsin the foreign exchangerate. Physicalcontingenciesof 15 percent have been
added to the base cost. Price and physicalcontingenciestotal US$28.7 millionor 26 percent of total
Project cost.
 - 28 -

Table3.2: ProjectCostEstimates

- USSMUIioiZ -

PFoin IDA
Description Local Foeip Toal as S of
Total * USSM
1. CIVIL WORKS
Mille-Assab
Logia - Semer (41 kin) 3.09 12.37 15.46 80 a5 13.14
Elidar - Bure (S0 kin) 5.15 20.17 25.39 so S5 22.01
Bure - Assab(75 kln) 4.73 1.94 23.67 so S5 20.12
Awash Section Depot: 0.07 0.07 0.14 50 S5 0.12
Subtotal CivU Works 13.01 52.0 6S.1? 53.39

11. TECHNICAL ASSISTANCE/TRAINING

Supervision of 1 0.59 3.32 3.90 85 100 3.90
PMS Consultancy 0.14 0.82 0.97 35 100 0.97
Design review, Addis-MiLie 0.06 0.45 0.53 a5 100 0.53
Training/Twinning 0.06 0.45 0.53 a5 100 0.53
Design review, HSIII Projects 0.11 0.62 0.72 25 100 0.72
Design Manual/Standard Specs. 0.11 0.60 0.70 a5 100 0.70
Sector Related Studies 0.04 0.21 0.24 I5 100 0.24
Subtotal T/A & Training 1.14 6.46 7.60

Ill. EQUIPMENT
Mtc Equipment 0.00 7.32 7.32 100 100 7.32
PMS-Equipment 0.00 0.24 0.24 100 100 0.24
Weighbridge Equipment 0.00 0.24 0.24 100 100 0.24
Subtotal Equipment 0." 7.06 7* 7.80

BASE COST 1991 14.2 6.35 U1SJ 88 70.79

IV. CONTINGENCIES
Price 6.15 10.45 16.60 14.59
Physical 15% 2.13 9.95 12.09 10.62
Subtotal 3.28 20.40 28.69 25.21

GRAND TOTAL (Net of Taxes and Duties) 22.90 3.75 10626 79 88 96.00
Taxes and Duties 12.42 0.00 12.42
GRAND TOTAL Inl. Taxes and Duties 34.92 56.75 121.66 96.00

E. F_
3.19 IDA's contribudonwould be USS96.0millionor 88 percent of the total project cost
net of taxes. The Govermmentof Ethiopiawill financepant of the local costs, and the total value of
the Governmentcontributionis estimatedat USS13.3 million,or 12 perct, not includingtaxes and
duties, which are estimatedat US$12.4 millionequivalont. Tho details of the financingplan are
shown in Table 3.3.
 -29 -

Table 3.3: FINANCINGPLAN

(US$ MUllion)

Description Total Cost

I ~~Funding
_________________________ _ mIncl.
Cont. MIA GOE
I. CIVIL WORKS
Mille - Assab:
Logia - Semera (41 kim) 20.96 17.82 3.14
Elidar - Bure (80 kIm) 35.11 29.85 5.27
Bure - Assab (75 kIm) 32.10 27.29 4.82
Awash SectionDepot: 0.20 0.17 0.03
Subtotal Civil Works 8837 75.12 13.26

L. TECHNICALASSISTANCE/TRAINING
Supervisionof I 5.29 5.29 0.00
PMS Consultancy 1.31 1.31 0.00
Design review, Addis-MUle 0.72 0.72 0.00
Training/Twinning 0.72 0.72 0.00
Design review, HSI-project 0.98 0.98 0.00
Design Maunal/StandardSpecs. 0.95 0.95 0.00
Sector RelatedStudies 0.33 0.33 0.00

Subtotal T/A & Training 10.30 10.33 0.00

HI. EQUIPMENT
Mtc. Equipment 9.92 9.92 0.00
PMS-Equipment 0.33 0.33 0.00
WeighbridgeEquipment 0.33 0.33 0.00
Subtotal Equipment 10.58 10.58 0.00

GRANDTOTAL INCL. CONTINGENCIES 109.26 96.00 13.26

et of axes and Duties
 - 30 -

F. ImRlementatlon
3.20 The General Managerof ERA under MOPW&UDwill be responsiblefor executing
the Project. Consultantswill be used: (i) to review ERA's design; (ii) to assist in the preparation
and carry out supervisionof the civil works components;(iii) to assist ERA in the design and
implementationof a pavementmanagementsystem; (iv) to assist ERA in preparingnew project
componentsfor a possible Third Road SectorProject; (v) and to assist MOPW&UDto carry out
sector related studies. The time schedulefor implementationof the Project is based on a five year
period starting actualconstructionin March 1993 (Annex 10). This time scheduleis considered
realistic, since the Project has been given high priority by Governmentand since the bulk of the
Project consistsof works to be carried out by internationalfirms and supervisedby international
consultants. To better monitor progresson institutionalreform there will be a comprehensivemid-
term reviewof the Project. includinga reviewof road maintenanceoperations.the establishmentof
the PMS and compliancewith axle load controls. It will also cover overall proiect implementation
and. compliancewith legal covenants. The mid-termreviewwould take place by mid-CY1995. The
Project is expectedto be completedby March 31, 1998.

G. Procurement
3.21 Procurementarrangementsfor the Project are as shown in Table 3.4. The civil works
contracts for the Mille-Assabroad will be awardedon the basis of internationalcompetitivebidding
(ICB) and limitedto prequalifiedcontractingfirms accordingto Bank Guidelines. Due to the small
amount involved(US$120,000)and because it is only improvementto existing structure,
improvementsto Awash Section Depot will be carried out through force account (ERA or Ethiopian
BuildingConstructionAuthority(EBCA)). Procurementof consultancyserviceswill be as per Bank
Guidelines. Road maintenanceequipment,vehicles, PMS and weighbridgeequipmentand spares will
be procured through ICB. All contractsgreater than US$100,000equivalent(which constitutesover
95 percent of all procurement),will be subjectto prior review by IDA before final award of such
contracts.
 -31 -

Tabk 3.4 PROECUJRE ARRANGEMENIS

(US $Million)

PROCUREMENT METHOD

Decriptin ICB OTHER

TOTAL
TOTAL IDA TOTAL IDA VALUE IDA

1. CIVIL WORKS
Mill - A_b:
Lo& - Semm (41 kn) 20.96 17.32 20.96 17.82
EWdar- Bure (0 km) 35.11 29.85 35.11 29.85
Bure - Asb (75 km) 32.10 27.29 32.10 27.29
Awash Section Depot: 0.20' 0.17 0.20 0.17
Subota CIi Werks 33.18 74.95 0.20 0.17 88.37 75.12

U. TECHNICAL ASSISTANCEMlRANING
Supervision of 5.29
3 5.29 5.29 5.29
PMS Cosultancy 1.31 1.31 1.31 1.31
Design review, Addis-Mille 0.72 0.72 0.72 0.72
Training/Twinning 0.72 0.72 0.72 0.72
Design rview, HSM-projects 0.98 0.98 0.98 0.98
Design Manual/Stadard Specs. 0.95 0.95 0.95 0.95
Sector Related Studies 0.33 0.33 0.33 0.33
Subtotal T/A & Tr 10.30 10.30 10.30 10.30

m. EQUIPENT
Mtc. Equipmet 9.92 9.92 9.92 9.92
PMS-Equipmen 0.33 0.33 0.33 0.33
We4hbridp Equipmsut 0.33 0.33 0.33 0.33
Subtotal Equ"t 10.53 105os 10.58 10.58

GRAND TOTAL INCL. CONTINGENCIES 96.76 85.33 10.50 10.47 109.26 96.00

/ force account
 - 32 -

H. Di_
3.22 Overall, 88 percent of total cost will be covered by the proposed Credit. For
individualcomponents,the Credit will be disbursedas follows:

Table 3.5: DISBURSEMENT

COMPONENT DISBURSEMENT
IN X FOR
Local Coati/ Foreign Cost!/
(a)Civil Works 25 100
(b) Tmchn1cal asmfstwiceand Training
SuPervision of civitworks 100 100
FM con ultancy 100 100
DesignReviewwndDesignganual 100 100
Training 100 100
Sector RelatedStudies 100 100
(c) Equipmnt
Road mintenrnceEquipmentand Spares 100 100
PNS Equln
int 100 100
wefSgh-brl *quipeent 100 100

Nt of taxes nd duties.
N/

3.23 The Project is expectedto be completedby March 31, 1998, and the Credit Closing
Date will be September30, 1998. An estimatedscheduleof disbursementof funds is set out in Table
3.5. All disbursementswill be fully documentedto the satisfactionof the Association. Payment
against contractsfor equipmentand technicalassistanceless than US$50,000will be disbursedunder
statementof expenditure(SOE). Documentsverifying expendituresfor the SOE are to be kept in a
centrallocationfor review by IDA supervisionmissions. During negotiationsit was agreed that a
specW accountto facilitateProject paymentsfor all expendituresin the amount of US$1,000,000be
opened in the National Bank of Ethiopiain the name of ERA (para. 5.02).
 -33 -

Table3.: ESTIMATED
SCHEDULEOF DISBURSEMENT
lank FY *nd Slibured CwutuatIv
Quarter Ending In Curtcr Axouit
...... .......... ... . . . .. . . . . . .. . .. . . . . . .. . . . . . . . . . . . . . . . . . .

1993
June 30, 1993 2.0 2.0
1994
S.pte. r 30. 1993 9.0 11.0
DceS=er 31 1993 2.0 13.0
March 31, 1494 3.0 16.0
Jure 30, 1994 3.0 19.0
1995
S.pteee r30, 1994 4.0 23.0
Dceccb r 31 1994 4.0 27.0
March 31, 1 9 5.0 32.0
Jure 30, 1995 6.0 38.0
1996
S.pt.a~.r 30. 199 6.0 4.0
Dceciber 31 1995 7.0 51.0
March 31, 14i 5.0 59.0
June 30, 1996 9.0 68.0
1997
Septe r SO, 1996 7.0 75.0
D*ce=r 31 1996 6.0 81.0
March 31, 147 5.0 86.0
Jurn 30, 1997 4.0 90.0
1998
S=pt. r 30, 1997 3.0 93.0
Dec.b r 31. 199 2.0 95.0
March 31, 1496 1.0 96.0
June 30, 1996 0.0 96.0
 - 34 -

CHART
Table 3.7: SCHEDULEOF DISBURSEMENT

ETHIOPIA RRP
SCHEDULE OF DISBURSEMENTS

100 -……

80- jj4

60 _ - 1- 101-AW8;w te!

U* 40-…… -- S-
C20

1993 1994 1995 1996 1997 1998 1999

Fiscal Year and Quarter

SAR Estimate Actual

CLOSING DATE: September 30, 1998

 - 35 -

I. Re=ortingand Audldngr
3.24 Project accounts will be maintainedby ERA with separate accountsfor ch
component. Auditingof ERA is the responsibilityof the EthiopianAudit ServiceCorporation
(EASC). For the Project the auditor will furnish the Associationcertified copiesof the ProJect's
financial statementsfor each year and a report of such scope and in such detail as the Asoc on
shall have requested.
3.25 The audit providedby the auditor would make specific referencoto the spoecl
accountsoperation and to expenditureswithdrawnunder the SOE proceduresand expres a separae
opinionon these matters. To avoidbottlenecksin auditing, the project accountswill, if ready, but
not audited by EASC within three monthsof being submitted, be audited by private uditors. Tne
accountswill be auditednot later than six months after the end of each fiscal year (starting with
FY93).
3.26 The executingagency, ERA, will be responsiblefor overall Project reportn as
follows:
(i) Inception, progress and final reports on technicalassistanceby consultan for the
Pavement ManagementSystem, and any sector relatd studies agreodupon;
(ii) Quarterly progressreports and completionreport on all Project componentsby ERA;
(iii) By January 1 of each year an audit report on the Project accountsfor the previous
fiscal year by the EASCor an independentauditor; and
(iv) Progress reports on compliancewith agreed action plans regarding:
a) Axle load controlsystem.
b) Pavement Managementsystem.
c) AnnualRoad MaintenanceProgram.
d) Classificationsystem.
3.27 During the negotiationsGovernmentagreed withthesoreportig requirements(pam.
5.02), includinga project completionreport by ERA in a form satisfactoryto the Associationnot later
than six months after the Project Closing Date (September30, 1998).

J. in_l 1
3.28 The Project is expectedto have both positive andnegative impacton the environment.
Table 3.8 summarizesthe impactfrom the main components. Overall, the environmentalimpactof
the civil works componentwill be very limited.
 -36 -

Table 3.8:

ASPECIb POSITIVE NEGATIVE

1. DURING Employmentopportunities Detours will reduce
CONSTRUCTION/ operating speed.
Rescuevehicles available
Single lane traffic.
Enhancedmaintenance
on critical sections. Dust and noise from
constructionactivities.
Medicalfacilities available
Soil erosion.

2. LONG TERM
(i) Civil Works Improvedriding quality.
Improvedroad safety due
to wider pavement, improved
geometry and better riding
surface.
Reducedrisk of bridge
failures.
Higher speeds could result
in an increase in the
accidentrates and the
severity of accidents.
New quarries will be
opened. Visual intrusion.

Possibleto perform proper

maintenance.

(ii) PMS Early warning of pavement

failure will reduce risk
of havingto repeat major
constructionworks.

More economicaluse of
scarce road building
materials.

1' The contractdocument will limit the lengthof detours in operationat any one time and specifyhow
the clean-upof quarriesshall be done to limit the visual impactand eliminatesafety hazards.
 - 37 -

IV. ECONOMI EVALATION

A. General

4.01 The proposedProject will make a major improvementto vehicle operationson the
critical route, Addis Ababa - Assab, by rehabilitating196 kms of the road in the poorest condition.
The project will improveabout 23 percent of the total route which is the main corridor to the port of
Assab and acts as the lifeline for the country and its population. During the period of droughts, the
road is particularlycrucial for relief cargo.

4.02 The great majorityof traffic on the project sectionsis long distance, heavy
commercialvehicles. In recent years, most of the traffic passing through Mile is travelling between
Addis Ababa and Assab. Vehiclesserving Combolchaand Northern Ethiopia connect with the route
at Mille; in the past this traffic was a small proportionof the total flow but its importancewill
increase with the end of the civil war and the openingof the Northern districts.

4.03 The Awash - Addis Ababa portion of the road traversespopulated and economically
active areas in the country and is essentialfor local traffic. The economicrate of return for the
proposedroad works (about 80 percent of the total Project base costs) is about 22 percent. The
benefitsof the remainingProject components(PMS, technical assistanceand training) are difficult to
quantifybut are expectedto be important;improvingthe life and physical conditionof paved road
networkand upgradingthe quality of local level transport which is directlylinked with agricultural
production.

B. TraMc on the Addis Ababa- AssabRoad

4.04 The road is the most traffickedin the country, carrying annuallyabout 2.5 - 3.0
milliontons of cargo. Wheat, rice, petroleumproducts, fertilizers and constructionmaterialsare the
principal importstransportedon the road while coffee, hides and livestock are the most prominent
exports. There is a major imbalancein cargo flows on the road with a 3:1, import:exportratio. This
imbalanceresults in low average vehicleload factors and high toanage costs. In additionto the long
distancetraffic, there is also some local freight traffic and sizeablepassengertraffic on sectionsof the
road nearer Addis Ababa.

4.05 Systematictraffic countshave been undertakenon the road by ETCAIERA. The

results of the 1989census show that, as expected, the heaviesttraffic is on the road section closestto
the capital, Addis - Nazareth (2,615 vpd); traffic on the remainderof the road is more uniform
rangingbetween650 - 475 vpd. The proportionof trucks in the traffic flow is extremelyhigh, 77
percent - 93 percent. The 1989traffic flow on the Mille - Assab section is shown in Table 4.1,
together with base projectedtraffic for 1997 and 2002. In assessingfuture traffic growth and
projectingaverage daily traffic (ADT)for 1997and 2002 (Table 4.1), a gradual modestincrease of
traffic is assumed. Taking also into accountpast developmentof the road traffic, fuel consumption,
developmentof export/importtrade and passenger transport, it is estimatedthat the underlyingannual
traffic growth will be 3.0 percent for passenger traffic, and 5.0 percent per year for the freight
traffic.
 - 38 -

4.06 To an extent, however, traffic flows recorded in 1989 may be an inadequatebasis for
forecastingfuture traffic demand as the overall geopoliticalsituationhas altered with the end of the
civil war. Ethiopia is now, de facto, a landlockedcountry (LLC) and like all LLC will not wish to
be dependenton a single transit route or transit country. Northern Ethiopia may again be served
through Massawaand even Port Sudan and much greater traffic may be routed through the port of
Djibouti, especiallyif a paved road is constructedbetweenDire Dawa and the border. Mombasamay
become an importantentry point for goods destinedfor Southern Ethiopia and Berberafor Eastern
Ethiopia. All these developmentswould suggestthe possible diversion of traffic away from Assab.
To take this possible diversion into accountthe flow of trucks has been reduced by 25 percent as the
base case. The sensitivityof the projects to different traffic assumptionshas also been tested. With
regard to the CDE Railwayit was assumedthat CDE will continue to operate during the estimated
life of the Project. Even an eventualdoublingof the traffic (from 300,000 tons at present to 600,000
tons) in the 1990's would not have any significantimpacton the economicviabilityof the project.

Table 4.1: ROAD TRAFFIC FLOWSON THE MILLE - ASSABROAD

(ADT)
...
........ .....................................................................................................
Actuat Pro iected
12ol 1°°7 Z22Z
ADT Trucks ADT Trucks ADT Trucks
............................................................................................................

Mills - Assab 496 (435) 558 (491) 889 (799)

4.07 An analysisof the potentialtraffic capacityof the Mille - Assab sectionwas

undertakento estimatethe residual geometriclife of the present road. If the present traffic
compositiondoes not change, the road has a capacity, translatedinto ADT, that varies between2,900
and 3,700 vehiclesper day. This capacityis sufficientto meet traffic demandsto, at least, 2023.
Investmentin additionaltraffic lanes is thus not necessary.

C. Economic Analysis

Civil Works

4.08 The economicanalysisis based on late 1990 prices and an exchangerate of USS 1.0
= Birr 5.0. Constructionfor the three sectionswill be spread over four years (1993-1996). Given
the nature of the traffic using the road and its present all-weatherstandardthe proposed improvements
are unlikelyto generatesignificantadditionaltraffic on the road. For the purpose of economic
analysisthe road was divided into three sections:Logia-Semera(41 kim),Elidar-Burie(80 kln) and
Burie-Assab(75 kim).

4.09 The economicanalysiscompares 'with' and 'without' the Project cases. In the
"without' case, the road will continueto deteriorate and vehicle operatingcosts (VOC) will rise as the
road deteriorates. The rising VOC will, however, have a negligibleeffect on traffic flows: a very
low demand elasticityis implicityassumedwhich is reasonablegiven the nature of the traffic. In the
"with' case, the improvementsto the road (reconstruction,resealing, pavementstrengthening,some
widening,reconstructionof shouldersand improvementof roadsidedrains and structures)will
significantlyreduce present VOC and will postponethe need for reconstructionduring the estimated
15-yearlife of the proposedproject.
 - 39 -

4.10 The main benefits of the rehabilitationof the Mille - Assab section (196 kim)will be
VOC savings. Additionalbenefits will result from passengertime savings and possibly also from
improvedroad safety. These are difficultto quantifyand were not included in the analysis. The
major direct beneficiariesof the project will be truck and bus owners/operatorsand passenger car
owners. It is expected,however, that with the growth of competitionwithinthe trucking sector, part
of these benefitswill be passed on to bus passengersand the consumers/producersof the goodsbeing
transported. The Governmentwill also benefit from some reduction in road maintenancecosts and by
avoidingthe future costs of road reconstruction(the benefitsof deferred reconstructioncosts were not
includedin the economicanalysis).

4.11 VOCs have been calculatedseparatelyfor each road sectionand for each year, taking
into accountthe changing roughnessof the road surface (dependenton the structural strengthof the
pavementand the effects of climate and traffic). VOCs were calculatedfrom appropriatestudies on
VOCs carried out by consultants(Annex 12). Four typicalvehicle types were selectedfor the
analysisOightvehicles, medium trucks, heavy truck trailers and buses).

4.12 The economicanalysiswas carried out in economicprices, net of taxes and duties.
The major assumptionsand inputs in the fifteen-yearcostlbenefitanalysisare as follows. The total
costs includedin the economicevaluationcomprise: (i) the cost of civil works; (ii) the cost of
supervision;(iii) 10 percent physicalcontingencies;(vi) cost of preparatory studies; and (v) costs of
road maintenance. The benefits consideredin the economicanalysisinclude savings in VOCs for the
normaltraffic growing at 3-5 percent per year (para. 4.06).

4.13 The immediateneed for the proposedimprovementsis illustratedby a First-Year

Return of 16.9 percent. The economicanalysis,based upon the assumptionsoutlined previously,
shows that the overall ERR for the proposedcivil works for the Mille - Assab Road is almost 24
percent;the ERRs per section range between 17.3 percent - 24.3 percent. The ERR would have been
even higherhad the additionalbenefits (para. 4.10) been taken into account. In the sensitivity
analysis,which varied constructioncosts by 15 percent and benefitsby 25 percent the Project remains
justified. (Annex 12).

Table 4.2: SUMMARYOF ECONOMICANALYSIS

Road Section KIM E NPV(1296)

1. Logia-Semera 41 17.3% Birr 25.52 million

2. Elidar-Burie 80 22.2% 88.01 million
3. Burie-Assab 75 24.3% 89.92 million

TOTAL 196 21.7% 203.45 million

PavementManagementSystem and MaintenanceEguipment

4.17 The introductionof a Pavement ManagementSystemand provision of road

maintenanceequipment(about 8 percent of project costs) will allowthe ERA to focus and implement
highly needed improvementsin the maintenanceof paved roads, particularlyon the Addis-Awashand
Awash-Millesections. Since these roads carry the highesttraffic volumesin the country, the
proposed assistanceto PMS will yield substantialbenefits. Based on an indicativecalculationof the
 - 40 -

benefits of more efficientperiodic maintenanceon the two sectionsthe investmentis expectedto yield
an ERR exceeding35 percent.

Other Sector RelatedStudies

4.18 The private sector has not been involvedin the road contractingsector for many
years. Road constructionand maintenancehas either been undertakenby force-accountor by public
sector constructioncompanies. Experiencefrom many other countriessuggeststhat constructionand
periodic maintenancecosts can be significantlyreducedby contractingthe work to competentprivate
sector contractors. This componentin the Project is includedto enable Governmentto carry out
studies on this and other sector related issues, if the need should arise during Project implementation.

D. Risks

4.19 Securityremainsa problem in Ethiopiaand there is a possibilitythat implementation

of the civil works might be affected. Otherwise, there is only limited risk connectedwith the
implementationof the civil works componentof the Project, since the work will be carried out by
contracts awardedunder ICB. With the support of consultantsfor procurementand supervisionthe
ERA should have no difficultyin managingthe project. With respect to extendingthe life of the
entire road and the Project's objectiveof rehabilitatingsectionsin need of urgent repairs, there is a
risk that sectionsnot includedin the Project might fail and require investmentsoonerthan anticipated
(Mille-Awash). This risk, however, is reduced by the inclusionin the Project of the PMS with
appropriatetechnicalassistanceduring the initial stage. Also, the Project includesa componentfor
the procurementof road maintenanceequipmentwhich will improveERA's capacityto carry out
routine and periodic maintenance.

4.20 Another risk to the Project relates to the implementationof a new Axle Load Control
System. The Axle Load Control System, which aims at reducingoverloadingand preventing
prematuredeteriorationof the reconstructedroads (as well as other sectionsof the paid road system),
may not be successfuldue to possible weaknessesof RTA to enforce fully the proposedsystem, or
due to general socio-behavioralfactors. Some risk is associatedwith the PavementManagement
System which may not be successfullyimplementedbecauseof possible organizationalweaknesses.
These risks are reducedby the fact that technical assistancewill be providedunder the Project. In
addition, Governmenthas already in place the basic infrastructurefor vehicle axleloadcontrol-even if
results are presently only used to gather statisticaldata.
 - 41 -

V. AGREEME AND RECOMMENDAQI

A. Actions Already Taken

5.01 Prior to negotiations,GovernmentprovidedIDA with the following:

(i) A detailed list of specializedequipmentneeded for road maintenanceunits on

the Addis Ababa - Assab Road (para. 2.25); (Annex 16).

(ii) A detailedtrainingprogram for ERA staff (para. 2.27) Annex 17; and

(iii) An action plan for the implementationof the axle load control system (Annex
11).

B. eements Reached

5.02 The followingagreementswere reached during Project negotiations:

(a) ERA will adopt functionalroad classificationsystem by December31, 1993.

Such a classificationsystem should clarify, inter alia, issuespertinent to rural
roads and recent decentralizationof Governmentinstitutions(para. 2.01);

(b) Starting June 1, 1994the GOE will submitto IDA for annualreview,
progress reports on the implementationof the new axle load legislation(para.
2.06);

(c) Starting with FY93 ERA will submitto DA for its review and commentson
the proposedannualroad maintenanceprogram and budget (para. 2.16);

(d) ERA will establishby June 30, 1994 and thereafter maintaina Pavement
ManagementSystemto monitor the paved road network and to assist in the
programmingof paved road maintenance(para. 3.13);

(e) There will be a mid-termreview of the project implementationby mid 1995

(para 3.20);

(f) A SpecialAccountfor ERA of US$1,000,000equivalentwill be establishedin

the NationalBank of Ethiopia (para. 3.24);

(g) ERA will, by March 31, 1993have establishedits own design department
(Para 2. 10).
 - 42 -

C. Conddons of EfftIvenm
5.03 (a) GOEhas sent the legalopinionto IDA statingthat the executionand delivery
of the DevelopmentCreditAgreementhas been dulyauthorizedor ratifiedby
all necessarygovernent actions.
(b) GOEhas submittedto IDAall outstandingauditreportsfor the SecondRoad
SectorProject(cr. 1404-El).

D. Recommendation

5.04 Subjectto the above,the Projectis suitablefor an IDACreditof SDR66.4million

(US$96.0
millionequivalent)at standardIDAterms. The Borrowerwouldbe the Governmentof
Ethiopia.
 -43- Annex 1
ETHIOPIA

RpAD REHABILITATION PROJECT

Vehicl- Fleet

TvDes of Vehicles 1985/86 1298§/87 1987/88 1988/89 1989/90 1990/91

1. Passenger cars 37,969 29,649 28,329 27,357 28,952 28,004

2. Land Rovers - 9,401 10,020 8,364 8,438 8,811
3. Taxi 4,307 3,454 3,530 2,582 1,104 984
4. Small Suses 3,507 2,948 3,027 2,796 3,570 5,275
S. Large Buses 1,071 1,114 1,080 1,075 890 724
6. Mini Truck 7,151 4,501 5,314 5,129 5,036 6,717
(up to 7t)

7. Trucks (7-14t) 6,843 5,226 6,192 5,284 3,956 4,733

8. Trailer 2,475 1,338 1,745 1,766 1,413 1,529
9. Truck-tractor - 958 783 763 692 584
10. Semi-trailer - 958 701 803 522 228
11. Tanker (liquid) 879 972 1,128 836 855 715
12. Trailers (liquid) 624 401 431 461 474 366
13. Semi-trailer - 64 67 21 83 68
(liquid)
TOTAL 64,826 60,984 62,347 57,237 55,985 58,738

SOURCE: Ministry of Transport and Communications, Addis Ababa, 1990

 -44' ANN.X 2

,THIOPrA

ROAD REHABILITATION PROJECT

Consum tion of P-troleum Products

(in '000 of MT)

PRODUCTS 1986/87 1987/88 1988/89 1929/90 1990/91

Gasoline Regular 172.491 170.164 127 120 125

Diesel Oil 439.551 453.770 399 385 349

puel Oil 129.336 134.377 138 117 70

Aviation Fuels 126.354 154.219 124 116 l15

Lubricants 15.00 17.02 19 18 -*

Kerosene 62.980 80.440 74 77 40

* Not AvaLlable

SOURCEs ZthiopLan Petroleum Corporatlon, Addis Ababa, 1990

 -45- -45- ~~~~~~ANNEX
3

ETHIOPIA

ROAD REHABILITATION PROJECT

Volume of Caroo Tranrnorted by Road

(in million)

Dry Cargo Fual Total

Year tonr ton-km tons ton-km ton-

1984/85 5.1 1,707.7 0.8 551.5 5.9 2,259.2

1895/86 5.3 2,050.2 0.9 572.5 6.2 2,622.7

1986/87 5.3 2,048.6 1.0 635.5 6.3 2,684.1

1987/88 5.2 1,898.7 1.1 680.6 6.3 2,579.3

1988/89 5.3 1,937.9 1.1 787.5 6.4 2,725.4

1989/901/ 5.4 2,269.1 1.2 910.6 6.6 3,179.7

1990/91 4.0 1845.3 1.0 638.3 5.0 2,483.6

SOURCE: Ministry of Transport and Communications, Addis Ababa, 1990

j/ Total transport by all modes (excluding international shipping) was

7.07 million tons
 -46-
,ZTHIOPIA

ROAD REHABILITATION PROJECT

Actual Recurrent Exoenditure on Road Maintenance

(in Birr '000)

------------------------- FISCAL YEAR-------------------------

1985/86 1986/87 1987/88 1298/89 1989/902 1990/91

Administrative and 3,313 2,400 2,800 3,100 4,447 3,490

General Services

Engineering and 10,369 5,400 5,700 6,300 3,579 4,385

Technical Services
Road Maintenance 24,797 26,703 27,494 33,430 34,550 31,654

Rural Road 4,777 3,899 6,S88 8,341 8,475 8,422

Maintenance

TOTAL 43,256 36,903 42,582 51,171 51,051 47,951

SOURCE: Ethiopian Road Authority, Addis Ababa, 1990

 - 47-. _47_ ~~~~~~ANNEX

THIOPIA

ROAD REHABILITATION PROJECT

Capital Expenditur* on Roads

(in Birr '000)

A. Inv-stm-nts In N-w Road Constructionl/

YEAR C~~~OVERNMENT FOREIGN TOTAL

1984/85 35,620 - 35,620

1895/86 26,439 10,923 37,362

1986/87 38,204 16,749 54,953

1987/88 41,413 17,056 58,469

1988/89 45,900 18,149 64,049

1989/90 42,500 - 42,500

1990/91 29,125 29,125

B. Investmgnt in Road Eauiment

1984/85 1,649 1,649

1895/86 2,608 - 2,608

1986/87 16,529 32,966 49,495

1987/88 - - _

1988/89 359 5,483 5,842

1989/90 6,814 5,440 12,254

1990/91

SOURCE: ERA, Addis Ababa, 1990

.;/ Includes Rural Roads Construction

 -48- ANNEX6

ETHIOPIA
ROADREHABILITATION
PROJECT
REVESUE CHARGES
FROMROAD nUER
(In Mittfons)

SOURCE 1982/83 1983/84 1984/85 1985/86 1986/87 1987/88 1988/89 1989/90 1990/91
....
...........
......
...
...... . ......... ....... .......... ....... .......... ....... .......... ....... ......... ....

1. Vohiel Inspection and 5.9 6.3 6.1 6.9 7.3 7.8 0.30 8.20 7.95
Registratfon fees
2. Driving Lfcense fees 1.3 1.3 1.8 2.2 2.0 1.6 2.30 2.37 2.48
3. importdutfloan Motor 43.3 39.4 39.8 28.2 49.3 * 59.5 * 46.73* 54.67 123.20
VehicLesmnd accessories
4. Tax on PetroletaProducts 34.7 40.4 41.2 43.5 40.2 a 43.7 * 44.67* 66.80 71.50
S. Tax on ImportedPotroleum 0.1 - 1.3 1.0 1.5 * 1.4 * 1.20* 1.40 25.20
Products
..... -----. ..... ..... . ...... -----. . ..... ..... . ..... .....

TOTAL 85.3 87.4 90.2 81.8 100.3 114.0 95.20 133.44 230.33
Mumama MauazM mamma.
.ans a amas.a=a= amsasa an mann==

SOURCE: Road TransportAuthorityand Ministryof Finance

NOTE: *Proelminary
Istimtes.
 -49- ILX 7

RTIPIA

ROAD REHABILITATION PROJZCT

Structurg of Fuel Pric-cl/

(in Birr per liter)

DZIHEL.* GASOLINZ*
(Regular)

Ex-Refinery Price 0.52 0.86

Excise Tax 0.06 0.41

Municipality Tax 0.02 0.02
Distribution Margin 0.04 0.05
Retailers Margin 0.03 0.04
Selling Price (Arsab) 0.68 1.28

Selling Price (Addis)j/ 0.79 1.50

SOURCE: Ethiopian Petroleum Corporation, Addis Ababa, 1990

)A/ Am of October 1990

/ Addis price higher due to transport costs

 ERA Organization Ghart
GEiNER-AL|
L EGC3AL M AN AG E R ADMINISTRAT
S}ERVICES ________________AND TRfWNING

I _ I l l lI l~~ I
PRRAMING ESN | CHIEF SUPPLIESAND FINANCIAL AUDITAND RURAL
PROGRAMM#ING
_ _ DESI
N t ENGINEER EQUIPMENT SERVICES METHODS ROADS

-Planning - Survey ProcurementGeneral Computing

Programming- RoadDesign Partsand Accounting Audit
andBudgetting
- BridgeDesign Supplies - Methods
- Monitoring - Materialsand -Equipment
CostAccounrins
andEvalualion Research Properq
Records

OPERATIONS|
MANAGER|

ROAD ROAD CONTRACT TECNICAL | 4 OE

AINTENANCE CONSTRUCTION
| ADMINISTRATION
|FCSSERVICES OFC

District Accr
| Force Contract Castr. Un Regional
Managers
(8) Construction L Constr.Unit oContact
Road Safety -BaileyBridges r C U
(14)

RoadMarkings_.uarry OperationsContract Constr. Unit i Regional

Mtc. Offces
n 0o
x
0
 MOHUD&C
ORGANIZATION CHART
MINISTER

Audit
and Inspectora

VICE V,IC
MINISTER, CONSTR MINISTER. URS3AN|

Psemkq~~~~~~~~~~~

aATU
l EFn| TAX m
Wheon
X E |t i l

aa. f~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Aow
ionm

ElA MeuSifig
 - 52- Page Annex
1 of 93

ETHIOPIA

ROAD REHABILITATION PROJECT

Outlined Terms of Reference for the

Development and Implementation of a Pavement Management System

A. Backi!round

1. The road network in Ethiopia consists of 19,020 km of all weather roads, of which 4,115
km are paved. The paved roads primarily radiate from Addis Ababa, the capital, to the major provincial
cities and to the port of Assab. As a result of age, overloading and insufficient road maintenance, over
many years, the road network is now showing signs of rapid deterioration. A large portion of the paved
road network will be in need of rehabilitation and reconstruction in the near future. As part of a strategy
for dealing with this problem, Government intends to introduce a country specific Pavement Management
System (PMS) that will enable the ERA to monitor the performance of the paved roads and provide the
basis for guiding the allocation of resources for road maintenance.

2. For this purposes, the Government require the services of an engineering consultant with
relevant experience to advise ERA on the form and operation of an appropriate PMS and to assist with
the implementation of the system.

B. Obiective

3. The objective of the consultancy is to institute a Pavement Management System, so that

ERA can better assess, alert itself to potential problems and plan its road maintenance, rehabilitation and
reconstruction needs in a timely and optimal fashion.

4. The system will be based on regular, objective assessments of pavement condition

parameters. Data on pavement condition will be compared with data on traffic volumes, axle loads and
weather conditions to provide the necessary inputs for assessment of future maintenance needs and
necessary funding. The system will further provide a basis for a long term monitoring of pavement
performance and residual life of the pavement, as a background for an optimum maintenance program.

C. Services to be Provided by the Consultant

5. The PMS will cover the whole of the paved road network in Ethiopia and should allow
for the likely extension of this network over the next decade. The work of the consultant will fall under
the following main headings:
 Annox 2
-53- Page 2 of 3

(i) Establish Procedures.

6. The consultant will review the existing organizationaland financial arrangementsfor road
maintenanceand rehabilitation,includingmaintenanceplanningand budgeting.The consultantwillreview
present maintenancepracticesand identify standard maintenanceactivities.

7. The consultantwill design and establishproceduresfor monitoringpavementcondition,

by carrying out regular measurements and inspections. It is envisaged that the parameters to be
monitored will be: deflection, cracking, potholes,rut depth and shoulder defects. The consultantshould
introduced/recommendparameters in addition to the above, if considereddesirable.

8. The consultantwill assessthe availableequipmentin the countryfor pavementmonitoring

and recommendadditionalequipmentand spare parts needed. He will assist in the procurementof such
additional equipmentif requestedto do so.

9. It is envisagedthat the monitoring will be carried out by a special unit to be set up and
trained for this purpose within ERA. The consultant will provide the necessaryguidance and training
for the establishmentof this unit.

11. The consultantwill determinethe programfor the data collection,i.e., the portion of the
network to be included,the divisionof the network into sections and subsections,the frequencyof data
collection for each section and the distance between points where data will be monitored. He will
determine the criteria for implementingthe various maintenancetasks (thresholdvalues).

12. The consultantwill specifyguidelinesfor estimatingfuture maintenancecost of paved roads, and

unit costs of various pavementmaintenancetasks.

13. The consultantwill also developmethodsto predict futuremaintenancerequirementsand

residual life of the various sectionsof pavement.

14. The consultant will advise Government on the operation of the new axle load control
system.

(ii) Implementation

15. It is envisagedthat data collected as part as the monitoringprocess will be processed in

microcomputers. The consultantwill developa system fordatahandlingsuitablefor local condition,and
train local staff in the process of both data collection and data processing. He will establishsuitable
report forms that can be of particular assistanceto ERA's managementat different levels in long term
planning, short term maintenanceprogrammingand in budgetingannual maintenanceoperations.

16. The consultantwill carry out preliminarytesting of the computerprogram, and will developthe
necessary modificationsthat may be needed.
 Annex 9
- 54- Page 3 of 3

17. The consultantwill design a long term field testing program to reviewthe empiricalfunctions
used in the program to estimate the residual life of the pavement, and to predict future pavement
deficiencyparameters,such as cracking, rutting, etc., in order to improvethe forecastingaccuracy of the
pavement managementsystem.

18. The consultantwill assist ERA in the start-up of data collection and processing of data for a
period of 3 monthsand shall carry out the final modificationsof the program that may become necessary.

(iii) Reortinz

19. The consultant will prepare an inception report within three months of starting his
assignment. The inceptionreport will give an outline of the study program for approvalby the client.
Every two months, during the study, he will prepare progress reports. The assignmentwill end up with
a manual that describesthe system in detail and can be used as instruction manualsfor local operators
both in the field and in the data handlingprocess at Headquarters. The consultantwill also be called
upon to organize workshopsfor maintenancepersonalboth at Headquartersand in the field, so that staff
can become familiar with the new procedures.

D. Services to be provided by the Client

20. Government will provide local staff to operate all components of the pavement
management system, both during the study phase and for future operations. Government will also
provide the relevantequipmentthat is already in the country and assist in the procurementof additional
equipment if needed. Funds for the recurrent budget necessary to operate the pavementmanagement
system will be budgetedfor.

E. FOllOW-Up

21. Consultantmight be calledupon to assist Governmentin the operation of the Pavement

ManagementSystem. For that purpose, the consultant should make suitable staff availableon a short
term basis for the next three to five years to assist when and if called upon.

22. The consultant shall assist in the maintenance of software, i.e., correcting any
programmning deficiencieswhich maybecomeapparentduring the use. Any softwareroyaltychargeshall
be consideredfull and sufficientcompensationto cover such maintenanceresponsibilities.
 Annex 10
-55- Page 1 of 1

ETHIOPIA
ROADREHABILITATION
PROJECT
Implementation Schedule
COMPONENT 1993 : 1994 1995 : 1996 1997
1. CIVIL WORKS . . . . . .. . . . .. .
I .
. . . . . . . .... . . I . . ... L .

Logia - Semera I _

Elidar - Bure I

Bure - Assab _ _|_ __l

11.TECHNICAL
ASSISTANCE
Supervision ,
PMS Consultancy
Design
Reviews l_l
Trainingand Twinning .
Design Manual/Specs.

III EQUIPMENT
Maintenance Equipment i
I. I I
 -56- AnnexmLli
Page 1 of 1

ETHIOPIA

ROAD REHABILITATIONPROJECT

Timetablefor the Implementationof New Axle Load Legislation

The followingaction plan for the implementationof the new regulationshas

been agreed upon:

(i) GOE to start enforcingthe new July 1, 1993

regulations.

(ii) GOE to start repair existing June 1, 1993

weighbridgestations.

(iii) GOE to prepare a plan for the March 1, 1994

introductionof mobDleunits,
includingcivil works and
equipment.

(iv) GOE to design and implementan March 31, 1993

informationcampaignon the
new regulations.

(v) GOE to submit to IDA for June 1, 1994

review and comments annual
reports on program implementation.
 Annex1
-57- Page 1 of 2

ETHIOPIA

ROAD REHABILITATIONPROJECT

Summaryof EconomicAnalysis

A. Estimated Vehicle OgeratingCosts on Mille-AssabRoad1 '

(in Birr/km)

Vehicle Rolling Terrain Hilly Terrain

Ty2e

1. Light Vehicle 0.759 + 0.000089*R 0.760 + 0.000101*R

2. Bus 1.898 + 0.000139*R 2.038 + 0.000179*R
3. Truck 1.656 + 0.000274*R 1.898 + 0.000364*R
4. Truck/Trailer 4.363 + 0.000774*R 4.898 + 0.001377*R

1/ In 1990price. Over the economiclife of the project the VOCs rise as a functionof
the estimatedroad roughness.

B. EstimatedRoad MaintenanceCosts '

(in Birr per km/year)

Withoutthe Project With the Project

1. Routinemaintenance 14,703 5,396

2. Periodicmaintenance No difference in costs is assumed

2/ Intensityof road maintenance/repairin "without the project case") is assumedto

increase as a function of road roughness, accordingto the relationship:

Routine Maintenance Costs (Birr/Km) = 5.02*R - 4419

C. EstimatedRoad Surface Roughness

Road roughnessis estimated to increase as a functionof the damagingeffect of traffic,

measured by the number of equivalentstandardaxles, and the structural strengthof the
pavement. The project will both reduce initial roughnessand provide a stronger pavement,
thus reducingthe impact of heavy commercialtraffic.

SOURCE Based on experienceand estimatesof ERA and relevant

consultantsreports, Addis Ababa, 1991.
 ETNIOPIA
OM UENIILITATION PSOJECT
5UMIW OF ECaIC MALTSIS
REMUAILITATION:
IILLE - AS N

LOGIA- SEmA (41 m) ELIUU -IE (80 KM) *UIE AS (7SAKN) NILLE -ASSA
Ttetl
Capital Voc Naintnce Not Capital Voc Naintnce met Capital Voc Usilatne lbt Not
Costs Sving Saving Sanfits Costs sving Saving Iawfits Costs Saving Saving 6unaf
its Isif its
1993 29.100 -29.800 26.212 -26.212 -56.062
1994 44.690 -. 690 45.994 -45.994 24.042 -24.042 -114.726
199s 9.575 0.511 10.066 59.134 -59.134 42.074 -42.074 -91.120
1996 10.403 0.531 10.934 27.419 0.737 2a.206 54.094 -54.094 -14.954
197 11.30M O.SSO 11.8a8 29.09 0.796 29.as 27.999 0.766 28.764 7O.s18
1a 12.296 0.570 12.868 30.896 0.305 31.700 29.719 0.774 30.493 75.061
199 13.381 0.590 13.971 32.817 0.814 33.630 31.55? 0.7M3 32.340 79.942
2000 14.S66 0.612 15.17B 34.872 0.624 35.696 33.524 0.792 34.316 as.189
2001 1S.862 0.635 16.497 37.072 0.034 37.906 35.628 0.802 36.430 90.a33
2002 17.282 0.658 17.940 39.430 0.845 40.274 37.882 0.812 38.694 96.90s
2003 18.836 0.683 19.520 41.956 o.856 42.812 40.296 0.822 41.119 103.451
2004 20.539 0.710 21.249 44.666 0.868 45.534 42.A85 0.833 43.718 110.S01 ao
2005 22.405 0.737 23.142 47.573 0.881 48.454 45.t66 0.845 46.56 118.102
2006 24.449 0.766 25.216 50.695 0.894 51.89 4.641 o.asr 49.496 126.302
2007 26.690 0.797 27.487 54.049 0.907 54.956 51.841 0.870 52.711 13515S4
2008 29.148 0.829 29.977 57.654 0.922 56.576 55.279 O.W84 56.163 144.71S
2009 31.843 0.862 32.705 61.532 0.937 62.469 s8.976 O.896 s9.874 155.047
2010 6s.705 0.953 66.6s5 62.952 0.913 63.865 130.523
2011 67.233 0.929 68.162 68.162
1R 17.3 X 22.2 Z 24.3 X 21.7 I
MPV (121) Birr 25.S2 miltion 88.01million 89.92 .itlin 203.45 million
Sewitivity Analys
(IRA)
LOGIA - SERA ELIDA - OUIE OURIE - ASSA NILLE - ASSAS

(a) Costs +151 15.01 10.61 21.61 19.21

(b) lenfits -25X 12.8X 11.11 19.01 16.7X
(c) (a) * (b) 10.81 14.91 16.6X 14.51

Source: Based on Report prepared by ERA, December 1990 o Z

and IDA 1992 mission estimates. NX
oN
 Annex 13
-59- Page 1 of 4

ETHIOPIA

ROAD REHABILITATION PROJECT

Proiect Progress ReportingRequirementsand SupervisionPlan

L. Progress Reports shall be submitted quarterly in triplicate no later than one calendar month
after the end of the quarter. The first report should cover the quarter ending December 1991.

11. The Report should contain the following information:

1. General Information

(a) Physical progress accomplished during the reporting period in respect of:

(i) Road Rehabilitation

- prequalification of contractors
- invitation to bid
- bid receipt and evaluation
- contract award
- preliminaries to mobilization
- construction progress

(ii) Procurement of Road Maintenance Equigment

- preparation of bidding documents

- invitation to bids
- bid receipt and evaluation
- contract award
- delivery of goods

(iii) Procurement of Materials

- assessment of needs
- calling quotations
- receipt and evaluation of quotations
- contract award
- delivery of goods

(iv) Technical Assistance

- calling proposals
- receipt and evaluation of proposals
- contract award
- arrival date of staff
- man-months expanded
 Annex 13
-60- Page 2 of 4

(vii) Training

- preparation of training program

- selection of trainees
- course(s) held with dates
- numbers and categories of staff trained

(b) actual or expected deviations from the project implementation schedule;

(c) actual or expected-difficulties or delays and their effects on the implementation

schedule, and the steps planned or taken to overcome the difficulties and avoid
further delay;

(d) expected changes in the completion date of the project;

(e) key personnel changes in the staffs of the ERA, consultants or contractors;

(t) matters which may affect the cost of the project; and

(g) any development activity likely to affect the economic viability of project
components.

2. A bar-type progress chart, based on the project implementation schedule, showing the
progress on each project component.

3. A financial statement set out in a tabular form showing for each project component:

(a) original estimated cost

(b) revised cost, if appropriate;

(c) actual expenditure;

(d) projected expenditure; and

(e) actual and projected withdrawals from the Credit Account.

4. The status o[ compliance on each covenant of the Credit Agreement.

III. Project Supervision

1. Bank Supervision Input into Key Activities. The staff input indicated in the table below is
in addition to regular supervision needs for the review of progress reports, procurement actions,
correspondence, etc.
 -61 - Annex
Page 3 13of 4

2. Borrower's Contribution to Supervision

(a) Project monitoring and coordination will be the responsibility of the ERA.

(b) ERA will be responsible for coordinating arrangements for Bank supervision
missions, and for providing information required by missions.

(c) Mission briefing meetings on arrival, and wrap-up meetings will normally be chaired
by the General Manager, ERA.
 Annex 13
-62- Page 4 of 4

Bank SuDervision Input into Key Activities

Approx Activity Skills Required Staff Input

Dates SW

10/92 Supervision mission TM, RRE, EC 5

Discuss strategy paper on
Rural Roads

04/93 Supervision mission TM, 4

Discuss progress on axle
load control

10/93 Supervision mission TM, RRE, ENV, TRG 9

Review progress on RR
activities
Review Mtc Program

1994 2 Supervision missions TM, EC, 7

Review Mtc. Programe
Review PMS implement

1995 2 Supervision missions TM, EC 8

Review Mtc Program
Mid-term review
1996 2 Supervision mission TM, EC, 6
Prepare PCR
Review Mtc Program

1997 2 Supervision mission TM, 8

1998 1 Supervision mission TM, EC 8

TM = Task Manager
HE = Highway Engineer
EC = Economist
RRE = Rural Roads Expert
ENV = Environmental Expert
TRG = Training Expert
 -63- Annex 14
Page 1 of 1

ROAD REHABILITATIONPROJECT(RRP)

ROADMAINTENANCEEQUIPMENT

ITEM TYPE NUMBER UNIT PRICE TOTAL COST ERA ERA

No. USS '000 PROPOSAL TOTAL

1 Grader 5 150 750 7 1050

2 Dozer 3 225 675 4 900
3 Dumptruck 10 75 750 10 750
4 Flat Truck 3 55 165 3 165
5 Distributer 2 100 200 2 200
6 Crusher 1 955 955 2 1910
7 Loader 3 140 420 4 560
8 Roller 3 65 195 4 260
9 Pickup 5 30 150 7 210
10 Spreader 3 80 240 3 240
11 Boiler 3 35 105 5 175
12 Compressor 3 40 120 4 160
13 Drill 2 55 110 4 220
14 Broom 2 50 100 2 100
15 Water Truck 3 70 210 4 280
16 Generator 3 30 90 2 60
17 Water Pump 3 10 30 2 20
18 Minor Items 1 45 45 1 45

TOTAL 5310 7305

 -64,- -64- ~~~~ANNEX
Page 1 of 15
1

ROAD REHABILITATION PROJECT (RRP)

ETHIOPIAN ROADS AUTHORITY

TRAINING PROGRAM

COST ESTIMATE USS

AREA OF SPECILIZATION NO. DURATION PER PERSON GROUP

Financial Management 3 6 months 8,000 24,000

Auditing Practice 2 6 months 8,000 16,000

Equipment Management 3 12 months 12,000 36,000

Personnel Management 2 6 months 8,000 16,000

Transportation Planning 2 12 months 12,000 24,000

Highway Engineering (Design) 3 12 months 12,000 36,000

Contract Management 2 6 months 8,000 16,000

Road Maintenance Management 6 6 months 8,000 48,000

Workshop Management 4 6 months 8,000 32,000

Road Maintenance Budgeting 2 6 months 8,000 16,000

Transport Economics 3 9 months 10,000 30,000

Rural Roads Labor Based Techn. 6 3 months 6,000 36,000

Training of Trainers 4 6 months 8,000 32,000

Highway Costing 2 6 months 8,000 16,000

Project Evaluation 3 3 months 6,000 18,000

Computer Science 3 12 months 20,000 60,000

50 456,000
MAP SECTION
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