AFRICAN DEVELOPMENT FUND

PROJECT COMPLETION REPORT

ROAD MAINTENANCE AND REHABILITATION PROJECT

ETHIOPIA

TRANSPORT DIVISION INFRASTRUCTURE DEPARTMENT - NORTH, SOUTH & EAST

AUGUST, 2005

EQUIVALENTS AND ABBREVIATIONS Currency Equivalents

PCR Appraisal 1 UA = Birr 11.0544 2.7856 WEIGHTS AND MEASURES 1 tonne (t) = 2,205 lbs 1 kilogramme (kg) = 2.205 lbs 1 metre (m) = 3.281 ft 1 foot (ft) = 0.305 m 1 kilometre (km) = 0.621 mile 1 square kilometre (km2) = 0.386 square mile 1 hectare (ha) = 0.01 km2 = 2.471 acres FISCAL YEAR July 1 - June 30 ABBREVIATIONS AADT = Average Annual Daily Traffic ADB = African Development Bank ADF = African Development Fund BIRR = Ethiopian Currency EU = European Union ERA = Ethiopian Roads Authority EIRR = Economic Internal Rate of Return ETCA = Ethiopian Transport Construction Authority FE = Foreign Exchange FUA = Fund Unit of Account GOE = Government of Ethiopia ICB = International Competitive Bidding JICA = Japan International Cooperation Agency MOC = Ministry of Construction MOFED = Ministry of Finance and Economic Development MOUDC = Ministry of Urban Development and Construction (?) TA = Technical Assistance TCDE = Transport Construction Design Enterprise UA = Bank Unit of Account VOC = Vehicle Operating Costs

TABLE OF CONTENTS

Page Project Log-Frame Basic Project Data i-iii Executive Summary iv-vi 1. INTRODUCTION 1 2. PROJECT OBJECTIVE AND FORMULATION 1

2.1 Project Objective 1 2.2 Description 2

2.3 Formulation, Evaluation and Approval 2 3. PROJECT EXECUTION 2 3.1 Effectiveness and Start-up 2 3.2 Modifications 3 3.3 Implementation Schedule 3 3.4 Reporting 4

3.5 Procurement 4 3.6 Financing Sources and Disbursement 5 4. PROJECT PERFORMANCE AND RESULTS 6 4.1 Overall Assessment 6 4.2 Operating Results 7 4.3 Institutional Performance 7 4.4 Management and Organisational Effectiveness 8 4.5 Staff Recruitment, Training and Development 8 4.6 Performance of Consultants, Contractors and Borrowers 9 4.7 Conditions/Covenants 10 4.8 Economic Performance 10 5. SOCIAL AND ENVIRONMENTAL SUSTAINABILITY 11 5.1 Social Impact 11 5.2 Environmental Impact 11 6. PROJECT SUSTAINABILITY 11 7. PERFORMANCE OF THE BANK 12

(con't)

8. OVERALL PERFORMANCE AND RATING 12 9. CONCLUSIONS, LESSONS AND RECOMMENDATIONS 12 9.1 Conclusions 12 9.2 Lessons learned 13 9.3 Recommendations 13 ________________________________________________________________________ This Report was prepared by Messrs M.O. Ajijo, Principal Transport Economist, D. R. Rao, Transport Engineer (Consultant) and A. Ambo Transport Economist (Consultant) following their mission to Ethiopia in September 2002. The document was revised in August 2005. Any inquiries relating to this report may be referred to either the authors or to Mr. J. RWAMABUGA, Manager, ONIN.3, Ext. 2181 or Mr A. R. RAKOTOBE, Director, ONIN, Ext 2040.

LIST OF ANNEXES

Annex No. of No. Titles Pages

1. Project Location Map 1

2. Implementation Schedule 1

3. Project Costs, Categories of Expenditure,

ADF Disbursements and Yearly Disbursement

by Source of Funding 4

4. Calculation of Economic Internal Rate of Return 3

5. Performance Evaluation and Rating 4

6. Recommendations and Follow-up Actions 1

7. Sources of Information 1

8 Borrower's PCR 1

9 Executing Agency's Comments on the Bank's PCR 1

ETHIOPIA ROAD MAINTENANCE AND REHABILITATION PROJECT

PROJECT MATRIX

REVISION DATE: 13th October, 2002 DESIGN TEAM: M.O.Ajijo/D.R..Rao/A.Ambo

Narrative Summary (NS)

Verifiable Indicators (VI)

Means of Verification

Assumptions

Goal: 1.1. The overall objective of the project is to expand the essential infrastructure with a view to support the economic and social development.

Appraisal (1989) 1.1 Rise the level of road

density by the year 2000. 1.2 Volume of goods and

passengers by road network increased by 60% by the year 2004.

PCR (2002) 1.1 Roughness reduced and

riding surface improved. 1.2 AADT increased by 90%

at 2002.

1.1 Annual road traffic survey of ERA

1.2 Road Traffic data of Central Statistical Authority

(Goal to super goal)

Project Objective: 1.1 The objective of the project is to improve the capability of ERA in maintenance activities and to improve road surface conditions to reduce VOCs and road maintenance costs and to facilitate movement of import/export traffic through Assab port by improving the Semera-Elidar road section.

1.1 Roughness less than 3.5 IRI throughout the life of the project.

1.2 Reduced vehicle operating cost by 35% when the project road is opened to traffic.

1.3 Maintenance cost are reduced at least by 50% over the life of the project.

1.4 AADT estimated at 1200.

1.1 Roughness of paved road surface observed at 3.0 1.2 Vehicle operating costs reduced by 40% in Aug. 2001. 1.3 Mtce cost reduced by about 50% in Sept. 2002. 1.4 AADT increased to 1300 in 2002..

1.1 Calculate VOC

using HDM model.

1.2 Measure roughness.

1.3 Traffic counts. 1.4 Annual budget of

ERA.

Project objective to Goal 1.1 Adequate Government commitment for the successful implementation of the Road Sector Development Program (RSDP).

Outputs 1.1 New equipment for maintenance procured. 2438 km of road maintained. 1.2 Semera-Elidar section (134 km) of the Mille-Assab road corridor strengtherned/rehabilitated.

1.1 More than 19 types of equipment to be purchased and fully utilised for maintenance activities. By May 1993. 2438 km of road maintained.

1.2 134 km of bitumen road between Semera and Elidar completed.

1.1. 19 types (307 equipment) purchased and fully utilised with maintenance of 2438 km of roads.. 1.2 Only 94 km of road section between Semera to Dobi junction completed.

1.1 QuarterlyProgress Reports (QPRs)

1.2 Supervision Reports(SRs)

1.3 Project Completion

Reports (PCR)

1.4 Audit Reports.

(Outputs to Project Objective) 1.1 ERA will maintain

the road after its completion and implemented the maintenance action plan.

Activities 1.1(a) Approval of bidding documentfor procurement ofequipment/machinery for maintenanceand construction works. (b) approval ofRFP for supervision consultancyservices. 1.2 Issue and receipt of tenders for procurement of equipment and construction machinery and RFP for supervision services. 1.3 Evaluation, negotiations and award of contracts for procurement and supervision services. 1.4 Commencement of procurement of equipment/machinery and commencement of consultancy services for supervision of Semera-Elidar section.

Input/Resources Input Million UA 1.1 Road Mtce Equipment 16.19 1.2 Road reh/ Construction 22.14 1.3 Consultancy Supervision 0.96 1.4 Contingencies - Physical 3.93 - Price 6.14 Total 50.16 Resources ADF 43.75 GOE 6.41 Total 50.16 EIRR : Mtce 0%-229% Reh. 23.15%

Input Million UA 1.1 Road Mtce Equipment 18.33 1.5 Road reh/ Construction 25.50 1.2 Consultancy Supervision 1.62 Total 45.45 Resources ADF 38.61 GOE 6.84 Total 45.45 EIRR : Mtce 28.6%-406.6% Reh. 20.3%

1.1 Appraisal

estimates 1.2 QPRs 1.3 SRs 1.4 PCRs 1.5 Audited accounts. 1.6 Disbursement

records.

(Activity to Output)

1.1 All procurement actions are on schedule. 1.2 Payments for

invoices are not delayed.

1.3 GOE’s timely payment of counterpart local funds.

1.4 Effective supervision by the Bank and ERA..

(i)

BASIC PROJECT DATA

1. Country : Ethiopia 2. Project : Road Maintenance and Rehabilitation Project 3. Loan Number : F/ETH/ROD/89/28 2. Borrower : Government of Ethiopia 3. Beneficiary : Government of Ethiopia 5. Executing Agency : Ethiopian Roads Authority(ERA) A. Loan Details Appraisal. Actual 1. Amount (in UA million) : 43.75 38.61 2. Commitment Charge : 0.75% 0.75% 3. Repayment Period : 40 Years 40 Years 4. Grace Period : 10Years 10 Years 5. Loan Negotiation Date : 16th August, 1989 6. Loan Approval Date : 22nd November, 1989 7. Loan signature Date : 1st December, 1989 8. Date of Entry into Force : 2nd December, 1990 B. Project Data

1. Project Cost

In UA million Item of Cost As per Appraisal

Estimate Actual

Foreign Exchange Component 43.75 38.61 Local Cost Component 6.41 6.84 Total Cost 50.16 45.45

2. Source of Finance

In UA million As per Appraisal Estimate Actual

Source of Finance F.E. L.C. Total % F.E. L.C. Total % ADF 43.75 - 43.75 87.2 38.61 - 38.61 85 GOT - 6.41 6.41 12.8 - 6.84 6.84 15 Total 43.75 6.41 50.16 100 38.61 6.84 45.45 100

Appraisal Actual 3. Effective Date of First Disbursement: - Jan 1991 4. Effective Date of Last Disbursement: Jun . 1994 Dec 2001 5. Commencement of Project : April 1990 Nov 1991 6. Completion of Project : May 1993 Aug 2001

(ii)

C. Performance Indicators 1. Cost Overrun/Underrrun : * 2. Time Overrun : 99 months * Slippage on Effectiveness (%) : 50% * Slippage on Completion Date (%) : 267% * Slippage on Last Disbursement (%) : 650% * Number of Extensions of Loan Validity Period : 7 3. Project Implementation Status : Completed 4. List of Verifiable Indicators and Levels of Achievement :

Score Evaluation Criterion Maximum Actual

1. Time Overruns 2. Cost Underruns 3. Adherence to Contractual Conditions 4. Adequacy of Supervision and Reports 5. Operational Performance Total Score

4 4 4 4 4 20

1 2 3 3 1 10

5. Implementation Performance

* Institutional Performance : Satisfactory * Supplier’s Performance : Satisfactory

* Consultant’s Performance : Satisfactory * Contractor’s Performance : Satisfactory

6. Economic Internal Rate of Return (EIRR): Appraisal PCR Maintenance: 0% - 229% 28.6% – 406.6% Rehabilitation 23.15% 21.6%

D. Missions

Project Cycle

M/Y

Numbers of Persons

Composition

Man Days

1. Identification 10/86 2 TE, TEn 14 2. Preparation 10/88 3 TE, TEn, LO 63 3. Appraisal 03/89 2 TE, TEn, 42 4. Supervision 11/89 2 TE, TEn 14

06/93 2 TE, TEn 22 05/94 2 TE, TEn 20 07/97 1 TEn. 14 09/99 2 FA, TEn 30 06/00 2 DM, TE 42 07/01 2 TE, TEn 42

11/01 1 TE 15 5.PCR 09/02 2 TE, TEn 28 TE: Transport Economist, TEn: Transport Engineer, LO: Loan Officer, DM: Division Manager, F.A:. Financial Analyst. * The percentage figure for cost overrun/underrun, cannot be indicated since the comparison was made between the “original cost” and the revised cost based on the reduced scope of works on the basis of “cost per km” length of the constructed road.

(iii) E. ADF Loan – Bank Disbursements (UA million)

Year

As at Appraisal Actual

Amount Cum (%) Amount Cum (%)

1990 5.61 12.8 - - 1991 17.67 53.2 3.04 7.8 1992 12.90 82.7 11.35 37.3 1993 5.06 94.3 4.33 48.5 1994 2.51 100.0 4.08 56.4 1995 - 7.09 77.4 1996 - 2.45 83.8 1997 - 2.24 89.6 1998 - 1.03 92.2 1999 - 0.71 94.0 2000 - 0.64 95.7 2001 - 1.60 99.8 2002 - 0.04 100.0 Total 43.75 100.0 38.61 100.0

Un disbursed balance 5.144 Loan Balance 5.144

F. SUPPLIERS

Equipment & Spare Parts Name Suppliers from Various Member Countries Responsibility Road Maintenance Activities for Alemgena, Jimma & Nkempte

Districts and Semera-Dobi Junction Road Construction Date Contract Signed 1 November, 1991 Date Contract Terminated 31 December, 1996 Contract Duration 61 months Amount UA 18.32 million (Birr 66.76 million)

G. CONTRACTOR

Civil Works Name Ethiopian Roads Authority (Force Account Unit) Responsibility Semera – Dobi Junction Road (94 km) Date Contract Signed July 1993 Date Contract Terminated 31 August, 2001 Contract Duration 98 months Amount UA 25.47 million (Birr 227.80 million)

H. CONSULTANT

Supervision Name Sir William Halcrow and Partners (UK) in Association unit

TCDE of Ethiopia Contract Description Supervision of Semera-Dobi Junction Road Works Date Contract Signed 21/01/93 Date Contract Terminated 31/08/2001 Contract Duration 98 months Amount UA 1.66 million (Birr 14.88 million)

(iv)

EXECUTIVE SUMMARY 1. INTRODUCTION 1.1 In 1988, the GOE as a part of its transport policy, embarked on restoration of road network through rehabilitation and maintenance activities. Given the country is landlocked, in order to facilitate transportation of goods to the nearest ports of neighbouring countries that handle more than 85% of foreign exchange trade, the GOE accorded priority for maintenance and rehabilitation of deteriorated road sections. Two such vital components, namely, road maintenance works on 17 road sections of Alemgena and Jimma districts and rehabilitation of Semera-Elidar section of Mille-Assab corridor were identified by the GOE that approached the Bank Group accordingly for financing. 1.2 The project was appraised in March 1989. The ADF Board approved the Loan in November 1989 and was signed in December 1989 for an amount of FUA 47.50 million (UA 43.75 million). 1.3 This PCR is based on the appraisal report, project files in the Bank, Borrower’s quarterly progress and annual audit reports and PCR, interviews and site inspection conducted during an ADF mission to Ethiopia in September 2002. The Borrower's PCR is on the file with ONIN.3. Project Objective and Description 1.4 The objectives of the project were (i) to improve the capability of ERA’s maintenance activities in two Districts through the procurement of road maintenance equipment, and (ii) to improve the road surface conditions to reduce vehicle operating costs and to facilitate movement of import/ export traffic through Assab port corridor by improving Semera – Elidar section. The project as originally conceived consists of (a) procurement of new equipment and spares for road maintenance activities in Alemgena and Jimma districts, (b) pavement strengthening and reconstruction including shoulders and drainage on 134 km Semera- Elidar road to two lane bitumen surface, and (c) consultancy services for supervision of construction works. Project Execution

1.5 The conditions precedent to first disbursement of the loan agreement, were fulfilled by the GOE on 26th October 1990, which was about 12 months after the Loan signature. In addition, there were some delays in the start up of the project mainly in the procurement of equipment/machinery and the recruitment of supervision consultant. In the course of the project implementation, modifications were made to the original scope of works with reduction in the length of the project road from 129 km to 94 km and improvements to the pavement design of the project road. Implementation Schedule 1.6 The project was scheduled for completion as per appraisal in June, 1993 (from April 1990 to May 1993 (37 months), but was actually implemented between November 1991 and August 2001 (117 months) with a slippage of 99 months and about 124 months after appraisal. In respect of maintenance component of the project, the procurement process of equipment commenced towards mid 1990 and delivery completed in 1996. Similarly, for consultancy services of supervision works, consultant should have commenced services by March 1990 while actually the Contract was awarded in January 1993. The execution of the rehabilitation works on Semera-Elidar section, which should have been completed by May 1993 as per appraisal, was continued up to August 2001. The reasons for various delays have been dealt with in the Report.

(v)

Project Costs 1.7 In 1989 at appraisal, the project cost was estimated at UA 50.16 million of which, UA 6.41 million was local cost. The actual cost of the equipment procured for maintenance was less than the cost estimated at appraisal. This coupled with the reduction in the scope of work on Semera-Elidar section, the actual project total cost has been reduced to UA 45.45 million: UA 38.61 million in foreign currency and UA 6.84 million in local currency. Financial Resources 1.8 The project was jointly financed by ADF and GOE. The estimated and actual expenditures by source of finance using historical exchange rates in the computation of local costs. With reduced scope of works, it can be noted that the counterpart fund local currency in real terms of UA, has slightly increased (7%) from UA 6.41 million at appraisal to UA 6.84 million at PCR. The ADF actual expenditure amounted to UA 38.61 million compared to appraisal estimate of UA 43.75 million. The ADF share of project costs was 85% at PCR while GOE share was 15%, as against 87.2% and 12.8% respectively at appraisal. Overall Assessment 1.9 The different types of equipment procured for maintenance activities have been found to be in good condition even after a period of 5 years and are being fully utilized by the district maintenance units. Very few breakdowns were reported and the availability of the equipment was estimated to be about 75%. The objective of restoring the 17 deteriorated road sections have been achieved. 1.10 The initial objective of the rehabilitation component of the project road was to rehabilitate the section between Semera and Elidar consisting of 129 km on contract basis. The procurement mode was later changed to Force Account. However, due to seismic areas along the existing alignment beyond Dichoto junction coupled with border conflicts towards Elidar end, only 94 km could be successfully completed, which accounts for 73% of the objective. As a result of the above, the GOE's strategy of movement import/export traffic through Assab has been diverted to the port of Djibouti and the Bank has agreed to this proposal. 1.11 In consideration of performance rating based on start up, implementation time, adherence to the implementation schedule and adequacy of supervision, the overall project execution can be rated just satisfactory. Economic Performance 1.12 Based on recent ERA traffic Survey data, the appraisal traffic forecast have been observed to grow at the rate of more than 4% per annum during the project life. The actual maintenance/construction and supervision costs as well as the benefits emanating from the revised traffic forecasts formed the basis for re-evaluation of EIRR. The benefits included savings in VOC and maintenance costs. The recalculated EIRR for the links for maintenance was between 28.6% and 406.6% (Annex 4) for the maintenance projects and 22.7% for the rehabilitation project. This compared with the range of 0% and 229% for maintenance at appraisal indicated that the intervention has been very viable. In the case of rehabilitation, the EIRR of 22.7% compared to 23.15% at appraisal is almost the same. Conclusions

1.1.3 The overall objectives of the project has been substantially achieved. The restoration of road sections to good condition in three districts through maintenance activities has resulted in increased traffic, reduction in VOCs and maintenance costs. The rehabilitated project road of Semera-

(vi)

Dobi Junction has improved transport services from the capital city to the two main ports on the East viz. Djibouti and Assab (now in Eritrea). 1.14 The performance of the Contractor, Consultant and Borrower were satisfactory. As a result, the overall implementation of the project was found to be satisfactory with a rating of 2.2 out of 4 (maximum). 1.15 Adequate funds have been allocated for the maintenance works of the project components out of the Road Fund budget and institutional arrangement for the maintenance, the ERA District maintenance organisations have been further strengthened. As such the project is sustainable. 1.16 In terms of financial performance, it was noted that the ADF had a loan balance of UA 5.144 million and the Bank with the consent of the GOE cancelled the loan balance. Lessons Learned The lessons learned from the project are given hereunder:

• An important lesson learnt out of this project is the execution of works of this magnitude through Force Account. The Force Account mode of execution is time consuming, and at times it may not be cost effective, this is evident from the implementation of this project.

• The Bank should be cautious during appraisals in considering the execution of works through

Force Account. Even though, execution of works through “Force Account” is one of the Procurement mode in the Bank’s “Rules of Procedure, for Procurement of Goods and Works”, its applicability should to be restricted only to small works and for maintenance activities.

• For projects of large magnitude, the Bank to undertake a mid-term review to assess the

progress on the spot, in order to consider restructuring of the project, if necessary. Recommendations We recommend as follows:

• For future projects of large magnitude, the Bank should ensure that construction works are executed on contract basis.

• The Borrower should rectify the defects observed during the field inspection of the completed

project.

1. INTRODUCTION 1.1 Ethiopia, situated in the North-Eastern corner of Africa, has a land area of 1.14 million km2, with a rugged topography of altitude ranging from 100 meters below sea level to 4,620 meters above sea level The estimated population of Ethiopia, as per 1999/2000 census was 65.3 million. The maintenance component of the project is located in Oromia and Southern Nations and Nationalities Regions and the rehabilitation project road is located in the Afar region. 1.2 In 1988, the GOE as a part of its policy, embarked on restoration of road network through rehabilitation and maintenance activities. Given the country is landlocked, in order to facilitate transportation of goods to the nearest ports of neighbouring countries that handle more than 85% of foreign exchange trade, the GOE accorded priority for maintenance and rehabilitation of deteriorated road sections. Two such vital components, namely, road maintenance works on 17 road sections of Alemgena and Jimma districts and rehabilitation of Semera-Elidar section of Mille-Assab corridor were identified by the GOE that approached the Bank Group accordingly for financing. 1.3 The Bank Group’s intervention in the transport sector in Ethiopia dates back to December 1979. The Bank has to date, approved a total of ten loans in the transport sector, viz. eight projects in road sub-sector and two in the airport sub-sector, apart from two studies (one in Road and the other in air transport). Seven out of the eight projects (six in the road sector and one in air sub-sector) have been successfully completed and three projects (2 road projects and one airport project) are under implementation. Currently, the Bank Group is participating, with other donors, in the implementation of the multi-faceted ten-year (1997- 2007) Road Sector Development Programme (RSDP). 1.4 The transport system consists mainly three modes of which roads play a dominant role. The three modes are: (i) a road network of about 16176 km federal and 14164 km regional, a railway system totalling about 781 km of tracks, and (iii) two international airports and over 20 smaller airfields. 1.5 At the time of the project appraisal, Ethiopia had about 18,053 km of classified roads, of which 4,072 km (23%) paved, 8,715 km (48%) gravel and 5,266 km (29%) low standard rural access roads. Most of them had deteriorated due to lack of maintenance. 1.6 The economic feasibility study and detailed engineering design on Semera- Elidar road section and road condition surveys on Alemgena and Jimma districts were carried out by the ERA. The Bank reviewed and found the reports acceptable. A Bank mission visited Ethiopia in March 1989 to appraise the project. The loan was approved by the Board in November 1989 and was signed in December 1989 for an amount of FUA 47.50 million (UA 43.75 million). 1.7 This PCR is based on the appraisal report, project files in the Bank, Borrower’s quarterly progress and annual audit reports and PCR, interviews and site inspection conducted during an ADF mission to Ethiopia in September 2002. 2. PROJECT OBJECTIVE AND FORMULATION

2.1 Project Objectives 2.1.1 The objectives of the project were: i) to improve the capability of ERA's (former ETCA) Road maintenance activities in two districts of Alemgena and Jimma through the procurement of road maintenance equipment and spare parts; ii) to improve road surface conditions so as to reduce vehicle operating costs and increase transport service levels and road safety; and iii) complement the ongoing

2 development of Assab Port financed by the ADF through facilitating the movement of import/export traffic along the Addis Ababa-Assab port corridor by improving the conditions of the Semera to Elidar road section. 2.2 Description The project consists of the following components:

i) Procurement of new equipment for road maintenance including spare parts; ii) Procurement of spare parts for the rehabilitation of existing equipment; iii) Pavement strengthening and reconstruction, and widening and reconstruction of

shoulders and improvement of drainage structures of the 134 km Semera (km 571) to Elidar (km 705) road to 2 lanes bituminous surfaced road 7.0m wide with 1.5m wide gravel shoulders; and

iv) Consultancy services for design review, pre-construction contract and supervision of civil works

2.3 Formulation, Evaluation and Approval 2.3.1 The project was formulated considering both rehabilitation and maintenance of deteriorated road sections before appraisal. A survey of road conditions in Alemgena and Jimma districts was carried out by ERA former ETCA) to determine the level of deterioration on each section. As a result of this, 17 road sections were identified for restoration through repairs under maintenance activities by procuring new equipment and spare parts. 2.3.2 In order to facilitate transportation of goods to the nearest port, the road conditions of the Mille-Assab corridor (355 km) required improvements through rehabilitation. The economic feasibility and engineering studies for the corridor were carried out by the Ethiopian Roads Authority (ERA) in collaboration with the Transport Construction Design Enterprise (TCDE). The project was well prepared and was supported by ADF. In the year 1988, GOE approached the Bank for financing a section (Semera-Elidar) of the Mille-Assab corridor along with other donor(s). The Bank reviewed the design and found it technically feasible and economically viable. An appraisal mission was fielded to Ethiopia in March 1989 to appraise the Road Maintenance and Rehabilitation Projects. All loan conditions were negotiated and there were no issues of disagreement. The Board approved the loan in November 1989 as conceived at appraisal and was signed in December 1989 for an amount of FUA 47.50 million ( UA 43.75 million). 3. PROJECT EXECUTION

3.1 Effectiveness and Start-up 3.1.1 The loan was approved on 22 November 1989, signed on 1 December 1989 and declared effective on 2 December 1990. In accordance with Clauses 9.01 and 15.01 of the General Conditions Applicable to Loan Agreement and Guarantee Agreement of the ADF, there was no slippage on the loan signature. There was however some slippage with respect to the loan effectiveness, as the loan was declared effective after the nominal period of 180 days from the date of loan signature. 3.1.2 The reasons for the delay in declaring the loan effective were due to frequent institutional changes within the Executing Agency and coordinating agencies. The delay in the loan effectiveness, did not however, had any effect on the implementation.

3

3.2 Modifications

3.2.1 In the course of the project implementation, modifications were effected as under:

(i) Technical (Design)

The appointed consulting firm who reviewed the initial design of the TCDE, made some improvements to the pavement structure on the Semera-Elidar section. The new pavement structure is replaced with asphalt concrete surfacing instead of double surface bitumen, with increase in thickness of base and sub-base courses, in order to be compatible to the adjacent pavement sections funded by the other donor, viz World Bank.

(ii) Scope of Project Works

The appraised length of the project road (Semera-Elidar) was 134 km, which was later corrected after detail survey to 129 km. During the course of implementation, in the year 1992, an earth quake was recorded and some of the existing structures were collapsed. As a result of this, GOE condoned an area of 10 km in diameter beyond Dichoto Junction (km 648) due to force majeur and declared as non-active zone with no construction activities. A re-alignment to the original route was the only alternative route to connect the destination. Among various alternatives explored, a detour at Dichoto junction up to Dobi depression junction (towards Djibouti), was found to be technically and economically the feasible alternative and GOE decided accordingly to proceed with design and construction along the chosen alignment. However, implementation of the project road beyond Dobi depression junction could not be continued due to border conflicts in the area, and the project was therefore terminated at Dobi junction with completion of 94 km instead of 129 km.

3.3 Implementation Schedule 3.3.1 The implementation of the project components were delayed due to several factors. The Semera-Elidar project road that was scheduled for completion as per appraisal in May 1993, could not be completed until August 2001. This gave a slippage of 99 months. Annex 2 shows the implementation schedule at Appraisal Vs Actual. Various factors that affected the implementation are stated hereunder:

Equipment for Maintenance Activities 3.3.2 Procurement processing delays coupled with supply delivery, affected the timely maintenance activities in the districts. The procurement process that should have been completed by September 1990, continued up to December 1993 causing a delay of nearly 3 years. Similarly, the equipment deliveries have continued up to nearly 5 years. The main reasons for such delays could be attributed to (i) long delays in the evaluation of bids by the Executing Agency and its submission to ADF for approval (ii) non-conformity of some bids to the Bank’s procedural requirements, and (iii) additional time taken due to re-tendering of some major items of the equipment. Construction Works 3.3.3 The project was implemented through the Force Account Unit of ERA. Many problems and difficulties were encountered during implementation that accounted for a large part of the slippage in the overall completion. The project, which should have been completed in three years

4 continued up to eight years for final completion. Some of the major factors that contributed to this long slippage are given hereunder:

• Frequent suspension of construction works due to conflicts in the project area; • Non-deployment of adequate construction equipment/machinery on site; • Delay in procurement of construction machinery and consequent delay in its supply

coupled with non-availability of spare parts on time during frequent breakdowns; • Non-availability of construction materials and water in the vicinity (it involved long

hauling distances); • Extreme bad weather conditions with day temperatures ranging from 45 to 50 degrees

centigrade during most part of the year, which restricted the working hours of the personnel that virtually retarded the progress and efficiency of the Force Account Unit personnel;

• Frequent changes in the deployment of the Project Manager and other personnel coupled with improper coordination;

• Huge earth works including rock blasting involved along the foot hill of Dobi depression realignment section, which took almost three years to complete the small stretch;

• Existence of flood prone area on the re-alignment section at Dobi depression; • Delay in initial review of the design and its effect on the commencement; • Non-deployment of an additional Force Account Unit brigade unit by the Executing

Agency (ERA) in the initial stages for its timely completion, even though it was agreed before commencement of works. This accounted for a large slippage in the implementation.

Consultancy Services for Supervision of Construction Works

3.3.4 Due to unawareness of Bank’s procurement procedures by the Executing Agency, the recruitment process and award of contract was delayed almost by three years. During the execution of the project, the supervision services of the main consultant (M/s Willam Halcrow & Partners of UK) was extended once up to June 1999 through an addendum. There after, their associated consultants (TCDE) continued the supervision of works until its completion in August 2001.

3.4 Reporting

Pursuant to the provisions of the General Conditions of the Loan Agreement, the GOE submitted quarterly progress reports, annual audit reports, the final Consultant's construction report and the Borrower's PCR. The contents of the progress reports in terms of keeping the Bank continually informed of the project status, was satisfactory. The final audit report has been submitted by the Government.

3.5 Procurement Maintenance Equipment 3.5.1 Procurement of all new equipment, including spares for maintenance activities was undertaken through ICB procedures following Bank's guidelines. Suppliers from seven different member countries supplied the equipment with warranties where necessary for the maintenance activities.

Supervision Consultancy Services

3.5.2 The supervision consulting firm for the construction works, M/s Sir William Halcrow &

5 partners of UK in association with TCDE, was chosen on the basis of shortlist of six consultants in line with Bank's procurement guidelines for consultants. Civil Construction Works (Semera - Elidar Section) 3.5.3 The construction works were executed by the Force Account Unit of ERA. Due to shortage of construction machinery, and to strengthen the existing fleet of the brigade for speedy execution of the project, additional construction/machinery was procured to meet the deficiency. ICB procedures in accordance with Bank's guidelines were followed in the procurement process. Items like tyres, spares, lubricants etc. were procured following domestic and international shopping procedures as applicable, and cement was procured through various state enterprises. 3.5.4 The schedule in terms of implementation of procurement activities (Appraisal Vs Actual) under the project are indicated below:

Procurement Actions Performance

Procurement Activities Road Maintenance Road Rehabilitation

Consultancy Construction Works

Appraisal Actual Comp.

Appraisal Actual Appraisal Actual

Bidding Process ADF approval

Contract Award Eqpt/Spare Parts Deliiver

Oct. 89 –Jan. 90 Jan 90 – April 90 April 90-Sept 90 Sept 90-Jun 91

May 90 Oct. 91 Dec. 93 Dec. 96

- - - -

- - - -

- - - -

- - - -

Appointment of Consultant ADF Approval Bidding process/contract award Commencement Construction completion

- - - - -

- - - - -

Sept 89-Mar 90

- - - -

Jan 93 - - - -

Aprl 90-Sept 90 Sept 90-Mar 91 Maar 91-May 91 May 91- May 93

April 93 Jul 93 Jul 93 Aug. 01

3.6 Financial Sources and Disbursements Project Costs 3.6.1 In 1989 at appraisal, the project cost was estimated at UA 50.16 million of which, the foreign exchange component was UA 43.75 million and the balance of UA 6.41 million was the local cost. During the execution of the project, some modifications took place as indicated in Section 3.2 above. The completed portion of the road was 94 km instead of 129 km, thereby the scope of works was reduced by about 27% at completion. Keeping this in view, the actual project cost at completion is UA 45.45 million: UA 38.61 million in foreign currency and UA 6.84 in local currency in 2002. The component-wise costs at appraisal vs actual are given in Annex 3. Financial Resources 3.6.2 The project was jointly financed by ADF and GOE. The estimated and actual expenditures by source of finance using historical exchange rates in the computation of local costs is presented in Table 1. With reduced scope of works, it can be noted that the counterpart fund local currency in real terms of UA, has slightly increased (7%) from UA 6.41 million at appraisal to UA 6.84 million. The actual expenditure schedule over the implementation period and the disbursement profile by categories of expenditure and by sources of financing are given in Annex 3.

6 3.6.3 As can be seen from the table, there is a change in the overall financing plan with ADF’s contribution reduced from 87.2% to 85%, but GOE’s contribution has increased from 12.8% to 15%. The final completion cost indicated a cost under run of UA 5.144 million relative to the appraisal estimate.

Table 1

In UA million As per Appraisal Estimate Actual

Source of Finance F.E. L.C. Total % F.E. L.C. Total % ADF 43.75 - 43.75 87.

2 38.61 - 38.61 85

GOE - 6.41 6.41 12.8

- 6.84 6.84 15

Total 43.75 6.41 50.16 100 38.61 6.84 45.45 100

Disbursements 3.6.4 The loan funds were disbursed by direct method to the contractor (in this case Ethiopian Roads Authority, ERA) and the consultant. However, the large slippage in the implementation schedule has significantly affected the disbursement schedules. The disbursements were planned to commence in 1990 at appraisal but did not actually start until 1991 because of delay in loan effectiveness. It can be noted that the first disbursement was effected in 1991 and the last disbursement took place in April, 2002. Annex 3 presents the disbursement profile at appraisal Vs actual. From the Bank’s records, it was noted that most disbursements were effected on time, except that few were delayed due to incorrect submissions by the Borrower. 4.0 PROJECT PERFORMANCE AND RESULTS 4.1 Overall Assessment Maintenance Equipment 4.1.1 The different types of equipment procured for maintenance activities have been found to be in good condition even after a period of 5 years and are being fully utilized by the district maintenance units. Very few breakdowns were reported and the availability of the equipment was estimated to be about 75%. The objective of restoring the 17 deteriorated road sections have been achieved. Construction works (Semera-Dobi Junction ) 94 km 4.1.2 The initial objective of the project was to rehabilitate the section between Semera and Elidar consisting of 129 km. However, as described in Section 3.2 above, only 94 km has been successfully completed, which accounts for 73% of the objective. 4.1.3 The non-adherence of the Government’s initial commitment to deploy two Force Account construction units to commence the works from both ends, had affected the completion of this component. In spite of implementation lags, the works were executed as per specification and the quality of workmanship was found to be satisfactory. In consideration of performance rating based on start up, implementation time, adherence to the implementation schedule and adequacy of supervision, the overall project execution can be rated just satisfactory.

7 4.2 Operating Results Maintenance Equipment for Alemgena, Jimma and Nkempte Districts 4.2.1 In spite of initial delays in the procurement process, the equipment for district maintenance activities was delivered in accordance with the requirements and specifications. All procured equipment deployed on different sections of road network has been reported to be in good working condition. The objective of restoring 17 sections of the deteriorated roads network (2438 km) to good condition has been achieved. Construction of Civil works (Semera- Dobi Junction) 4.2.2 The completed project road of 94 km ( Semera- Dobi junction) was fully opened to traffic in September 2001. In spite of several difficulties experienced by the contractor (Force Account Unit), the workmanship and overall quality of work executed by the Unit was satisfactory and the rehabilitated road was generally in good condition. The constructed road followed the standard geometrics and specifications and was able to meet the requirements of providing a safe, faster and smooth riding surface with an all weather bitumen road between Mille and Dobi junction. A field inspection of the completed road concluded no visible major surface distress and the side drains along the route were found to be free from clogging 4.2.3 Some defects that were noted during field inspection of the completed road include: (i) failure of the pavement surface at some places forming undulations along the route length; (ii) depressions and variation in levels of pavement at some places caused due to shearing of sub-base/base courses; (iii) differences in the levels of the road formation and the shoulder; (iv) high elevation of culvert slab than the road formation level at four locations, (iv) low parapet walls at some culvert locations with no hand rails; (v) non-provision of guide stones at embankments, and (vi) non-installation of signposts at strategic points. These were brought to the authority of GOE for immediate remedial actions in order to protect the investment. The construction equipment procured under this component is now being used effectively for maintenance activities. Traffic 4.2.4 There has been significant increase in traffic in all 17 road sections of maintenance districts, as well as on the Semera-Dobi junction project road. In this regard, AADT on the 17 sections of maintenance roads increased from 3721 in 1989 to 7357 in 2002. Similarly, AADT on Semera-Dobi Junction road increased from 444 in 1991 to 803 in 2002. The traffic growth rates at PCR were observed to be higher than at appraisal on maintenance roads as shown in Annex 4. However, in the case of Semera-Dobi junction project road, the growth rate of 4.5% was observed at PCR, which is marginally lower than the appraisal growth rate of 5%. This lower growth rate is attributed to the competition of the railway line that runs between Addis Ababa and Djibouti.. 4.3 Institutional Performance 4.3.1 At appraisal, the Executing Agency was the Ethiopian Transport Construction Authority (ETCA) which was later changed through a proclamation to Ethiopian Roads Authority (ERA). Within ETCA, the Force Account works were under the responsibility of the Chief Engineer through the department of Heavy Construction. Furthermore, ETCA had the responsibility of construction and maintenance of air, seaport, urban and railway works. Under ERA, the Force Account works were managed directly by the Operations Department headed by a Deputy General Manager. In addition, ERA has a very efficient Cost Accounting Branch where the Force Account expenditures were maintained with proper accuracy. By this transformation, the efficiency of ERA has significantly

8 improved, which enabled the authority to concentrate only on road infrastructure. However, this organisational changes has not affected the implementation of the project. 4.3.2 The Force Account Unit has personnel with high skills and long experience in the construction activities of bitumen and gravel roads and bridge works. During the implementation, proper, regular, and realistic work programs were prepared to meet the targeted outputs. Though the calibre is high, the Unit was unable to achieve its goal in particular the time schedule for its completion. Irrespective of several constraints, the quality and workmanship of the works executed by the Unit on this project were of high standard. 4.4 Management and Organisational Effectiveness 4.4.1 The new structure of ERA headed by a General Manager has three departments each headed a Deputy General Manger as follows: (i) Regulatory & Engineering services who controls the Planning, Contracts Administration and Design & Research (ii) Operations Department which has responsibility for Force Account construction and maintenance, and (iii) Human resources and Financial Management department in charge of staffing and financial matters. The Force Account construction and maintenance of road network was under the responsibility of Operations Departmental. The Force Account Division headed by a Manger has specialized branches, with a branch head responsible for activities under his jurisdictions and is assisted by qualified and experienced professionals in relevant fields. Each engineer is assigned with projects and is in charge for overall supervision and day-to-day monitoring of projects. For the rehabilitation project, a qualified and experienced engineer, approved by the Bank, as Project Coordinator was assigned for the overall supervision and monitoring of the day-to–day activities of the project. 4.4.2 There are ten maintenance districts under ERA located in various parts of the country, each headed by a District Manager who is responsible for the maintenance operations of the federal trunk road network and major link road in the respective districts. In view of effective set up, the maintenance aspect of the project roads can be effectively and efficiently managed by the qualified and experienced personnel. 4.5 Staff Recruitment, Training and Development 4.5.1 All technical units of the ERA are staffed by qualified Ethiopians including 10% of women. The current staffing of ERA is about 15,000 of which about 10% are professionals. However, there still exists shortage in technical and managerial positions in some areas of operations. 4.5.2 ERA has its own in-house and on the job training programmes at all levels of its Personnel. Recruitment of professionals is carried out on regular basis based on the work programme and are given on the job training in its institutes. ERA has capacity to train personnel engaged in construction and maintenance of all trunk and major link roads. In addition, training facilities exist in labour based techniques, equipment operation, engineering and financial management etc. ERA through these training centres arranges advanced training courses in foreign institutions with the assistance from World Bank, JICA, and EU. 4.5.3 In order to strengthen the institutional capacity of ERA, training of more personnel in highway design and engineering, transport planning, contract administration and equipment management is underway. More than 80 professionals have been trained so far in different disciplines

4.5.4 with financial assistance received from EU and GTZ. Currently, in order to meet the objectives of RSDP technical assistance in different fields are provided in order to compliment the in-house activities of ERA. A total of seven Technical Advisors financed by EU and World Bank, are assisting ERA in planning, contract administration, supervision and monitoring of works.

9 4.6 Performance of Consultants, Suppliers, Contractors and Borrowers Consultant 4.6.1 The overall performance of the consultant, M/s Willam Halcrow & Partners of UK in association with TCDE was found to be satisfactory. The Consultant as a part of his services had reviewed and suggested improvements to the initial design carried out by TCDE. The Resident Engineer conducted regular field pavement tests to conform to the specified requirements before incorporation in the works. Constant supervision of project works was undertaken at every stage to maintain quality of pavement works. Adding to this, the Consultant was regular in submitting progress reports to the EA for review and onward transmission to the Bank. Good coordination existed between the Consultant and the field personnel during execution. Suppliers 4.6.2 The performance of the suppliers on the equipment was satisfactory. Good quality equipment/machinery was supplied with no problems and were in accordance with the provisions of the stipulated requirements of the contract agreement(s). It was observed that all suppliers have maintained good relationship with EA. Contractor ( Force Account Unit of ERA) 4.6.3 The technical performance of the contractor in the execution of works on the quality and workmanship was found to be satisfactory. The contractor ( Force Account Unit) had considerable difficulty in managing the project road works during the first two years that resulted in a very slow progress. This was largely due to slow pace of mobilization of plant and equipment due to non-availability and change of key personnel. In general, the works executed by the Force Account Unit were in accordance with the standard engineering practices and methods. However, the contractor's performance on site management is barely satisfactory in terms of output and delivery schedule. The reasons can be attributed to the poor management and non-deployment of the second Force Account Unit as originally agreed. The ERA being the contractor, could have estimated their available resources in respect of equipment/machinery for execution of the works of this magnitude and acted accordingly. Lack of proper and timely availability of the equipment/machinery, coupled with the non-deployment of additional Unit, had made the project's completion to suffer implementation lags. Had there been effective planning of the equipment/machinery required before the commencement of the works, several obstacles faced by the Force Account Unit during execution, could have been avoided. 4.6.4 The Executing Agency, ERA, has maintained a close working relationship with the supervising consultant during the course of the project implementation. The Borrower The Loan Agreement was signed by the Borrower within ten days of the approval. There were however some delays in fulfilment of all conditions precedent to the first disbursement that affected the loan effectiveness. The Borrower had submitted the quarterly progress reports regularly to the Bank. In conclusion, the performance of the Borrower is judged as satisfactory.

10 4.7 Conditions/Covenants

4.7.1 In accordance with Loan Agreement, there were eleven conditions precedent to first disbursement and two other conditions. Three conditions out of eleven were fulfilled within one month after the loan signature while the remaining eight conditions were met between seven to eleven months. The Loan was declared effective twelve months after the signature. 4.7.2 The Borrower fulfilled the two "other conditions" 'after the supervision consultant submitted the revised Bill of Quantities based on the review design. 4.8 Economic Performance 4.8.1 The maintenance of the roads under Alemgena and Jimma districts and the rehabilitation of Semera-Elidar road were evaluated at appraisal on net incremental benefit by comparing “with” and “without” project scenarios. In accordance to budget expenditure and project implementation, the period between 1991 and 2000 was considered for analysis in the case of maintenance components and between 1996 and 2005 in the case rehabilitation project. This was because, the maintenance activity was delayed and the last disbursement was effected in 1996. Similarly, sections of the Semera-Elidar road project was delayed until 2002 and about 80 km of the project was open to traffic in 1996. The analysis was conducted using the 1990 prices in the case of maintenance roads and 1995 in the case of rehabilitation road. 4.8.2 Historical and actual traffic was provided by ERA. The 1989 AADT was used as base traffic at appraisal while the actual traffic was used at PCR with projection to 2005 in the case Semera-Elidar road. The 1989 average AADT on 17 maintenance roads was 219 while the actual AADT in 2002 was 408. The 1989 AADT on Semera-Elidar road was 544 and the actual in 2002 was 803. 4.8.3 The project benefits were estimated based on vehicle operating cost (VOC) and maintenance cost savings. At appraisal, future traffic was forecasted using annual traffic growth rates between 2% and 3.0% in the case of maintenance activities, and between 3% and 5% in the case of Semera-Elidar road. The actual traffic growth rates on the maintenance roads were calculated between 4.3% and 8.6% and at 4.5% on Semera-Elidar road. 4.8.4 VOCs were used as provided by ERA based on international roughness index (IRI). Specific VOCs for each road sections were estimated based on IRI ‘before’ and ‘after’ maintenance/rehabilitation activities. These figures were adjusted for each year between 1991 and 2005 using GDP deflators at constant factor cost. 4.8.5 Project costs used at PCR were based on actual expenditure as provided by ERA and ADB. The base costs amounted to Birr 78.98 on maintenance and Birr 230.62 million on rehabilitation activities. GDP deflators at constant factor cost were used to minimize inter-temporal cost differences. Accordingly, corresponding costs at 1990 prices were estimated at Birr 71.11 and Birr 170.57 million on maintenance activities and rehabilitation projects respectively. Similarly, financial maintenance cost savings were provided by ERA at Birr 3,000/km for paved roads, Birr 1,880/km for gravel roads and Birr 10,000/km for project roads. Both VOCs and maintenance cost savings were shadow-priced using an adjustment factor of 0.78 as also provided by ERA. A salvage value of 30% has been accounted in the case of Semera-Elidar project.

11 4.8.6 The maintenance cash flows were discounted at 1990 prices and the rehabilitation at 1995 price using 12% as opportunity cost of capital. Based on the results of the analyses, both EIRRs and NPVs at PCR exceeded the appraisal figures in Alemgena and Jimma districts as shown in Annex 4. The highest EIRR at PCR was calculated at 406.6%, which was 229.0 at appraisal. Similarly, the lowest EIRR at PCR was calculated at 28.6% that was none at appraisal. The EIRR for all maintenance projects was calculated at 139.7%. In the case of Semera-Dobi junction road, EIRR was calculated at 21.6%, which was marginally lower than the 23.2% at appraisal. 4.8.7 The implementation of both maintenance and rehabilitation projects were found to be economically feasible. In this regard, the overall EIRR was calculated at 73.6% and NPV at Birr 1,015 million. 5.0 SOCIAL AND ENVIRONMENTAL SUSTAINABILITY 5.1 Social Impact 5.1.1 Most of the interventions in Alemgena and Jimma districts are existing roads. Communities along the roads are settled and their daily activities are consistent and stable. The maintenance of the roads would improve the livelihood of the people in facilitating access to markets, schools, hospitals and social amenities and enhancing poverty alleviation. However, no major road rehabilitation activities were carried out to result in any significant social impact 5.1.2 Similarly, no major social impact was observed within the area of influence of the Semera-Dobi junction road. The rehabilitation of the road has benefited women in respect of income generation through selling charcoal and firewood along the route. In addition, the project road has provided a significant number of employment opportunities to the people within the area of the influence.

5.2 Environmental Impacts 5.2.1 Alemgena and Jimma districts are familiar with the implementation of environmental mitigative measures such as erosion protection and maintenance of drainage structures. In this regard, no negative impact was observed within the area of influence of the maintenance roads. 5.2.2 In respect of rehabilitation works, the Semera-Elidar road was designed on existing alignment and no environmental impact assessment was carried out at appraisal. At PCR however, the first 77 km was on the existing alignment while the remaining 17 km between Dichoto and Dobi junction was a new alignment. Along the new alignment, there are neither nature reserves nor identified archaeological or palaeological sites within the road reserve. The new alignment did not displace any human settlements and uncontrolled settlements are not expected due to general land use within the road corridor. The borrow pits and quarry sites have been properly restored. No visible negative impacts were observed along the project road since its completion. Mitigative measures for drainage and protection for possible landslides were however taken by provision of retaining walls. 6. PROJECT SUSTAINABILITY 6.1 The maintenance activities of both trunk and rural roads were the responsibility of ERA through its Operations Department. The maintenance activities are carried out through ten districts spread over the country. The responsibility for maintenance of regional/rural roads has been delegated to the Regional Government’s Rural Roads Organization under the respective regions. Each maintenance district is headed by a District Manger who is responsible for planning,

12 6.2 budgeting and monitoring of maintenance activities under his District and reports directly to the Deputy General Manager of the Operations Department of ERA. 6.3 ERA’s policy of commercialisation of the Force Account Unit and contracting out increasingly to match pace of development of domestic constructing capacity in line with the Maintenance Action Plan will ensure project sustainability. In addition, the establishment of the Road Fund will enhance the road maintenance capacity of the subject roads through financial availability. The Road Fund has surplus revenue to finance road maintenance requirements. In this regard, RF had excess money of Birr 203.2 million in 1999/00 that was carried over to 2000/01. 7.0 PERFORMANCE OF THE BANK 7.1 The project was fully in line with the Borrower’s priorities. The Bank’s timely intervention, facilitated the GOE to improve the transport services in the maintenance Districts and along the Semera-Elidar corridor. The Bank’s performance at appraisal was satisfactory. 7.2 The Bank carried out regular desk monitoring and field supervision during implementation. The project was supervised with eight field and follow up missions during the implementation period including participation of experts from other departments. However, the Bank could not undertake mid-term review even though this was one of the loan conditions due to staff constraints. 7.3 The Bank adhered to the agreed procurement schedule at appraisal. However, the slippages during implementation were caused mainly due to other factors stated in the earlier sections. 7.4 The processing of loan documents and disbursement applications were handled within the guidelines of the Disbursement manual; however at times payment of some applications were delayed, due to incorrect submissions by the Borrower. From the perspective of the Borrower, it appears that long delays occurred in the release of certain payments. However, on verification from the disbursement section, it was found that such cases were the minimum. Timely advice was given by the Bank to the Borrower to solve the problems that arose out of the disbursements. 7.5 Overall, the performance of the Bank is judged satisfactory. 8.0 OVERALL PERFORMANCE AND RATING 8.1 In accordance with the implementation performance indicators (Annex 5), the overall assessment of implementation performance is satisfactory with an overall rating of 2.2 out of 4 maximum. The rating for the Bank's performance is 3.0 out of 4 maximum indicating highly satisfactory while the rating for the project outcome is just satisfactory with a rating of 2.71 out of 4 maximum. In general, the overall performance of the project is satisfactory except delay in the implementation due to unforeseen circumstances. 9.0 CONCLUSIONS, LESSONS LEARNED AND RECOMMENDATIONS 9.1 Conclusions 9.1.1 The overall objectives of the project has been substantially achieved. The restoration of road sections to good condition in three districts through maintenance activities has resulted in increased traffic, reduction in VOCs and maintenance costs. The rehabilitated project of Semera- Dobi Junction has improved transport services from the capital city to the two main ports on the East viz. Djibouti and Assab (now in Eritrea).

13 9.1.2 The performance on the road maintenance undertaken in the three districts was satisfactory. The equipment procured is being fully utilized for maintenance activities with 75% availability. The performance on the construction works of Semera-Dobi Junction was affected due to delays.

9.1.3 The performance of the Contractor, Consultant and Borrower were satisfactory. As a result the overall implementation of the project was found to be satisfactory with a rating of 2.2 out of 4 (maximum). 9.1.4 Adequate funds have been allocated for the maintenance works of the project components out of the Road Fund budget. The periodic and routine maintenance schedules prepared for the district road network and for the completed road section of Semera-Dobi Junction were reviewed and found adequate to sustain the desired high level of maintenance necessary to protect the investment. 9.1.5 The recalculated EIRR at PCR in the case of maintenance component is between 28.6% and 406.6% as against the EIRR of 0% and 229% at appraisal. The corresponding EIRRs in respect of Semera-Dobi Junction were 22.7% and 23.2% respectively. A review of the physical performance confirmed that after usage of the procured equipment over a period of 5 years for the maintenance works it was noted that these are still in good working condition. Similarly, the constructed project road between Semera and Dobi junction is in good condition with a smooth riding surface. 9.1.6 In terms of financial performance , it was noted that the ADF had a loan savings of UA 5.144 million, while the GOE incurred a small cost overrun in terms of UA amounting to UA 0.43 million. This local cost overrun was mainly due to the frequent devaluation of local currency during the period of implementation. 9.1.7Bank has informed the GOE over the cancellation of the balance amount of UA 5.144 million available under the ADF loan.

9.2 Lessons Learned

9.2.1 The lessons learned from the project are given hereunder:

• An important lesson learnt out of this project is the execution of works of this magnitude through Force Account. The Force Account mode of execution will be time consuming, and at times it may not be cost effective, this is evident from the implementation of this project.

• The Bank should be cautious during appraisals in considering the execution of works through

Force Account. Even though, execution of works through “Force Account” is one of the Procurement mode in the Bank’s “Rules of Procedure for Procurement of Goods and Works”, its adoption is to be restricted only to small works and maintenance activities.

• For projects of large magnitude, the Bank to undertake a mid-term review to assess the

progress on the spot, in order to consider restructuring of the project, if necessary. 9.3 Recommendations

9.3.1 Our recommendations are as follows:

• For future projects of large magnitude, the Borrower should ensure that construction works are executed on contract basis;

14

• The Borrower should rectify the defects observed during the field inspection of the completed project.

• For future Bank’s participation in projects of large magnitude (where appreciable slippages

are possible), a mid-term review is preferably undertaken A matrix of recommendations is presented in Annex 6.

ANNEX 1

ETHIOPIA ROAD MAINTENANCE AND REHABILITATION PROJECT

MAP OF THE PROJECT AREA

ANNEX 2

ETHIOPIA ROAD MAINTENANCE AND REHABILITATION PROJECT IMPLEMENTATION SCHEDULE (APPRAISAL Vs ACTUAL)

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 COMPONENT

PROCURMENT OF MAINTENANCE EQUIPMENT AND SPARE PARTS

BIDDING PROCESS

BID REPORT/ADF APPROVAL

NEGOTIATIONS / CONTRACT AWARD

EQUIPMENT / SPARE PARTS DELIVERY

ROAD REHABILITATION

SELECTION OF CONSULTANT/APPOINTMENT

PREQUALIFICATION OF CONTRACTORS

DESIGN REVIEW/PREPARATION OF BIDDING DOCUMENTS

BIDDING/CONTRACT AWARD

MOBILIZATION/COMMENCEMENT

EXECUTION OF THE WORKS

MAINTENANCE PERIOD

CONSULTANCY SERVICE

SOURCE: ERA and ADB MISSION, SEPTEMBER 02 LEGEND: APPRAISAL

ACTUAL

Annex 3 Page 1 of 4

Ethiopia

Road Maintenance and Rehabilitation Project

Project Completion Report (PCR) Actual Project Costs (Component and Sourcewise)

(UA million)

ADF GOE Total Foreign

Exchange Local Cost

Total

%

Foreign Exchange

Local Cost

Total

%

Foreign Exchange

Local Cost

Total

%

Road Maintenance (Equipment and Spares)

16.98

-

16.98

44%

-

1.35

1.35

19.7

16.98

1.35

18.33

40.3

Road Rehabilitation (Semera – Elidar Const)

20.56

-

20.56

53%

-

4.94

4.94

72.2

20.56

4.94

25.50

56.1

Consultancy (Supervision of Construction)

1.07

-

1.07

3%

-

0.55

0.55

8.1

1.07

0.55

1.62

3.6Total 38.61 - 38.61 100% - 6.84 6.84 100 38.61

(85%)6.84

(15%)45.45 100

Source: ERA and ADB Mission, September 2002.

Annex 3 Page 2 of 4

ETHIOPIA

Road Maintenance and Rehabilitation Project Project Completion Report (PCR)

Categories of Expenditure

(UA million)

As per Appraisal Actual Foreign

Exchange Local Cost

Total

%

Foreign Exchange

Local Cost

Total

%

A. Road aintenance

New Equipment & Spares for rehabilitation

18.40

1.29

19.69

39.26

16.98

1.35

18.33

40.3

Sub Total (A) 18.40 1.29 19.69 39.26

16.98

1.35 18.33

40.3

B.Road Rehabilitation Construction Works Consultancy Services

24.28

1.07

4.92

0.19

29.21

1.26

58.23

2.51

20.56

1.07

4.94 0.55

25.5

1.62

56.1

3.6 Sub-Total (B) 25.35 5.12 30.47 21.63 5.49 27.12 59.7 Grand Total 43.75 6.41 50.16 100.0 38.61 6.84 45.45 100.0

Source: ERA and ADB mission, September 2002

ANNEX 3

Page 3 of 4

ETHIOPIA

ROAD MAINTENANCE AND REHABILITATION PROJECT

PROJECT COMPLETION REPORT YEARLY DISBURSEMENT BY SOURCE OF FUNDS

(In UA MILLION)

ADF GOE TOTAL Year As at Appraisal Actual As at Appraisal Actual As at Appraisal Actual Amount Cum.(%) Amount Cum.(%) Amount Cum.(%) Amount Com.(%) Amount Cum.(%) Amount Cum.(%) 1990 5.61 12.8% - - 0.40 2.6% 6.01 11.9% - 1991 17.67 53.2% 3.04 7.8% 2.24 41.1% 0.14 2.04% 19.91 51.7% 3.18 7.0% 1992 12.90 82.7% 11.35 37.3% 2.24 76.1% 0.83 14.18% 15.14 81.6% 12.18 33.8% 1993 5.06 94.3% 4.33 48.5% 1.02 92.1% 0.08 15.35% 6.08 93.9% 4.41 43.5% 1994 2.51 100.0% 4.08 56.4% 0.51 100.0% 1.39 35.67% 3.02 100.0% 5.47 55.5% 1995 7.09 77.4% 0.82 47.66% 7.91 72.9% 1996 2.45 83.8% 0.89 60.67% 3.34 80.3% 1997 2.24 89.6% 0.85 73.09% 3.09 87.0% 1998 1.03 92.2% 0.42 79.23% 1.45 90.3% 1999 0.72 94.0% 0.38 84.79% 1.10 92.7% 2000 0.64 95.7% 0.36 90.00% 1.00 94.9% 2001 1.60 99.8% 0.66 99.70% 2.26 99.9% 2002 0.04 100.0% 0.02 100.00% 0.06 100.0% Total 43.75 100% 38.61 100.0% 6.41 100% 6.84 100,0% 50.16 100% 45.45 100.0% Sources: FFCO & ERA

Annex 3 Page 4 of 4

Ethiopia Road Maintenance and Rehabilitation Project

Project Completion Report (PCR) ADF Disbursement Schedule (Appraisal Vs Actual)

As at Appraisal Actual

Year Amount Cum (%)

Amount Cum (%)

1991 17.67 53.2 3.04 7.8 1990 12.8 - -

1992 12.90 82.7 11.35 37.3 1993 5.06 94.3 48.5 1994 2.51 100.0 4.08 56.4 1995 - 7.09 77.4 1996 - 2.45 83.8 1997 - 2.24 89.6 1998 - 1.03 92.2 1999 - 0.71 94.0 2000 - 0.64 95.7 2001 - 1.60 99.8 2002 - 0.04 100.0 Total 43.75 100.0 38.61 100.0

Un disbursed balance 5.144 Loan

Savings 5.144

Annex 4

Page 1 of 2 Ethiopia

Road Maintenance and Rehabilitation Project Project Completion Report (PCR)

Summary of Economic Internal Rate of Returns and Net Present Values

AADT AADT Growth Rates (%) EIRR (%) NPV at 12%(Birr in million)

No.

Road Section

Length (km)

Appraisal (1989)

PCR

(2002)

Appraisal

(1989)

PCR

(2002)

Appraisal

(1989)

PCR

(2002)

Appraisal

(1989)

PCR (2002)

Alemgena District (Paved) Addis-Ghion-Gibe River 175 431 1137 2.3 4.4 148.5 406.6 24.5 67.9 Addis-Fitche-Dejen 220 342 387 2.3 5.0 81.8 116.4 10.6 15.5 Addis-Ambo 118 541 929 2.3 5.8 68.8 127.4 7.0 18.1 Addis-Borkena River 304 280 726 2.3 6.5 61.3 127.5 8.4 24.4 Nazareth-Melkesa-Asela 96 513 1450 2.3 11.6 229.0 360.3 14.9 66.1

1

All Paved Roads-Alemgena 2.3 6.7 216.1 143.2 Alemgena District (Unpaved) 40.4 Aemgena-Butajira-Sodo 313 154 202 3.3 3.9 69.1 136.3 20.4 1.4 Hossana-Welkite 125 107 324 3.3 4.7 2.8 29.1 - 4.1 Nekempte-Ghimbi 112 158 239 3.3 3.1 30.6 59.6 2.0 2.4 Holeta-Muger 55 239 304 3.3 6.7 38.7 77.9 2.2 1.4 Zeway-Butajira 48 160 200 3.3 2.8 12.0 28.6 - 28.4 All Gravel Roads-Alemgena 3.3 4.3 93.3 71.5

2

Total Alemgena District 164.2 846.4 Jimma District (Paved) Gibe River-Agaro-Dedessa River 151 240 547 2.3 8.5 135.0 270.8 10.8 14.3

3

Bedelle-Metu 116 118 207 2.3 9.4 12.8 36.1 0.1 2.2 All Paved Roads-Jimma 2.3 9.0 170.9

Jimma District (Unpaved) 2.3 9.0 Agaro-Chira 48 111 126 3.3 7.1 4.7 29.5 - 0.4 Jimma-Mizan-Tepi 226 83 171 3.3 6.1 16.1 52.0 0.5 5.6 Metu-Gori-Gambella 164 81 94 3.3 4.7 62.0 66.3 5.2 6.8 Metu-Alge 51 40 82 3.3 13.3 - 45.4 - 1.3 Arjo-Bedelle-Dedessa River 116 123 232 3.3 12.0 64.9 89.0 5.6 10.2 All Gravel Roads-Jimma 3.3 8.6 60.7 30.6

4

Total Jimma District 96.1 278.8 Alemgena and Jimma Districts 139.7 Semera-Elidar Rehabilitation Project 5.0 4.5 23.1 21.6 39.1 56.1 Overall Project 135.6 834.61

Annex 4 Page 2 of 2

Overall Cash Flows and Economic Parameters (Birr in million)

Year Alemgena Jimma Alemgena and Jimma Semera-Elidar Total

1990 -45.60 -25.50 -71.10 0.00 -71.10 1991 65.94 19.41 85.35 0.00 85.35 1992 76.81 21.83 98.64 0.00 98.64 1993 95.66 32.25 127.91 0.00 127.91 1994 134.95 34.81 169.76 0.00 169.76 1995 122.17 38.49 160.65 -215.46 -54.81 1996 141.27 45.96 187.22 45.82 233.04 1997 159.93 54.02 213.94 38.64 252.58 1998 190.15 71.08 261.23 42.65 303.88 1999 213.09 78.36 291.45 59.25 350.69 2000 224.09 71.90 295.99 53.00 348.99 2001 234.42 85.96 320.38 59.79 59.79 2002 257.26 95.99 353.25 62.41 62.41 2003 65.19 65.19 2004 71.12 71.12 2005 145.70 145.70

EIRR 164.2% 96.1% 139.7% 21.6% 135.6% NPV (Birr in million) 715.01 226.19 1125.23 56.61 834.61

ANNEX 5 Page 1 of 4

ETHIOPIA ROAD MAINTENANCE AND REHABILITATION PROJECT

PROJECT COMPLETION REPORT Performance Rating Scale and Evaluation Criteria 1. Rating Scale

X > 3 Highly satisfactory

2 < X < 3 Satisfactory

1 < X < 2 Unsatisfactory

X < 1 Highly unsatisfactory

Where X is the value assigned to a performance variable. Classification: Implementation performance is considered satisfactory if the average value of X > 2. 2. Evaluation Results

Component Indicators Score (1-4)

Remarks

1. Adherence to time schedule 1 Delay 99 months 2. Adherence to cost schedule 2 Under run cost since project scope

reduced 3. Compliance with covenants 2 50% delay in loan effectiveness 4. Adequacy of monitoring & evaluation and reporting

3 Adequate monitoring but delays in evaluations

5. Satisfactory Operations (if applicable)

3 VOC decreased, traffic flow closer to projection.

TOTAL 11 Overall Assessment of Implementation Performance

2.2

Satisfactory

ANNEX 5 Page 2 of 4

ETHIOPIA

ROAD MAINTENANCE AND REHABILITATION PROJECT PROJECT COMPLETION REPORT

FORM BP 1

BANK PERFORMANCE

Component Indicators

Score

(1 to 4)

Remarks

1. At Identification 3 The project was a component of the Road Sector Development Programme ( RSDP).

2. At preparation of project

-

3. At appraisal

4

The project was of high priority by the GOE.

4. At supervision

3

Most of the problems were resolved in time and adequate measures taken.

Overall assessment of Bank Performance

3.33

ANNEX 5 Page 3 of 4

ETHIOPIA

ROAD MAINTENANCE AND REHABILITATION PROJECT PROJECT COMPLETION REPORT

FORM PO 1

PROJECT OUTCOME

No.

Component Indicators

Score (1 to 4)

Remarks

1 Relevance and Achievement of Objectives*

i) Macro-economic policy 2 ii) Sector Policy 3 iii) Physical (incl. Production) 2 iv) Financial v) Poverty alleviation & social & gender 3 vi) Environment 3 vii) Private sector development 3 viii) Other (Specify) 2 Institutional Development (ID) i) Institutional framework incl.

Restructuring 2

ii) Financial and Management Information Systems including Audit Systems

iii) Transfer of Technology 2 iv) Staffing by qualified persons (incl.

Turnover), training & counter-part staff

3

Annex 5 .Page 4 of 4

Contd.

3

Sustainability

i)

Continued Borrower Commitment

3

ii)

Environmental Policy

3

iii)

Institutional Framework

3

iv)

Technical Viability and Staffing

3

v)

Financial viability including cost recovery systems

-

vi)

Economic Viability

4

vii)

Environmental Viability 3

viii) O&M facilitation (availability of recurrent funding, foreign exchange, spare parts, workshop facilities etc.)

-

4

Economic Internal Rate of Return 4

TOTAL 46

Overall Assessment of Outcome 2.71

ANNEX 6

ETHIOPIA ROAD MAINTENANCE AND REHABILITATION PROJECT

PROJECT COMPLETION REPORT RECOMMENDATIONS AND FOLLOW-UP MATRIX

Main Findings & Conclusions Lessons Learned Recommendations Follow-up Actions Responsibility Formulation & Project Rational: The project was a component of a Road Sector Development(RSDP) programme funded by various donors.

The outcome of the project shows there was an effective donor-co-ordination.

Donor-co-ordination should be encouraged in the transport section.

ADF/ GOE

Project Implementation: 1. Execution of Works through Force Account. 2. Cost-under run due to delay in the implementation.

Bank should not encourage execution of works of large magnitude through Force Account mode. Bank can consider this mode, if the works are small in nature and the Borrower has capacity and capability to execute them Cost under run has been realised in the project, mainly due to reduction in the scope of construction works. Had the appraised project scope executed, probably the overall cost would have exceeded the approved estimated cost

The Bank should be cautious during appraisals in considering the Force Account Mode for the execution of works. Minimise start-up delays in project implementation.

ADF

ADF/ GOE

Compliance with Loan Conditions & Covenants: 1. No final Audit Report

The Borrower should always comply with the Loan Agreement

The GOE was requested to submit.

GOE

Performance Evaluation & Project Outcome: The overall project performance rating was satisfactory. The initial objective was however not fully achieved.

The delay in completion was mainly due to institutional weakness, inadequate monitoring & supervision and the field conditions. To avoid this, Bank to consider execution of through contract basis.

The appraisal missions to assess the situation in the field during appraisal and decision taken on the mode of execution of works.

ADF/GOE

ANNEX 7 ETHIOPIA

ROAD MAINTENANCE AND REHABILITATION PROJECT PROJECT COMPLETION REPORT

SOURCES OF INFORMATION

1. An Economic Evaluation of A Road Maintenance Project in Alemgena and Jimma Districts, Main Report, Vol. 1,

Addis Ababa, Ethiopia, March 1989. 2. An Economic Re-Evaluation for the Upgrading of the Mille-Assab Highway, Ethiopian Transport Construction

Authority, January 1989.

3. Annual Report 1996/97 (Ethiopian Fiscal Year 1989), National Bank of Ethiopia, Addis Ababa, Ethiopia, February 1999.

4. Ethiopia: Focussing Public Expenditures on Poverty Reduction, Vol. 1: Main Report, World Bank Country Office

in Ethiopia, December 2001.

5. Ethiopia: Focussing Public Expenditures on Poverty Reduction, Vol. 2: Appendixes and Statistical Tables, World Bank Country Office in Ethiopia, December 2001.

6. Monitoring Report of the Third Year 2000/2001, Draft, European Commission, Ethiopian Roads Authority,

December 2001,

7. Quarterly Bulletin, National Bank of Ethiopia, Fiscal Year Series, Second Quarter 2001/2002,Vol. 17, No. 2, Addis Ababa, Ethiopia.

8. Borrower’s Project Completion Report for the Road Maintenance and Rehabilitation Project, Ethiopian Roads

Authority, Addis Ababa, Ethiopia, August 2002.

9. Semera-Elidar Asphalt Rehabilitation Project, Final Report, Transport Construction Design Enterprise, Addis Ababa, Ethiopia, October 2001.

9 Appraisal Report on Road Maintenance and Rehabilitation Project, ADF March 1989. 10 Project Files.

ANNEX 8

ETHIOPIA ROAD MAINTENANCE AND REHABILITATION PROJECT

BORROWER’S PCR

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

ANNEX 9

ETHIOPIA

ROAD MAINTENANCE AND REHABILITATION PROJECT

EXECUTING AGENCY’S COMMENTS ON THE BANK’S PCR The comments were taken into account and are in the project file with ONIN