SCCD: N.G.

AFRICAN DEVELOPMENT FUND Language: English Original: English

REPUBLIC OF GHANA

ROAD INFRASTRUCTURE PROJECT (EASTERN AND WESTERN REGIONS)

APPRAISAL REPORT

NB: This document contains errata or corrigenda (see Annexes) INFRASTRUCTURE DEPARTMENT OCIN CENTRAL & WEST REGIONS JUNE 2003

TABLE OF CONTENTS

Page PROJECT INFORMATION SHEET, CURRENCY AND MEASURES, LIST OF TABLES, (i-xiv) LIST OF ANNEXES, LIST OF ABBREVIATIONS, BASIC DATA SHEET, STUDY LOGICAL FRAMEWORK, PROJECT LOGICAL FRAMEWORK, EXECUTIVE SUMMARY 1. ORIGIN AND HISTORY........................................................................................................................... 1 2. THE TRANSPORT SECTOR ................................................................................................................... 2

2.1 THE TRANSPORT SYSTEM..................................................................................................................... 2 2.2 TRANSPORT POLICY, PLANNING AND COORDINATION ......................................................................... 4

3. THE ROAD SUB-SECTOR....................................................................................................................... 4 3.1 THE ROAD NETWORK........................................................................................................................... 4 3.2 VEHICLE FLEET AND TRAFFIC .............................................................................................................. 5 3.3 THE ROAD TRANSPORT INDUSTRY ....................................................................................................... 5 3.4 ROAD ADMINISTRATION AND TRAINING .............................................................................................. 5 3.5 ROAD FINANCING................................................................................................................................. 6 3.6 ROAD ENGINEERING AND CONSTRUCTION ........................................................................................... 7 3.7 ROAD MAINTENANCE........................................................................................................................... 7

4. THE PROJECT........................................................................................................................................... 7 4.1 CONCEPT AND RATIONALE................................................................................................................... 7 4.2 THE PROJECT AREA AND BENEFICIARIES ............................................................................................. 9 4.3 STRATEGIC CONTEXT......................................................................................................................... 11 4.4 OBJECTIVES........................................................................................................................................ 12 4.5 DESCRIPTIONS.................................................................................................................................... 12 4.6 ENVIRONMENTAL IMPACTS ................................................................................................................ 14 4.7 SOCIAL IMPACT.................................................................................................................................. 16 4.8 PROJECT COSTS.................................................................................................................................. 18 4.9 SOURCE OF FINANCING AND EXPENDITURE SCHEDULE...................................................................... 19

5. PROJECT IMPLEMENTATION........................................................................................................... 21 5.1 EXECUTING AGENCY.......................................................................................................................... 21 5.2 INSTITUTIONAL ARRANGEMENT......................................................................................................... 21 5.3 IMPLEMENTATION SCHEDULE ............................................................................................................ 22 5.4 PROCUREMENT ARRANGEMENTS ....................................................................................................... 23 5.5 DISBURSEMENT ARRANGEMENTS....................................................................................................... 24 5.6 MONITORING AND EVALUATION ........................................................................................................ 24 5.7 FINANCIAL REPORTING AND AUDITING.............................................................................................. 25 5.8 DONOR CO-ORDINATION .................................................................................................................... 25

6. PROJECT SUSTAINABILITY AND RISKS ........................................................................................ 26 6.1 RECURRENT COST .............................................................................................................................. 26 6.2 PROJECT SUSTAINABILITY.................................................................................................................. 26 6.3 CRITICAL RISKS AND MITIGATING MEASURES................................................................................... 27

7. PROJECT BENEFITS ............................................................................................................................. 28 7.1 ECONOMIC ANALYSIS ........................................................................................................................ 28 7.2 SOCIAL IMPACT ANALYSIS................................................................................................................. 28 7.3 SENSITIVITY ANALYSIS ...................................................................................................................... 29

8. CONCLUSIONS AND RECOMMENDATIONS .................................................................................. 30 8.1 CONCLUSIONS .................................................................................................................................... 30 8.2 RECOMMENDATIONS AND CONDITIONS FOR LOAN AND GRANT APPROVAL....................................... 30

This Report has been prepared by Messrs. J. K. Nyasulu, (Transport Economist, OCIN.3, Ext. 2483), R. A. Sherman, (Civil/Transport Engineer, OCIN.3, Ext. 2307); following a mission to Ghana from 28th October to 11th November 2002. Mr. E. Shannon, (Environmentalist, PSDU, Ext.3209) also participated in the preparation of the report. Any matters relating to this report may be referred to the Authors or Mr. B.M. L. Askofare, (Ag. Manager, OCIN.3, Ext. 2526).

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AFRICAN DEVELOPMENT FUND HEADQUARTERS TEMPORARY RELOCATION AGENCY 01 B.P. 1387 Abidjan 01 BP 323-1002 Tunis Belvédère Côte d’Ivoire Tunisia Tel: (225) 20 20.44.44; 20 20 48 48 Tel: (216) 71 33 35 11 Fax: (225) 21.65.45 Fax: (216) 71 35 19 35

PROJECT INFORMATION SHEET

DATE April 2003 The information given hereunder is intended to provide some guidance to prospective suppliers, contractors, consultants and all persons interested in the procurement of goods, works and services for projects approved by the Board of Directors of the Bank Group. Further detailed information and guidance may be obtained from the Executing Agency of the Borrower. 1. COUNTRY : The Republic of Ghana 2. PROJECT TITLE : Road Infrastructure Project (Eastern and Western

Regions) 3. LOCATION : Eastern and Western Regions of Ghana 4. BORROWER : Republic of Ghana 5. EXECUTING AGENCY : Ghana Highway Authority (GHA) P.O. Box 1641, Accra, Ghana Tel: 233 21 66 39 22/66 91 62 Fax: 233-21-66 20 51/66-55-71 6. PROJECT DESCRIPTIONS :

The project will consist of the following components:

A). CIVIL WORKS

The works consist of rehabilitating a 41 km of two lane` single carriageway road to a standard of 7.3 m width and shoulder of 2.5 m bitumen surfaced on each side. The works include construction of a 10.3 km bypass at Nsawam. B). CONSULTANCY SERVICES

(I) The consulting services for works would be divided into three phases, namely: (i) the design review and tendering, (ii) supervision of works, and (iii) defect liability phase. Each phase would require a different level of staffing.

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(II) Consulting services for conducting the study on the Agona Junction-Elubo Road Study.

7. PROJECT TOTAL COST : UA 25.55 million i) Foreign Exchange : UA 20.31 million ii) Local Currency Cost : UA 5.24 million 8. BANK GROUP FINANCING ADF LOAN : UA 18.00 million ADF GRANT : UA 0.80 million NTF LOAN : UA 3.00 million 9. OTHER SOURCES OF FINANCING OPEC : UA 1.50 million IDA : UA 0.04 million Government of Ghana : UA 2.21 million 10. DATE OF LOAN APPROVAL : September 2003 11. ESTIMATED STARTING DATE : August 2004 (51) months AND DURATION 12. PROCUREMENT OF GOODS

AND WORKS : The Procurement of Civil Works will be carried out using International Competitive Bidding with pre-qualification in accordance with ADF rules of procedures.

13. CONSULTANCY SERVICES REQUIRED

AND STAGE OF SELECTION : Consulting services for works, and carrying out the road study will be procured on the basis of a short list of consulting firms. The selection process will be based on Technical Quality and Price Combination.

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CURRENCY AND MEASURES

Currency Equivalents

(April 2003) 1 UA = Cedi 11750.9 1 UA = USD 1.37379

Fiscal Year in Ghana

January 1 – December 31

Weights and Measures 1 metric ton (t) = 2,205 pounds (lbs). 1 kilogram (kg) = 2.2 lbs. 1 meter (m) = 3.281 ft 1 kilometer (km) = 0.621 mile 1 square kilometer (km2) = 0.386 square mile (mi2)

LIST OF TABLES Page 4.1 Summary of Project Cost Estimates by Component 18 4.2 Summary of Project Cost by Expenditure Category 18 4.3 Project Sources of Finance 19 4.4 Study Sources of Finance 20 4.5 Project Category of Expenditure by Category 20 4.6 Project Expenditure Schedule by Source of Financing 20 5.1 Proposed Project Implementation Plan 22 5.2 Summary of Procurement Arrangements 23 6.1 Road Fund Annual Increments and Accrual 27

LIST OF ANNEXES

1 Project Location Map 2 Organizational Chart (GHA) 3 Environmental Summary 4 Provisional List of Goods and Services 5 Project Implementation Plan 6 Study Terms of Reference Summary 7 Detailed Cost Estimates 8 EIRR and Sensitivity Tests Results Summary 9 Project Implementation Documents 10 List of On-going Bank Operations

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LIST OF ABBREVIATIONS AADT Annual Average Daily Traffic ADF African Development Fund AFD French Development Agency BADEA Arab Bank for Economic Development in Africa DANIDA Danish International Development Agency DFR Department of Feeder Roads DUR Department of Urban Roads ECOWAS Economic Community Of West African States EDF European Development Fund EIRR Economic Internal Rate of Return ERAP Economic Recovery and Adjustment Program ERP Economic Recovery Program ESAL Equivalent Standard Axle Load GDP Gross Domestic Product GEPA Ghana Environmental Protection Agency GHA Ghana Highway Authority GOG Government of Ghana GPN General Procurement Notice HDM Highway Development and Management Model HSIP Highway Sector Investment Program ICB International Competitive Bidding IDA International Development Agency IRI International Roughness Index JBIC Japan Bank for Investment Cooperation KFW Kreditanstalt Fur Wiederaufbau MOF Ministry of Finance MRH Ministry of Roads and Highways MTC Ministry of Transport and Communications NEAP National Environmental Action Plan NFRRMP National Feeder Roads Rehabilitation and Maintenance Project NTF Nigeria Trust Fund OECF Overseas Economic Cooperation Fund OPEC Organization of Petroleum Exporting Countries ROSSIP Road Sub-sector Investment Program RSDP Road Sector Development Program

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...

Year Ghana Africa Developing DevelopedCountries Countries

Basic IndicatorsArea ( '000 Km²) 239 30,061 80,976 54,658Total Population (millions) 1999 19.7 765.6 4,793.2 1,185.2Urban Population (% of Total) 1999 38.0 37.1 39.4 75.8Population Density (per Km²) 1999 82.5 25.5 59.2 21.7

SPGNP per Capita (US $) 1999 390 684 1,250 25,890NYLabor Force Participation - Total (%) 1999 47.5 43.3 … …

Labor Force Participation - Female (%) 1999 47.7 35.0 … …Gender -Related Development Index Value 1998 0.6 0.483 0.634 0.916Human Development Index (Rank among 174 countries) 1998 129 n.a. n.a. n.a.Population Living Below $ 1 a Day (% of Population) 1995 ... 45.0 32.2 …Demographic Indicators

SPPopulation Growth Rate - Total (%) 1999 2.7 2.4 1.6 0.3Population Growth Rate - Urban (%) 1999 3.8 4.5 2.8 0.6

SLPopulation < 15 years (%) 1999 43.5 42.7 32.8 18.5Population >= 65 years (%) 1999 3.1 3.2 5.0 14.0Dependency Ratio (%) 1999 79.7 86.1 61.0 48.6Sex Ratio (per 100 female) 1999 99.0 99.4 103.3 94.8Female Population 15-49 years (millions) 1999 4.5 181.1 151.8 297.2Life Expectancy at Birth - Total (years) 1999 61.6 52.7 64.3 75.5Life Expectancy at Birth - Female (years) 1999 63.4 53.5 66.0 79.2

SI Crude Birth Rate (per 1,000) 1999 36.2 36.3 23.4 10.9SPCrude Death Rate (per 1,000) 1999 8.8 13.7 8.4 10.3SPInfant Mortality Rate (per 1,000) 1999 59.7 76.4 57.6 8.9

Child Mortality Rate (per 1,000) 1999 86.2 116.6 79.8 10.2SPMaternal Mortality Rate (per 100,000) 1990-96 740 698 491 13SHTotal Fertility Rate (per woman) 1999 4.8 4.8 2.8 1.6SHWomen Using Contraception (%) 1990-99 22.1 … 56.0 70.0SEHealth & Nutrition IndicatorsSEPhysicians (per 100,000 people) 1992-97 6 35 78 287SENurses (per 100,000 people) 1992-97 72 107 98 782

Births attended by Trained Health Personnel (%) 1992-98 44 38 58 99Access to Safe Water (% of Population) 1992-98 56 58 72 100Access to Health Services (% of Population) 1992-98 ... 64 80 100Access to Sanitation (% of Population) 1990-97 32 58 44 100Percentage of Adults (aged 15-49) Living with HIV/AIDS 1997 2.4 5.7 … …Incidence of Tuberculosis (per 100,000) 1997 59 201 157 24Child Immunization Against Tuberculosis (%) 1997 72 72 82 93Child Immunization Against Measles (%) 1997 59 64 79 90

NYUnderweight Children (% of children under 5 years) 1990-97 27 26 31 …Daily Calorie Supply 1998 2,586 2,439 2,663 3,380

NEPublic Expenditure on Health (as % of GDP) 1993-98 1.6 2.0 1.8 6.3NYEducation IndicatorsNY Gross Enrolment Ratio (%)

Primary School - Total 1996 75.0 80.0 100.7 102.3BN Primary School - Female 1996 69.8 73.4 94.5 101.9DT Secondary School - Total 1996 30.9 29.3 50.9 99.5DT Secondary School - Female 1996 24.0 25.7 45.8 100.8DTPrimary School Female Teaching Staff (% of Total) 1990-97 34.4 40.9 51.0 82.0DTAdult Illiteracy Rate - Total (%) 1999 29.8 38.8 27.2 1.3

Adult Illiteracy Rate - Male (%) 1999 20.7 30.7 19.5 0.9Adult Illiteracy Rate - Female (%) 1999 38.6 48.2 35.0 1.7

DTPercentage of GDP Spent on Education 1990-97 4.2 3.5 3.9 5.9Environmental IndicatorsLand Use (Arable Land as % of Total Land Area) 1998 15.8 5.9 9.9 11.6Annual Rate of Deforestation (%) 1990-95 1.3 0.7 0.4 -0.2Annual Rate of Reforestation (%) 1981-90 2.0 4.0 … …Per Capita CO2 Emissions (metric tons) 1996 0.2 1.1 2.1 12.5Source : Compiled by the Statistics Division from ADB databases; UNAIDS; World Bank Live Database and United Nations Population Division.

COMPARATIVE SOCIO-ECONOMIC INDICATORSGHANA

Population Growth Rate (%)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1991 1992 1993 1994 1995 1996 1997 1998 1999

Ghana Africa

GNP Per Capita ( US $ )

0

100

200

300

400

500

600

700

800

1991 1992 1993 1994 1995 1996 1997 1998 1999

Ghana Africa

Life Expectancy at Birth ( Years )

52

52

52

53

53

53

53

1991 1992 1993 1994 1995 1996 1997 1998 1999

#REF! Africa

Infant Mortality Rate ( Per 000 )

0

20

40

60

80

100

1991 1992 1993 1994 1995 1996 1997 1998 1999

Ghana Africa

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STUDY LOGICAL FRAMEWORK

ROAD INFRASTRUCTURE PROJECT (EASTERN AND WESTERN REGIONS)

PREPARED BY J. K. NYASULU/R. A. SHERMAN May 2003 Narrative Description (ND) Verifiable indicators (OBVI) Means of verification(MV) Assumptions/Risks 1.Sector Goal

1.1 to provide an integrated, well managed, viable and sustainable transport infrastructure and services meeting national poverty reduction and regional integration goals.

1.1 Road User cost currently nearly 80% of marketing cost, is reduced by at least 20% by year 2008 1.2 At least 25 % increase in the volume of trade by year 2008 1.3 Overall growth of 9% in transit traffic by year 2008

1.1 National and ECOWAS Statistics

2. Project Objectives 2.1 (i) determine the technical feasibility, economic viability, the environmental and social Impacts as well as prepare detailed engineering designs, cost estimates and Tender Documents for the Agona Junction to Elubo Road.

2.1 The most economically viable and technically feasible road rehabilitation option designed at the end of the Study by 2005

2.1 Feasibility, Environmental, Socio-economic, Detailed Engineering Design Reports and Tender Documents

2.1 Implementation of the recommended road project and the RSDP

3. Output 3.1 Feasibility, Environmental, Socio-economic, Poverty Reduction and Gender Study Reports 3.2 Detailed Engineering Designs, Cost

Estimates and Tender Documents

3.1 Feasibility, Environmental, Socio-economic, Poverty Reduction and Gender, reports prepared by 2005 3.2 Detailed Engineering Designs, Cost Estimates and Tender Documents prepared for implementation by 2005

3.1 Study Reports completed and submitted by 3.2 Comments and approval by the Government and the Bank 3.3 Supervision Mission Reports (Technical and Financial Reports)

3 Continued favourable social and political environment

4. Activities A. Study Consultancy Services - Conduct and complete the Study - Award\of Contract - Opening and analysis of Proposals - Request for Proposals - Short listing of Consultants B. Audit - Conduct and complete the Audit

SOURCES OF FINANCING MILLION UA

FOR STUDY

FE LC TOTAL ADF Grant 0.50 0.30 0.80 IDA 0.01 0.00 0.01 GOG 0.00 0.13 0.13 TOTAL 0.51 0.43 0.94

a) Signed Contracts b) Protocol of Agreement Signed c) Government’s Budget contribution d) Technical and Audit Reports e) Disbursement ledger f) Bank Supervision

4.1 Payment for invoices are not delayed 4.2 Government will make timely payment of counterpart local funds

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ROADWORKS LOGICAL FRAMEWORK

ROAD INFRASTRUCTURE PROJECT (EASTERN AND WESTERN REGIONS)

PREPARED BY J. K. NYASULU/R. A. SHERMAN May 2003 Narrative Description (ND) Verifiable indicators (OBVI) Means of verification(MV) Assumptions/Risks 1.Sector Goal

1.1 to provide an integrated, well managed, viable and sustainable transport infrastructure and services meeting national poverty reduction and regional integration goals.

1.1 Road User cost currently nearly 80% of marketing cost, is reduced by at least 20% by year 2008 1.2 At least 25 % increase in the volume of trade by year 2008 1.3 Overall growth of 9% in transit traffic by year 2008

1.1 National and ECOWAS Statistics

2. Project Objectives 2.1 (i) reduce the vehicle operating cost and improve road safety between Nsawam and Apedwa

2.1.1 Reduction of Road International Roughness Index from 5.5 to 2 by year 2007 2.1.2 Number of road accidents is reduced from the current annual average of 135 by at least 50% by completion of the road works in 2007.

2.1 Statistics from the Ministry of Roads and Transport.

2.1.Adequate maintenance of the trunk road. 2..2 Implementation of the project and the RSDP

3. Output 3.1 The newly rehabilitated 41 Km road between Nsawam and Apedwa.

3.1 A Nsawam-Apedwa (41Km) newly rehabilitated asphalt road, with pavement typical cross-sections being: 7.3 m carriageway, with 2.5 m shoulders on each side This includes a 10.3 km eastern bypass and three bridges at the beginning of the project in Nsawam by-passing the heavily built-up business district, by 2007.

3.1.1 Progress reports 3.1.2 Supervision mission reports 3.1.3 Final Report and PCRs

3 Continued favourable social and political environment

4. Activities A. Supervision - Supervision, Inspection and acceptance of Works - Award\of Contract - Opening and analysis of Proposals - Request for Proposals - Short listing of Consultants B. Civil Works - Acceptance of Works - Implementation of works by Contractors - Award of Works contract - Invitation of Bids - Pre-qualification of Contractors C. Audit - Conduct and complete the Audit - Award\of Contract - Opening and analysis of Proposals - Request for Proposals - Short listing of Consultants

SOURCES OF FINANCING MILLION UA

FOR ROADWORKS

FE LC TOTAL

ADF Loan 17.80 0.20 18.00 NTF 1.97 1.03 3.00 OPEC 0.00 1.50 1.50 IDA 0.03 0.00 0.03 GOG 0.00 2.08 2.08 TOTAL 19.80 4.81 24.61

a) Signed Contracts b) Loan and Protocol of Agreements Signed c) Government’s Budget contribution d) Technical and Audit Reports e) Disbursement ledger f) Bank Supervision

4.1 Payment for invoices are not delayed 4.2 Government will make timely payment of counterpart local funds

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EXECUTIVE SUMMARY

1. PROJECT BACKGROUND 1.1 The Government of Ghana for the past decade has been implementing road improvement programs as part of its transport policy. The programs have involved periodic and medium term maintenance as well as rehabilitation and reconstruction of rural, trunk and urban infrastructure. The Government is currently implementing its Road Sector Development Programme 2003-2007, with assistance from donors including the World Bank, the EU, KFW, DFID and the ADB. The Nsawam-Apedwa Road and the Agona Junction-Elubo Road form an integral part of the current RSDP. The rehabilitation of the Nsawam-Apedwa Road and the Agona Junction-Elubo Road, located in the Eastern Region and Western Region of Ghana, respectively, will specifically enhance Regional Integration and Cooperation between Ghana and the rest of ECOWAS member states by carrying across the borders international traffic. The roads, when improved, will enhance national economic activities, movement of goods and people to market, and facilitate regional trade and economic integration. 1.2 In pursuance of the development of an improved transport sector in general, and the road sub-sector, in particular, the Government approached the Bank for financing the Feasibility Study and Detailed Engineering Designs of the Achimota-Anyinam Road section of the Accra-Kumasi Trunk Road using TAF grant resources. The Bank financed the Study, which included the Environmental Impact Assessment Study and Gender /Poverty Reduction Studies. These Studies have been conducted and the results indicate that there will be both positive and minor negative environmental impacts associated with the project. The project has accordingly been classified as Category II, indicating that associated environmental adverse effects, which are limited and have been included into the design of the road works, will be mitigated during the project implementation. The Detailed Designs and Preparation of Tender Documents were completed in August 2001. The Bank subsequently appraised and approved the Achimota-Anyinam road project in 1997. The approved project was divided into three sections, namely Achimota-Apedwa, Apedwa-Bunso, and Bunso-Anyinam, which were to be financed by JBIC, ADF and BADEA, respectively. The Apedwa-Bunso and Bunso-Anyinam sections are under construction. 1.3 The OPEC Fund is also co-financing the Achimota-Anyinam road project. The JBIC withdrew its funding support for the project when the Government opted for the Highly Indebted Poor Country (HIPC) initiative, which rendered the Government of Ghana ineligible for JBIC loans considered too costly for HIPC countries. During Supervision, Portfolio Review and CSP Missions, the Government approached the Bank for assistance to finance the Nsawam-Apedwa road section. The Government has requested the Bank for assistance to rehabilitate the Nsawam-Apedwa road section. Meanwhile, it is soliciting funds from other donors for implementing the Achimota–Nsawam section of the road link. 1.4 The Government has also requested the Bank to finance a Study to determine the technical feasibility and economic viability of rehabilitating the Agona Junction-Elubo Road. The road forms part of the Trans-West African Coastal Highway that links Liberia, Cote d’Ivoire, Ghana and Togo. The road’s full potential to contribute to the regional economic integration is currently constrained because of its poor state that imposes difficulties and heavy

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costs in the movement of both national and international goods and passengers as well as in the delivery of social services. Consequently, the current state of the road retards national socio-economic development of the areas it traverses and negates the regional efforts aimed at enhancing regional social and economic integration. The Government of Ghana has recognized the importance of the regional road, hence the current proposal to carry out the study. In order to undertake appropriate cost-effective interventions on the Agona Junction-Elubo road section, there is need for a study to determine the economic viability and technical feasibility, as well as the preparation of detailed designs. It was in response to these requests that the Bank mounted a Mission in November 2002 to appraise the proposed road works on the Nsawam-Apedwa road and finalize the Terms of Reference for the Study on the Agona Junction-Elubo Road that had been prepared by the Government. 2. PURPOSE OF THE LOAN The ADF loan of UA18.00 million represents 77.5% of the total road works cost of UA 23.20 million. This amount will be used to finance 100 percent and 90% of the foreign cost of road works consultancy services and civil works, respectively. The NTF loan of UA 3.0 million represents 12.9% of the total road works cost. This will constitute 23% and 10.5% of the local cost and foreign cost of civil works, respectively.

The ADF Grant of UA 0.80 million represents 85% of the total cost of the Study, amounting to UA0.94 million. The ADF amount represents 100% of the foreign exchange and 70% of the local cost. 3. SECTOR GOAL AND PROJECT OBJECTIVE Sector Goal The current goal set by the transport sector is to provide an integrated, well managed, viable and sustainable transport infrastructure and services meeting national poverty reduction and regional integration goals. Project Objectives The objectives of the project are to: (i) reduce the travel time and vehicle operating cost, resulting in reduced road user costs for both passengers and freight between Nsawam and Apedwa; (ii) determine the technical feasibility, economic viability, the environmental and social impacts and prepare detailed engineering designs, cost estimates and Tender Documents for the Agona Junction to Elubo Road.

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4. Descriptions

The project will consist of the following components: A. ROAD WORKS

I. Civil Works

Rehabilitation of 41-Km Nsawam-Apedwa Road, and construction of 10.3 km bypass to the east of Nsawam Business District, with a design life of 20-years. The pavement typical cross-sections would be: 7.3 m carriageway, with asphalted 2.5 m shoulders on each side. The structure would consist of a 200 mm natural gravel Sub-base, 150mm Crushed stone base, and 80 mm dense bitumen base course, with the binding course of 60 mm Asphalt, and Wearing Course of 40 mm Asphalt.

II. Consultancy Services for Works

A consulting engineering firm will undertake the supervision of the road works throughout the implementation period of the project on behalf of the Executing Agency. The consultants will monitor the road works and ensure that the contractor conforms to the specifications. The consultants’ responsibility will also include evaluation of tenders, measurement of works, the preparation of progress reports, certification of payment invoices, authorization of completion certificates, and preparation of project completion report at the end of the project. The consultant will be required to satisfy himself with the authenticity of the design through a design review that should include a road safety audit prior to implementation. As part of its responsibility, the consultant should provide an expert who would conduct HIV/AIDS Awareness campaigns and Workshops for the consultant and contractor’s teams as well as the population within the project area.

B. STUDY I. Consultancy Services for Study

The Study will be conducted on the Agona Junction- Elubo in the following two stages:

Stage I: Feasibility Study, Environmental Impact Assessment Study and

Impact on Poverty Reduction and Gender Study;

Stage II: Detailed Engineering Designs, Cost Estimates and Preparation of Tender Documents for the approved alternative.

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C. MANAGEMENT AND COORDINATION

I Administration

The project management and coordination will involve the provision of policy guidance to the consultants and contractors, project monitoring and review, preparation of periodic Government reports on the project, liaison amongst Government road sub-sector agencies and other Government ministries and development partners etc. Government’s counterpart contribution to the project, therefore, includes the provision of these management and coordination services. II. Audit Services

An external auditing firm will perform the financial and technical audit on the

Road Works and Study Components annually to ensure that the components of the project are implemented in accordance with the provisions of the loan and grant Agreements.

5. PROJECT COST

The total project cost, net of customs duties and taxes, has been estimated at UA 25.55 million including UA 20.31 million in foreign exchange and UA 5.24 million in local cost. 6. SOURCES OF FINANCE The ADF, NTF, OPEC Fund and the Government of Ghana will finance the project. The ADF loan contribution to the road works will be UA 18.00 million (70% of the road works cost). This amount should be used to finance 100 percent and 90% of the foreign cost of road works consultancy services and civil works, respectively. The NTF will contribute UA 3.0 million (12.9%) towards the road works. This should constitute 23% of the local cost and 10.5% of the foreign cost of civil works. The OPEC Fund shall contribute UA 1.50 million (6.5%) of the road works cost. The total amount would be utilized towards 33% of the local cost of civil works. The Government of Ghana shall contribute UA 2.02 million (8.7%) of the road works cost. This amounts to 44% of the local cost of the civil works. The amount will also be used to finance the local component of coordination and administration costs of the supervision. The contribution, of the Government, exceeds 10% of the total cost to be financed by the ADF and the Government as required by the ADF IX Lending Policy. The ADF and the Government of Ghana would jointly finance the study at UA 0.93 million with UA 0.50 million in foreign exchange and UA 0.43 million in local cost. The ADF Grant contribution would be UA 0.80 million or 90 % of the total cost. The ADF amount represents 100% of the foreign exchange and 70 % of the local cost of the study. The Government will contribute UA 0.13 million that amounts to 14% of the total cost. The total cost of the audit services for the project estimated at UA 0.04 million would be financed by the IDA under the Government’s Road Sector Development Program. It is estimated that UA0.03 million and UA0.01 million would be used to audit the road works and the study, respectively.

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7. PROJECT IMPLEMENTATION The consulting services for the road works would be provided in the following three phases: (i) the design review and tender (6 months), (ii) supervision (30 months) and (iii) defect liability phases (3 months). Each phase would require different level of staffing. The phases would span over an estimated period of fifty-one (51) months. The contractor’s works should begin in July 2005 and end in December 2007, followed by a twelve-(12) months defect liability period ending December 2008. It is envisaged that the study would be carried out in 17 calendar months. The auditing services for the project would be conducted on an annual basis. The executing agency for the project will be the Ghana Highway Authority under the supervision of the Ministry of Roads and Highways. 8. CONCLUSIONS AND RECOMMENDATIONS 8.1 CONCLUSIONS 8.1.1 The Nsawam-Apedwa and Agona Junction-Elubo Roads in the Eastern and Western Regions of Ghana, respectively, are important international roads, forming an integral branch of the Trans West African Highway Network. The roads provide an important link in the integration of the administrative and economic activities within Ghana, as well as with its trading neighbors/partners in the ECOWAS region. The two roads have been selected for possible Bank financing because they form critical continuation of on-going Bank financed project roads. The Nsawam-Apedwa Road section leads into the Achimota-Anyinam (Apedwa-Bunso section), and Anyinam–Kumasi Road, and serve as one of the inter-connectors between the Trans-West African Highway and the Trans-West African Sahelien Highway, whereas the Agona Junction-Elubo road forms an integral part of the Trans-West African Coastal Highway, leading into the Tema-Aflao Road (Akatsi-Aflao section) and Akatsi-Dzodze-Noepe Road project, which was approved by the ADF Board in December 2002. 8.1.2 The roads have deteriorated so much that they impose serious traveling difficulties, high transport costs and safety problems. These problems have contributed to reduced agricultural production and industrial activities and also constrain the development of international trade that could otherwise facilitate socio-economic development and reduce poverty, especially in the Eastern Region which is one of the poorest regions in the country. The feasibility, environmental and detailed engineering design studies that were done for the Achimota-Anyinam road project which includes the Nsawam-Apedwa road section, have proven that the rehabilitation of the Nsawam-Apedwa road is economically, environmentally, and technically sound. The rehabilitation of the Nsawam-Apedwa, and the Study on the Agona Junction-Elubo Road have been included in the Government’s Road Sector Development Program and have the support of the Donor Community active in the sector in Ghana. The Road Sector Development Program is part of the Comprehensive Development Framework, which has been developed with a view to assisting the Government implement its Vision 2020. The proposed project is in line with the Bank Group Policy on Regional Economic Integration as articulated in its Vision, and bilateral agreement between the Bank and the ECOWAS, as well as Bank Strategies for Ghana for the period 2002-2004, which have placed the rehabilitation and upgrading of the infrastructure, especially roads, as a priority under the basic funding scenario.

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8.1.3 The project will enhance the flow of regional and inter-regional traffic and trade, and reduce road user costs, thereby strengthening regional economic integration. The road safety measures that will be put in place will enhance safety standards on the project road. The project will also facilitate easier access by the farmers and traders to markets that will generate income hence augment the Government’s efforts in achieving economic development and reducing poverty. 8.2 RECOMMENDATIONS

It is recommended that the Republic of Ghana be granted an ADF Loan not exceeding UA18.00 million, and an NTF loan not exceeding UA 3.0 million, for the implementation of the road works described herein subject to the conditions specified in the Loan Agreements.

It is also recommended that the Republic of Ghana be assisted with an ADF grant not

exceeding UA 0.80 million, in order to carry out the Study described in this report, and details of which are presented in the Terms of Reference in the Program Implementation Document (PID). The grant and its entry into force would be subject to the conditions specified in the Grant Protocol of Agreement.

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1. ORIGIN AND HISTORY 1.1 The Government of Ghana for the past decade has been implementing road improvement programs as part of the Government’s transport policy. These programs have involved periodic and medium term maintenance as well as rehabilitation and reconstruction of rural, trunk and urban infrastructure. The importance attached to the rehabilitation of the road network is a result of Government’s recognition that with an improved infrastructure, vehicle operating costs and long waiting travel times would be reduced and transport services would be improved, with consequent reduction in poverty and developmental impact in all parts of the hinterland. 1.2 Within the approved 3 year-rolling programs, the Government has been implementing projects under various programs such as the Highway Sector Investment Program, Road Sub-sector Investment Programs and Road Sector Development Programs, as part of the Government’s overall development program. The transport sector and road sub-sector programs have been implemented with the assistance from various international financing institutions including the African Development Bank Group, World Bank, EU, Japan Bank for International Cooperation (JBIC), just to mention a few. 1.3 In pursuance of the development of an improved transport sector in general, and the road sub-sector, in particular, the Government approached the Bank for financing the Feasibility Study and Detailed Engineering Designs of the Achimota-Anyinam Road section of the Accra-Kumasi Trunk Road using TAF grant resources. The Bank financed the Study and subsequently appraised and approved the project in 1997. The approved project was divided into three sections, namely Achimota-Apedwa, Apedwa-Bunso, and Bunso-Anyinam, which were to be financed by JBIC, ADF and BADEA, respectively. The OPEC Fund is also co-financing all three road sections. The Apedwa-Bunso section is under construction with funding from ADF, the OPEC Fund and the Government. The Bunso-Anyinam section is under construction with funding from BADEA, the OPEC Fund and the Government. The JBIC withdrew its funding support for the project when the Government opted for the Highly Indebted Poor Country (HIPC) initiative, which rendered the Government of Ghana ineligible for JBIC loans considered too costly for HIPC countries. The Government has requested the Bank for assistance to rehabilitate the Nsawam-Apedwa road section. Meanwhile, it is soliciting funds for implementing the Achimota –Nsawam section of the road link. 1.4 The Government has also requested the Bank to finance a Study to determine the technical feasibility, economic viability as well as environmental and social impacts of rehabilitating the Agona Junction-Elubo Road. The road forms part of the Trans-West African Coastal Highway that links Liberia, Cote d’Ivoire, Ghana and Togo. The road’s full potential to contribute to the regional economic integration is currently constrained because of its poor state that imposes difficulties and heavy costs in the movement of both national and international goods and passengers as well as in the delivery of social services. Consequently, the current state of the road retards national socio-economic development of the areas it traverses and negates the regional efforts aimed at enhancing regional social and economic integration. The Government of Ghana has recognized the importance of the regional road, hence the current proposal to carry out the study. In order to undertake appropriate cost-effective interventions on the Agona Junction-Elubo road section, there is need for a study to determine the economic viability, technical feasibility, environmental and social impacts as well the preparation of detailed designs.

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1.5 It was in response to the Government’s requests that the Bank mounted a Mission in November 2002 to appraise the proposed Nsawam-Apedwa road works and finalize the Terms of Reference for the Study that had been prepared by the Government. The Appraisal Report and the Study Terms of Reference were updated during a Bank mission to Ghana in March 2003. 2. THE TRANSPORT SECTOR 2.1 The Transport System 2.1.1 Transport plays a direct role in poverty reduction, fostering regional integration and enhancing economic development by facilitating income generation activities linked to agriculture and other sectors. The Bank’s support to the road sector is in keeping with the Bank’s Vision as reflected in its Ghana 2002-2004 Country Strategy that puts emphasis on poverty reduction through increased agricultural production, socio-economic development, and strengthening the foundations for sustainable development through the improvement of the social and economic infrastructure and enhancing the enabling environment for private sector growth. The Transport sector is crucial in this regard because of its central role in providing rural feeder roads and the development of road links from crop production to market centers and transport facilities to the export markets. The Bank’s interventions include infrastructure rehabilitation, especially in the road sub-sector and institutional capacity building. In this way, the Bank’s participation in the transport sector will complement other sectors, especially agriculture, and promote internal and regional integration. 2.1.2 The transport system in Ghana constitutes the following modes that are spread over an area of 239,460 km2: (i) a road network of about 40,112-km; (ii) a railways network of about 950-km; (iii) air transport services consisting of one international and four domestic airports; (iv) a maritime service with two major seaports, and (v) a 415-km inland water transport facility. Roads are the predominant mode of transportation currently accounting for about 98% of freight and 95% of passenger traffic movement. Rail transport is the only alternative to road for the movement of bulk commodities from collection centers to the ports. However, the railway has limited coverage and inland waterway transport is limited to the Volta River. Road Transport 2.1.3 Due to inadequate road maintenance in the past, a substantial backlog of road maintenance works has developed that includes not only periodic and routine maintenance but also rehabilitation works. Considering the importance of the road network to the country’s economy, the Government of Ghana, in 1985, began a system of 5-year investment programs in the road sub-sector that has resulted in an increase in the quality of the road network. The government is currently implementing the 2003-2007 Road Sector Development Programme. More details are given in Chapter 3.

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Railway Transport 2.1.4 The Ghana Railway Corporation (GRC) operates a network of about 950-km of railways. The three main lines are the Western line (Takoradi port to Kumasi including the Dunkwa to Awaso Branch), the Eastern line (Accra to Kumasi including the Accra to Tema Branch), and the Central line (Huni Valley to Kotoku Junction including the Achiasi Junction to Kade Branch). An estimated 0.615 million passengers and 1.158 million tons of freight were carried by GRC in 2000, representing a decrease of 58.2% and an increase of 19% respectively from the 1999 aggregate data. The railway transport is now being restructured on the basis of the Railway Modernization and Development Plan, which should lead to the expansion of the rail-network, divestiture and concessioning of the corporation. Air Transport 2.1.5 The Ghana Civil Aviation Authority (GCAA) is responsible for development, maintenance and operation of aviation infrastructure. GCAA provides navigational services and operates Kotoka International Airport and four domestic airports, Kumasi, Sunyani, Tamale and Wa. Kotoka International Airport is the international gateway for air traffic into Ghana and serves about 15 different international airlines, including the national airline Ghana Airways. In 2002 passenger traffic was 672,892 and approximately 46,978 tons of cargo were handled as compared to 622,525 and 44,779 respectively in 2001. The GCAA is continuing its improvement program for the international airport, while the national airline has increased its regional, continental and intercontinental services. Maritime Transport 2.1.6 Port infrastructure in Ghana is made up of two major deep-sea ports at Tema and Takoradi, which are managed by the Ghana Ports and Harbors Authority (GPHA). The throughput cargo handling for the ports in 2002 was 3,844,563 tonnes and 1,967,126 tonnes for Tema and Takoradi, respectively. This represents a decrease of 39 % and an increase of 41% in tonnage over 2001 for these two respective ports. About 82% of all imported cargo is handled by the Tema port, while the remaining 18% is handled by Takoradi. Conversely, Tema handles about 32.2% of the export cargo while the remaining 67.8% passes through Takoradi. Tema handles the majority of the high value imported cargo either in break bulk or container mode. Takoradi handles mainly the agricultural and mining export cargo. The Government policy in this sub-sector is to develop an integrated multi-modal transport system which spans from Tema port by roads via the Volta lake and then by road to the northern sector and beyond to the land locked countries of Burkina Faso and Mali. The Government is therefore implementing programs and projects, and is reviewing investment policies and strategies with a view to developing an efficient inter-modal transport system.

Inland Water Transport 2.1.7 In Ghana, the inland water transport on the Volta Lake is operated by the Volta Lake Transport Company (VLTC) whose sole shareholder is the Volta River Authority. The VLTC operates passenger and cargo services along a 415-km route with three (3) vessels between its Eastern Region port at Akosombo and Buipe in the Northern Region with seven (7) intermediate stops. In addition, the VLTC operates ferry stations for passenger and cargo traffic. The vessels’

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passenger and cargo traffic for the year 2002 was 25,415 persons and 92,615 tons, while that of the ferry service was 385,675 persons and 21,601 vehicles. The inland water transport system is still under-developed but has the potential as an intermediary mode for transporting goods from the Greater Accra Region to northern Ghana. 2.2 Transport Policy, Planning and Coordination 2.2.1 The Ministry of Roads and Transport (MRT) is the primary agency responsible for planning, and formulating policies and strategies for the transport sector in Ghana. It is also responsible for establishing the regulatory framework for transport operations, creating the enabling environment for investment, the development of an integrated transport system, implementing road sub-sector development programs, as well as monitoring the performance of implementing agencies within the transport sector. These activities are undertaken in close consultation with the Ministry of Finance. The relationship between MRT and the various public agencies in maritime, railways, road, air and lake transport is well established. In order to streamline the procedures and to effectively carry out sector-wide functions, investment planning, policy formulation, transport regulations and monitoring of transport projects under their purview, institutional strengthening of the Ministry is continuing under the current Road Sector Development Program (RSDP). 2.2.2 In Ghana, policies have been designed to support the Government’s long-term vision that aims at transforming Ghana into a middle-income country by the year 2020. The medium-term program supporting this vision, and covering the second five years 2001-2005, aims at consolidating the gains so far secured over the past decade and at laying strong foundations for economic growth and development in the subsequent two decades. Consequently, during the past decade, investment in economic infrastructure, communications, and transport has dominated the Public Investment Program. The current goal set by the transport sector is to provide an integrated, well-managed, viable and sustainable transport infrastructure and services meeting national poverty reduction and regional integration goals. 3. THE ROAD SUB-SECTOR 3.1 The Road Network 3.1.1 The following are the quantities for the different types of roads in Ghana: (i) 12,383-km of trunk roads, (ii) 24,000 km of feeder roads, (iii) 2,909 km of urban roads and (iv) 820-km of town roads. The trunk roads are further classified into (i) 4,365-km of National Roads, (ii) 2,393-km of Inter-Regional Roads and (iii) 5,625-km of Regional Roads. About 5,551-km of trunk roads and 1649-km of urban roads are paved. The remaining 7,651-km of trunk and town, 1260 of urban roads and the 24,000-km of feeder roads are essentially of gravel or earth surface. Of the 24,000 km of feeder roads only 50 percent are in maintainable condition. 3.1.2 The Government of Ghana initiated a trunk road stabilization program in 1988, which resulted in improvements in the trunk road network. In order to enhance this achievement in the sub-sector, since 1996 the Government is implementing the rolling road sector Strategic Plans. The programs aim at providing the country with a network condition mix established at around 70% good, 20% fair and no more than 10% poor. However, due to funding gaps, it is projected that the national road condition will improve to 59% good, 27% fair and not more than 14% poor by 2005.

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3.2 Vehicle Fleet and Traffic Vehicle Fleet 3.2.1 In Ghana, the total estimated vehicle fleet registered for the 2002 was 623,125, with an annual growth rate of 9.6%. Based on the statistics, the vehicle fleet comprises 6.1% motorcycle, 63.7% light vehicles, 20.6% medium vehicles, 9.2% heavy vehicles, and 0.4% tractor/trailers. Vehicle Traffic 3.2.2 In Ghana, road traffic data have been collected regularly over the 15 years by the GHA on the entire road network. The Average Annual Daily Traffic (AADT) for the year 2002 was estimated at 1,846, 860, and 709 vehicles for National, Inter-regional and Regional roads, respectively. The AADT growth rates between 1990 and 2000 were 4.6% for the trunk roads, 5.9% and 5.4% for National, Inter-regional and Regional roads respectively. In 2002, recent traffic counts on the trunk roads indicate an AADT of 2,483 vehicles compared with an AADT of 1,986 vehicles in 2000. Nearly 11 % are buses and trucks, and 89 % are cars and pickups. 3.3 The Road Transport Industry 3.3.1 The private sector dominates the road transport industry and carries the greater proportion of goods and passenger traffic. Entry into the road transport industry is free and generally any individual owning a road-worthy vehicle with valid insurance can operate transport services for goods and passengers along any route. 3.3.2 The major problems in road transport are a badly run-down infrastructure, many old and obsolete vehicles, capacity overloads, traffic congestion, poor or non-existent pedestrian facilities, high frequency of accidents, and virtual breakdown of the systems due to lack of financial resources and of only embryonic town planning services. The Government of Ghana, through policy reforms, institutional restructuring and strengthening programs and resources mobilization as part of the Economic Recovery Programs, has embarked on rehabilitation programs that are now producing significant results in the improvement of transport infrastructure. 3.4 Road Administration and Training 3.4.1 The overall administration of the road transport infrastructure in Ghana is the responsibility of the MRT. The Ghana Highway Authority has the responsibilities of administration, control, development and maintenance of the trunk roads and related facilities, subject to the national transport policies and strategies. The organizational chart of GHA is in Annex 2. 3.4.2 The GHA senior management consists of a Chief Executive with its functions divided among three departments of Development, Administration and Maintenance. Each department is headed by a Deputy Chief Executive who is responsible for monitoring the activities under his jurisdiction and ensures efficiency within the department. GHA structure consists of a central office in Accra, 10 regional offices and 32 road area offices.

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3.4.3 External consultants supervise most of the capital-intensive road projects implemented by GHA. The force account workload has been drastically reduced because road maintenance works are now being implemented by the private construction industry. Consequently, GHA staff, mainly involving young professionals, is increasingly assuming the responsibility of planning, supervising, monitoring and evaluating the works. However, the majority of GHA young professionals lack management and technical skills as well as knowledge in highway planning, financial management, research and development, road safety and environmental issues, and road information system. Such skills are pre-requisite to working in more coordinated and efficient fashion at the Head Office and in the decentralized GHA’s Regional offices. In addition, GHA has insufficient facilities and equipment, especially computers and software. In order to enable them to adequately undertake the new responsibility, institutional capacity building for GHA has been provided under the RSDP. 3.5 Road Financing 3.5.1 Ghana road programs are financed from both the local and external sources. The local funding is from the central government’s Consolidated Fund and the Road Fund. External resources are in the form of grants, concessional loans, and credits accruing from bilateral and multilateral donors. The Road Fund and some external sources mainly finance road routine and periodic maintenance, while the rehabilitation and new road construction are financed by the Consolidated Funds and external sources. 3.5.2 In Ghana, the total funds released to the road sub-sector have averaged USD 200 million per annum between 1996 and 2002 for both road maintenance and reconstruction. On average GOG has been contributing USD 110 million and the donors have been contributing USD 90 million annually. Since the restructuring of the Ghana Road Fund (GRF) in 1997, and with the appointment of an independent Board and the establishment of a secretariat responsible for the daily operation of the fund, the collection and disbursement of resources by the Road Fund have improved. Consequently, the GRF releases are taking a larger share of the total contribution to the road sub-sector by the Government. Additional information on the Road Fund performance is discussed under the project sustainability. According to the Road Fund Act of 1997, the GRF receives its funds through fuel levies, tolls, vehicle registration fees, road user fees, and international transit fee. The original projection of the GRF for the period 1999 to 2003 was USD 466.83 million giving an average of USD 93.37 million per annum. The revised estimate for the same period based on actual collection for the period 1999 to 2002 is USD 451.45 million or an average of USD 90.27 million per annum. Intervention of donors 3.5.3 Most multi-lateral and bilateral donor organizations in Ghana are active in the road sub-sector in formulating the road sub-sector programs and financing the implementation of the projects and programs. These Donors include ADF, IDA EU, BADEA, OPEC Fund, Kuwait Fund, JICA, KfW, GTZ, Dutch Government, DANIDA, USAID, and AFD. In Ghana, past commitments (1988-1994) made by Donor agencies have averaged about USD115 million equivalent per annum, mainly for major reconstruction and rehabilitation works. This amount was necessary to meet the annual road sector expenditure budget. However, as previously mentioned since 1996, the contribution has declined to USD 90 million per annum.

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3.6 Road Engineering and Construction Ghana has resources both in the Engineering Consulting activities and in the construction industry. More than 850 local construction companies and 20 engineering consulting firms are currently registered with the MRH. Most of the road works are contracted to the private sector as a result of the current policy on road construction and maintenance. However, GHA still handles some engineering services including designs and supervision. The role of the Ghanaian contractors has become more important because national contractors execute nearly 90% of contractual Routine and Periodic Maintenance activities, which are financed from the Road Fund. In line with the Road Fund Act, the medium and long-term plan of the Road Fund is to finance a substantial part of the development program. 3.7 Road Maintenance 3.7.1 The Road maintenance in Ghana, under the Highway Sector Investment Program, is carried out through three departments, namely: (a) the Department of Feeder Roads, (b) the Department of Urban Roads and (c) the Ghana Highway Authority. Each of these departments is responsible, each year, for planning and budgeting for the maintenance works to be undertaken for roads under their jurisdiction. All routine and periodic maintenance are planned in the framework of the Road Sub-sector Investment Program. 3.7.2 From 1996 to 2002 GHA has achieved the reconstruction of 1017-km (111%) against 920-km, the rehabilitation of some 223-km (62%) against the planned 360-km and 2995- km (39%) against the planned 7600-km under periodic maintenance of roadwork. The achievement of routine maintenance during the same period is 30189 km (52%) against the programmed 58000-km. The overall road condition mix attained between 1999 and 2002 was a decrease from 32.7% to 30.3% good, a decrease from 36.9% to 20.6% fair; and worsened from 30.4% to 49.1% bad. There have been fluctuations in the road condition mix over the period, in direct response to the availability of resources required for the program. Road maintenance is mainly funded by the Road Fund, which is steadily increasing its contribution to resources needed for road maintenance. Government is making an effort to re-focus more on routine and periodic maintenance than on reconstruction. The percentage of the fund presently being allocated to the GHA is being increased annually to meet its higher levels of the budgeted projections for over the three-year rolling programs. As an example, the budgetary allocation for GHA increased from USD 62.56 million in 2001 to USD 72.08 million in 2002. 4. THE PROJECT 4.1 Concept and Rationale 4.1.1 The Road Sector Development Program 2002-2004 has been revised and extended to 2007. The program, which covers the trunk roads, urban roads and feeder roads, comprises routine maintenance, periodic maintenance and rehabilitation, upgrading, reconstruction and major rehabilitation, bridges/culverts, traffic management and safety, as well as administration and services. The main objective of the RSDP is to open up the country, introduce competition and create an enabling environment for private sector opportunities and growth. It is estimated that the RSDP will require US $ 2.64 billion, broken down into US$1.26 billion for trunk roads, US$688.72 million for feeder roads and US$ 693.4 million for urban roads. So far, US$410.98 million has been

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secured from Donors including the IDA, the EU and the ADF for the implementation of the trunk roads. As regards the feeder roads, US$104.23 million has been secured from Donors, including the DFID, EU, DANIDA, JICA and AFD. As for the urban roads, US$ 79.4 million has already been secured from Donors such as the World Bank, AFD and DANIDA. The Nsawam-Apedwa and Agona Junction-Elubo trunk roads are included as priority roads for rehabilitation under the RSDP. 4.1.2 The Nsawam-Apedwa and the Agona Junction Elubo trunk roads form part of the Accra Kumasi and Accra Elubo trunk roads, respectively. The roads are integral branches of the Trans-African Highway network, linking Ghana with its northern and western ECOWAS trading partner-countries. The roads currently handle a lot of regional international traffic to and from the ports of Tema and Takoradi. The roads have deteriorated so much due to heavy truck traffic that they impose serious traveling difficulties, high transport costs and safety problems. In order to minimize these transport-related problems, the Government of Ghana has given priority to these roads and has included them in its RSDP. The two roads have been selected for possible Bank financing because they form critical components of on-going Bank financed projects within the RSDP. 4.1.3 During the implementation of the Feasibility, Environmental and Social Economic Studies for the Nsawam Apedwa road, the various stakeholders were actively involved in shaping the project that was eventually recommended for implementation. In this regard, people residing within the project road’s immediate area of influence participated in field meetings and interviews with the Consultants and Government officials with a view to soliciting their comments and concurrence with the project design. In addition to the consultations as mentioned above, two seminars will be held for stakeholders during the implementation of the Agona Junction Elubo Study. 4.1.4 Following the completion of the studies that have found the Achimota –Anyinam road section to be economically viable and technically feasible, JBIC provided funds for the Achimota-Apedwa Section of the road, which includes the Nsawam-Apedwa link. However, JBIC withdrew its funding support for the project when the Government opted for the Highly Indebted Poor Country (HIPC) initiative because the Government was no longer eligible for loans from JBIC, which are considered too expensive for HIPC countries. The Government has since requested Bank’s funding for the rehabilitation of the Nsawam-Apedwa Road that links to the Apedwa Bunso and Bunso Anyinam road sections currently being rehabilitated with funding from ADF, OPEC Fund and the Government and BADEA, OPEC Fund and the Government respectively. The Government is soliciting funds from other donors for the Achimota-Nsawam section. 4.1.5 The road works will involve the rehabilitation of Nsawam-Apedwa (30.7 Km) Road and construction of a 10.3 km eastern bypass at the beginning of the road works in Nsawam, by-passing the heavily built-up business district. The design life of the road works is 20-years. The road works design was obtained using the Transportation Road Research Laboratory (TRRL) Road Note # 31 (4th Edition) the Ghana Highway Authority Pavement Design Manual (1998), and the Republic of Ghana, Ministry of Roads and Highways Standard Specifications for Road and Bridge Works. Using the World Bank’s Highway Design and Maintenance Standard Model (HDM), two different by-pass options, eastern and western, were investigated for the 10.3-km road link. The evaluation of the bypasses was made from an environmental and socio-economic perspective, without prejudice to technical and economic considerations. From the cost and economic points of view, the eastern bypass is more expensive and has a lower internal rate of return, however, it is still above the

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benchmark investment level of 12% rate of return and has a positive net present value. It has the advantage of linking to the town center via the Adeiso road, which would reduce the adverse effect the removal of through traffic would have on the town traders who sell produce and confectionary to passing traffic. 4.1.6 Since the Bank started funding projects and studies in Ghana in 1973, to date the Bank Group has financed 11 transport operations amounting to UA105.91 million. The overall performance in the implementation of the transport sector operations has been satisfactory. However, there remain a number of areas that need to be improved upon. Generally, there are delays in fulfilling loan/grant conditions. The Government has generally been late in preparing basic documentation for the procurement of goods and services, and submitting quarterly reports and audited financial statements. Furthermore, Government has been experiencing difficulties in timely providing counterpart funds for the transport projects. In an effort to resolve these problems, the Government is streamlining the fulfillment of loan/grant conditions, by among others, speeding up approval processes within the Government. Moreover, with a number of road projects underway, the Government staff are now acquiring the experience and know how necessary for the speeding up of procurement processes and reporting. Government has been opening and running special accounts for project counterpart funds for the transport projects. The opening of special accounts in fulfillment of loan conditions, has resulted in some improvement in both the mobilization and availability of project counterpart funds. These positive developments are enhancing the pace of project implementation, and therefore should be sustained. 4.1.7 Over the years, there has been some improvement in the funding, management and implementation of the projects and studies. These improvements have been partly due to a joint effort by the Bank and the Government in improving communication and exchange of ideas. The Bank has also actively participated in the preparation and implementation of the development programs in consultation with other donors. In this respect, the Bank has been and will continue supporting measures such as the appointment of Government officers as counterparts to expatriates, consultants, and training the staff that are aimed at improving study and project implementation through the GHA institutional capacity building program being financed by the Bank. The Bank has also intensified its supervision of the projects and studies. 4.2 The Project Area and Beneficiaries Project Area 4.2.1 The road works on the Nsawam-Apedwa road falls within the political/administrative districts of Akwapim South District and the Suhum Kraboa Coaltar District, and its immediate area of influence is the 19,323 sq. km Eastern Region of Ghana. The area traversed by the road is characterized by savanna ochrosols. Soil type varies from sandy soil to clayey, alluvial or loamy. The road works area has a bimodal rainfall pattern. The area is relatively flat with heights between sea level and 160 m. Suhum and its environs are characterized by heights between 160m and 330 m above sea level. The major rainy season begins in April rising to a peak in June and then continues to decline until July/ August. Rainfall then rises again from September until it reaches another peak in October and then begins to decline with the approach of the dry season. Rainfall in the Akwapim South varies between 750 mm and 1,200 m, while in the Suhum and Kraboa Coaltar it ranges between 1,500 mm and 2030 mm. The vegetation along the road corridor is semi-deciduous

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Antiaris Chlopuora association and of the Celtis Triplochiton association. Within this area, there are pockets of rain forest between the north of Suhum and Apedwa and beyond. The major trees within the forest zone include Odum, Wawa, Ofram, Kyenkyen and Abako. 4.2.2 The Agona Junction-Elubo road falls within the Western Region and has direct influence over 23,921 square kilometers. The road serves as an important link to the sea-ports of Tema and Takoradi. The proposed study will yield the detailed information on the area of influence. Project Beneficiaries 4.2.3 A total of 739,392 inhabitants live in the Nsawam-Apedwa road works area. The Ga, Akwapim South, and Suhum Kraboa Coaltar Districts have a population ranging from 136,886 to 181,735 while the East Akim District has some 275,943 inhabitants. The main economic activity is in agricultural production, involving crop production and animal husbandry and virtually every household in the project area engages in some form of agriculture. About 70 to 75 percent of the population is employed in the agricultural sector in the road corridor. The most common crops cultivated are watermelon, pineapple, maize, cassava, coco yam, citrus, oil palm, cocoa, cola, garden eggs, okra, pepper, tomatoes, beans, cabbage and lettuce. Production of these crops is mostly on small peasant holdings, ranging between 0.5 ha to 1.5 ha. Given the relatively good transport links to major centers of demand in Accra and Kumasi and the number of relatively large town along the road, most farmers produce a significant proportion of their output for the market and are far from being pure subsistence producers. 4.2.4 There are several economic activities; especially in the industrial sector, being implemented in the road works area, namely two juice producers, pharmaceutical plant and several bakeries in Nsawam and sawmills at Suhum. Cassava processing operations, palm oil mills and central brewing are prevalent in villages and towns along the corridor. Block making for the construction of building is also common within many of the towns, and there are carpentry and mechanical workshops in many towns and villages. These economic activities are undertaken with various levels of technology ranging from the simple to the modern. These economic activities will greatly benefit from and improved road.

Poverty Profile in the Area

4.2.5 The poverty incidence stands between 5.2% in Greater Accra Region and 43% in the Eastern Region. These disparities are a reflection of the fact that poverty is more pronounced in the rural areas, which is equivalent to the national average based on the upper poverty line of 900,000 Cedis. It is further estimated that the average consumption among the poor in Ghana is around 30 % below the upper poverty line. There are wide variances between farm-gate and consumer prices such that about 21% and 70 % for livestock and foodstuff, respectively, are attributable to marketing costs. These disparities would be reduced with improved roads that would lower transportation costs. 4.2.6 The Agona Junction-Elubo Road has immediate impact over 1.84 million inhabitants, of whom nearly 27.3 per cent live below the poverty line. The road traverses an area that is noted for its production of timber, as well as cash and food crops for consumption and exports.

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4.2.7 The current poor state of the roads impede agricultural production for export purposes and retards access to gainful employment, and hinders the delivery of basic services such as education, health, water and sanitation, family planning services, and weakens social fabric. Exorbitant passenger and freight rates are being charged which erode incomes and make the people poorer. 4.3 Strategic Context 4.3.1 Transport costs constitute between 60% and 80% of the marketing costs for foodstuff and other primary produce such as grains, root crops, oil products, fruits and vegetables. The Government of Ghana therefore realizes that in order to reduce poverty, efforts are needed to enhance access to basic social services and infrastructure available to the poor and reduce the transport cost. Consequently, the Government has developed a Strategy of Poverty Reduction that prioritizes and lays emphasis on improved road and communication networks, which would facilitate i) economic growth, ii) integrated rural development, iii) expansion of employment opportunities, and iv) improved access by the rural and urban poor to basic public services such as education, health care and water and sanitation, and family planning services. 4.3.2 The Nsawam-Apedwa Road and the Agona Junction-Elubo Road, which form part of the Trans West-African Highway Network, carry national, regional and international traffic, thereby fostering economic development as well as regional trade and integration. The roads provide important links in the integration of the administrative and economic activities within Ghana, as well as with its trading neighbors/partners, mainly, Burkina Faso, Mali and Niger. The roads currently carry a lot of international traffic to and from the Ports of Tema and Takoradi. Consequently, upper sections of the Accra-Kumasi-Paga road have been identified under UMEOA road program for possible funding. The Nsawam-Apedwa road, which forms part of the Accra-Paga road and the Agona Junction-Elubo have deteriorated so much that they impose serious traveling difficulties, high transport costs and safety problems. These problems have contributed to reduced agricultural production, and also constrained the development of the international trade that would otherwise facilitate socio-economic development, reduce poverty and enhance overall regional integration. 4.3.3 The roads are considered by the Government of Ghana to be critical international roads that need immediate attention in order to reduce poverty especially in the Eastern Region, which is one of the poorest regions in the countries. Consequently, the roads have been included in the current Road Sub-sector Development Program. The project, as designed, will facilitate regional integration activities as well as access to social services and markets. The proposed project is in line with the Bank Group Policy on Regional Economic Integration as articulated in its Vision, and bilateral agreement between the Bank and the ECOWAS, as well as Bank Strategies for Ghana for the period 2002-2004, which has placed the rehabilitation and upgrading of the infrastructure, especially roads, as a priority under the basic funding scenario.

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4.4 Objectives Sector Goal The current goal set by the transport sector is to provide an integrated, well managed, viable and sustainable transport infrastructure and services meeting national poverty reduction and regional integration goals. Project Objectives The objectives of the project are to: (i) reduce the travel time and vehicle operating cost, resulting in reduced road user costs for both passengers, freight and improved road safety between Nsawam and Apedwa; (ii) determine the technical feasibility, economic viability, the environmental and social Impacts and prepare detailed engineering designs, cost estimates and Tender Documents for the Agona Junction to Elubo Road. 4.5 Descriptions The project will consist of the following components: A. ROAD WORKS

I. Civil Works

A rehabilitated 41-Km Nsawam-Apedwa Road, including a newly constructed 10.3 km bypass to the east of Nsawam Business District. The pavement typical cross-sections would be: 7.3 m carriageway, with 2.5 m shoulders on each side. The structure would consist of a 200 mm natural gravel Sub-base, 150mm Crushed stone base, and 80 mm dense bitumen base course, with the binding course of 60 mm Asphalt that extends as shoulders on both sides, and Wearing Course of 40 mm Asphalt. In addition to borrow pits currently being used by the GHA for maintenance whose material were tested as suitable, nine new borrow pits were investigated yielding California Bearing Ratios (CBR) ranging from 10% to 120% at 95% compaction. The road will have a design life of 20-years with designed speeds of 100-km/hr for the highway and 50-km/hr for the built-up areas (Towns and Villages). The project design was obtained using the Transportation Road Research Laboratory (TRRL) Road Note # 31 (4th Edition) the Ghana Highway Authority Pavement Design Manual (1998), and the Republic of Ghana, Ministry of Roads and Highways Standard Specifications for Road and Bridge Works and using the World Bank’s Highway Design and Maintenance Standard Model (HDM). The road works shall include earthworks, construction of a by-pass that includes two single span reinforced concrete bridges of 7.5 and 15 meters and a 100 meter multi-span reinforced concrete bridge, installation of new pipe culverts as well as repairs and extension of culverts. The normal practice of designing major culverts to accommodate a 1 in 25 year storm and bridges for a 1 in 50 tear storm was adopted. The works would also include pavement works, road safety features and miscellaneous works.

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II. Consultancy Services for Works

A consulting engineering firm will undertake the supervision of the works throughout the implementation period of the project on behalf of the Executing Agency. The consultants will monitor the project and ensure that the contractor conforms to the specifications. The consultants’ responsibility will also include evaluation of tenders, measurement of works, the preparation of progress reports, certification of payment invoices, authorization of completion certificates, and preparation of project completion report at the end of the project. The consultant will be required to satisfy himself with the authenticity of the design through a design review that should include a road safety audit prior to implementation. As part of its responsibility, the consultant should provide an expert who would conduct HIV/AIDS Awareness Workshops for the consultant and contractor’s teams as well as the population within the project area.

B. STUDY I. Consultancy Services for Study

The Study will be conducted on the Agona Junction- Elubo in the following two stages and in line with the terms of reference summarized in Annex 6:

Stage I: Feasibility Study, Environmental Impact Assessment Study and

Impact on Poverty Reduction and Gender Study;

Stage II: Detailed Engineering Designs, Cost Estimates and Preparation of Tender Documents for the approved alternative.

C. MANAGEMENT AND COORDINATION

I Administration

The project management and coordination will involve the provision of policy guidance to the consultants and contractors, project monitoring and review, preparation of periodic Government reports on the project, liaison amongst Government road sub-sector agencies and other Government ministries and development partners etc. Government’s counterpart contribution to the project, therefore, includes the provision of these management, support and coordination services. II. Audit Services

An external auditing firm will perform the financial and technical audit on the

Road Works and Study Components annually to ensure that the components of the project are implemented in accordance with the provisions of the loan and grant Agreements.

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4.6 Environmental Impacts 4.6.1 The Government of Ghana has developed Environmental Policies, and Legal and Administrative Frameworks, which ensure the improvement and management of a high quality of life that guarantees a sustainable management of the country’s environmental resources namely forests, wildlife, soils, water bodies, minerals, etc. The Environmental Protection Agency (EPA) of Ghana, under the Ministry of Environmental Sciences and Technology, ensures the implementation of environmental policies and co-ordination of environmental activities. There also exists the Ghana Environmental Action Plan (GEAP), prepared in 1988 to articulate government’s policies and provide the framework for interventions needed to protect the environment. There are also guidelines for the preparation of Environmental Impact Assessment (EIA) Reports, Environmental and Social Management Plan (ESMP) and Environmental Impact Statements (EISs). The preparation of such reports before major development projects such as mining enterprises, road development, housing and urban development, industrial activities such as cement works, oil refineries fertilizer plants, agricultural schemes, etc. are pre-requisites before project implementation. 4.6.2 In accordance with the Bank's classification of projects, the project is classified as Category II. There are several positive and minor negative aspects expected to be associated with the road works. Mitigating measures have been included into the design of the road works. These measures include (i) relocation or replacement of public utilities such as electricity, water and telephone lines, (ii) rehabilitation or regrassing of exposed soils and burrow pits, (iii) provision of overhead pedestrian crossings, where necessary, etc. For details see Annex 3. Positive Social and Economic Aspects 4.6.3 The upgrading and rehabilitation of the Nsawam Apedwa Road will have a series of positive aspects on the overall economy of the country due to inter-alia the easier flow of traffic and shorter travel times. This will result in fuel use savings and a decline in vehicle depreciation and overall maintenance costs. The improved road will enable the people in the area of influence to be exposed to the growing modern sector of the economy; speed up the rate of urbanization; make conspicuous the social needs of the rural population which is expected to increase as a result of the program; provide increased employment; ready markets to women caterers as a result of the road construction over the construction period; enhancement of the general landscape of the project area after construction of the by-pass and the rehabilitation phase; and the improvement of the overall quality of life in the area. The Nsawam Apedwa Road forms part of the Trans-West-Africa Trunk Road regional network that will carry heavier traffic across the borders to Ghana’s neighbouring countries and facilitate regional trade and economic integration. The project will provide a better road that will divert the heavy truck traffic away from the built up town at Nsawam, thereby improving safety. In recognition of the vulnerability of transport operators, especially truck drivers, as both vectors and victims, during the implementation of the project, sensitization campaigns and workshops will be held for the project staff and the local population on HIV/AIDS with funding from the project.

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Negative Social and Physical Aspects 4.6.4 Some social and physical negative aspects are expected to be associated with the road works during the implementation phase. The social aspects include rapid urbanization, which could result in inadequate sanitary facilities; inadequate housing; and potable water. 4.6.5 The physical aspects include, general environmental degradation; and loss of cropland as a result of the Nsawam by-pass (P2), the removal of top soil and vegetation as well as excavation; noise, dust, as well as vibration during construction; accumulation of pools of standing water which could act as breeding sites for mosquitoes, transmitting malaria to people in search of jobs. The potential negative effects of the road works may arise from un-reclaimed borrow pits, slope erosion, water pollution by surface wash, dust pollution, disruption of utility services, and silting. Mitigation Measures 4.6.6 The proposed mitigation measures (see Annex 3) to alleviate the adverse physical and social aspects associated with the road works include the following:

a. the construction of overhead pedestrian crossings and under passes in major town centers where the road passes. This should be accompanied by appropriate public education on the use of such facilities before the completion of the project;

b. all utility lines (water, electricity, and telephone) disrupted in some of the

settlements during construction would be re-installed;

c. it has been recommended that loose topsoil, which may eventually pollute water bodies, be scrapped off from the land and used to fill open burrow pits. The pits should then be re-vegetated to avoid erosion.

d. road shoulders should be well vegetated so as to avoid excessive erosion and

subsidence of pavement;

e. during construction, road surfaces should be watered to reduce dust levels;

f. institute measures to control the incidence of surface water pollution especially where newly constructed drains are likely to be used as waste receptacles. This may be avoided by the construction of closed drainage systems; and measures must be taken to mitigate the occurrence of onchocerciases, malaria, bilharzia and guinea worm, which are common within the area between Achimota and Anyinam.

4.6.7 The requisite mitigation measures have been incorporated into the design of the road works to reduce or alleviate any potential negative aspects associated with the project. They will include full rehabilitation of borrow pits, land and contractor’s camp. The cost for enhancement measures and compensation value for the reclamation of burrow pits and payment for land on which burrow pits have been dug has been incorporated in the road works’ construction cost. During construction, slopes, which may experience erosion, will be stabilized. The road will be watered daily, to reduce dust pollution. During construction, utility services, which will be

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disrupted, will be re-instated as rapidly as possible. Those institutions and areas affected will be sufficiently notified, access roads and detours will be improved and provided where necessary, bridges, and culverts re-installed, and pedestrian walk ways and guard rails installed. Maximum safety features will be installed, including reflectors, stop signs, and speed bumpers. Road traffic police patrol will also be put into place, during construction so as to reduce vehicular and human accidents.

Environmental and Social Management Plan 4.6.8 The Environmental and Social Management Plan for the Nsawam-Apedwa will be prepared to ensure that a framework exists for the implementation of the mitigating measures through the incorporation of suitable clauses in the construction contract documents. This will allow for control of contractors' activities, which may result into adverse impacts. This plan will also allow for rigid enforcement of contract clauses if they are to be effective. To this effect, the contractors will provide bonds and guarantees. This will obligate the contractor to implement the recommended mitigating measures and if necessary propose additional mitigating measures to offset all negative aspects associated with the project. The contractor shall also be responsible for familiarizing himself with all national and provincial legislations relating to environmental protection relevant to his activities. The submission of the ESMP shall be a loan condition. Consultation with Stakeholders 4.6.9 Some of the stakeholders along the routes who would be affected negatively or positively by the program were consulted by the consultants who carried out the Studies and the appraisal mission as regards the impact of the program on their activities. Those consulted included managers of petrol stations, bread sellers, drivers, mechanics/fitters/vulcanizers, street food sellers, cemetery workers, ASTEK managers, kiosk managers, hunters, farmers and market women. The majority of the stakeholders who were consulted indicated that the project was good and necessary to improve transportation links in the country. Consultations will continue during the implementation of the project. 4.7 Social Impact 4.7.1 In order to augment these consultations, during the implementation of the project, the Government and the Consultants will periodically discuss the program objectives and implementation with the stakeholders with a view to ensuring their fullest participation in the project. In this regard, the initial consultations will take place as soon as the Consultants have been engaged. The subsequent consultations will be conducted periodically, especially with a view to explaining to various stakeholders the importance of looking after the infrastructure, especially drainage and safety facilities. The Government and the Consultants will, on a continuous basis, during the life of the project implementation, hold sensitization discussions with communities within the project area on the impacts and prevention of malaria and HIV/AIDS. The consultations will also enable stakeholders to discuss ways and actions required to optimize use of the various road safety measures and facilities that will be installed during the project implementation.

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4.7.2 The roads in their current state retard accessibility to socio-economic activities such as schools, hospitals, and markets. The implication is that people residing within the project road area of influence experience lower life styles in terms of literacy levels, health status, and economic and financial standing. It is also posing constraints on the smooth flow of international traffic, thereby reducing the magnitude of regional trade. The improved roads will enhance the socio-economic standing of the people residing within the area of influence through increased agricultural production, improved access to educational facilities and better deliveries of medicine and health services. With reduced travel time and effort due to improved roads, both men and women will have extra time to focus on family and social issues and responsibilities, thereby fostering social cohesion. Gender Impact 4.7.3 The rehabilitation and reconstruction of the Nsawam-Apedwa road will offer the people within its area of influence with more trade opportunities. This will be more pronounced for nearly 420 women who sell along the roadside, confectionary and agricultural produce such as watermelon, maize and vegetables. During construction, the labor force will constitute an additional market for the agricultural produce and confectionary that are mainly sold by women. After the completion of the construction work, with increased traffic, more customers will avail themselves of the abundant agricultural produce being sold along the road. The road will also improve women's access to social services such as health centers, hospitals, etc, particularly where bypasses will be constructed. Delivery of agricultural inputs, educational learning material, and health services will be improved to a greater benefit for the women, girls and children. Poverty Reduction 4.7.4 The Government’s development goal is to reduce poverty through increased economic growth, largely in the agricultural sector, and through improving access to social services, particularly in the rural areas. This would partly be achieved through improved road infrastructure, reduction in transport cost and travel time. Consequently, the project will support the Government in its efforts to attain its objectives and goal in a number of ways. Firstly, by reducing vehicle operating costs through maintenance, rehabilitation and reconstruction of the project roads. With reduced operating costs, lower tariffs due to competition among transport operators would be offered to the users thus improving access to markets. Secondly it will offer employment not only to some of the more than 150,000 local people residing in towns and villages within the area of influence, but also the local consultants and contractors who may be involved in the project. Thirdly, once the roads are improved, local traders, including women will have more customers for their local agricultural produce for sale, i.e. vegetables, cassava, bananas, yams etc, some of which are exported. This will therefore contribute to the governments’ overall goal of economic recovery and poverty reduction.

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4.8 Project Costs 4.8.1 The total project cost, net of customs duties and taxes, has been estimated at UA 25.55 million including UA 20.31 million in foreign exchange and UA 5.24 million in local cost. The supervision cost is derived by applying 6% to the cost of physical works. The total estimated cost includes a 10% physical contingency and a price escalation of 3% per annum. The cost was calculated from quantities and unit prices prepared by the consultants, along with prices from ongoing and recently completed activities and those provided by the Ghana Highway Authority. A summary cost estimate of the project is shown in Table 4.1 below. A provisional list of goods and services and the detailed cost of the project are given in Annexes 4 and 7.

Table 4.1

Summary of Project Cost Estimates by Component US$ Million UA Million

COMPONENTS FE LC TT FE LC TT %F.E.

A. ROAD WORKS a) Civil Works 21.93 5.14 27.07 15.84 3.72 19.56 78 b) Works Consultancy Services 1.32 0.20 1.52 0.95 0.15 1.10 5B. STUDY a) Study Consultancy Services 0.69 0.46 1.15 0.50 0.33 0.83 2 b) Project Audit 0.05 - 0.05 0.04 - 0.04C. MANAGEMENT AND COORDINATION a) Project Administration - 0.22 0.22 - 0.16 0.16Base Cost Sub-Total 23.99 6.03 30.02 17.33 4.36 21.69 85Physical Contingency 2.40 0.60 3.00 1.73 0.44 2.17 9Price Contingency 1.71 0.62 2.33 1.25 0. 44 1.69 6Contingency Sub-Total 4.11 1.22 5.33 2.98 0.88 3.86 15TOTAL COST 28.10 7.25 35.35 20.31 5.24 25.55 100 4.8.2 The summary of costs by expenditure category for the project is shown below in Table.4.2

Table 4.2 Summary of Project Costs by Expenditure Category

US$ Million UA Million

Categories F. E. L. C. TOTAL F. E. L. C. TOTAL %F.E A. CIVIL WORKS 25.81 6.29 32.10 18.65 4.55 23.20 92B. CONSULTANCY SERVICES Works Consultancy Services 1.55 0.28 1.83 1.12 0.20 1.32 6Study Consultancy Services 0.69 0.46 1.15 0.50 0.33 0.83 2Project Audit Consultancy Services 0.05 - 0.05 0.04 - 0.04Sub-Total Consultancy Services 2.29 0.74 3.03 1.66 0.53 2.19 8C. Miscellaneous Project Support Services - 0.22 0.22 - 0.16 0.16TOTAL COST 28.10 7.25 35.35 20.31 5.24 25.55 100

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4.9 Source of Financing and Expenditure Schedule 4.9.1 The ADF, NTF, OPEC Fund and the Government of Ghana will finance the project. The ADF loan contribution to the road works should be UA 18.00 million (70%). This amount should be used to finance 100 percent and 90% of the foreign cost of road works consultancy services and civil works, respectively. The NTF will contribute UA 3.00 million (12.9%) towards the road works. This should constitute 23% of the local cost as well as 10.5% of the foreign cost of civil works. The OPEC Fund shall contribute UA 1.50 million (6.5%) of the road works cost. The total amount would be utilized towards 33% of the civil works local cost. The Government of Ghana shall contribute UA 2.02 million (8.7%) of the road works cost. This amounts to UA 2.02 (44%) of the civil works local cost. The amount will also be used to finance the administration and coordination costs of the road works (UA 0.07 million). The contribution of the Government is 10.4%. This satisfies the ADF IX Lending Policy requirement that the Government’s contribution to the project should be at least 10% of the total cost to be financed by the Government and the ADF. It is proposed that the ADF and the Government of Ghana would jointly finance the study at UA 0.93 million with UA 0.500 million in foreign exchange and UA 0.43 million in local cost. The project’s total audit estimated cost of UA 0.04 million would be financed within the IDA program under the Government’s Road Sector Development Program. It is estimated that UA0.03 million and UA0.01 million would be used to audit the road works and the study, respectively. 4.9.2 The ADF Grant contribution would be UA 0.80 million or 90 % of the total cost of the Study. The ADF amount will contribute towards 100% of the foreign exchange and 70 % of the local cost of the study. The cost would be used to cover remuneration of Consultant’s staff, transportation (both international and domestic), administration, logistic and surveys. The Government’s contribution of UA 0.13 million, which is 14 % of the study cost, will be used to finance administration and coordination costs of the study. Table 4.3 below shows the financing plan for the Project.

Table 4.3 Project Sources of Finance

UA MILLION

SOURCE F. E. L. C TOTAL % of Total

ADF Loan 17. 80 0.20 18. 00 70.0ADF Grant 0.50 0.30 0.80 3.2NTF 1. 97 1.03 3.00 12.1OPEC FUND - 1. 50 1. 50 5.9IDA 0.04 - 0.04 0.16GOG 2. 21 2 .21 8.2TOTAL 20.31 5.24 25.55 100

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4.9.2 Table 4.4 below shows the project categories of expenditure by source of financing.

Table 4.4 Project Category of Expenditure by Source of Financing (UA Million)

ADF ADF

GRANT NTF OPEC FUND

IDA

GOG TOTAL

F. C L. C F. C L.C F. C L. C F. C L. C F. C L. C F. C L. CSource/Category

CIVIL WORKS 16.68 0.00 1.97 1.03 0.0 1.50 2.02 23.20WORKS CONSULTING SERVICES 1.12 0.20 0.06 1.38

STUDY CONSULTING SERVICES 0.50 0.30 0.03 0.83STUDY ADMINISTRATION 0.10 0.10PROJECT AUDIT 0.04 0.04TOTAL 17.80 0.20 0.50 0.30 1.97 1.03 0.0 1.50 0.04 2.21 25.55 4.9.3 A projection of expenditure by category for the project is presented in table 4.5 below.

Table 4.5

Project Expenditure Schedule by Category (UA Million) CATEGORY 2 004 2 005 2 006 2 007 2008 TOTALCIVIL WORKS 0.00 7.24 10.13 4. 67 1. 16 23.20PROJECT CONSULTING SERVICES 0.14 0.39 0.44 0.23 0.06 1. 32STUDY CONSULTING SERVICES 0.37 0.52 0.83PROJECT ADMINISTRATION 0.02 0.04 0.05 0.03 0.02 0.16PROJECT AUDIT 0.01 0.01 0.01 0.01 0.04TOTAL 0.53 8.20 10.63 4.94 1.25 25 .55 4.9.4 A projection of expenditure by source for the project is presented in Table 4.6 below.

Table 4.6 The Project Expenditure Schedule by Source of Financing

(UA million) Source 2 004 2 005 2 006 2 007 2008 TOTAL ADF LOAN 0.12 5. 59 7.78 3. 64 0.87 18.00ADF GRANT 0.31 0.49 0.80NTF LOAN 0.02 0.94 1.31 0.59 0.14 3.00OPEC FUND 0.47 0.65 0.30 0.08 1.50IDA 0.01 0.01 0.01 0.01 0.04GOG 0.08 0.70 0.88 0.40 0.15 2.21TOTAL 0.53 8.20 10.63 4.94 1.25 25.55

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5. PROJECT IMPLEMENTATION 5.1 Executing Agency The Ghana Highway Authority will be the executing agency for the project. The GHA was originally established in 1974 as the organization responsible for the development and administration of the whole road network in the country. Since the re-enactment of GHA in December 1997, its main role has been the overall planning, design construction, construction supervision, and maintenance of all trunk roads as well as preparation of short and long-term plans for trunk roads construction and maintenance. 5.2 Institutional Arrangement 5.2.1 The Development Department within the GHA is responsible for the planning and implementation of all trunk road programs. It has the capacity and experience acquired during the implementation of on-going Bank financed projects and training to over-see the implementation of the program. The Director of Contracts and the Director of Planning, heading the Contracts and Planning Divisions of this Department, will be the officers directly responsible for the project implementation. The road works and study components would each have a Coordinator, who will be based at GHA, to assist their Directors. The Directors would be further assisted by one Counterpart Engineer (CE), each for the road works and the study, designated from the staff of GHA. The CEs will be stationed on the field. The Coordinators should have obtained a degree in civil engineering with specialisation in highway/urban transport engineering. They should also have at least 10 years experience in planning, design, construction, maintenance of roads/highways and urban infrastructures. The Counterpart Engineers should hold at least an undergraduate degree in civil engineering (BSc. or Equivalent) and have at least 2 years of work experience in transport/highways engineering. The Bank should approve the Curriculum Vitae of the Coordinators and Counterpart Engineers. The profiles of counterpart officers are presented in the PID. The designation of the coordinators and the counterpart engineers will be a loan condition. 5.2.2 Supervision of the road works will be strengthened by the commissioning of a consulting engineering firm, which will provide the necessary staff to supervise the daily performance of the contractor, the daily inspection and certification of works, contractor’s monthly payment certification, and preparation of progress reports on the works. In addition, the firm will provide technical and professional advice to the GHA during evaluation of tenders and the award of the construction contract. Also, as a loan condition, the Consulting firm in conjunction with the Ghana Environmental Protection Agency and the GHA Division of Safety and Environment will monitor the implementation of the environment mitigating measures. Likewise, an experienced consulting engineering firm will carry out the Study.

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5.3 Implementation Schedule 5.3.1 The road works consulting services period would be divided into the following three phases: (i) the design review and tender (6 months), (ii) supervision (30 months) and (iii) defect liability phases (3 months). Each phase would require different level of staffing. The phases would span over an estimated period of fifty-one (51) months. The contractor’s works should begin in July 2005 and end in December 2007, followed by a twelve-months (12 months) defect liability period ending December 2008. It is envisaged that the study would be carried out in 17 calendar months. Table 5.1 below is the proposed implementation plans for the project and the study, which are also represented graphically in Annex 5.

Table 5.1 Proposed Project Implementation Plan

Activity Action/Agency Timing Loan Processing Approval of Loan and Grant ADF September 2003 GPN Prepared/Issued GOG/ADF November 2003 Schedule of Supervision Consultancy Services RFP Submitted/Approved GOG/ADF December 2003 RFP Issued GOG January 2004 Proposal Received GOG March 2004 Evaluation Submitted/Approved GOG/ADF May 2004 Consultant Negotiations GOG/Consultants May 2004 Draft Contract Submitted/Approved GOG/ADF June 2004 Contract Signed GOG/Consultants July 2004 Consultancy Services Supervision Commenced GOG/Consultant August 2004 Consultancy Services Supervision Completed GOG/Consultant/ADF December 2008 Schedule of Civil Works SPN/Pre-qualification Issued GOG/ADF December 2003 Pre-qualification Received GOG February 2004 Pre-qualification Report Submitted/Approved GOG/ADF April 2004 Tender Issued GOG December 2004 Tender Received GOG February 2005 Tender Evaluation Submitted/Approved GOG/ADF April 2005 Contract Negotiations GOG/Contractor May 2005 Draft Contract Approved ADF June 2005 Contract Signed GOG/Contractor June 2005 Civil Works Commenced GOG/Contractor July 2005 Civil Works Completed GOG/Contractor December 2007 Defect Liability Period Ends GOG/Contractor/ADF November 2008 Schedule of Study Consultancy Services RFP Submitted/Approved GOG/ADF December 2003 RFP Issued GOG January 2004 Proposal Received GOG March 2004 Evaluation Submitted/Approved GOG/ADF May 2004 Consultant Negotiations GOG/Consultants May 2004 Draft Contract Submitted/Approved GOG/ADF June 2004 Contract Signed GOG/Consultants July 2004 Consultancy Services Study Commenced GOG/Consultant August 2004

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Table 5.1 (cont’d) Proposed Project Implementation Plan

Stage I First Workshop GOG/Stakeholders/Consultant September 2004 Inception Report GOG/Consultant/ADF October 2004 Interim Report GOG/Consultant November 2004 Draft Final Report (Feasibility Study) GOG/Consultant/ADF December 2004 Second Workshop GOG/Stakeholders/Consultant January 2005 Comments and Approval GSL/ADF February 2005 Final Report (Feasibility Study) GOG/Consultant/ADF March 2005 Stage II Start Detailed Engineering Design GOG/Consultant April 2005 Progress Report (monthly thereafter) GOG/Consultant May 2005 Draft Final Report (Detailed Design) GOG/Consultant/ADF July 2005 Comments and Approval GSL/ADF August 2005 Final Report (Detailed Design) GOG/Consultant/ADF October 2005 Consultancy Services Study Completed GOG/Consultant/ADF November 2005

5.4 Procurement Arrangements 5.4.1 All procurement of goods, works and acquisition of consulting services financed by the Bank will be in Accordance with the Bank’s “Rules of Procedure for Procurement of Good and Works” or, as appropriate, “Rules of Procedure for the Use of Consultants”, using the relevant Bank Standard Bidding Documents (SBD). The procurement of Audit Services will follow IDA procedures. Procurement arrangements are summarized in Table 5.2 below.

Table 5.2

Summary of Procurement Arrangements (UA million)

Project Categories ICB Other* Short List Non-Bank

Funded Total

1. Civil Works (19.68)

23.20 (19.68)

23.202. Consulting Services Supervision (1.32) 1.32 (1.32) 1.323. Consulting Services Study (0.80) 0.93 (0.80) 0.934. Project Administration 0.06 0.065. Project Audit 0.04 0.04

Total (19.68)

23.20 0.06 (2.12) 2.25 0.04 (21.80)

25.55*Government’s Procurement Rules; ( ) ADF/ NTF Contribution Civil Works 5.4.2 Procurement of civil works amounting to UA 23.20 million will be carried out under one construction contract using International Competitive Bidding (ICB) procedure, with pre-qualification of contractors, in accordance with the Bank Group “Rules Of Procedure For Procurement Of Goods And Works”.

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Consulting Services 5.4.3 Procurement of consulting services for Supervision and the Study amounting to UA 1.32 million and UA 0.83 million respectively, will be undertaken on the basis of short lists of qualified consultants. The selection process will be based on Combining Technical Quality with Price Consideration procedure in accordance with the Bank Group “Rules Of Procedure For The Use Of Consultants”. 5.4.4 An external auditing firm, which has been recruited under the Road Sector Development Program and financed by the World Bank, will perform annual financial auditing of the road works and the study. National Procurement Regulations And Executing Agency 5.4.5 The Ghana national procurement laws and regulations have been reviewed and determined to be acceptable. The Executing Agency, the Ghana Highway Authority, will be responsible for the procurement of works and acquisition of consultancy services. The GHA has adequate resources, capacity, expertise and experience to carry out the procurement. General Procurement Notice And Review Procedures 5.4.6 The text of the General Procurement Notices (GPN) has been agreed upon with the Government and will be issued for publication in the United Nations Development Business Journal upon approval of the proposed loan by the ADF Board of Director. 5.4.7 The following documents are subject to review and approval by the Bank before promulgation: (i) Specific Procurement/Pre-qualification Notices (SPN); (ii) Requests for Proposals; (iii) Tender evaluation reports, including evaluation of consultant’s proposal, post-qualification analysis, and recommendations for contract award, and (iv) Draft Contracts and Minutes of Contract Negotiations, if these have been amended from the drafts included in the tender invitation documents. 5.5 Disbursement Arrangements Disbursement on the project and the study will be by Direct Payment in accordance with section 7.4 of the Bank’s Disbursement Handbook. The Executing Agency will prepare disbursement applications and retain all disbursement records in the manner prescribed in the Bank’s Disbursement Handbook. 5.6 Monitoring and Evaluation 5.6.1 The Consultant supervision team will be responsible for the daily supervision of the road works during implementation. However, the Director of the Contracts Division in the GHA Development Department will be the officer directly responsible for the program monitoring and evaluation. A counterpart to the consultant’s resident engineer, designated from the GHA staff, who will be stationed in the field, will assist him. As for the Study, a counterpart engineer will be appointed to work with the Study consulting engineers. In addition to the presence of counterpart resident engineers in the field, the GHA Project Coordinator will actively participate in site meetings and ensure that monthly and quarterly progress reports are prepared and forwarded to the Fund in time. Additionally the Bank will

25

field a launching mission prior to the commencement of the procurement process, and subsequently, its own project supervision missions at least two times annually after the physical implementation of works begin. 5.6.2 The implementation of the environmental mitigating measures will be performed by the contractor during the construction period and would be monitored by GHA and the Ghana Environmental Protection Agency (GEPA) based on the GOG established guidelines and procedures. The GEPA is well staffed, and has established regional offices within the country. 5.6.3 An Environmental and Social Management Plan will be prepared by the Government, indicating those who will be responsible to monitor and ensure that all the mitigating measures proposed to alleviate the predicated negative effects are fully implemented during the various stages of the project. The preparation and submission of the ESMP shall be a loan condition. 5.6.4 Post-construction monitoring by the Government and the supervising consultant has been recommended so as to ensure that the mitigation aspects, which have been included in the design of the project such as the rehabilitation of borrow pits, institution of safety instruments, inspection of drainage systems, pedestrian crossings, re-vegetation, etc., have been undertaken. 5.7 Financial Reporting and Auditing 5.7.1 The project accounts will be kept by the Executing Agency through the division tasked with administrative and financial management. An external auditing firm, recruited under the Road Sector Development Program and financed by the World Bank, will perform annual financial auditing of the project. The Government has agreed that the financial reporting and auditing will be conducted in accordance with the Bank’s Guidelines For Financial Reporting and Auditing of Projects. 5.7.2 The Executing Agency and the Consultants are required to prepare and submit to the Bank, monthly and quarterly progress reports for the project. The quarterly reports would be prepared in accordance with the Bank’s format. The supervising consulting engineering will prepare a detailed project final report covering both the technical and financial aspects of the road works. In accordance with the Fund’s rules, the Borrower will prepare a Project Completion Report (PCR) within three months of completion of the project. Subsequently, the Fund will prepare its PCR according to the established format. The Fund’s PCR will form the basis for performing post evaluation of the project. 5.8 Donor Co-ordination 5.8.1 Collaboration among donors is strong and a good working relationship exists between donors and the Government. Coordination mechanisms include Consultative Group (CG) meetings held every two years, Quarterly Mini CGs chaired by the Government, and Sector Investment Programmes (SIPs) which allow donors to collectively agree on the acceptability of the Government of Ghana policies in addition to fostering strong donor collaboration. There is also an ongoing Multi-donor Budget Support Programme aimed at assisting the Government implement its Poverty reduction Strategy. All these coordination efforts have helped to improve understanding among the donor community and the Bank has been actively represented at the meetings.

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5.8.2 The Government of Ghana continues to benefit from the support of the donor community with its development programs. The donor agencies have particularly supported the Government’s Transport Sector Programs, with special emphasis on the Road Sub-sector. Donors, including the World Bank, KFW, the EU, DFID, and the ADB, etc, actively participated in the formulation of the country’s 1996-2000 Road Sector Expenditure Program and have effectively participated in formulating the 2001-2003 and 2003-2007 Road Sector Development Programs. The Nsawam-Apedwa road works and the Agona Junction-Elubo Road Study fall within the Government’s current road sector investment program. During the appraisal mission to Ghana, the mission held discussions with major multinational financing institutions, all of which were supportive of the project. 5.8.3 In Ghana, donors’ coordination in the Transport Sector, is handled on a daily basis by the Donor’s Coordination Office in the Ministry of Roads and Transport. Monthly in-country donors’ meetings, for which the ADB receives minutes and participates if the meeting coincides with a transport sector mission to Ghana, supplement the coordination’s office. In addition, all donors that are currently active in the road sub-sector participate in an Annual Highway Sector Donor’s Conference hosted by the Ministry of Roads and Highways. During the conference, the Donor Community and the Government jointly review the implementation of the various projects and programs or interventions in the previous year and develop the work program for the following year, with donors selecting their projects from the approved development program. The Bank has actively been participating in these annual meetings and has consistently selected its projects from the agreed road sector development programs for funding. The Bank will continue to liaise with other donors active in the transport sector in Ghana with a view to harmonizing the implementation of the transport sector programs in the country. 6. PROJECT SUSTAINABILITY AND RISKS 6.1 Recurrent Cost The recurrent maintenance activities, which are in conformity with the Government’s maintenance policies, comprise routine and periodic maintenance. During the construction and guarantee periods, recurrent cost for maintaining the project road will form part of the road works cost. However, after the contractor defect liability period, the cost becomes the responsibilities of the Government. These maintenance activities are financed mainly through the Road Fund. It is estimated that after the completion of the road works, and with adequate axle load control, routine maintenance will require US$ 0.03 million annually. The periodic maintenance will cost US $0.92 million every five years, which would contribute to the sustainability of the rehabilitated road and the optimization of road user benefits. 6.2 Project Sustainability 6.2.1 The Ghana Highway Authority has both the technical and human resources to adequately maintain the rehabilitated road if financial resources are available. In the implementation of the current road sector development program, the Road Fund as well as external donors finance routine and periodic maintenance. Prior to the restructuring of the GRF in 1997, the collections amounted to USD 36.2 million in 1996, which was 35 percent of the USD 102.5 million required as the Fund’s contribution to the road maintenance expenditure. In the year 2002, the Fund collected an amount of USD 52.67 million, amounting to 44.63 percent of the USD 118 million required as the Fund’s contribution to the road maintenance expenditure. The Road Fund has so far been properly and efficiently used for road

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maintenance. It is envisaged that the collection and proper use of these funds will be maintained during and after the project. In addition to the GRF, the Government is currently developing the national road-tolling program to enhance the collection of funds for road maintenance. 6.2.2 The fuel levy, which contributes 91 % of the Fund’s revenue, effectively decreased from USD 0.04 per liter in 1996 to USD 0.03 per liter in the year 2002 due to non increments in fuel prices and inflation. The Government has since increased the fuel price to an equivalent of USD 0.05 per litre. In Cedis terms and over the same period, there has been an increase from 68.78 cedis in 1996 to 209.99 cedis in 2002. The Cedis equivalent for 2003 is 427.68 cedis. The current Government policy is to continue the annual increase in the fuel levy for the Fund until the required funding for maintenance is met. Meanwhile, the Government is reviewing its policy on fuel pricing and other road user fees, which would clearly state how and when the current target of 9.5 cents per litre would be attained. Table 6.1 below shows the annual increments in the fuel price.

Table 6.1

Road Fund Annual Increments and Accruals

PROJECTIONS ACTUAL YEARLY INCREMENT and ACCRUALS

ACTUAL MTCE. DONE

YEARLY MTCE. PROG.

YEAR

Increment US ¢

Revenue US $ m

Planned Mtce. Exp. US$ mi

Cedis Equiv.

Eqv. US Cents

Revenue Eqv. US $m

US$m US $ m

1996 4.0 46 78 68.78 4.0 38.68 21.60 102.5 1997 5.0 60 107 96.60 5.0 54.52 41.95 118.0 1998 6.0 74 120 161.74 7.0 81.83 81.18 138.7 1999 7.0 90 129 145.08 5.2 79.35 78.06 138.1 2000 8.0 106 127 165.12 2.9 47.60 62.68 118.0 2001 9.0 124 130 237.34 3.3 50.65 43.50 130.0 2002 9.5 136 134 209.99 3.0 51.29 52.67 134.0 2003 9.5 136 136 427.68 5.0 136.0 2004 9.5 136 136 9.5* 136.0

*Current target. Source: Ghana: Road Sector Development Programme, 2002 Review Report

6.3 Critical Risks and Mitigating Measures 6.3.1 The realization of the project objectives depends on the assumption that the Government’s contribution to the project will be met on time. The Government of Ghana counterpart funding is considered critical and should its availability on a regular basis become unattainable, the project will experience delays in its implementation, which would negatively impact on the overall project benefits. 6.3.2 In order to secure the Government contribution to the project, the GOG will be required to open an account with a Commercial Bank where each year the GOG contribution required within the framework of the project to finance the year’s work will be deposited. The minimum initial deposit should cover the Government’s contribution towards the Contractor’s advanced payment, which is currently set at 15% of the accepted contract value. Thereafter the quarterly budgetary allotment for the project will be deposited into the account at the beginning of each quarter. This account will be under the control of GHA. The opening of the special account and undertaking to deposit Government’s contribution will be a loan condition.

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6.3.3 Another risk could come from Government’s inability to timely undertake both routine and periodic maintenance of the rehabilitated road after completion of the project. This risk will be mitigated by Government’s regular adjustments in the fuel levy and other road user fees and then using the funds for maintenance. 7. PROJECT BENEFITS 7.1 Economic Analysis 7.1.1 The standard methodology of cost-benefits analysis has been used to compare situations with and without the project over a 20-year period, covering the useful life of the project road. The main assumption is that maintenance works, which will largely be funded from the Road Fund, will sustain the projected level of service of the road. In as far as possible, the HDM-IV was used in the analysis in order to analyze the available data, such as traffic volume and composition (see Annex 8), traffic flows, speed etc. It is estimated that the AADT on the project road by end of 2002 was nearly 5,971 of which 34% are cars, 10% are buses and 19% are trucks and truck trailers. It is projected that traffic will grow at an average annual growth rate of 5% due to increased socio-economic activities. The Economic Internal Rate of Return (EIRR) was the criterion used to assess the project viability. The calculation of the EIRR was based on the estimated levels of traffic and its development, road maintenance costs, economic costs of investment, and the vehicle operating costs on the entire road. A minimum Economic Internal Rate of Return of 12%, which is the current opportunity cost of capital in Ghana, was selected as a condition of eligibility for the project. 7.1.2 The project economic costs that have been included in the evaluation are estimated at 35.35 million US Dollars. They comprise the construction costs, supervision costs, audit, maintenance costs, and those related to the implementation of the environmental mitigating measures. A 10 per cent physical contingency has also been included. The costs related to the price escalations have been excluded. These costs have been estimated at March 2003 exchange rates. 7.1.3 The economic benefits that have been considered are reductions in vehicle operating costs and avoided maintenance costs. Both the Government and the consultants who carried out the studies provided the data and the unit costs. 7.1.4 On the basis of the costs and benefits that have been estimated over the 20-year economic life of the rehabilitated road, the project will yield an Economic Internal Rate of Return of 22.1%. This rate is considered satisfactory to warrant financing the project. 7.2 Social Impact Analysis 7.2.1 During the implementation of the project, there will be direct and indirect employment for the people within the program area of influence, resulting in increase of income of households. Accessibility to the production centres and markets, within Ghana and the ECOWAS region, as well as to the social facilities such as education and health will be enhanced due to the implementation of the project. Improved accessibility to health facilities will in turn enable the population to devote more time and effort to income generating activities, especially trade and agriculture for the betterment of their families. With an improved road, accessibility to a wider market would be ensured and will also result in increased income for the local people, especially women who sell their agricultural produce

29

and confectionary along the roadside. The interaction with foreigners and foreign transporters will expose the local residents to new ideas and information on various aspects of social and economic life. The main beneficiaries will be women and children who constitute a larger proportion of the population, resulting in a stronger social fabric. All these benefits will contribute to a healthier and more socially advanced people who reside within the project area of influence. 7.2.2 It is envisaged that the rehabilitation of the Nsawam-Apedwa road would benefit not only those within its immediate area of influence as a result of increased agricultural production, but also facilitate international trade between Ghana and its regional neighbours through lower transportation costs for passengers and freight. Therefore, the rehabilitation of the road would augment Government’s efforts aimed at reducing poverty. The proposed study would recommend modalities of rehabilitating the Agona Junction-Elubo road that would optimize the benefits. 7.3 Sensitivity Analysis 7.3.1 The risks as outlined in 6.3 above could affect the construction costs and benefits. Therefore, the factors considered for sensitivity tests are the construction costs and benefits. The analysis shows that with costs increased by 20%, the EIRR for the project is 19.5 per cent and with benefits decreased by 20% the EIRR is 18.9 per cent. In addition, should costs increase and benefits decrease by 20 per cent at the same time, the EIRR is 16.5%. In all three cases, the project will remain economically viable. In order to reduce the probability of these changes occurring, provisions have been made in the project design, costing and economic analysis. These provisions include: i) allowing for 10 per cent contingency on physical costs, ii) applying a medium traffic growth rate of 5 per cent compared to the projected 8% in the Vision 2020, and iii) the proposed monitoring and supervision arrangement. These measures will minimize the probability that costs and benefits will go up and down respectively, by more than 20 per cent. The results of the sensitivity tests are presented in the Annex 8. 7.3.2 The analysis has demonstrated that the project is economically viable and that it remains viable even in cases where costs increase or benefits decrease by 20% as well as in cases where both occur concurrently.

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8. CONCLUSIONS AND RECOMMENDATIONS 8.1 Conclusions 8.1.1 The Nsawam-Apedwa and Agona Junction-Elubo Roads in the Eastern and Western Regions of Ghana, respectively, are important international roads, forming integral parts of the Trans-West African Highway Network. The roads provide an important link in the integration of the administrative and economic activities within Ghana, as well as with its trading neighbors/partners within the ECOWAS. The roads carry international traffic to and from the Ports of Tema and Takoradi in Ghana. The roads have deteriorated so much that they impose serious traveling difficulties, high transport costs and safety problems. These problems have contributed to reduced agricultural production and industrial activities and have also constrained the development of international trade that could otherwise facilitate socio-economic development and reduce poverty, especially in the Eastern Region which is one of the poorest regions in the country. The feasibility, environmental and detailed engineering design studies that were done for the Achimota-Anyinam Road that includes the Nsawam-Apedwa road section, have proven that the implementation of the Nsawam-Apedwa road works is economically, environmentally, and technically sound. The rehabilitation of the Nsawam-Apedwa, and the Study on the Agona Junction-Elubo Road have been included in the Government’s Road Sector Development Program and have the support of the Donor Community active in the sector in Ghana. The Bank Group is has been actively involved in the financing of the components of the RSDP. The Road Sector Development Program is part of the Comprehensive Development Framework, which has been developed with a view to assisting the Government implement its Vision 2020. The proposed project is in line with the Bank Group’s Policy on Regional Economic Integration as articulated in its Vision, Bank Strategies for Ghana over the 2002-2004 period, which prioritizes the rehabilitation and upgrading of the infrastructure, especially roads, under the basic funding scenario. 8.1.2 The project will enhance the flow of regional and inter-regional traffic and trade, and reduce road user costs, thereby strengthening regional economic integration. The road safety measures that will be put in place will enhance safety standards on the Nsawam-Apedwa road. The project will also facilitate easier access by the farmers and traders to markets that will generate income. The study on the Agona Junction-Elubo road, would recommend road rehabilitation modalities that would optimize the benefits. Hence the project will augment the Government’s efforts in achieving economic development and reducing poverty. 8.2 Recommendations and Conditions for Loan and Grant Approval 8.2.1 It is recommended that the Republic of Ghana be granted an ADF Loan not exceeding UA18.00 million and an NTF loan not exceeding UA 3.0 million, for the implementation of the road works described herein subject to the following conditions: A. Conditions Precedent to the Entry into Force of the Loan Agreements

The entry into force of the loan agreements will be subject to the fulfillment by the Borrower of the conditions set forth in Section 5.01 of the General Conditions Applicable to Loan Agreement and Guarantee Agreements of the Bank and the Fund.

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B. Conditions Precedent to First Disbursement

The obligations of the Fund and NTF to make the first disbursement of the loans will be conditional upon entry into force of the Loan Agreements as provided for in A above, and the fulfillment by the Borrower of the following conditions. The Borrower shall have to the satisfaction of the Fund and NTF: i) Provided evidence of having appointed a Project Coordinator and a Counterpart

Resident Engineer both whose qualifications and experience shall be subject to the approval of the Bank prior to their appointment (par 5.2.1);

ii) Provided evidence of opening a Special Account to be managed by Ghana

Highway Authority in a bank acceptable to the Bank, where counterpart funds will be deposited (par 6.3.2);

iii) Provided a written undertaking to deposit its own contribution in the Special

Account in accordance with the Financing Plan (par 6.3.2); iv) Submitted a Policy Letter to the Fund describing the Government’s policy

towards future increases of the fuel levy, and the Government’s plans to achieve the Road Fund target amount of USD 130 million per annum by attaining a fuel levy target of USD 0.095 per litre and/or by increasing other revenue sources of the Road Fund ( par. 6.2.2)

v) Submitted an Environmental and Social Management Plan acceptable to the

Fund (par.5.6.3). C. Other Condition

The Borrower shall during the implementation of the Project: i) Disburse to the Project, counterpart funds for each year of Project

implementation, in accordance with the financing plan agreed with the Fund (par 6.3.2);

iii) Ensure that mitigating measures relating to environmental impact of the Project

are implemented and monitored (par 5.2.2)

8.2.2 It is also recommended that the Republic of Ghana be assisted with a grant not exceeding UA 0.80 million, to carry out the Study described in this report, and details of which are presented in the Terms of Reference in the Project Implementation Document (PID). The grant and its entry into force would be subject to the following conditions:

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A. Conditions Precedent to Entry into Force of the Protocol of Agreement

The entry into force of the grant agreement for the Study will be subject to the signing of the Protocol of Agreement by the Recipient of the Grant and the Fund.

B. Conditions Precedent to First Disbursement

The obligations of the Fund to make the first disbursement shall be conditional upon the entry into force of the Protocol of Agreement as provided in A above and to the fulfillment by the Recipient of the following conditions. The Recipient shall have to the satisfaction of the Fund:

i) Submitted to the Fund for approval the curriculum vitae of an experienced Civil

Engineer proposed by the Recipient to become the Coordinator of the Study (par.5.2.1) and

ii) Submitted to the Fund for approval the curriculum vitae of experienced Civil Engineer,

proposed as national counterpart expert to work with the Consultant for the Study (par. 5.2.1).

C. Other Condition

(i) The Recipient will give a written undertaking to implement the recommendations of the

Study.

ANNEX 1 LOCATION MAP

GHANA

ROAD INFRASTRUCTURE PROJECT (EASTERN AND WESTERN REGIONS)

ANNEX 2

GHANAROAD INFRASTRUCTURE ROJECT (EASTERN & WESTERN REGIONS)

GHAHA HIGHWAY AUTHORITYORGANIZATIONAL CHART

LEGAL SERVICES DIVISION

INTERNAL AUDIT DIVISION

DIRECTLY RELATED TO THEPROJECT IMPLEMENTATION

DIVISION OF PERSONNELDIRECTOR

DIVISION OF FINANCEDIRECTOR

DIVISIONOF PUBLIC RELATIONSDIRECTOR

DIVISION OF TRAININGDIRECTOR

DIVISION OF INFORMATION SYSTEMSDIRECTOR

DEPARTMENT OF ADMINISTRATIONDEPUTY CHIEF EXECUTIVE

DIVISION OF PLANNINGDIRECTOR

DIVISION OF SURVEY & DESIGNDIRECTOR

DIVISION OF CONTRACTSDIRECTOR

DIVISION OF MATERIALSDIRECTOR

DIVISION OF BRIDGESDIRECTOR

DIVISION OF SAFETY & ENVIRONMENTDIRECTOR

DEPARTMENT OF DEVELOPMENTDEPUTY CHIEF EXECUTIVE

HIGHWAY REGIONAL OFFICES (10)DIRECTORS

DIVISION OF ROAD MAINTENANCEDIRECTOR

DIVISION OF PLANT & EQUIPMENTDIRECTOR

DIVISION OF STORES & SUPPLIESDIRECTOR

DEPARTMENT OF MAINTENANCEDEPUTY CHIEF EXECUTIVE

CHIEF EXECUTIVE

BOARD OF DIRECTORS

MINISTRY OF ROADS AND HIGHWAYS

ANNEX 3 PAGE 1/2

GHANA

ROAD INFRASTRACTURE PROJECT (EASTERN AND WESTERN REGIONS) ENVIRONMENTAL SUMMARY

A) ENVIRONMENTAL CATEGORY : II JUSTIFICATION FOR ENVIRONMENTAL CATEGORISATION The project has been classified as category II, indicating that there will be both positive and minor negative environmental impacts associated with the road works. The project’s associated environmental adverse effects, which are limited and have been included into the design of the program. To this effect, the mitigating measures earmarked have been integrated into the design and budgeting of the program. BRIEF DESCRIPTION OF THE PROJECT The Nsawam Apedwa Road in the Eastern Region of Ghana is an important international road, forming an integral part of the Trans African Highway Network. The road provides an important link in the integration of the administrative and economic activities within Ghana, as well as with its trading neighbors/partners within the ECOWAS region. The road also carries international road and maritime traffic diverted from the Ports of Abidjan and San Pedro to Tema and Takoradi in Ghana. The project shall consist of the following components: i) Civil Works- A rehabilitated 41-Km Nsawam-Apedwa Road, including a newly constructed 10.3 km bypass to the east of Nsawam Business District, with three bridges of 7.5, 15 and 100 meters long. The pavement typical cross-sections would be: 7.3 m carriageway, with 2.5 m shoulders on each side. The structure would consist of a 200 mm natural gravel Sub-base, 150mm Crushed stone base, and 80 mm dense bitumen base course, with the binding course of 60 mm Asphalt, and Wearing Course of 40 mm Asphalt; ii) Consultancy Services which would include a) Pre-contract and Supervision of civil works B): POTENTIAL ENVIRONMENTAL IMPACTS

i) Dust and noise pollution as a result of construction vehicular movements; removal of laterite, and gravel from quarry sites; and siting of asphalt plants during construction

ii) Pollution risk to nearby water resources; iii) Silting and destruction of bridges and culverts; iv) Accidents and deaths as a result of the lack of pedestrian walk-ways and other safety

features; v) Disruption of Utility Services vi) Slope erosion; vii) Poor Access roads,

ANNEX 3 PAGE 2/2

C): MITIGATION MEASURES

i) A full rehabilitation of borrow pits will be carried out. This aspect has been included within the project design budget;

ii) The compensation value for the reclamation of burrow pits and payment for land on which burrow pits have been dug and by-pass is constructed has fully been included in the project cost;

iii) Steep slopes which will experience erosion will be stabilised; iv) Roads will be watered daily to reduce dust pollution; v) Utility Services which be disrupted, will be re-instated as rapidly as possible; vi) Access roads will be improved, bridges and culverts re-installed and pedestrian

walkways and guard rails installed; vii) Other safety features including reflectors, stop signs, speed bumpers and police traffic

directors and patrol so as to reduce vehicular and human accidents, and viii) Run-off will be re-directed or tailing ponds established so that run-offs may not enter

water courses

D) PUBLIC CONSULTATION AND DISCLOSURE REQUIREMENTS During implementation of the project, the Government and the consultants will periodically discuss the project objectives and the implementation with stakeholders, with a view to ensuring the stakeholders fullest participation in the project. Against this background, the initial consultation will take place as soon as the consultants have been engaged.

E): RE-SETTLEMENT PLAN REQUIRED

There will be no resettlement on the Nsawam Apedwa Road; therefore no resettlement plan will be required. There will also be no land lost due to the re-alignment of the road as it will not intersect major farm land or economic assets.

ANNEX 4

GHANA ROAD INFRASTRUCTURE PROJECT (EASTERN AND WESTERN REGIONS)

PROVISIONAL LIST OF GOODS AND SERVICES

Project/Study Categories US$ Million UA Million Co financiers (UA million) F. E. L. C. TOTAL F. E. L. C. TOTAL ADF NTF OPEC Fund IDA GOG 1. WORKS 1. 1 Civil Works 21.93 5.14 27.07 15.84 3.72 19.56 14.23 2.52 1.26 0.00 1.72 2. CONSULTANCY SERVICES 2. 1 Works Consulting Services 1.32 0.31 1.63 0. 95 0.22 1.177 0.94 0.00 0.00 0.00 0.06 2.2 Study Consulting Services 0.69 0.58 1.277 0.50 0.42 0.92 0.80 0.00 0.00 0.00 0.13 3. MANAGEMENT & COORDINATION 3.1 Audit Consulting Services 0.05 0.00 0.05 0.04 0.00 0.04 0.00 0.00 0.00 0.04 0.00 BASE COST 23.99 6.03 30.02 17.33 4.36 21.69 15.97 2.52 1.26 0.04 1.91 Non-affected Items 4.11 1.22 5.33 2.98 0.88 3.86 2.83 0.48 0.24 0.00 0.30 TOTAL COST 28.10 7.25 35.35 20.31 5.24 25.55 18.80 3.00 1.50 0.04 2.21

ANNEX 6 Page 1/3

GHANA ROAD INFRASTRUCTURE PROJECT (EASTERN AND WESTERN REGIONS)

STUDY TERMS OF REFERENCE SUMMARY

The Study will be conducted on the Agona Junction-Elubo Road in the following two stages: Stage I: Feasibility Study, Environmental Impact Assessment Study and Impact on Poverty Reduction and

Gender Study; Stage II: Detailed Engineering Designs, Cost Estimates and Preparation of Tender Documents for the

approved alternative. The Consultants will cover the following areas: 1 General 1.1 The consultant shall perform all necessary planning, engineering, economic, financial, and environmental analyses, field investigations and related works as described herein with due care and diligence to attain the objectives of the project. 1.2 The overall responsibility for administration and coordination of the study rests with the Ministry of Roads and Highways through the Ghana Highway Authority. 1.3 In the conduct of his work, the consultant shall regularly communicate with the Ministry of Roads and Transport, the Ministry of Finance and Economic Planning, the Ministry of Tourism, the Ministry of Agriculture and all other Government Departments and Agencies responsible for transport, development and Environment. 1.4 The Government will provide the consultant with the data and services appropriate to achieving the objectives of the study as outlined in the proposed contract format attached to the letter of invitation for submission of proposals. The consultants shall be responsible, however, for the analysis and interpretation of all data received and the conclusion and recommendations derived from the data. 1.5 The studies will use a participatory approach involving all stakeholders during the implementation. To ensure effective consultations with all stakeholders, the consultant shall hold two workshops. The impacts that the project resulting from the proposed study would have on poverty reduction, especially among farmers, etc would also be discussed. 2. Stage I: Feasibility Study, Environmental Impact Assessment Study and Impact on Poverty

Reduction and Gender Study;

Engineering Feasibility and Economic Viability 2.1 The consultant shall conduct all topographical surveys, aerial surveys or satellite imagery (if required), hydrological studies, sub-surface soil exploration, materials surveys, and other field and laboratory investigations required for the examination of various scenarios of alignments, the location of suitable construction materials and water, probable location of the bridges and their access, and the preparation of preliminary engineering design based on the traffic studies, economic analyses, and geotechnical tests. The Consultants will apply the design standards those issued by the Ghana Highway Authority.

ANNEX 6 Page 2/3

Economic Evaluation 2.2 The consultant shall undertake evaluation of the economic feasibility of the projects for the twenty years following the completion of the construction of the road. The economic viability shall be expressed in terms of a). the economic internal rate of return; b) the net present value in relation to the Government’s current opportunity cost of capital; and d) the benefit-cost ratio. The consultant shall also undertake sensitivity analyses on the results of the selected design standards. The consultant shall provide a written economic justification based on the traffic analysis and forecast, cost and benefit as well as economic internal rate of return and sensitivity tests.

Environmental Impact Assessment

2.3 The Consultants shall carry out the Environmental Impact assessment on the project road. Most significant construction - related negative impacts are those related to clearing, grading or roadbed construction; loss of vegetative cover; foreclosure of other land uses; modification of natural drainage patterns; changes in groundwater elevation, landslides, erosion, stream and lake sedimentation; flooding, degradation of vistas or destruction of cultural sites; and interference with movements of wildlife, livestock and local residents. The Consultant shall conduct analyses detailing the positive and negative effects of the development of the project on the environment and recommend appropriate solutions to minimize any undesirable effects resulting from the project implementation. The Consultant shall prepare a detailed plan to monitor the implementation of the mitigating measures; and include in the plan an estimate of capital and operating costs and a description of other needed inputs.

Gender Development And Poverty Alleviation 2.4 The Consultant shall undertake a study to assess the impact of the project on the quality of life of the people. He shall concentrate on the vulnerable groups especially women and the poor living along within the project area. He shall recommend measures aimed towards alleviating poverty within the area. The Consultant shall prepare monitoring and management plans for implementing poverty alleviation.

Cost Estimates and Economic Viability 2.5 Based on the above analyses and findings, the consultant shall provide preliminary quantity estimates for the approved alignment between Agona Junction and Elubo, and preliminary cost estimates for construction of the project broken into foreign and local cost. The Consultant shall examine all available information on vehicle operating and road maintenance costs and shall produce valid current estimates of such costs for the project road in its present and improved state. He shall also quantify the benefits, especially savings in vehicle operating costs, road maintenance expenditure; residual value of the road’s structures at the end of the evaluation period as well as value of time savings. 3 STAGE 2: Detailed Engineering Design and Preparation of Tender Documents 3.1 Subject to the feasibility results of Stage 1, and at the option of Government, the Consultant may be instructed to provide a detailed engineering design for the construction of the selected road, complete with construction quantities, cost estimates for earthworks and bridges, and bidding documents to call for tenders on an international competitive bidding basis and based on standards agreed with the Government. The Consultant shall provide cost estimates of work and supervision of construction items in both foreign and local currency components. The Consultants will carry out the engineering and soils and materials investigations. He will also carry out drainage and bridge site investigation and shall fully define the horizontal alignment of the road centerline, tangent points and other critical points. The Consultants will also prepare geometric designs, which shall incorporate all the environmental aspects identified in the preliminary engineering report. The Consultant shall investigate whether there will be any other possible impacts on the environment and make proposals for remedial measures.

ANNEX 6 Page 3/3

Traffic Engineering Design and Plans 3.2 A detailed traffic engineering analysis shall be prepared to specify the design of necessary traffic control features. The Consultant shall prepare the engineering plans for the project: a.) Plan and Profile, Scale 1/2,000 and 1/200, b. Typical Cross-Sections, Scale 1/25, c) Cross-section, Scale 1/50, d), Typical Culverts, e), Major Structures, f), Soils Plan and g) Ancillary Works.

4 RESPONSIBILITIES OF THE CONSULTANT AND THE GOVERNMENT 4.1 Responsibilities Of The Consultant 4.1.1 The Consultant will take all necessary responsibilities for the execution of the studies during the implementation of the two stages. All information, data and reports obtained from the Government in the execution of the services of the Consultant shall be properly reviewed and analyzed by the Consultant. All such information, data and reports shall be treated as confidential and returned to the Government. 4.1.2 The consultant shall train one qualified Civil Engineer assigned as counterpart to the studies by the Government. The training should be carried out through participation and exposure in all possible aspects of study during both stages. 4.2 Responsibilities Of The Government 4.2.1 The Government shall provide the necessary liaison between the Consultants and relevant Ministries and Departments for the collection of all information, data and reports as available and considered relevant to the execution of the Consultant’s services. In this regard, the Government will appoint a Study coordinator. 4.2.2 The Government will grant the Consultant and his expatriate staff the facilities to import foreign exchange into the country for purpose of the studies and personal needs up to the equivalent of the salaries received; as well as exemption from duties, taxes, and royalties. In the event of these exemptions not being granted, the Government shall be responsible for providing the funds required for the payment of the duties, taxes, etc.

ANNEX 7

Page 1/2GHANA

ROAD INFRASTRUCTURE PROJECT (EASTERN AND WESTERN REGIONS) CIVIL WORKS DETAILED COST ESTIMATE

ITEMS LOCAL COST USD FOREIGN COST USD TOTAL USD LOCAL COST UA FOREIGN COST UA TOTAL UA General 0.72 1.52 2.24 0.52 1.11 1.63 Site Clearance 0.11 0.04 0.15 0.08 0.03 0.11 Earthworks 0.45 1.71 2.16 0.33 1.24 1.57 Road Pavement 2.80 15.67 18.47 2.04 11.40 13.44 Drainage 0.12 0.06 0.18 0.09 0.04 0.13 Protection Works 0.06 0.14 0.20 0.04 0.10 0.15 Bridges 0.52 2.00 2.52 0.38 1.46 1.83 Road Miscellaneous 0.20 0.79 0.99 0.15 0.57 0.72 Works Sub-Total 4.98 21.93 26.91 3.62 15.96 19.59 Supervision 6% 0.30 1.32 1.62 0.22 0.96 1.18 Support Services for Works 0.07 0.07 0.05 0.00 0.05 Sub-Total 5.35 23.25 28.78 3.89 16.92 20.81 Physical Contingency 6% 0.32 1.39 1.72 0.23 1.02 1.25 Price Contingency 3%/annum 0.92 2.69 3.61 0.67 1.96 2.63 Contingency Sub-Total 1.22 4.11 5.33 0.89 2.99 3.88 TOTAL CIVIL WORKS COST 6.57 27.36 33.93 4.78 19.91 24.69

ANNEX 7

Page 2/2 REPUBLIC OF GHANA

ROAD INFRASTRUCTURE PROJECT (EASTERN AND WESTERN REGIONS) STUDY DETAILED COST ESTIMATE

UNIT PRICE (USD) QUANTITY (man-month) UNIT PRICE (UA)

ITEM

FOREIGN LOCAL TOTAL HOME SITE TOTAL FOREIGN LOCAL TOTAL

STAGE I: FEASIBILITY STUDY REMUNERATION OF STAFF 6.50 13.75 20.25 249,250.00 249,250.00 TRAVEL COST 21,600.00 136,875.00 158,475.00 SURVEYS 30,500.00 31,500.00 62,000.00 SERVICES 22,500.00 28,000.00 50,500.00 WORKSHOP (2) 12,000.00 12,000.00 2 24,000.00 24,000.00 COORDINATION AND ADMINISTRATION 9,150.00 59,200.00 68,350.00 TOTAL COST FEASIBILITY STUDY 333,000.00 279,575.00 612,575.00 STAGE II: DETAILED ENGINEERING REMUNERATION OF STAFF 7.50 12.00 19.50 241,000.00 241,000.00 TRAVEL COSTS 19,200.00 129,000.00 148,200.00 SERVICES 20,00.00 32,000.00 52,000.00 SURVEYS 16,000.00 27,000.00 43,000.00 COORDINATION AND ADMINISTRATION 9,150.00 69,500.00 78,650.00 TOTAL COST DETAILED ENGINEERING STUDY 305,350.00 257,500.00 562,850.00 TOTAL BASE COST STAGES I & II (USD) 638,350.00 537,075.00 1,175,425.00 CONTINGENCIES Physical (5%) 31,917.50 26,853.75 58,771.25 Price (3%) 20,108.03 16,917.86 37,025.89 Total Contingency 52,025.53 43,771.61 95,797.14 TOTAL COST (USD) 690,375.53 580,846.61 1,271,222.14 TOTAL COST (UA) 502,467.68 422,750.58 925,218.26

ANNEX 8 PAGE 1 of 3

GHANA ROAD INFRASTRUCTURE PROJECT( EASTERN AND WESTERN REGIONS)

CURRENT TRAFFIC VOLUME AND COMPOSITION ROAD SECTION I II III CLASSIFIED (AADT) ON EACH OF THE THREE SECTIONS TRAFFIC CATEGORIES Cars 3221 1475 1443 Light Goods 3423 1912 1371 Mid Buses 988 470 408 Medium Goods 678 489 428 Heavy Goods 338 358 300 Large Buses 269 185 158 % Heavy Traffic 14,41 21,10 21,57 Total Traffic 8918 4887 4109 Traffic Category % AGE COMPOSITION Cars 36 30 35 Light Goods 38 39 33 Mid Buses 11 10 10 Medium Goods 8 10 10 Heavy Goods 4 7 7 Large Buses 3 4 4 It is assumed that Traffic will grow at 5% per annum It is also assumed that Traffic Composition will remain unchanged over the project life

ANNEX 8 PAGE 2/3 GHANA ROAD INFRASTRUCTURE PROJECT (EASTERN AND WESTERN REGIONS) ECONOMIC EVALUATION SUMMARY OF THE ROUTE BENEFITS AND CONSTRUCTION COSTS

ALL VALUES IN US $ MILLIONS OLD ROAD COSTS WITHOUT PROJECT NEW ROAD COSTS WITH PROJECT BEEFITS FROM IMPROVEMENTS TOTAL TOTAL TOTAL TRAFFIC BENEFITS BENEFITS CONST COMBINED YEAR VEHICLE VEHICLE PERSON ROAD VEHICLE VEHICLE PERSON ROAD COSTS (BEN-COSTS)

RUNNING TIME TIME MAINT RUNNING TIME TIME MAINT VEHICLE PERSON DIV/GEN RD.

MAINT

COSTS COSTS COSTS COSTS COSTS COSTS COSTS COSTS

2004 0 0 0 0 0 0 0 0 0 0 0 0 0 0.73 -0.73 2005 0 0 0 0 0 0 0 0 0 0 0 0 0 11.35 -11.35 2006 0 0 0 0 0 0 0 0 0 0 0 0 0 14.71 -14.71 2007 0 0 0 0 0 0 0 0 0 0 0 0 0 6.83 -6.83 2008 10.97 0.93 0.69 0.21 8.42 0.82 0.63 0.04 2.66 0.06 0 0.17 2.89 1.73 1.16 2009 22.7 1.7 1.3 0.4 15.74 1.49 1.19 0.08 7.17 0.11 0 0.32 7.6 7.6 2010 26.67 1.5 1.38 4.6 16.44 1.57 1.25 0.08 10.16 0.13 0 4.52 14.81 14.81 2011 25.55 1.87 1.44 2.56 17.35 1.65 1.32 0.08 8.42 0.12 0 2.48 11.02 11.02 2012 25.95 1.96 1.52 0.36 18.32 1.73 1.4 0.08 7.86 0.12 0 0.28 8.26 8.26 2013 28.53 2.06 1.62 0.5 19.35 1.81 1.48 0.08 9.43 0.14 0 0.42 9.99 9.99 2014 31.49 2.18 1.72 -0.98 20.47 1.91 1.56 4.26 11.29 0.16 0 -5.24 6.21 6.21 2015 35.17 2.3 1.82 4.79 21.69 2.01 1.65 3.72 13.77 0.17 0 1.07 15.01 15.01 2016 33.43 2.39 1.91 1.31 22.97 2.1 1.74 0.08 10.75 0.17 0 1.23 12.15 12.15 2017 36.33 2.52 2.01 2.1 24.32 2.22 1.85 0.08 12.31 0.16 0 2.02 14.49 14.49 2018 38.11 2.66 2.12 0.64 25.8 2.32 1.94 0.08 12.65 0.18 0 0.56 13.39 13.39 2019 42.88 2.8 2.26 4.96 27.42 2.45 2.06 0.08 15.81 0.2 0 4.88 20.89 20.89 2020 40.88 2.9 2.35 1.46 29.24 2.57 2.17 0.09 11.97 0.18 0 1.37 13.52 13.52 2021 45.14 3.06 2.51 0.88 31.28 2.71 2.28 4.28 14.21 0.23 0 -3.4 11.04 11.04 2022 51.47 3.25 2.66 3.15 33.67 2.85 2.42 3.74 18.2 0.24 0 -0.59 17.85 17.85 2023 52.76 3.4 2.79 4.41 36.11 3.01 2.56 0.1 17.04 0.23 0 4.31 21.58 21.58 2024 51.64 3.53 2.92 0.26 38.69 3.16 2.7 0.11 13.32 0.22 0 0.15 13.69 13.69 2025 58.66 3.75 3.1 1.97 41.68 3.33 2.85 0.12 17.4 0.25 0 1.85 19.5 19.5 2026 65.34 3.98 3.3 6.24 45.28 3.51 3.01 0.14 20.53 0.29 0 6.1 26.92 26.92 2027 60.77 4.1 3.42 1.98 49.71 3.69 3.18 4.38 11.47 0.24 0 -2.4 9.31 9.31 2028 69.83 4.37 3.65 2.26 55.45 3.92 3.36 0.2 14.83 0.29 0 2.06 17.18 17.18 2029 78.89 4.63 3.87 6.59 61.2 4.12 3.56 3.9 18.2 0.31 0 2.69 21.2 14.14 35.34

ECONOMIC INTERNAL RATE OF RETURN 22.1%

ROUTINE AND PERIODIC MAINTENANCE COST PER ANNUM US$ 0.92

MIL. RESIDUAL VALUE F 40% of the road cost

ANNEX 8

PAGE 3/3 GHANA

ROAD INFRASTRUCTURE PROJECT (EASTERN AND WESTERN REGIONS) ECONOMIC EVALUATION

SUMMARY OF THE ROUTE BENEFITS AND COSTS 30 MONTHS CONSTRUCTION PERIOD

ALL VALUES IN US $ MILLIONS SENSTIVITY TESTS

COSTS UP BY 20%

BEN.DOWN 20%

COSTS UP 20% and Ben. Down 20%

BEN-COSTS

0.876 -0.876 -0.73 0.876 0 -0.876

13.62 -13.62 -11.35 13.62 0 -13.62

17.652 -17.652 -14.71 17.652 0 -17.652

8.196 -8.196 -6.83 8.196 0 -8.196

2.076 0.814 0.582 2.076 2.312 0.236

7.6 6.08 6.08 6.08

14.81 11.848 11.848 11.848

11.02 8.816 8.816 8.816

8.26 6.608 6.608 6.608

9.99 7.992 7.992 7.992

6.21 4.968 4.968 4.968

15.01 12.008 12.008 12.008

12.15 9.72 9.72 9.72

14.49 11.592 11.592 11.592

13.39 10.712 10.712 10.712

20.89 16.712 16.712 16.712

13.52 10.816 10.816 10.816

11.04 8.832 8.832 8.832

17.85 14.28 14.28 14.28

21.58 17.264 17.264 17.264

13.69 10.952 10.952 10.952

19.5 15.6 15.6 15.6

26.92 21.536 21.536 21.536

9.31 7.448 7.448 7.448

17.18 13.744 13.744 13.744

16.96 38.16 31.9 16.96 16.96 33.92

19.5% 18.9% 16.5%

SENSTIVITY TESTS A: COSTS INCREASED BY 20% 19.5%

B: BENEFITS REDUCED BY 20% 18.9% C: Combined Costs up by 20% and Benefits Reduced by 20% 16.5%

ANNEX 9 GHANA

ROAD INFRASTRUCTURE PROJECT ( EASTERN AND WESTERN REGIONS) PROJECT IMPLEMENTATION DOCUMENTS

1. Detailed Study Terms of Reference 2. Typical Cross Section 3. Design Standards 4. Profiles of Counterpart Officers 5. Road Sector Development Program –Status of Funding for Trunk Roads 6. Supervision Plan

ANNEX 10

Finance Date Date EffectiveDeadline

last Am ount Am ount Am ount Balance to Percent S tatus

Source Approved signed datedisbursem e

nt approved disbursed cancelled disburse Disbursed

AG R IC ULTU RE1 Kpong Irrigation Project ADF 17/09/90 14/08/91 11/3/1994 31/12/03 23.24 19.33 0.00 4.14 83% O n-going2 Kpong Irrigation Project ADF 17/09/90 14/08/91 11/3/1994 31/12/03 2.08 1.31 0.00 0.77 63% O n-going3 Foods Crops D evelopm ent ADF 12/10/1997 29/05/98 13/06/00 30/06/04 10.00 2.89 0.00 7.11 29% O n-going4 Sm all Scale Irrigation D evelopm ent Project ADF 4/12/1997 29/05/98 25/08/00 30/06/04 15.00 2.03 0.00 12.97 14% O n-going5 Agro-Industria l sub-sector study TAF 9/9/1998 9/2/1999 26/04/99 20/11/01 0.70 0.50 0.00 0.20 72% O n-going6 Line of C redit IV to Agri. D ev. Bank ADF 14/07/99 10/9/1999 13/06/03 31/03/03 15.00 8.08 0.00 6.92 54% O n-going7 C ashew D evelopm ent ADF 31/10/2000 8/3/2001 24/12/01 30/06/08 9.89 0.50 0.00 9.39 5% O n-going8 Afraim P la ins Study TAF 3/5/2000 29/12/2000 nye 30/06/04 0.62 0.00 0.00 0.62 0% O n-going9 Special Food security Program m e TAF 17/05/2000 29/12/2000 17/08/01 31/03/04 0.71 0.71 0.00 0.00 100% O n-going10 Inst. Support to R ural Banks ADF 7/9/2000 8/3/2001 N YE* 30/04/04 5.00 0.00 0.00 5.00 0% NYE11 Inland Valley R ice D evelopm ent Pro ject ADF 18/05/2001 23/05/2001 N YE 31/12/07 15.00 0.00 0.00 15.00 0% NYE12 Livestock D evelopm ent Project ADF 10/10/2001 2/8/2002 3/6/2003 31/12/08 19.58 0.00 0.00 19.58 0% NYE

Sub-total 116.82 35.36 0.00 81.47 30%

PU B LIC UT ILIT IES1 Accra Saniation Study TAF 30/05/00 28/12/02 30/08/01 31/12/03 0.95 0.15 0.00 0.80 16% O n-going

TRAN SPO R T1 Anyinam Kum asi R oad Rehab. ADF 22/11/85 20/12/85 22/07/86 31/12/05 23.67 14.93 0.00 8.74 63.09% O n-going2 Achim ota Anyinam Road R ehab. ADF 15/12/97 29/05/98 15/09/98 31/12/03 10.00 2.84 0.00 7.16 28.36% O n-going3 Three R oads S tudy TAF 20/10/99 17/02/00 17/02/00 30/06/04 1.16 0.03 0.00 1.13 2.58% O n-going4 Tetteh Q uarshie C irc le-M am fe R oad Project ADF 11/12/2000 8/3/2001 24/09/01 31/12/05 25.00 1.53 0.00 23.47 6.12% O n-going5 Tem a Aflao R oad R ehab.Project ADF 17/04/02 2/8/2002 5/12/2002 31/12/06 14.72 0.00 0.00 14.72 0.00% O n-going6 Akatsi-D zodze-N oepe Road Project ADF 20/12/02 18/07/03 NYE 31/12/07 12.72 0.00 0.00 12.72 0.00% N YE

Sub-total 87.27 19.33 0.00 67.94 22.15%

SO C IAL SEC TO R

1 Prim ary Education R ehabilitation Project ADF 9/1/1997 22/07/97 20/09/99 31/12/02 12.00 9.56 0.00 2.44 80% O n-going2 Poverty A lleviation Project ADF 10/12/1997 29/05/98 4/5/1999 31/12/02 11.00 6.25 0.00 4.75 57% O n-going3 H ealth Services Rehabilita tion III ADF 10/1/2002 4/6/2003 NYE 31/12/08 17.64 0.00 0.00 17.64 0% O n-going

Sub-total 40.64 15.81 0.00 24.83 38.90%M ULTI-SEC TO R1 Institu tional Support to Two M in is tries TAF 28/10/98 2/2/1999 10/12/1999 31/10/02 2.00 0.39 0.00 1.61 20% O n-going2 Econom ic R eform Support Loan II ADF 29/03/2001 23/05/2001 17/0701 30/09/02 39.00 39.00 0.00 0.00 100% O n-going3 Instit.Support for G overn.and Poverty redu. TAF 14/11/2001 ny s igned N YE 31/12/04 3.00 0.20 0.00 2.80 7% NYE

Sub-total 44.00 39.59 0.00 4.41 89.98%

Sector /Project T itle

G HAN A: SUM M AR Y O F B ANK G R O U P O NG O ING O PER ATIO N S (in U A m illion)As at 04 August 2003

Annex

Republic of Ghana Road Infrastructure Project (Eastern and Western Regions)

Corrigendum to the Appraisal Report

The Appraisal Report for the Road Infrastructure Project (Eastern and Western Regions) has been amended as follows.

a) On Page i, Item 2, PROJECT TITLE should read as Road Infrastructure Project- 2003

b) On Page x, Section 4, paragraph I, Civil Works, bypass to the east of Nsawam

Business District should now read as bypass to the West of Nsawam Business District.

c) On Page 12, paragraph 4.5.1, section I. Civil Works, bypass to the east of

Nsawam Business District should now read as bypass to the West of Nsawam Business District

d) Following an adjustment in the road maintenance cost, the Economic Rate of

Returns have been revised as follows, and as a consequence, Annex 8, pages 2 and 3 have revised and replaced with one table, which has been attached below.

i) On Page 28, paragraph 7.1.4 Economic Internal Rate of Return of 22.1% becomes Economic Internal Rate of Return of 22.5%.

ii) On Page 29, paragraph, 7.3.1, 19.5 per cent becomes 19.8 per cent; 18.9 per cent becomes 19.0 per cent; 16.5 per cent becomes 16.8 per cent