Document of

The World Bank

Report No. T-7051-ER

TECHNICAL ANNEXES

STATE OF ERITREA

ROAD SECTOR ENGINEERING PROJECT

March 13, 1997

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CURRENCY EQUIVALENTS

Currency unit = BirrUS$1.00 = Birr 6.3Birr 1.00 US$0.15US$1.00 = SDR 1.43563 (as of January 1997)

WEIGHTS AND MEASURES

Metric System

ABBREVIATIONS ANI) ACRONYMS

CAS Country Assistance StrategyGOE Government of EritreaMOC Ministry of ConstructionPIP Project Implementation PlanRTCD Road Transport Construction Department (of MOC)

GOVERNMENT FISCAL YEAR

July 7 - July 6

Vice President: Mr. Callisto Madavo, AFRCountry Director: Ms. Oey Meesok, AFCO6Technical Manager: Mr. Yusapha Crookes, AFT'I'1Task Team Leader: Mr. Simon Thomas, AFTT1

TABLE OF CONTENTS

SECTION AProject Description

Background .................................................. 1Project Rationale and Objectives .................................................. 1Project Components .................................................. 2

Feasibility and Design Study .................................................. 2National Bridge Inventory .................................................. 3Technical Assistance and Capacity Building ...............................................4

Environmental Issues .................................................. 6Lessons from Previous Bank Group Involvement ..................................................6Critical Risks .................................................. 7Alternative Project Funding ................................................... 9Actions Agreed .................................................. 10

SECTION BProjectAdministration & Implementation ................................................... 11

Project Administration ................................................. 1 1Logistic and Adrninistrative Support Provided by the Borrower .......................... 12RTCD Counterpart Staff ................................................. 12Procurement ................................................. 12Disbursement ................................................. 13Project Supervision ................................................. 14Accounts and Audits ................................................. 15Project Reporting ................................................. 16

ANNEXESSchedule 1 Implementation ScheduleSchedule 2 Training Plan

THE STATE OF ERITREA

ROAD SECTOR ENGINEERING PROJECT

SECTION A

Project Description

Background

1. Eritrea became formally independent in 1993, after 3 decades of war, and becamea member of the Bank Group in July 1994. Eritrea inherited a shattered economy, aninfrastructure damaged by the war and inadequate maintenance, a neglected social sector,large numbers of refugees, and limited institutional capacity. This project has beenformulated by the Government of the State of Eritrea (GOE) to address some of the keyissues by establishing the basis for improving essential national infrastructure links, andbuilding institutional capacity in the road sector.

2. The road network in Eritrea is limited with approximately 1,400 km of main roadand 4,500 km of rural/feeder roads. 622 km of the network are paved and, in total, lessthan 1000 km can be considered as providing all-weather access. The main road networkwas mainly constructed during the mid-1930's to geometric designs based upon verylimited traffic. The Government places high priority on improving the coverage andquality of the network and, with the assistance of the European Union, is in the process ofrehabilitating and widening the main road between Asmara and the port of Massawa.The improvement of the Nefasit - Dekemhare - Tera Imni road is expected to commencein 1997.

Project Rationale and Objectives

3. The overall goal of the Country Assistance Strategy (report # 15324-ER, February1996) is poverty reduction, to be achieved through seven detailed programs: (i)establishment of an enabling environment for private sector led growth and employment;(ii) physical infrastructure strengthening to support private sector development andmarket linkages, and to facilitate access to public services; (iii) rural development andfood security; (iv) human resource development (basic health and education programs,and resettlement of refugees); (v) institutional capacity building; (vi) protection of theenvironment; and (vii) macro-economic support.

4. The project has been formulated to address several of these CAS objectives eitherdirectly or indirectly. The project will establish the basis for major improvements in theroad network which will open up important areas in Western Eritrea to development andsettlement, improve market linkages and facilitate the provision of, and access to basicsocial services. The project directly responds to the findings of the 1994 IDA

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Participatory Rural Assessment Study, which identified isolation and lack of road links assubstantial constraints to poverty alleviation. The project will also provide theinstitutional capacity necessary to meet GOE' s commitment to encourage private sectorparticipation in the road sector program; a policy fully consistent with the Bank'sexperience and advice. It will be several years, however, before the private sector canassume responsibility for all roadwork and, until that time, some force accountconstruction and maintenance will be necessary to meet total demands in the sector. Theproject will thus also assist RTCD to improve the efficiency and reduce the costs of itsown operations.

Project Components

5. The proposed project consists of three components:

(a) Feasibility study, environmental assessment and detailed design of theKaren - Tessenei and Barentu - Mendefera roads to Western Eritrea;

(b) National Bridge Inventory, Condition Survey and Strength Analysis of allbridges not covered by (a), and the preparation of a prioritized remedialprogram of bridgeworks;

(c) Technical assistance and capacity building for RTCD to create a contractadministration capability, improve procurement and stores management,and train mechanics, electricians, equipment operators and trainers.

(a) Feasibility and Design Study: Karen - Tessenei and Barentu - Mendefera Roads

6. A major improvement in the road links to Western Eritrea is essential to reducetransport costs and provide the access and market linkages necessary for the developmentof rain-fed agriculture and refugee settlement in the Gash Setit region which has majoragricultural potential. According to GOE statistics, over 70 percent of applications (over100,000 ha.) for commercial land concessions have been made for the Gash Setit region,and agricultural yields (according to FAO estimates) are almost 40 percent higher thanthe national average. The improvement of this road is the Government's highest roadpriority; when completed, an improved East-West road route will exist between Massawaand the Sudan Border, providing not only a primary road axis for Eritrea but also somepotential as a regional transit route. The project proposes to fund the feasibility anddetailed design for both the rehabilitation of the existing Keren-Barentu-Tessenei road(265 km) and the proposed upgrading of the Barentu-Mendefera part engineered road andtrack (195 km). The two roads will form a network connecting Western Eritrea to therest of Eritrea.

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* The Karen - Tessenei road is an existing narrow engineered road, primarilygravel, which has deteriorated very severely; its Telford base is exposed overmuch of its length.

* Much of the proposed Barentu - Mendefera road is presently a track onlypassable by four wheel-drive vehicles.

The feasibility study will assess the most economic program of road improvements,including stage construction, to meet GOE's ultimate objective of a national roadnetwork with 7m pavement and 1.5m shoulders. The environmental assessment willassess the impact of road improvements on the affected areas and prepare a detailedmitigation plan to minimize any direct or indirect effects. The feasibility study andenvironmental assessment will be completed within four months.

7. Following agreement on the findings of the feasibility study, the consultants willprepare detailed designs, engineers' cost estimates, and the bidding documents necessaryfor Intemational Competitive Bidding. Preparation of the detailed engineering designand contract documents will take nine months. Prior to completion of the study, theconsultant will install all soils and materials testing equipment, procured under the study,in a RTCD provided building, and will train RTCD personnel in its use. This facility willthen serve as the basis for RTCD's central laboratory.

8. Vehicles and office equipment for the study will be provided by RTCD; theConsultants will have to rent office accommodation. Training of RTCD personnel in theuse of materials' testing equipment will be undertaken through in-service training, by thechief materials engineer.

(b) National Bridge Inventory, Condition Survey, Strength Analysis andRehabilitation Program, and associated Capacity Building.

9. Bridges are critical for transport access, and Eritrea's bridges have sufferedconsiderably during the last thirty years from both war and neglect. Several bridges weredestroyed and many more are thought to be in a critical condition. To safeguard roadaccess throughout Eritrea, it is essential that the structural integrity of the bridges isguaranteed. The situation is aggravated by the lack of any records of the originaldesign/structural standards, poor construction techniques and inadequate materials. Thenational bridge survey will cover all bridges, other than those included in the feasibilityand detailed design study, amounting to approximately 110 bridges. The study will:

establish a complete data base of the bridges including: inventory data, ratedcondition of all bridge elements, and any associated road, drainage or river works;

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* conduct physical non-destructive testing on all bridges showing signs of distressand on a representative sample of other bridges (: 25 percent), sufficient to allowdetailed analysis of structural strength and load bearing capacity;

* identify all bridges in need of repair, strengthening or replacement and preparedetailed proposals for the necessary works;

* develop and appraise a prioritized national bridge remedial program; and

* train RTCD staff (two engineers and two technicians) in all aspects of the workundertaken so that, by the end of the study, RTCD has the capability to undertakesimilar work and analysis.

The national bridge inventory, condition survey, strength analysis and national bridgeworks program is expected to take approximately twelve months and result in aprioritized program of work which would allow, if necessary, GOE to seek externalassistance.

10. Vehicles and basic office equipment will be provided to the Consultants byRTCD. To help ensure constant interaction between the Consultants and RTCD staff,office accommodation will be provided in the main RTCD complex in Asmara. Thetraining of the counterpart staff in bridge survey and structural strength analysis will beundertaken through in-service training. Initially the counterparts will work together withthe consultants, but once the basic knowledge and skills have been transferred, thecounterparts will works as a survey team, under the overall supervision of the consultants.

(c) Technical Assistance and Capacity Building

11. Contract Administration: It is GOE policy that the construction andmaintenance of roads will be progressively contracted to the private sector, with RTCDassuming a planning, management and supervision role. This policy can only beimplemented efficiently if RTCD has the capability to administer these construction andmaintenance contracts. This project component is designed to establish the basis forcontract administration within RTCD. The consultant will: (i) provide TA in contractadministration; (ii) develop standard contract documents and recommended contractadministration organization, systems and procedures; and (iii) train a minimum of twoRTCD engineers in contract administration, to create in-house capacity, and provideseminars to other RTCD engineers and staff. The assignment will consist of an initial 18month continuous period, followed by short-term interventions over the following twelvemonths.

12. Office accommodation and transport will be provided by RTCD, as well as officeequipment and computers for both the expert and the counterpart engineers. The creationof in-house contract administration capacity will be developed through: (i) the provision

of standardized bidding and contract documents; (ii) the development of a contractadministration manual for RTCD; (iii) in-service training of RTCD counterparts; (iv)supervised work experience; and (v) in-house seminars to counterparts and other RTCDengineers. Counterparts will have early hands-on experience of contract administrationwith the contracts to be financed by the European Union, in late 1997.

13. Procurement and Spares Management: the present system of sparesprocurement and management in RTCD results in inadequate identification of critical andfast moving spares. As a consequence, repairs and overhauls are delayed, leading to thegrounding of equipment and poor equipment availability and reliability. To improvesystems within RTCD and ensure efficient procurement of spares, provide adequateestimates for budgeting, and improve the monitoring and control of both spares andequipment, RTCD requires the advice of a procurement/spare parts management expert.The expert will undertake an initial twelve month assignment, to be followed by short-term interventions over the following twelve months. A financial management expert isalso required for a short period (two months) to review overall financial managementsystems within RTCD and ensure that systems recommended by the procurement adviserwill be compatible with improved financial management systems.

14. The procurement specialist will work closely with the Chief Warehouse Manager;office accommodation, office equipment and transport will be provided by RTCD.Having developed new procurement and stores' management systems, the specialist willtrain RTCD staff in their use through: (i) preparation of system manuals; (ii) in-servicetraining; and (iii) supervised work experience.

15. Equipment Mechanic and Operator Training: the vocational institutes inEritrea produce basic mechanics without the specialist skills needed for the maintenanceof heavy equipment and plant. The project proposes to finance the training/upgrading ofRTCD mechanics, mainly through supervised on-the-job training. The basis of thetraining will be the repair/rehabilitation of about 40 units of grounded heavy plant andequipment over a 12 month period. Two master mechanics and an expert on electricalsystems will provide two 6 month courses to a total of about 32 mechanics. The projectwill fund the trainers, training aides and specialized equipment as necessary, and spareparts (approximately US$1.0 million). In addition, the project will provide for thetraining of trainers (three mechanics, one electrician, and one equipment operator). Theoverall duration of the mechanic training will be approximately 36 months, comprising aninitial period to survey the equipment and determine the requirement for spare partsfollowed, after delivery of the spares, by the twelve month training period, and thenshort-term interventions over the subsequent twelve months.

16. RTCD will provide the necessary training facilities, office accommodation,equipment and transport. Training of mechanics will be largely accomplished bysupervised work experience: groups of four mechanics will repair/rehabilitate items ofplant/equipment under the guidance and supervision of the external mastermechanics/electrician; each master mechanic will be responsible for two groups in each

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training course This supervised work experience will be supplemented by basicclassroom instruction, and selected specialist courses by equipment manufacturers.

17. The training of a plant equipment operator trainer will be undertaken in Eritrea;training of the mechanic trainers will be through sending selected mechanics onappropriate overseas courses. The trainers will then be supervised, on their return, by theexternal master mechanics on their follow-up visits.

18. Training facility: a modest RTCD mechanic training facility will be constructedas part of the project. It will comprise two classrooms and a small training workshop,located within the main RTCD complex in Asmara. The construction cost of the facilitywill be funded by GOE.

Environmental Issues

19. This is considered a Category "C" project, with no enviromnental risks. TheProject comprises basically of studies, technical assistance and training; the only civilworks are the construction of 2 classrooms and a small workshop in the RTCD Asmaracomplex. The road studies are likely to propose major new construction, with thepotential for adverse environmental impacts. To ensure that environment is taken fullyinto account in the planning and design of these road improvements, a full environmentalimpact assessment (to IDA's Category "A" standards) will be undertaken, prior todetailed design. The environmental assessment will be undertaken in collaboration withthe Eritrea Environmental Agency which has agreed the Terms of Reference for theassessment.

20. There are no social, gender or resettlement issues associated with the project.

Lessons from Previous Bank Group Involvement

21. The only completed Bank assisted project in Eritrea is the multi-donor Recoveryand Rehabilitation Project for Eritrea (RRPE), which included a roads componentconsisting of: (i) the rehabilitation and upgrading of the Asmara - Massawa road,financed by the European Union; and (ii) the construction of RTCD maintenance depotsat Karen and Barentu by IDA. The project was highly satisfactory in realizing theimplementation and development objectives, reflecting 'genuine governmentcommitment' to successful project implementation. The main lessons learnt from theproject were: (a) over-complexity - a simpler emergency project, with clearly definedobjectives and implementation procedures, would have been preferable; (b) a lack ofimplementation indicators; and (c) the limited implementation management capacity,which required the establishment of a Project Management Unit (PMU).

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22. The design of the Road Sector Engineering Project (RSEP) has taken into accountthe lessons of RRPE: very simple project; clearly defined objectives; clear deliverymechanisms; and implementation indicators for each component. The components ofRSEP are basically free-standing and, given their modest size and complexity, do notrequire a PMU. GOE will, however, appoint a suitably qualified project coordinator tooversee overall implementation.

Critical Risks

23. There is relatively little risk attached to the Roads and Bridge Studies. IDAprocurement procedures will help ensure that suitably qualified and competentconsultants are employed to undertake these basic technical studies. The risks are muchgreater with respect to the technical assistance/skills' transfer components. The Projectincludes a substantial component of technical assistance. This is necessary becauseEritrea has just emerged from a long period of civil war, and local capacity has to bedeveloped. TA projects in Africa have not been particularly successful, for a number ofreasons, the most important being:

(i) insufficient Borrower ownership of, and commitment to the project;

(ii) poor design of the technical assistance;

(iii) inadequate technical advisers; and

(iv) unsuitable institutional/motivational environment.

There are risks attached to any TA project but they are assessed to be relatively modest inthis project, at least, in the short-term.

(i) Borrower Commitment and Ownership

24. The management of RTCD is energetic and highly committed to the rehabilitationof the country's roads and bridges, as shown by the very impressive volume of work thathas been achieved with very little foreign assistance. In addition to the widening andrehabilitation of the Massawa - Asmara road, RTCD activities include:

Asmara - Keren: comprehensive program of pothole and edge repairs and there-alignment of about 9 km of road through mountainous terrain;

* Keren - Aderde (Barentu road): rehabilitation of the seriously deterioratedpaved road;

* Mendefera - Asmara: major widening and re-surfacing on mountainoussection;

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* Mendefera - Barentu: improvement of existing tracks through the black cottonsoil areas, major earthworks to improve the track through the mountainousarea west of Maidama, construction of numerous culverts and two majorbridges; and

* spot improvements to open the Massawa - Assab road to bus transport.

These works (not a comprehensive list) have been achieved with six professionalengineers and much of the supervision is undertaken by experienced sub-professionalsand foremen. This commitment is also apparent with respect to the maintenance of plantand equipment. RTCD maintains its plant/equipment/heavy vehicle fleet of about 600items with only 12 grade I and 20 grade II mechanics but reports average plantavailability at 60 - 70 percent.

25. RTCD is committed and has demonstrated its capacity to perform substantialwork without TA, but it has also identified the need for additional skills to administercontract construction and improve equipment maintenance. RTCD specifically requestedand defined the technical assistance components included in the project. It has developedvery tight terms of reference which give the highest priority to the goal of capacitybuilding. RTCD management will monitor the TA components very closely to ensurethat the objectives are fulfilled. RTCD recognizes that it has limited capacity to absorblarge numbers of consultants and has consequently planned to stagger the introduction ofconsultants over a six-month period. The TA component will be introduced prior to thebridge and road studies and the contract administration TA will be able to assist RTCDwith the administration of the subsequent contracts.

(ii) Design of the technical assistance

26. The TA component has been designed to incorporate best practices identifiedfrom successful projects elsewhere. The Terms of Reference are clear and closelyfocused, with considerable emphasis on the need for the transfer of skills. For eachcomponent, there are clearly defined deliverable outputs. The evaluation framework forconsultant proposals places significant emphasis upon the proposed program for thetransfer of skills, and selected consultants will be expected in their Inception Reports tooutline monitorable benchmarks for skills' transfer. Toward the end of their initialassignments, the experts will be expected to develop clear exit strategies to hand overresponsibilities to their counterparts, and the sustainability of the components will beenhanced by periodic follow-up visits.

(iii) Adequacy of technical advisers

27. RTCD places very high priority on the transfer of skills to its staff. The qualityand experience of experts will form a very substantial part of the evaluation of TAproposals, especially previous, and successful experience in skill transfer programs. Even

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if qualified personnel are recruited, there is still the possibility that skills' transfer may nottake place. The causes can be various: the expert is not suited to the environment, thecounterpart is inadequately qualified or motivated, or the institutional framework isinimical. To provide an early warning of potential problems, as well as to monitor theprogress of the skills' transfer, there will be regular confidential assessments, to RTCDmanagement, of the advisers by the counterparts, and vice versa.

(iv) Institutional/motivational environment

28. At present there is great commitment within RTCD, a legacy of the struggle forindependence. Salaries and wages may eventually, however, become the mainmotivational factor. The most immediate problem, perhaps, is with respect to the trainedtrainers. Trainers, compared to mechanics and plant operators, are often not eligible forout-station and other operational allowances and, consequently, receive lower totalremuneration. RTCD recognizes the problem and has undertaken, as a covenant of theProject, to recognize trainers specifically within its salary structure to ensure thatmotivation is retained.

29. There is, however, a much more general problem of salary scales in the mediumterm. With the development of the private sector in Eritrea, GOE's policy of contractingout roadwork, the likelihood of substantial investments in the road sector within Eritrea,and a massive road development program planned in neighboring Ethiopia, the skillsprovided under the project, engineering and equipment maintenance, will be in very highdemand in the region. Salaries and wages in the private sector are likely to rise verysubstantially, and there is the very real possibility that trained personnel will be attractedaway from RTCD and possibly also away from Eritrea. The longer term sustainability ofthe project is thus at risk.

30. RTCD recognizes the problem, and the need to maintain salary scales at a levelwhich will attract and retain key staff. Given GOE's policy of shifting responsibility forthe implementation of road construction and maintenance to the private sector, the loss ofsome personnel to the private sector is acceptable (it can be assumed that the privatesector will raise salary scales to compete effectively with Ethiopia). On the other hand, itwill be imperative that RTCD retains the capacity for contract administration as well asother key personnel. The conversion of RTCD into an autonomous roads' authority,outside the civil service, will offer RTCD the potential to react flexibly to the changingeconomic environment.

Alternative Project Funding

31. During project preparation, discussions were held with both the European Union(EU) and UNDP. The EU has already developed a substantial program of assistance forthe road sector, including limited technical assistance. This project will complement the

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EU on-going and planned activities. UNDP were supportive of the project but the roadsector is outside its priority assistance program.

Actions Agreed

32. The following conditions for Project Effectiveness have been agreed:

(i) Confirmation by GOE that the local costs for the first year of the projecthave been included in the Budget;

(ii) Identification of the counterparts assigned to the contract administrationand bridge survey components and confirmation by GOE that thesecounterparts will be able to work full-time with the technical advisers; and

(iii) Provision of the engineering designs for the construction of the mechanictraining facility.

Other actions agreed:

(i) The positions of mechanic and operator trainer will be suitably recognizedand rewarded within the RTCD salary scales; and

(ii) A mid-term project review will be held after fifteen months of projectimplementation.

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SECTION B

Project Administration and Implementation

Project Administration

33. The project will be implemented by the Road Transport Construction Department(RTCD) of the Ministry of Construction (MOC). The administrative design of the projectis very simple, comprising: (i) three consultant contracts; (ii) procurement of vehicles,computers and office equipment; and (iii) procurement of spare parts for the trainingcomponent. The day-to-day activities of the Consultants will be managed by therespective RTCD Head of Department:

Project Component RTCD Responsibility

Feasibility study and detailed design: Head of Engineering OfficeBridge inventory and condition survey: " " "Contract administration: -" " "Parts procurement/management: Chief Warehouse ManagerMechanic and operator training: Head of Technical Services and Training

Division

34. The Head of the Engineering Office will also act as the overall ProjectCoordinator, responsible to the General Manager, RTCD. The Project Coordinator will:

* facilitate GOE's responses to IDA's and the consultants' communicationsand requests;

* coordinate provision of GOE inputs, including: construction of themechanics' training school; provision of counterpart staff, trainees,facilities, equipment and data, consultants' work permits, tax clearanceand customs clearance;

* monitor, in conjunction with the respective Division Head, the contractsand outputs to ensure successful implementation;

* establish, monitor and control project accounting, disbursement andauditing procedures; and

prepare regular progress reports to be submitted to IDA, and ensure thataudited project accounts are submitted according to the provisions of theDCA.

35. Consultants reports, their findings and recommendations for adoption will bereviewed by a committee consisting of the General Manager RTCD (Chairman), theProject Coordinator, and relevant RTCD Divisional Heads. Assistance foradministration of the contracts will be provided by the contract administration consultant,

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and assistance for the procurement of the spare parts will be provided by the procurementconsultant.

Logistic and Administrative Support Provided by the Borrower

36. The GOE contribution to the project will consist of the following: (i) a trainingfacility, 2 classrooms and a workshop, for the in-service mechanic training, as well asworkshop facilities and repair bays for the repair/rehabilitation of the groundedequipment; (ii) a building for the installation of the soils and materials testing equipmentas the nucleus of a central RTCD laboratory; (iii) vehicles, computers and basic officeequipment to the consultants (procured under the project); (iv) office accommodation forall consultants, except for the road feasibility and detailed design study; and (v) all localcosts associated with the implementation of the project.

RTCD Counterpart Staff

37. RTCD will provide to the consultants the following counterparts for the respectiveproject components:

Project Component Counterpart Staff

Bridge Study 2 qualified civil engineers2 qualified technicians

Contract Administration > 2 qualified civil engineersSpare parts procurement/management 2 1 senior procurement officerMechanic training 32 mechanics, in 2 tranchesTraining of trainers 3 senior mechanics

1 senior electricianI senior plant operator

Counterparts will be selected from within RTCD staff, although additional engineersfrom elsewhere in the Ministry of Construction may also be attached to the contractadministration component. Candidates for the training as mechanic and electriciantrainers will be selected by RTCD on the recommendation of the mechanic trainers.

Procurement

38. All consulting services, spare parts, vehicles and equipment will to be procured inaccordance with the IDA procurement guidelines, using IDA's Standard BiddingDocuments:

(i) Consulting Services: these will be procured following IDA's Guidelinesfor the Employment of Consultants, adopting the time based contract forcomplex assignments, and incorporating price in the evaluation ofproposals with a weighting of 20 percent;

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(ii) Spare parts: where spare parts for equipment to be repaired/rehabilitatedare commonly available from several sources, Limited InternationalBidding (LIB) will be used to procure these parts competitively fromsuppliers approved by the Original Equipment Manufacturer (OEM). LIB,using OEM suppliers, will avoid the problem of counterfeit spare parts.Certain spare parts may only be obtainable from the original equipmentmanufacturer and will, therefore, be procured through Direct Contracting(DC). A provisional sum of US$50,000 (5 percent of the total) will beincluded in the consultant's contract for the rapid procurement ofunforeseen spares or materials needed in rehabilitating existing equipment(spare parts will be procured from the OEM or approved agent);

(iii) Vehicles, computers and related office equipment: subject to IDAapproval, these will be procured through the UNDP's Inter-AgencyProcurement Service, IAPSO;

(iv) Civil works: these will be constructed by RTCD, using its own resources.

The procurement arrangements are summarized in Table 1.

Table 1. Project Procurement(US$ Million)

Description LIB NCB Other Non-Bank TotalFinanced

Civil Works 0.11 0.11Goods 1.07 0.50 1.58

(1.07) (0.50) (1.58)Consulting Services 2.13 2.13

(1.88) (1.88)Training 0.08 0.08

________ (0.08) (0.08)

Studies 3.30 3.30(2.79) (2.79)

TOTAL 1.07 6.01 0.11 7.20(1.07) (5.25) (6.32)

Note: Figures in parentheses are the amounts to befinanced by IDA

Disbursement

39. Overall, 88 percent of the total project cost will be covered by the IDA Credit.The Credit will be disbursed as in Table 2.

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Table 2. IDA Disbursement Categories

Disbursement Category IDA Amount Percent (%o) of Expenditure(US$ million) to be financed

Consultant Services and Studies 4.11 100% of foreign expendituresGoods 1.41 100% of foreign expendituresTraining 0.07 100% of foreign expendituresUnallocated 0.73

Total IDA 6.32

The proposed project is expected to be completed by June 30, 2000, and the CreditClosing Date will be December 31, 2000. An estimated schedule of disbursement of theproceeds from the Credit is shown in Table 3. All disbursements will be fullydocumented to the satisfaction of the Association. Payments for goods for amounts lessthan US$100,000, and for all training, will be disbursed under Statements of Expenditure(SOE). Documents verifying expenditures under the SOE procedure will be retained forreview by IDA supervision missions. To facilitate the availability of funds for theProject, a Special Account would be established and maintained on terms and conditionssatisfactory to IDA. An initial deposit of US$200,000 will be made against an authorizedallocation of US$400,000, which will become available when disbursements will havereached SDR 2,000,000.

Table 3. Estimated Schedule of IDA Disbursement

Fiscal Year Ending Disbursement Cumulative Disbursement Cumulative(US$ million) (US$ million) Disbursement (°/)

Fiscal Year 97June 30, 1997 0.20 0.20 3Fiscal Year 98December31, 1997 2.14 2.34 37June 30, 1998 1.83 4.17 66Fiscal Year 99December 31, 1998 1.16 5.33 84June 30, 1999 0.87 6.20 98Fiscal Year 2000December 31, 1999 0.08 6.28 99June 30, 2000 0.04 6.32 100

Project Supervision

40. IDA will send a supervision mission to 'launch' the project, soon after projecteffectiveness. A Project Launch Workshop will be organized during this mission forRTCD senior and middle management involved in the implementation of the project.

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The mission will ensure that RTCD is fully briefed on the necessary procurement anddisbursement procedures (Special Account operations and replenishments, withdrawalapplications etc.) and that the accounting systems for the necessary project accounting arein place. Subsequently, supervision missions will be undertaken at approximately 6month intervals, following receipt of progress reports from RTCD. These supervisionmissions will review progress, assess the extent to which the project is meeting itsobjectives; and help resolve issues with regard to either the project or IDA procedures.

41. A mid-term review, approximately 15 months after project effectiveness, willundertake a more intensive review of project implementation and the achievement ofproject objectives. The mission will agree measures with RTCD and GOE to remedy anyunresolved problems, decide on the utilization of any uncommitted funds, and develop anaction plan for the remainder of the project. The mission may also be an opportune timeto discuss further IDA assistance to the road sector.

42. During the six months prior to the closing date of the project, an ImplementationCompletion mission will assess, with RTCD, the success of the project in meeting itsobjectives, as the basis for preparing the Implementation Completion Report (arequirement for all IDA projects) within six months following the closing date.

Accounts and Audits

43. The Project Coordinator will be responsible for the maintenance of accounts forthe project (including counterpart funds) and for arranging their annual audit. Accountswill be maintained using computer based accounting software; the software and systemsdeveloped for the Eritrean Community Development Fund Project are thought to beadaptable to the needs of this project. For the efficient management of project resources,the accounting system will allow: (i) the production of annual financial statements inaccordance with International Accounting Standards in a forrm suitable for audit andinclude integrated accounts; (ii) reflect the performance of each component of the project,in comparison with annual budget and project appraisal estimates; and (iii) permitefficient management of external funds by category of expenditure and in the currency ofthe funding. Trial Balances and financial reports, summarizing this information, will beproduced by the 15th of each month following the month to which they relate.

44. Annual Financial Statements will include a Balance Sheet and Statements ofOperating Expenses and movements of Funds. They will be audited, in accordance withInternational Standards on Auditing, by an independent auditor acceptable to theAssociation. The audit report will be provided to IDA no later than six months followingthe end of the Government's fiscal year. The auditor's report will include a statement onthe adequacy or otherwise of the accounting system and internal controls, and thereliability of statements of expenditure as a basis for credit disbursement.

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Project Reporting

45. The primary project components consist of consultant studies or technicalassistance. Progress reporting on the details of the project will form part of the Terms ofReference of the study consultants or technical assistance experts. In addition to thespecific technical reports (feasibility study, detailed design, bridge inventory, contractmanuals etc.) the consultants will prepare (a) inception reports within one month ofmobilization; (b) bi-monthly progress reports; and (c) final reports.

46. RTCD will also prepare a six monthly report for submission to IDA. The reportwill outline the progress in project implementation, the status of each of the components,the financial commitment and disbursements made under the project, and any issueswhich have to be resolved. The report will also summarize RTCD management'sassessment of the "knowledge and skills' transfer and any further actions required. Thereport will forn the agenda for the subsequent IDA supervision mission.

47. A mid-term review report will be prepared by the Borrower as the basis for themid-term review.

Schedule 1

ROAD SECTOR ENGINEERING PROJECT - ERrTREA

_______________________________IMPLEMENTATION SCHEDULE SUMMARY

Item Activity Months- …………--

9 ~~~~~~~~~~~~~112131 4 5 6 7 8i 9 10 II 12 13 14 I 16 17 181 19 201 21 221 23i 24 25 26 27 28 29 30 31 32 33 34 35' 36

1. FEASIBILITY STUDY & DETAILED DESIGN & DOC -I-_ ___ _ __ -- ~1.1I Mobilize/Demobilize Consultant

1.2 Conduct Feasibility & Environmental Studies & Prelimn Design Proposals ………………… 1-1.3 GOE/IDA Approve Prelinm Design & Feasibility & Environmnental Findings-

1.4DratAppro/Finalize Enginerng Drwings andContract Docs _… I

1.5 Draft/Finalize Design Report

1.6 Draf't/Appro/Finalize Consulting Services Final Report = L-

2. BRIDGE STUDY

2.1 Mobilize/Demobilize Consultant

2.2 Provide In-country Services/TA

2.3 Conduct Field Investigations& Analysis - .- -_

2.4 1Draft/Appro/Finalize Bridge Inventory Report t F 2.5 Draft/Appro/Finalize Bridge Strength Analysis Report

2.6Draft/Appro/Finalize Bridge Works Program F-I 1I4. 2.?JDraft/Appro/Finalize Consulting Services Final Report 9

3. CONTRACT ADMINISTRATION TA_____- II --- l

3.)_i4obilize/Demobifize Long Term TA Ikm__ I- - - - …… t1~3.2tProvdeLongTermTIA /Establish CAdmin Unit~~* * - ** * * * ~1 …… K -3.3 Draft/Appro/Fisalize Standard Contrct DocsI-F-------3AL!Draft/Appro/Finalize CAdmin Systems Manual __________ I-3.51Draft/Appro/Finalize CAdmis Organization Manual ml ~ - _

3.6~Draft/Appro/FinalizeTA Final Report _______ _- - - -- -- J3.7]PTovide Short Term TA follow up ______________ }---

4. SPARE PARTS PROCUREMENT TA _ A

4.1 Mobilize/Demobilize Long Term TA I -_4.2 Provide Long Term TA / Establish NwPoueetPatssmi

4.3 Process Sparc Parts Orders- - -4.4 Draft/Appro/Finalize Parts Proc Systems Recommendations _______--- -I

4.5 Draft/Appro/Finalize Max/Mis Stock Holdings11 _i.

4.6 Draft/Appro/Finalize Parts Proc Systems Manual 14.18rvd hr Termn TA follow up, I--- -t l

S. MECHANIC, ELECTRICIAN & EQUIPMENT OPERATOR TRAINING TA

5.2 Provide Long Term TA

5.3 Provide Short Term TA

5.4 Ins-pect E-quipment/Identify units BER/Prepare Individual Parts Orders & Costs

5.5 Draft/Appro/Fisalize 0/all Inspection Report,inc Parts Orders & Costs1

5 6 Draft/Appro/Finalize Tools & Training W'shop Equipment Orders & Cost

5.7lDraw-up Equip Repair Schedule/Identify I st Tranche Trainees

5.8 Seafreight Delivery of Repair Parts & Training Tools & Wshop Eqsip Orders

5.9 Repair I st Tranche Equip/Upgrade I St Tranche W+E 446 Repair 2nd Tranche Equip/Upgrade 2nd Tranche M ± E

6.1 Training by others of HE Mechanics-iElectfics as Trainers

6.2 Train HE Operators/Mechanics as Operator Trainers__1

6.3 Draft/Appro/Finalize Consulting Services Final Report rspp0_l

- 18 -

Schedule 2Page 1 of 3

THE STATE OF ERITREA

ROAD SECTOR ENGINEERING PROJECT

TRAINING PLAN

Introduction

1. The need for increased institutional capacity has been recognized as a priority inEritrea. The staff of the Road Transport Construction Department (RTCD) are highlymotivated but lack expertise in certain important areas: (i) the administration andsupervision of works undertaken, under contract, by the private sector; (ii) modem spareparts' management and procurement systems; (iii) the specialist mechanical skillsnecessary for the maintenance and repair of heavy plant and equipment; (iv) soils andmaterial testing; and (v) bridge condition and structural strength analysis. This projectwill address these skill areas and provide capacity building and training in order toremedy the identified deficiencies.

Recruitment of Trainees

2. In almost all components, the staff for training will be drawn from the regularstaff of RTCD. The exception will be in the component for training in contractadministration under which: (i) additional personnel from other branches of the Ministryof Construction may be attached as counterparts; and (ii) seminars by the contractadministration expert may be given to a wider audience of GOE officials involved incontract administration.

Training Mode

3. Training in most project components will be undertaken through in-service andsupervised work experience training. The technical advisers will be provided with smallgroups of full-time counterparts with whom the expert will work and transfer the requisiteskills and techniques. The basic exceptions to the small counterpart group approach arewith respect to the training of mechanics and the training of mechanic trainers. A formaltraining approach is adopted for the mechanics, although most of the training will beprovided by closely supervised work experience. The training mode(s) in each of theproject components is detailed below:

- 19 -

Schedule 2Page 2 of 3

Project Component Training Requirement Training Delivery Mode(s)

Roads Study Soil and materials testing In-service trainingBridge Study Survey and structural strength In-service training

analysis Supervised work experienceContract Contract supervision and In-service trainingAdministration administration Supervised work experience

SeminarsParts Management Modem parts management and In-service training

procurement systemsMechanic Training Heavy plant mechanical skills Classroom training

In-country courses by suppliersSupervised repair of equipment

Mechanic Trainers Pedagogic skills and techniques Specialist overseas trainingPlant Operator Improved operator techniques In-country one-to-one trainingTrainer Basic pedagogic skills

For the training of mechanic trainers, candidates will be selected from the existing GradeI mechanics and sent to appropriate courses overseas. These will be the only overseastraining courses provided under the Project.

Training Design and Monitoring

4. The broad design of the training program will form part of the technical proposalsfrom the consultants and will be evaluated as part of the selection process. The detailedtraining program will form part of the Consultant's Inception Report and will bediscussed and agreed with the RTCD. With regard to the training of trainers throughoverseas courses, the Consultant will identify the potential courses and makerecommendations to RTCD management for decision.

5. The training programs will be monitored by the Heads of the relevant Divisions inRTCD and by the overall project coordinating committee. To assist with the monitoringboth the technical experts and the counterparts will complete regular assessments of thetraining program, detailing the achievements and problems with the program as well asthe performance of the expert/trainer and the counterparts/trainees.

- 20 -

Schedule 2Page 3 of 3

Expected Results of Training

6. The training under the project will provide RTCD with in-house capacity for soilsand materials testing, bridge structural testing and analysis, and contract administration.

In addition, the spares' management and procurement systems will be improved and stafftrained in their use, and RTCD's mechanical maintenance capacity and capability will besubstantially enhanced.

Re-Entry of Trainees into RTCD

7. This will not be a problem as the training proposed, with the exception of theshort overseas courses for mechanic trainers, will be undertaken as in-service training orsupervised work experience. The Trainees will thus continue to work within RTCDthroughout the training period.

IBRD 28433

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