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USE ONLY

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Report No.

11303-JO

STAFF APPRAISAL REPORT

HASHEMITE KINGDOM OF JORDAN

THIRD TRANSPORT PROJECT

FEBRUARY 11, 1993

Infrastructure Operations Division Country Department II Middle East and North Africa Region

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

CURRENCY AND EOUIVALENT UNITS (As of January 1, 1993 Currency Unit US$1.00 JD 1.00

Jordanian Dinars (JD) JD 0.6882

= = =

US$1.453

WEIGHTS AND MEASURES 1 kilometer (kmn) 1 meter (m) 1 square kilometer (km2 ) 1 metric ton (t)

0.62 miles (mi) 39.37 inches (in) 0.386 square miles (mi2 ) 2,204 lbs

= = = =

ABBREVIATIONS MOP MPWH -

-

Average Daily Traffic Aqaba Port Corporation Aqaba Railway Corporation Civil Aviation Authority Canadian International Development Agency District Engineer Environmental Assessment European Community

-

Governmentof Jordan

ADT APC ARC CAA CIDA

-

DE EA

EC GOJ HRID

-

ICB

-

IDTA

-

IRR JPMC

-

LCB MOF MOI

-

Human Resource and Institutional Development International Competitive Bidding Institutional Development Technical Assistance Internal Rate of Return Jordan Phosphate Mining Company Local Competitive Bidding Ministry of Finance Ministry of Interior

MOT PCI PPTA

-

PSTA

-

PTC

-

QAIA

-

RJ RMMS

-

R&PM

-

SOE TOR vpd VOC

-

GOVERNMENT OF JORDAN FISCAL YEAR January 1 - December 31

Ministry of Planning Ministry of Public Works and Housing Ministry of Transport Pavement Condition Index Project Preparation Technical Assistance Policy Support Technical Assistance

Public Transport Corporation Queen Alia International Airport Royal Jordanian Airlines Road Maintenance Management System Routine and Periodic Maintenance Statement of Expenditure Terms of Reference vehicles per day Vehicle Operating Costs

FOR OFFICIALUSE ONLY HASHEMITEKINGDOMOF JORDAN THIRDTRANSPORTPROJECT STAFFAPPRAISALREPORT TABLE OF CONTENTS Page No. LOAN AND PROJECT SUMMARY ....................................

i

1.

INTRODUCTION ...........................................

I

A. B. C.

I I

II.

II.

Macro-economic Situation ................................... Macro-Objectives and Transport Sector Strategy .................... Rationale for Bank Involvement ...............................

3

THE TRANSPORT SECTOR .................................

4

A. B. C. D. E. F.

4 4 9

Description of the Sector ................................... Roads and Road Transport Sub-sector ........................... Railvays .............................................. Aqaba Port ............................................. Civil Aviation ........................................... Previous Bank Involvement ..................................

10 11 13

THE PROJECT ............................................

14

A. B.

14 15 15 15 16 17 19 20 21 23 24 25

Background and Objectives .............. .. .................. Project Description ....... ............. .................... (i) Ras El Naqab to Wadi Yutum Road ......................... (ii) Road Rehabilitation Program .............................. (iii) Technical Assistance Component ........................... C. Cost Estimates and Financing ............. .. ................. D. Implementation and Monitoring ............................... E. Project Supervision ....... ............ .................... F. Procurement ..................... ....................... G. Disbursements ....... .............. ...................... H. Environment ..................... ....................... I. Accounting and Auditing ............... .. ..................

This report is based on an Appraisal Mission in March 1992 comprising Messrs. T. Wolden (Task Manager), R. Bonney, P. Cheryan, B. Dixon-Smith (consultants). Mr. G. Tharakan (Senior Transport Economist) updated the economic evaluation. The Peer Review team consisted of Messrs. P. Blackshaw, L. Revuelta (EMTIN) and P. Long (EA1IN). Secretarial assistance was provided by Mrs. Maria-Pilar Reyes. This document has a restricteddistribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

IV.

ECONOMIC EVALUATION ................................... A. B. C. D.

Page No. 26

Introduction ............................................ Ras El Naqab to Wadi Yutum Road ............................ Road Rehabilitation Program ........... ...................... Technical Assistance Component ......... .....................

V.

PROJECT RISKS.28

VI.

AGREEMENTS REACHED AND RECOMMENDATIONS ....

26 26 27 28

........29

Ax NEES: N 1 2. 3. 4. 5. 6. 7. 8. 9. 10.

Documents in the Project File ..........

.........................

I'he Road Transport Sector ............ ......................... New Vehicle Load Limits ............. ......................... Policy Support TA for Road Transport Sector, Outline of Studies and Project Management .......................... Technical Assistance Program for Aqaba Railway Corporation...................................... Implementation Schedule.65 Pavement Rehabilitation Program ................................. Economic Evaluation ......................................... Supervision Plan ............................................ DisbursementForecast Table ....................................

31 32 36 38 49 66 67 83 86

LIST OF TABLES: Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table

1.1: 2.1: 2.2: 2.3: 2.4: 2.5: 2.6: 2.7: 2.8: 3.1: 3.2: 3.3: 3.4: 3.5: 4.1:

Planned Public Sector Development Expenditures 1986-90............. Road Expenditures and Road User Revenues 1988-92 ................ Estimated Registered Vehicles 1986-90 .......................... Consumption of Petrol and Diesel 1980-90 ....................... ARC Financial Summary and Projections, 1986-95 .................. Aqaba Port Corporation: Income and Expenditure .................. Aqaba Port Traffic ........................................ Royal Jordanian Airlines Traffic .............................. Civil Aviation Authority Revenue and Expenditure ................. Project Composition and Estimated Costs ........................ Financing Plan .......................................... Forecast of Project Supervision ............................... Summary of Proposed Procurement Arrangements .................. Disbursements Against Project Components ....................... Summary Results of the Economic Evaluation ....................

2 6 8 9 10 II

11 12 13 18 19 21 22 23 28

MAP: IBRD No. 23517 ............................................ 87 Approving Regional Vice President: Mr. Caio Koch-Weser Approving Director: Mr. Ram K. Chopra Approving Division Chief: Mr. Alastair J. McKechnie

HASHEMITEKINGDOMOF JORDAN THIRDTRANSPORTPROJECT STAFFAPPRAISALREPORT Loan and Project Summary Borrower: Beneficiary:

Hashemite Kingdom of Jordan Ministry of Public Works and Housing (MPWH), Ministry of Transport (MOT),

Aqaba Railway Corporation (ARC) Loan Amount:

US$35.0 million

Terms:

20 years, including 5-year grace period at the Bank's standard variable interest rates

Project Objectives and Description: The project would promote a viable and efficient transport sector by rehabilitating and upgrading road arteries critical for foreign trade and transit traffic. The project would also enhance service life for road investments by supporting lower axle load limits for trucks, more appropriate and stronger road pavement construction and better maintenance. Technical assistance to review institutional arrangementsand develop the capacity and capability of sector agencies to ensure sustainable improvementsof roads and operational efficiency and financial viability of the railway will also be an important objective. Benefits:

The roads selected under the project have deteriorated pavements with high road roughness and excessive vehicle operating costs (VOC); in particular the 71-km Ras El Naqab-Wadi Yutum section of the main north-south road where partially the road pavement is in the process of disintegrating. The project components, together with the technical assistance would permit a continued and increased level of phosphate exports, reductions in domestic transport costs, particularly of imports and exports, and increased revenues from the expected future revival of the lucrative transit trade. The improvement of the Ras El Naqab-Wadi Yutum Road is critical to maintain the efficient transport of phosphate rock (Jordan's primary export commodity), cement, most other exports and imports and transit traffic, and therefore, absolutely critical to the functioning of the entire economy. The economic rate of return, derived from savings in vehicle operating costs and road maintenance costs, is estimated to be 14.2 percent. The road links in the pavement rehabilitation program are expected to yield an economic rate of return ranging from 33 - 57 percent. Benefits are derived from vehicle operating cost savings and the avoidance of major reconstruction costs. In addition, the rehabilitated roads will improve traffic safety.

Risks:

The proposed project is unlikely to be subject to any unusual risk, excepting, of course, the Region's potential volatility. Although, with other projects, there have been delays due to restrictions on local cost financing, these have always been overcome within an acceptable time frame. Moreover, the Government places high priority on this project, especially the reconstruction of the Ras El NaqabWadi Yutum road, and in view of the critical nature of this transport artery to the whole economy, the Government has confirmed that adequate local funds will be made available. Special care has to be taken to maintain road traffic movements during work on the Ras El Naqab-Wadi Yutum Road by providing adequate detours.

-

11-

Estimated Project Costs (US$ Million) Local

Foreign

Total

(a) Ras El Naqab-Wadi Yutum Civil Works (2 contracts) Supervision of Works Environmental Supervision

14.41 0.60 0.10

33.63 0.90 -

48.04 1.50 0.10

(b) Road RehabilitationProgram Priority Road Links Supervision of Works

4.29 0.20

10.00 0.30

14.29 0.50

(c) Technical Assistance Phase I Policy Support, Transport Sector Phase II Institutional Development Base Cost December 1992

0.32 1.00 20.92

0.48 1.50 46.81

0.80 2.50 67.73

Contingencies Physical Price Total Project Cost

1.44 2.47 24.83

3.37 5.04 55.22

4.81 7.51 80.05

23.70 1.13

1.50 33.87 19.85

25.20 35.00 19.85

24.83

55.22

80.05

Financing Plan Government IBRD

Cofinanciers: - EIB TOTAL

Estimated Disbursements (US$ millions)

Annual Disbursement Cumulative Disbursement

FY93

FY94

IBRD Fiscal Year FY95 FY96 FY97

FY98

FY99

2.50 2.50

7.60 10.10

9.80 19.90

8.40 28.30

5.00 33.30

1.30 34.60

0.40 35.00

57

81

95

98

100

Percent (%)

7

29

Estimated Rate of Return: Ras El Naqab-Wadi Yutum Road Road Rehabilitation Program

14.2% 37% (range from 33% - 57%)

HASHEMITEKINGDOMOF JORDAN THIRDTRANSPORT PROJECT STAFF APPRAISALREPORT I.

INTRODUCTION

A.

Macro-economic Situation

1.1 The economy of Jordan has traditionallyrelied upon five main sources of foreign exchange: (i) remittances from Jordanian workers in other countries (particularly the Gulf states where, in 1988, an estimated 40 percent of the Jordanian work force was employed); (ii) exports of manufactured goods and agricultural produce to regional markets; (iii) exports of phosphate, potash and fertilizers to the world market; (iv) tourism (amounting to approximately 18 percent of foreign currency earnings in 1989); and (v) grant aid, primarily from the region's oil-rich nations, which in the past has financed about 30 percent of the country's imports and provided about 80 percent of government revenues. During the 1970s and early 1980s, these sources were adequate to maintain economic growth and internal and external financial stability. However, the regional recession, largely caused by the decline in oil prices in the mid-1980s, led to a steep reduction in these sources of income and resulted in sharp deteriorations in Jordan's balance of payments, public finances and employment situation. By the end of 1988, the economy was in a very precarious position. 1.2 The Government responded to these difficulties by undertaking economic and financial reforms in the context of a standby arrangement with the IMF and an adjustmentprogram with the Bank (Industry and Trade Policy Adjustment Loan, 3142-JO). Throughout 1989 and 1990, until the onset of the Gulf crisis, the Government's policy, focussing on measures to reduce macroeconomic imbalances, stimulate export led growth and reduce unemployment, remained largely on track. Monetary growth was moderate, inflation was receding and a number of cost recovery and subsidy reduction measures limited pressures on the budget. The development program was also strictly constrained. The onset of the Gulf crisis, however, posed severe difficulties for the adjustment program. A World Bank analysis indicatesthat the negative impact upon Jordan's balance of payments was US$1 billion in 1990 and about US$2.3 billion in 1991. Furthermore, the large number of expatriate Jordanian workers returning from the Gulf region has swelled the ranks of the unemployed. The overall unemployment rate was estimated to have risen to 25 percent, with about 20,000 unemployed within the transport sector alone, but has now declined somewhat to about 15 percent. Although priority in the immediate allocation of resources must be given to urgent, crisisrelated needs, the original adjustment objectives remain valid and are being pu;rsuedthrough the IMF standby arrangement and the Bank's program of structural reforms. The Government and the Bank agree that achieving many of the adjustmentobjectives requires an efficient and responsive transport system in view of the importance of the sector in generating foreign exchange earnings and employment. B.

Macro Objectives and TransRort Sector Strategy

1.3 Transport infrastructure and operations are a key element in the effective functioning of the economy, internally and vis a vis external trade. Jordan's transport capability, by virtue of its location on an important transit route, also provides a revenue-earning service that contributes significantly to economic activity and growth. Both the Government and the private sector have sought to develop this capability by building and maintaining efficient transport links with neighboring countries; ensuring reliable and cost efficient export routes and facilities; and promoting regional transport services such as transshipment. In major urban areas, especially Amman, the road network has been upgraded to ease traffic flows and, thus, permit the cities to fulfil their functions as major economiccenters. Prior to the Gulf crisis, the transport industry directly contributed about 11 percent of the Gross Domestic Product (GDP). The overall impact of the

-2 industry is reflected in the large proportion of investmentexpenditure thathas been allocatedto the sector. The following table relates public investrnentin the transport sector to that in otier sectors during the 1986-90 Five-Year DevelopmentPlan, and shows that transport accounted for about 9 percent of total public investment. Table 1.1: Planned Public Sector Develogment Expenditures 1986-1990 (JD Million) 1986-90

Sector

%

3,114

100

Non-Transport Infrastructure

710

23

Transport:

271

9

-

214 13 28

7

Total Planned Public Expenditure

Roads Ports Railways Civil Aviation a) Public Transport b)

11 5

-

Source: Ministry of Planning, Amman. Notes: a) including Royal Jordanian Airlines. b) Public Transport Corporation (Amman bus service). 1.4 Transport also plays a major role in providing employment. It is estimated that direct employment in the sector, prior to the crisis, was approximately 47,000, or 10 percent of the total work force. Following the onset of the crisis, the sector's unemployment rate has been about 40 percent, with most unemployment occurring in the road freight industry, largely a result of the loss of transit trade with Iraq. 1.5 Prior to the onset of the Gulf crisis, transport had been a major earner of foreign currency based on the transit operations of Aqaba Port and the road transport industry. In 1989, these earnings amounted to more than US$500 million. However, transit operations were not without cost to the infrastructureand environment in Jordan. There was severe deterioration of long stretches of the road system, especially on the road between Aqaba and the Iraqi border; the quality of life in the small towns through which the road traffic passed has declined; and, in Aqaba, the heavy traffic through the port caused both land and sea pollution. Some of these problems are already being addressed through reconstructionof about 240-km of the main road between Amman and the Iraqi border; completion of the new north-south road through the Eastern Desert; construction of a new road parallel to the Dead Sea and the recently completed road to Aqaba port that bypasses the town of Aqaba. 1.6 In the past, the emphasis in sector development has been on improving conditions along the transit corridors, and considerable progress in this direction has already been achieved as discussed above. However, much remains to be done if the transport system is to support socioeconomic activity and contribute to solving the balance of payments problem. Pressing concerns in the sector now are: to reduce the burden imposed on the Government's budget; to better regulate truck

operations; to improve design and construction practices in the road sector; and, to increase the accountability and commercial orientation of public enterprises in the sector. Consequently, sector strategy is now increasingly focussed upon: (i) improving cost recovery in the sector; (ii) improving the efficiency of the sector through the organizational and financial restructuring of public revenueearning entities to make them more commercially-oriented;(iii) modernizing and rationalizing the road freight industry; (iv) developing new markets for the services of Aqaba port; and, (v) giving added emphasis to design and construction practices. C.

Rationale for Bank Involvement

1.7 Past Bank involvement in the transport sector in Jordan has focussed on institutional and policy reforms. Major initiatives have included: (i) the design and implementationof a road maintenanceplanning and management system; (ii) the adoption of project evaluation techniques as an integral part of project design; (iii) the drafting of vehicle axle-load legislation; and (iv) the introduction of management tools in some of the parastatal agencies, especially the Aqaba Railway Corporation (ARC). However, not all of these initiatives have been successful; more support is needed to consolidate and develop these reforms in line with Jordan's changing economic and social conditions. 1.8 With significant reductions in the budget deficit remaining a priority macro-objective, the Government recognizes the need for increased efficiency in transport agencies such as ARC the Public Transport Corporation (PTC), Royal Jordanian Airlines (RJ), and the Civil Aviation Authority (CAA), in order to reduce the demands on public finance for subsidies, capital investmnent and debt service. Furthermore, the authorities now accept the need for the largest sub-sector, road transport, to recover the costs of provision of road infrastructure initially to cover avoidable costs such as maintenanceand eventually, depreciation and debt service. The renewed willingness of the Government to address longstanding issues is evidenced by: the agreement to enforce axle load limits, the acceptance of the need to review road pavement design and construction practices to address quality issues, the phosphate transport contract with ARC, the increase in fuel prices and the strengthened road maintenancemanagement. Bank involvement would consolidate and deepen past project achievements and recent policy and institutional reforms at a time when some major transport sector donors are inactive. The achievementof these objectives, fundamental to Banksupported macroeconomicpolicy, will be facilitated through technical assistance to be provided under the proposed project. 1.9 The main component of the proposed project is the reconstruction of the 71-km Ras El Naqab to Wadi Yutum section of the Desert Highway tying the Port of Aqaba to the rest of the country. This road section, which has exceeded its design and economic life, represents a serious and costly bottleneck in the country's major transport artery; maintenance is no longer a viable alternative to reconstruction. Should the road fail, or even deteriorate much further, the effect upon the economy would be severe, threatening the rest of the Government's Bank-supportedadjustment program. Bank support of this component is of importance not only in addressing institutional, operational, engineering and environmental issues, but also in attracting cofinancing, which has been difficult to obtain since the onset of the Gulf crisis.

-4 II.

THE TRANSPORTSECTOR

A.

Description of the Sector

2.1 Most of the road transport industry is operated privately, and that part (e.g., the Iraq/Jordan Land Transport Company, the Jordan/Syria Land Transport Company and the PTC) which is government-controlledis constrained to operate according to commercial precepts. Aqaba Railway Corporation, Royal Jordanian Airlines, Aqaba Port and the Civil Aviation Authority are autonomous agencies of the Ministry of Transport (MOT). MOT, according to Law 42 of 1971, has overall responsibility for the entire transport sector, including roads' and the regulation of private sector transport operations. Traditionally, MOT has not been active in development matters, with road sector investments being the responsibility of the Ministry of Public Works and Housing (MPWH). Consequently, coordination between sector investments and operations has been weak. The major function of MOT, with regard to roads, is to regulate private sector activity through licensing and fare and tariff setting, carried out by the Road Transport Directorate of MOT. However, as the administrative systems evolves, MOT is likely to take a more active role in sector development. During loan negotiations, the Govermnent undertook to establish an inter-ministerial coordinating committee to supervise and evaluate studies under the project, with arrangements that would allow participation also by NGO's and stakeholders in the private sector. 2.2 During the past 10 years, major improvementshave been made to all the transport mnodesin the sector. Nearly all desirable links in the road system (approximately 3,500 km of main and secondary roads and 4,550-km of village and agricultural roads) have been completed. Much of the 300-km narrow gauge, single-track railway line and the equipment of the Aqaba Railway Corporation (ARC) serving the phosphate mines have been rehabilitated and upgraded. A new internationalairport has been built at Amman (Queen Alia International Airport, QAIA) and the Aqaba airport has been upgraded to internationalstandards. Aqaba port has been significantly expanded and is capable of handling more than 20 million tons of cargo a year, and additional port facilities are being built to serve the fertilizer complex south of Aqaba. Relatively little new construction is required for the road network: the emphasis must be on rehabilitation and upgrading of existing roads, and on institutional and policy reform to improve operational efficiency and maintenance. However, it should be emphasizedthat, with the current situation in the Middle East, predictions of traffic trends, the basic information for transport planning and policy, can only be tentative and the above assessments may need to be changed if transport needs grow unexpectedly. The following sections describe the salient features of the four main transport subsectors: roads, railways, ports and civil aviation. B.

Roads and Road Transport Subsector

2.3 The Ministry of Public Works (MPWH) is responsible for the construction and maintenance of the main, secondary and rural/village road networks. Municipalities are responsible for the roads within their jurisdictions, unless they form links in the national road system. Traditionally one of the most influential ministries, MPWH is generally efficient and staffed by well-trained and experienced personnel. Although overall highway and transport planning is the responsibility of the Ministry of Planning's Infrastructure Department, it is normally MPWH that undertakes feasibility studies, most often by using Jordanian consulting firms. Highway and pavement design standards are based on guidelines established by the US Federal Highway Administration and the American Association of State Highway and Transportation Officials. These standards may not be optimal given the heavy axle-loads in Jordan, the extreme diurnal temperature difference and available road

However,the Ministryof PublicWorksand Housingis responsiblefor roadconstructionand maintenance.

- 5pavement construction materials. A road pavement study carried out by the MPWH with assistance from foreign consultants is reviewing the appropriateness of these standards under Jordanian conditions. Annex 2 gives more information about the organization of the sector. 2.4 The legal limit for a single axle-load was established at 13 tons in 1983 but could not be enforced. New legislation introduced later allowed considerable truck overloading to take place but required that an overloading fee be paid to the Ministry of Finance. As a result, the axle load limits legislated in 1983 were ineffective in reducing actual axle loads. Inappropriate asphalt concrete pavements prone to cracking or rutting in combination with high axle loads have accelerated pavement deterioration on much of the main road network and especially on the Aqaba-Iraqi border highway. The Government has recently revoked a cabinet order that a year ago stopped implementationof the first step in a program of phased reduction in overloading over 2 years in 4 steps, i.e., a 25 percent reduction in overloading at each step, with each reduction being put into effect on specific dates, about 8 months apart, until the equivalent of a 13-ton axle-load limit is achieved (Annex 3). Regular axle load surveys would be required by the Bank during the implementation of the project to confirm the enforcement of each step in lowering the axle-load limit. MPWH has been provided with several portable "weigh-in-motion" axle load recording instruments as part of a road pavement study which the Government of Japan financed. These instruments would be used to verify compliance with changes in loading limits for trucks of different axle configurations. The introduction of the first 25 percent reduction in excess axle loading was a condition of loan negotiations, and during negotiations assurances were received on the continued implementationof this phased program of axle load reductions. Construction 2.5 Road construction in Jordan is normally executed under unit price contracts awarded after internationalor local competitivebidding, although a small amount of force account work is also undertaken. Depending on the size and nature of the contract, supervision is undertaken by MPWH engineers or local consultants. The Jordanian civil works contractingindustry has developed significantly during the past 10 years, although it has been hit hard by the economic downturn and the Gulf crisis. There are 3 firms in the top class capable of undertaking major civil works; 8 firms in the second class capable of carrying out most works, but requiring additional technical expertise for complex works; and 12 smaller registered contractors. Maintenance

2.6 Routine, emergency and some periodic road maintenanceis undertaken by the MPWH force account units while most periodic maintenance, including asphalt concrete overlay and strengthening, is carried out under contract. Under the Multi-Mode Transport Project (Loan 2463-JO), a simple road maintenancemanagement system (RMMS) was developed and implementedwith the assistance of foreign consultants. However, since the onset of the economic crisis and subsequent austerity measures, funds allocated for regular road maintenancehave been below the annual amount considered necessary by the RMMS. During loan negotiations, the Government agreed that road maintenancebudget allocations are to be adequate to the needs identified for the road sector based also on the road sector policy studies to be carried out under the project. The Government further agreed that it will inform the Bank of its annual allocation for road maintenance within the overall budget for exchange of views with the Bank. 2.7 The Government recognizes that a large maintenancebacklog exists and that additional resources are needed to correct the situation. Approximately 50 percent of the funds earmarked or spent under the category "Capital Investment" (Table 2.1) are for works to prevent pavement deterioration beyond the stage where expensive reconstruction is required to bring the roads back to a maintainablestate. Recent decisions to strictly curtail the construction of new roads and to

increase fuel prices and transit fees are significantsteps towards achieving full cost recovery from road users and securing funding to preserve the road system. Technical assistance provided under this project would assist the Goverrnent in determining road maintenance needs, institutional arrangements and the future role of force account works in road maintenance. Road Expenditures and Financing 2.8 Road expenditures are budgeted on a year-to-year basis, rather thanwithin the context of a multi-year plan, and the uncertain economic environment is partially responsible for the uncertainties in road maintenance funding. When the economy is stabilized, multi-year programming of all road works will be reinstituted, based upon road planning studies to be carried out under this project. Table 2.1 gives expenditure and revenue figures for 1988 to 1991 and budgeted amounts for 1992. Road maintenance funding at about JD 4 million per annum is low. The Maintenance Department of MPWH estimates that, given the successful completionof a program of essential rehabilitation, an annual maintenancebudget of JD 10 million (1991 prices) will be required (JD 6 million more than the 1992 level). Studies to be carried out under this project will determine appropriate levels of road expenditures including maintenanceand assess options for flnancingthe road sector (see Annex 4). Table 2.1: Road Expenditures and Road User Revenues 1988-1992 (JD millions) Expenditure: Capital Investments (self-financed) b/ Village Roads Farm Roads Maintenance Equipment, etc. Administration Capital Investments (loan financed) b/ Total Expenditures Revenue: Fuel Taxes License Fees Transit Fee, etc. a/ Total Revenues

1988

1989

1990

1991

1992 a!

17.36 3.20 0.70 3.82 0.58 3.00 18.35

17.85 1.93 0.45 2.65 2.91 20.53

16.38 2.14 2.38 2.47 0.03 2.72 22.67

10.95 2.50 3.00 3.00 2.79 24.28

15.99 5.00 5.00 4.00 1.00 3.32 33.32

47.02

46.34

48.80

47.53

67.63

1.86 18.09

2.42 18.96

2.10 20.58 -

2.10 24.90 5.00

3.00 28.00 8.00

22.68

32.00

39.00

-

19.95

-

21.38

1.00

Notes: a/ estimates. b/ road reconstruction,rehabilitation and strengthening. 2.9 In line with the Government's macroeconomicstrategy, which includes reducing public expenditure and debt, the objective for road sector financing should be for revenues derived from road users to be adequate to cover the costs not only of routine and periodic maintenance, but also of capital investment necessary to preservethe road network and prevent decapitalization of the road assets including reconstruction,rehabilitation and the debt service. Following the recent increases in fuel prices and transit fees, the road user revenue figures in Table 2.1 show a significant increase. In 1992 it is estimated that road user charges will cover almost 60 percent of total road expenditures. Present road-user charges are complicated due to their piecemeal evolution and neither reflect the wear and tear to the network occasioned by different classes of road users nor provide incentives to use more appropriate vehicles.

2.10 Commercial vehicles, particularly trucks, are the vehicles responsible for practically all of the gradual breakdown of a road's superstructureover time; and will impose particularly high damage costs during the temporary period when excess axle loads are permitted. However, even with full enforcement of axle load limits, heavy trucks will be responsible for a very large proportion of pavement wear and tear. Presently, diesel trucks not in transit traffic are hardly paying any fees to cover the costs they impose. To encourage the import of vehicles that cause less damage to pavements, and to achieve less overloading of existing vehicles, load- and distance-related user charges and differential license fees and duties should be considered, along with higher diesel fuel prices. Increasing diesel fuel prices is by far the most convenient, equitable and efficient way of revenue collection; it also ensures that heavy trucks and other heavy vehicles contribute their fair share towards financing the road sector, and this will also help reduce the budget deficit. Implementation of a more efficient road-user charge structure will require further investigations concentrating on the amount of additional revenue needed, the optimal structure of charges and the methods of collection. This would be addressed in a Road Transport Policy Study under the project. A five-year action plan for cost recovery based on a multi-year, sector financing plan would also be developed (see Annex 4). The implementation of the action plan to achieve full cost recovery would be monitored as part of an annual budget review with the Bank. Options such as toll roads and loadand distance-related charges would be evaluated. In the policy study, all borrowing requirements would be identified and financial flows made transparent to establish a clear linkage between necessary annual expenditure on roads and the user charges needed to finance them. This policy study would be completed by June 30, 1994 and would be financed under the proposed pro&Wt. During negotiations, it was agreed that the Government would initiate recruitment of the consultants before the loan becomes effective and that further refinements of the terms of references will take place before then in cooperation with the Bank. 2.11 While fuel prices at present cover economic costs, taking into account the advantageous prices paid by Jordan for Iraqi crude, the differential between diesel and gasoline prices makes an increase in diesel prices of 25 fils/It feasible. Regular petrol is priced at 170 fils/It (26 US¢/lt); super petrol is priced at 300 fils/It (46 /Ilt);and diesel fuel is priced at 105 fils/It (16 ¢/lt). The Februarv 1992 cif prices in Italy (this is used as a proxy for Aqaba as Jordan's supply of oil products is largely based on Iraqi crude obtained at an advantageous price) were: regular grade petrol priced at US$183.28/ton (16 0/lt); super grade petrol, US$212.15/ton (18.3 0/lt); and diesel, US$170.28/ton (14.6 0/1t). When local distribution costs are included, it is clear that petrol prices exceed economic costs, and diesel prices just about cover economic costs. The Government is addressing the genieral issue of energy prices in its dialogue with the IMF and in the context of a possible Bank-supported Energy Sector Adjustment Loan. Traffic and Road Transport 2.12 During the period 1980 to 1990, road traffic in Jordan experienced major fluctuations. Central to these changes were the outbreak of the Iran-Iraq war, the cessation of hostilities in that war and the onset of the Gulf crisis. Traffic passing through the port of Aqaba, which is one of the country's major traffic generators is representative of all road traffic in Jordan during this time. In 1980, total traffic passing through Aqaba amounted to about 6.6 million tons, of which about 31 percent was transit traffic: in 1988, at the height of the war, the total had risen to 20.1 million tons. of which 49 percent was transit traffic. Comparing the first nine months of 1990 with 1988, there was a decline in traffic of about 20 percent as Iraqi demand declined. Although no national road traffic census has been undertaken in recent years, it is clear that not only has port traffic been affected but, as port traffic is indicative of a general economic malaise, traffic country-wide has also probably declined. The economic evaluation of the proposed Ras El Naqab-Wadi Yutum Road improvement takes account of these reduced levels of traffic (Annex 8).

2.13 The following table shows the growth in fuel consumption during the period 1980 to 1990. The suddenjump in diesel consumption after 1980 is a reflection of the sharp increase in transit traffic between Aqaba Port and Iraq resulting from the Iran-Iraq war. Table 2.2 Consumption of Petrol and Diesel 1980-1990 ('000 ton) Year

Petrol*)

Diesel

Total

1980 1982 1984 1986 1988 1990

269.8 318.9 331.1 332.7 341.1 385.9

519.1 825.8 705.8 782.7 805.7 848.0

788.9 1144.9 1036.9 1115.4 1146.6 1234.0

Annual growth (%)

3.64%

5.03%

*) Approximately 15% of petrol consumption is super grade. 2.14 The Jordanian road transport industry is predominantly a private operation, ranging from single owner/operators to large specialized carriers, and there is freedom of entry into the industry although the tariffs are set and controlled by the Government (MOT). There are, in addition, three autonomous state-owned road transport companies: (a) the Iraqi-Jordanian Land Transport Company with approximately 450 vehicles, operated on a 50:50 basis by the two Governments; (b) the Jordanian-Syrian Land Transport Company with approximately 350 vehicles (most of which are nearing the end of their economic lives), which, althoughjointly owned by the two Governments, is limited almost entirely to operations within Jordan; and (c) the Public Transport Corporation, which operates the Greater Amman bus service with a fleet of about 300 buses. The trucking fleet in Jordan is dominated by private owner/operators providing about 60 percent of all transport capacity. The effect of truck tariff regulation on the trucking industry, and in particular on the long-standing problems of truck overloading, requires detailed attention. The policy study (Annex 4) to be carried out under this project would explicitly consider this question, and will clearly establish a case for or against eventual deregulation of freight rates in the road transport sector. During loan negotiations, the Government agreed to include the issue of deregulation of the trucking industry in the transport policy studies, and the terms of reference (Annex 4) will be further developed with this in mind. 2.15 Data on the size and composition of the vehicle fleets are generally unreliable in developing countries, due to poor record keeping, the large proportion of unlicensed vehicles and the failure to take into account vehicle scrapping. Generally, official figures tend to overestimate the size of the vehicle population. With that caveat, the following table gives an estimate of the vehicle fleet for 1986-90based on figures provided by the Government.

-9 -

Table 2.3: Estimated RegisteredVehicles 1986-90 1986

1987

1988

1989

1990

Cars Taxis Buses Trucks 5 ton

130,973 16,320 835 34,679 12.917

146,565 16,624 909 36,068 13,021

150,021 16,970 924 37,581 13.045

151,221 17,134 928 37,678 13.061

153,261 17,271 931 38,262 13.293

Total

195,724

213,187

218,541

220,022

223,018

Vehicle Type

C'.

Railwavs

2.16 The rail sector in Jordan comprises two railways although the Hedjaz Railway Corporation, which originally ran from Syria, via Amman and Ma'an, to the Hedjaz region of Saudi Arabia, is now essentially defunct and only operates an intermittent service to the Syrian border. The Aqaba Railway Corporation (ARC) is a dedicated railway serving the needs of the Jordan Phosphate Mining Company (JPMC) only, transporting phosphate from the mines at El Hasa and Al Abyad approximately 300 km to Aqaba port. ARC started operations in 1975, using a single-line narrowgauge track (1050 mm) with a 16-ton axle load limitation. Originally designed to carry about 1.5 million tons of phosphate a year, the system was unable to keep up with increased demand and rail transport has had to be heavily supplementedby private road transport. Under the Multi-Mode Transport Project approved by the Board in 1984, much of the track has been upgraded; new workshops have been built; and new rolling stock has been procured. After some initial setbacks, productivity is showing clear signs of improvement: the quantity of phosphate transported to Aqaba increased by nearly 18 percent in 1990, and, despite the impact of the Gulf crisis on ships calling at Aqaba port, a further increase of 12 percent was achieved in 1991. In 1991 ARC carried a total of 2.9 million tons of phosphate. 2.17 The ARC's improved operating performance, together with the recently signed one-year renegotiable contract with the JPMC and a 37 percent increase in tariffs, has led to a noticeable improvement in the corporation's financial situation. The deterioration in the financial situation of ARC appears to have been arrested and reversed; and there is scope for further improvements. Based on a continuation of the present trends, Table 2.4 shows past financial performance together with projections for 1992 to 1995. 2.18 Table 2.4 also provides details on phosphate carried, operating revenues, working expenses, net operating income, debt service and net surplus (deficit) for the years 1986-95. Continued upgrading of the infrastructure under the Multi-ModeTransport Project (Loan 2463-JO), supported by technical assistance in management, operations and finance, has improved ARC's financial performance. However, because of the devaluation of the Jordanian dinar, and because ARC has borne the foreign exchange risk of the investments financed, financial performance has not, and will not meet the financial targets agreed to under Loan 2463-JO. Operational inefficiencieshave exacerbated the situation. The devaluation of the JD is beyond the control of ARC, and it is difficult for ARC to be responsible for the foreign currency transaction losses when its revenues are in local currency. With close monitoring and better management, ARC should be able to increase its productivity and carry the recently allocated guarantee of 3.5 million tons, possibly even 4.0 million tons per annum. Several studies have shown that the avoidable economic costs of ARC are

- 10

-

Table 2.4: ARC. Financial Summary and Projections. 1986-1995 (JD million) Actual

Estim.

< Projected>

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

NORTHERNMINES PhosphateFreight (000 ton)2.8

2.6

2.2

2.2

2.6

2.9

3.2

3.5

3.5

3.5

OperatingRevenues WorkingExpenses

6.0 4.3

5.8 3.5

4.8 4.6

4.7 4.3

6.2 4.8

8.8 5.0

9.6 6.0

10.5 6.6

10.5 7.0

10.5 7.3

Net OperatingIncome (excludesdepreciation)

1.6

2.2

0.2

0.4

1.4

3.7

3.6

3.9

3.5

3.2

DEBT SERVICE Principal + Interest

3.8

4.1

5.7

5.7

4.0

4.5

4.3

3.7

2.6

2.4

6.2

6.0

6.1

5.7

5.0

3.5

3.1

11.9

10.0

10.6

10.0

8.7

6.1

5.5

CurrencyAdjustment Total Debt Service

3.8

4.1

(2.2)

(1.9)

(5.4) (11.5)

(8.6)

(6.9)

(6.4)

(4.8)

(2.6)

(2.3)

SURPLUS(DEFICIT) (2.2) (excl. currencyadjustment)

(1.9)

(5.4)

(5.3)

(2.6)

(0.8)

(0.7)

0.2

0.9

0.8

OperatingRatio (%) WorkingRatio (%) Debt Service Coverage

98 73 0.54

89 61 0.04

129 91 0.03

112 77 0.14

91 57 0.48

88 60 0.50

93 63 0.61

96 67 0.88

100 69 1.02

SJURPLUS(DEFICIT)

100 73 0.43

5.7

less than the corresponding costs of road transport, i.e., it is economical for the railway to continue in operation. Further, international comparisons indicate that ARC tariffs are considerably lower than rail freight tariffs elsewhere. The gradual enforcement of the axle-load limits for trucks, and increases in diesel fuel prices and other load-related charges on heavy vehicles, should increase the competitivenessof rail with road transport and enable rail tariffs to be raised to a level closer to economic cost. 2.19 The issues of the ARC's linkage to its only customer, JPMC, its debt structure, organizational restructuring, traffic levels and the transport needs of the El Shidiya mines would be reviewed under this project in a policy study to precede the institutional development technical assistance to be provided to ARC. This support to ARC would include preparation of a corporate development plan and a multi-year financing plan for the railway which includes a contract plan between ARC, JPMC and the government setting out the obligations and responsibilitiesof each. The provision of appropriate operational and management technical assistance is designed to help ARC carry out the necessary studies to cut costs, improve performance and achieve financial viability. See Annex 5 for an outline of the terms of reference for the support to ARC. D.

Aqaba Port

2.20 Port traffic has experienced large fluctuationsduring the past 10 years. However, on the whole, as is shown in the following table, the financial position of Aqaba Port has remained strong (although data concerning returns on revalued fixed assets are unavailable).

-

11 -

Table 2.5: Aqaba Port Corporation: Income and Expenditure (JD 000s) 1986

1987

1988

1989

1990

Revenue Expenditure a/

38,884 22,231

36,867 24,572

40,574 28,470

35,013 22,330

32,924 19,989

Surplus (Deficit)

16,653

12,295

12,104

13,583

12,935

a' includes depreciation and debt service. 2.21 While the recent fluctuationsin traffic have been larger than is common (see Table 2.6 below), and 1991 is likely to show a significant decline, ports frequently experience fluctuations due to a variety of factors including (i) general economic conditions; (ii) regional politics and economic groupings; and (iii) changes in technology and price and service competition. Whereas (i) and (ii) above are largely outside the controlof the port authorities, the last factor is something that should be under continuous review by port management. The Port of Aqaba has, for the most part, responded to traffic situations instead of developing action plans based on a well-researched marketing policy. Bearing in mind the past and potential contribution of the port of Aqaba to Jordanian trade and direct foreign exchange earnings, marketing and associated development strategies deserve careful examination;the Port Authorities are planning to undertake such a study with their own resources, independent of the proposed project. Table 2.6: Aqaba Port Traffic ('000 ton)

i28

1987

1988

1989

1990

IMPORTS Break-bulk Bulk Liquid Bulk Dry Total

2,908 417 3.234 6,559

3,040 771 4.392 8,203

3,797 766 3.944 8,507

2,826 842 4.498 8,166

1,862 499 3,382 5,743

EXPORTS Phosphate Potash Fertilizer Fuel Oil Other Total

5,198 1,125 552 345 f77 9,697

5,543 1,205 575 816 3.809 11,948

5,811 1,285 600 660 2.597 10,953

6,411 1,235 573 573 2.170 10,962

4,874 1,394 668 668 1.841 9,445

33,677 26,634

35,559 15,040

36,411 24,071

27,098 22,815

27,957 12,090

Containers-Jordan (TEUs) Containers-Transit (TEUs)

- 12 -

E.

Civil Aviation

2.22 The two main organizations in the civil aviation subsector are Royal Jordanian Airlines (RJ) and the Civil Aviation Authority (CAA). Both of these are autonomous entities responsible to MOT. Royal Jordanian Airlines 2.23 Royal Jordanian Airlines (RJ) founded in 1963, is an autonomous corporation required to operate on a commercial basis. In addition to domestic, regional and international air services, there are a number of subsidiaries: the Royal Jordanian Air Academy, travel and tourism services, hotels, training and consultancy services. Like the rest of the economy, the company's operations have been subjected to problems resulting from regional economic and political instability. Moreover, it has had to operate for the most part in a very competitivemarket. Despite these challenges, until recently RJ had developed a good reputation based on competent staff and sound marketing and expansion policies. In 1987, RJ made a profit of JD 1.9 million on its operations after depreciation and debt service; official results for 1989 and 1990 are not yet available, but net profit in 1989 was estimated at JD 4.2 million. Table 2.7: Royal Jordanian Airlines Traffic Units Aircraft km (000's) Passengers (000's) Seat Factor (%) Load Factor (%) Cargo Ton

1980

1982

1984

1986

1988

1989

1990

21,368 1,112 57.4 51.5 27,090

25,193 1,667 59.4 53.3 38,223

25,050 1,328 56.2 51.2 35,564

26,519 1,132 51.7 48.1 42,574

29,588 1,286 64.4 56.4 53,906

31,936 1,204 61.2 54.8 49,717

28,265 964 63.2 56.0 53,170

2.24 At the beginning of 1990 several measures were taken to improve profitability, these included dropping loss-making routes, entering into route sharing with other companies to optimize load factors, selling part of the fleet on a lease-back arrangement and leasing out aircraft surplus to needs. Based on these measures, it was expected that profits in 1990 would increase to about JD II million. Unfortunately, with the onset of the Gulf crisis these expectations could not be achieved and, currently, the airline is experiencing major operating and financial problems. The Jordanian authorities and RJ management recognize the present difficulties and accept that a solution to these problems lies in privatization. Before that can happen, however, the Government needs to address the issues of RJ debt and the restoration of profitability. As an interim measure, the airline will become 100 percent state-owned in order to be restructured prior to privatization, which is expected within three years. Civil Aviation Authority 2.25 The CAA, which is responsible for the management of Jordan's airports, air traffic control and licensing, is well managed and efficient. A surplus was achieved on its recurrent budget from 1987 to 1990, which was more than enough to finance its program of capital expenditure. However, overflying fees were the major source of revenue and the Gulf crisis, which caused a severe reduction in civil aviation in the region, will undoubtedly have a large negative impact on the financial position of CAA; there is, unfortunately, little that can be done to address this problem.

-

13

-

Table 2.8: Civil Aviation Authority Revenue and Expenditure (JD '000) 1984

1985

1986

5,527

4,920

excl. debt service

5,451

Capital Expenditure

1,472

Revenues

1987

1988

1989

1990

3,555

11,731 7,669

8,900

7,661

5,116

5,429

5,432

5,220

5,086

5,087

870

1,237

2,618

1,390

1,872 1,504

Recurrent Expenditure

F.

Previous Bank Involvement

2.26 The proposed project would be the third operation in the transport sector. In June 1971, IDA approved a credit (262-JO), in the amount of US$ 6 million equivalent, to finance the construction of an 18-km dual carriageway road between Amman and Zarqa, as well as consultancy services, the purchase of road maintenanceequipment and an urban transport study of Amman. The credit was closed and fully disbursed in December, 1974 with the road component being completed two years later than expected with a 30 percent cost overrun. Considering that this was the first transport sector project, and in an urban area, the delays were not excessive. Most of the delay was occasioned by difficulties in obtaining the right-of-way and difficulties in contractor mobilization, due to the Jordan-Syria border closure: these, in turn, gave rise to a significant claim being paid to the contractor, which was the main reason for the cost overrun. Under the proposed project, the planned Ras El Naqab-Wadi Yutum Road would be reconstructed and widened along the existing road on land already acquired by the Government and acquiring right-of-way will not therefore present problems. 2.27 The Multi-Mode Transport Project (Loan 2463-JO), with a Bank loan of US$30 million equivalent, was approved by the Board in July 1984 and became effective in February 1985. The project was extended three times due to project delays and, recently, the Gulf crisis, and the project closed on December 31, 1992. The project had as its objectives: (a)

easing bottlenecks on critical export/import routes through (i) improving highway maintenance; (ii) upgrading the capacity and productivity of ARC; and (iii) improving cargo handling operations at Aqaba port;

(b)

ensuring the implementationof axle-load legislation;

(c)

achieving financial viability for ARC;

(d)

strengthening transport sector institutions through training and technical assistance; and,

(e)

introducing and implementingbetter project preparation, implementationand monitoring.

2.28 Delays in implementingphysical objectives were largely occasioned by differences between the Government and the Bank on the procurement of civil works; in particular, on the use of price variation in civil works contracts. All components have been fully committed and are in progress. The achievementof institutionaldevelopment objectives has not been quite so successful; however, the recent economic crisis has led to a realization on the part of the Government of the need for institutional reform. Key issues are: (i) MPWH and MOT, although making better use of project feasibility studies and implementinga road maintenancemanagement system, are still relatively

- 14 weak as regards the integrationof planning; (ii) the enforcement of axle-load legislation is only now being seriously attempted through a gradual reduction in overloading, and the 13-ton axle-load limit will not be in effect for another two years; and (iii) ARC operations and finances have only just started to show an improving trend (para. 2.18). However, the devaluation of the Jordanian dinar has put debt servicing beyond the capacity of ARC and, therefore, the meeting of the financial covenant is no longer feasible solely through operational efficiencies as had originally been expected. 2.29 While ARC has made important strides in its program of infrastructure upgrading and workshop and equipment procurement, improvementshave been slower than anticipated, and, thus, operations have continued to be affected by derailments and locomotivebreakdowns. Consequently, productivity improvements are only beginning to be realized. A policy of major tariff increases alone *kould probably not have been effective in remedying the ARC financial position either. Traffic would have been diverted to competing road transport where, in the past, low user charges and the overloading of trucks permitted lower truck tariffs to be stipulated by the Government for phosphate. Despite these obstacles to increased rail tariffs, an overall tariff increase of 37 percent has been negotiated with JPMC. Several factors now indicate that better performance is likely: (i) rail traffic is expanding, and tariffs have been increased, although insufficiently; (ii) the gradual enforcement of axle-load limits for roads and increases in user charges, including diesel fuel prices, should increase the competitivenessof rail with road transport and enable rail tariffs to be raised to a level closer to economic cost; (iii) technical assistance in the form of policy support proposed under the project (to review, inter alia, cost recovery from road users, in particular the trucking industry) should lead to recommendationson how to improve the competitiveness of rail; and (iv) the institutionaldevelopment technical assistance to ARC proposed under this project should also improve efficiency and financial performance. The future role of ARC and the issues related to the contractual arrangement between ARC and its only customer JPMC, ARC's debt structure, tariff levels, and the transport needs of the new mine at El Shidiya will have to be reviewed as part of this TA support. III.

THE PROJECT

A.

Backeround and Objectives

3.1 In view of the country's macro-economic imbalances, the impact of the Gulf Crisis, especially the loss of traditional regional export markets and transit trade, and limited natural resources, the Government has decided to focus its efforts in infrastructure on a limited number of actions that will support its socio-economicobjectives. The project would promote an efficient and economicallyand financially viable transport sector in line with the Government's short and medium-term strategy by: adjusting the relative prices between rail tariffs and road haulage rates; improving durability of road pavements; improving the quality of maintenanceof roads; and supporting the implementationof axle load regulations. Key objectives of the project are: (a)

contributing to the economic adjustment program by continued upgrading of foreign trade arteries, especially seriously substandard road sections;

(b)

cost effective preservation of past road investments and reduction of long term transport costs by: (i) rehabilitation of key road sections; (ii) enforcement of legislation on axleload limits and improvments in pavement design and construction to extend the life of road investments; (iii) securing sufficient funding for road maintenance; and

(c)

providing technical assistance for policy support and institutional development to:

- 15 -

B.

(i)

enable GOJ to develop the organizational, administrative, technical and financial capacity of the road agency to a level sufficient to ensure that the utility of the roads to be reconstructed and rehabilitated is sustained over the long term;

(ii)

improve the operational efficiency and financial viability of ARC in a sustainable way by strengthening the management and improving operations and maintenance.

Project Description

3.2 Based on the objectives outlined in para. 3.1 the proposed project components, designed to assist in their achievement, are described in the following sections. (i) Ras El-Nagab to Wadi Yutum Road 3.3 The north - south 327 km Desert Highway links the port of Aqaba, Jordan's only outlet to the sea with Amman and the area north, and the phosphate mines at El Hasa, Al Abyad and El Shidiya. Most of the road has been upgraded geometrically and the pavement rehabilitated and strengthened. However, the 71 km section between Wadi Yutum and Ras El Naqab, which includes the steep 12.6 kmnRas El Naqab escarpment, has suffered severe deterioration over much of its length. Consequently, vehicle operating costs have risen on this section (Project file and Annex 8) which now requires major reconstruction and rehabilitation. On the escarpment section and on the 13-km long climb along the river (Wadi Yutum) at the Aqaba end of the project, the reconstruction of the road will have to take place in the present alignment with widening to four lanes to improve road safety and provide additional road space for slow moving trucks. This would require provision of detour roads, and significant improvementswould have to be made to the Ras El Naqab Resthouse Road to act as a temporary detour during the estimated 30 months construction period of the main road. 3.4 The estimated cost of this component (excluding quantity and price contingencies) is JD 33.90 million (US$48.04 m) divided into two contracts of JD 17.50 million (US$24.80 m) for the road improvementbetween Wadi Yutum and the foot of the Ras El Naqab escarpment (43 km), and JD 16.40 million (US$23.24 m) for the 28-km long Ras El Naqab escarpment section (including JD 2 million for road detours). Quantity and price contingencies and construction supervision will add US$12.4 million to this estimate. The foreign cost component of these works is estimated at 70 percent. The design details of the proposed upgrading and detour are given in the Project File (Annex 1) and the implementationschedule is given in Annex 6. Regarding the detours on the escarpment section and other critical detours, the Government agreed at loan negotiationsto establish and staff a management group that would include users and the traffic police to oversee the contractors' operation and ensure that the critical regulation of traffic through the works and on detours with associated services are of sufficient standard during the construction period. (ii) Road RehabilitationProgram 3.5 Although the MPWH is operating a road maintenanceplanning system the budget resources allocated for road maintenancehave been insufficient (para. 2.6) and, as a result, a backlog of periodic maintenance has developed. The proposed project will address this problem by assisting in the finance of a road pavement strengthening program. Four road links have been tentatively identified for the 1993-95 rehabilitation program with a total cost estimated at JD 10.08 million (US$14.29 m). Price contingencies and construction supervision would add about US$2.0 million to this. Ongoing planning and design work in Jordan may identify other high priority road links with

- 16 -

better rate of return than some of the selected links, and it is understood that substitutions or additions may take place in the program within the allocated amount for civil works in the loan agreement. This is necessary because ongoing annual surveys of road pavement conditions may identify deteriorated road sections where the base and subbase are in good condition and can be preserved by a less expensive (asphalt concrete) surfacing operation that would yield higher returns and save deeper layers from further deterioration. Annex 7 describes the first four road links in the Government's present road rehabilitation program. During loan negotiations, an assurance was obtained from the Government that the annual allocations for roads and in particular road maintenance would be adequate and that exchange of views in this respect would take place with the Bank prior to finalizing each year's budget. It was further agreed at loan negotiations that any changes or additions to the rehabilitationprogram would be subject to individual economic analysis based on guidelines provided by the Bank, and would need to satisfy a minimum rate of return of 15 percent and would be subject to prior approval by the Bank. (iii) TechnicalAssistance Component 3.6 While the technical assistance component of the proposed project comprises less than 5 percent of the total estimated project cost, it will be instrumental in achieving government objectives in the transport sector. There are two categories of technical assistance (TA) in the project: Policy Support (PSTA); and InstitutionalDevelopment (IDTA). For the road sector, the PSTA aims at assisting the Government in reviewing key policy issues, developing related policy options, and providing support for implementationof policy reforms within the road transport sector. For the rail sub-sector, the technical assistance is aimed at facilitating restructuring of ARC and improving the railway's corporate strategy, management performance, information and decision support systems, and providing several forms of training assistance. (a)

PSTA for Road Transport Sector

3.7 Outline terms of reference are presented in Annex 4 for a proposed program of studies for the road sector. A two-phase approach to the studies has been adopted, the first phase being concerned with resolving key policy and institutional issues in the road transport sector, while the second phase focuses on devising detailed arrangements for the implementationof decisions reached at the end of Phase 1. Phase 1 comprises, in turn, two interdependent studies; a Road Transport Policy Issues Study and an Institutional Options Study. A study timetable is presented in Annex 4 for both Phase I and the implementationstudies in Phase 2 indicating completion of the first phase in six months. To facilitate a thoroughgoing debate and a full appreciation of the difficult policy considerations connected with road transport, particularly during the Phase 1 study period, it is proposed to organize two policy seminars and a FacilitationSpecialist will be recruited to conduct these seminars and facilitate the process of policy change. The cost of the Phase 1 studies is estimated at US$0.5 million and the Phase 2 studies at about US$1.0 million, the latter depending somewhat on the outcome of Phase 1. During loan negotiations, the Government agreed that prior to the start of these studies a Coordinating Committee would be established comprising senior government officials and representatives of the main interest groups in the road transport sector. At loan negotiations it was also agreed that the establishment of the Coordinating Committee, and initiation of recruitment of the consultant(s)for the Phase I studies would be a condition of effectiveness. (b)

PSTA for Agaba Railway Corporation

3.8 ARC has agreed to the necessity of recruiting a technical assistance team to assist in the management of ARC's operation. But before that can take place, initial policy studies on Corporate Development and Restructuring would be needed to address the policy and institutional issues and to

- 17 -

prepare action plans to make ARC a more commercially-orientedcorporation. The studies would assist in developing consensus for institutional and financial restructuring and assess the detailed needs for implementation support. US$300,000 would be needed to carry out this first phase, which would be managed by the Government and the outcome (Phase II) would be implementedusing the technical assistance team. Terms of Reference are attached in Annex 5. During loan negotiations, it was agreed that the initial studies should be completed as soon as possible after effectiveness and before June 30, 1994. (c)

IDTA for Aqaba Railway Corporation (Phase II)

3.9 Based on the results of the policy study and the needs identification, a TA team would be recruited for a period of up to two years, to carry out further analysis and assist in the implementationof action plans for restructuring of operations, maintenanceand general management of ARC. A brief description and Terms of Reference are in Annex 5 and a more detailed version is in the project files. The technical assistance team will be in place for up to 24 months and will require approximately 102 man-months at a cost of about US$1.5 million. In providing the above assistance to ARC, the Government at loan negotiationsagreed that ARC would only undertake investments in new railway facilities after the technical and financial viability of such investments has been established on the basis of principles and arrangements agreed upon between the Bank and ARC, including, i.a. the contractual arrangements to be concluded between ARC and JPMC for covering the capital and financial costs of such investments. C.

Cost Estimates and Financing

3.10 Project cost estimates and financing are summarized in the following two tables and was confirmed at loan negotiations. The project cost estimates are based on December 1992 price levels. The estimated foreign exchange component is JD 38.99 million (US$55.22 m). 3.11 Cost estimates for civil works are based on quantities from the final engineering design and on unit rates based on construction contracts from 1992. A road pavement study with the objective of reviewing general pavement design standards and other aspects related to existing and new road pavements' performance and durability was completed by the end of November 1992. This study, financed with a grant from the Japanese Government, concluded that the premature road pavement failures in Jordan are primarily caused by weaknesses in the pavement design standards adopted by the Government for use in Jordan. Furthermore, the study indicated that the existing base and subbase layers of the Ras El Naqab-Wadi Yutum Road are in a better condition than previously anticipated. During loan negotiations, the Government and the Bank agreed to make modification to the detail design of the project to allow the recommendations of the pavement study to be rcelected as options in the tender documents. It was also agreed at negotiations, that the construction supervision consultant to be recruited under the project should review the design and make any adjustments to the tender documents in order to be able to take full responsibility for the quality of the works. 3.12 A 10 percent physical contingency is added to the base cost of the Desert Highway Project. No physical contingency has been added to the base cost of the road rehabilitation program since the theoretical volumes of resurfacing and asphalt overlays as well as other pavement layers are easy to calculate with a high degree of accuracy. For the calculationof price contingencies it is assumed that the foreign component will increase by 3.8 percent per year, and that the domestic inflation will be 4.5 percent in 1993, 4.4 percent in 1994, 4.3 percent in 1995, and 4.0 percent in 1996 and 1997. The foreign exchange component of the Ras El Naqab-Wadi Yutum Road and the road rehabilitation program is estimated at 70 percent. The average exchange rate for the construction period has been assumed to be US$1 = 0.7057 Jordanian Dinars.

- 18 Table 3.1: Project Composition and Estimated Cost (Million) Local US$ JD (a)

Section I Section II Environm. Supervision Supervision of Works Sub-Total (a)

5.25 4.92 0.70 0.42

17.36 12.25 24.80 17.50 16.27 11.48 23.24 16.40 0.10 0.07 0.90 0.64 1.50 1.06

70 70 0 60

15.11 10.66

34.53 24.37 49.64 35.03

70

70 60

7.44 6.97 0.10 0.60

4 Road Links Supervision of Works

4.29 3.02 0.20 0.14

10.00 0.30

7.06 14.29 10.08 0.21 0.50 0.35

Sub-Total (b)

4.49 3.16

10.30

7.27 14.79 10.43

0.32 0.22 1.00 0.70

0.48 1.50

0.34 1.07

0.80 2.50

0.56 1.77

60 60

1.32 0.92

1.98

1.41

3.30

2.33

60

46.81 33.05 67.73 47.79

69

Technical Assistance: i) Phase I - Policy Support ii) Phase II - Inst. Dev. TA Sub-Total (c) Base Cost December 1992:

(d)

% Foreign Exchange

Road RehabilitationProgram: i) ii)

(c)

Total US$ JD

Ras El Nagab - Wadi Yutum Road: i) ii) iii) iv)

(b)

Foreign US$ JD

20.92 14.74

Contingencies: i) Physical ii) Price Total Project Cost:

1.44 1.02 2.47 1.75 24.83 17.51

3.37 5.04

2.38 3.56

4.81 7.51

3.40 5.31

55.22 38.99 80.05 56.50

69

3.13 The Bank loan would amount to US$35 million or 43.5 percent of the total project cost. The Bank would finance the foreign exchange element of the southern flat section of the Ras El Naqab-Wadi Yutum Road (Section I), construction supervision, the road rehabilitation program and the Road Transport Policy Studies (Phase I) and the Phase I studies to restructure and commercialize ARC. Parallel financing of ECU 15 million (about US$19.85 million equivalent) would be provided by the European Investment Bank which has expressed willingness to finance the foreign exchange component of the escarpment section (Section II) of the Ras El Naqab-Wadi Yutum Road. ARC/GOJ will provide additional funding for the Phase II technical assistance. This leaves no financing gap. However, the European Community and Canadian IDA have also indicated an interest in grant funding of parts of the TA component including Phase I studies. If these or other sources of financing for the Phase I TA materialize, the proceeds of the Bank loan would be reallocated to cover more road pavement rehabilitationor parts of Phase II of the technical assistance. It is expected that design modificationsto the Ras El Naqab-Wadi Yutum project would lead to cost reductions and the savings would be utilized for the Road Rehabilitationcomponents of

- 19 -

the project. Each financing agency would (unless agreed odierwise) administer procurement related to its part of the project, and the Government would arrange regular exchanges of information among cofinanciers and regular progress reports would include the status of all project components. During loan negotiations, the Government agreed to provide the necessary counterpart funds. Table 3.2: Financing Plan (USS Million) Local*) Foreign Total

WB

EIB

GOJ

9.20 8.62 0.10 17.92

(a) Ras El Nagab-Wadi Yutum Rd (i) (ii) (iii) (iv)

Section I Section II Environm. Superv. Superv. of Works

9.20 8.62 0.10 0.60

21.20 19.85 0.90

30.40 21.20 28.47 19.85 0.10 1.50 1.50

17.52

41.95

60.47 22.70 19.85

4 Road Links Supervision

4.78 0.20

11.00 0.30

15.78 11.00 0.50 0.50

4.-8

Subtotal (b)

4.98

11.30

16.28 11.50

4.78

0.32

0.48

0.80

1.00

1.50

2.50

Sub-Total (c)

1.32

1.98

3.30

Total Project Costs

24.83

Subtotal (a) (b) Road RehabilitationProgram

(c) Technical Assistance (i) (ii)

Transport Sector Studies Institutional Development

0.80 2.50 0.80

55.22 80.05 35.00 19.85

2.50 25.20

*) Includes 2% taxes and duties

D.

Implementation and Monitorine

3.14 The Hashemite Kingdom of Jordan will be the borrower for the Bank loan of US$35.0 million, and the executing agencies would be MPWH for the two road works components; MOT for the transport policy and ARC corporate development studies, and MPWH and ARC for other TA activities. During loan negotiations, agreement was obtained from the Government that it would retain consultants for construction supervision of the road sections to be reconstructed including the Ras El Naqab-Wadi Yutum Road under terms of reference satisfactory to the Bank. During loan negotiations, the ImplementationSchedule contained in Annex 6 was discussed and agreed with the Government. The TOR and work program for the TA component contained in Annexes 4 and 5 was also reviewed by the Government. However, it was agreed during negotiations that final review and endorsement of the TOR should take place once the Coordinating Committee is

- 20 -

established (para. 3.7). 3.15 In addition to supervision missions, the project would be monitored through quarterly progress reports to be submitted by the MPWH to the Bank within 30 days after the end of each quarter during the entire implementationperiod. The progress reports would review progress based on the contractors' implementationplans and work program of the consultants for the TA component. This was agreed at loan negotiations. These reports would focus on both the cumulative and the incremental progress achieved during the reporting period in: (i) the physical progress of both contracts for the main road reconstruction compared to the contractors work plans; (ii) all supervision work including supervision of contractors' archaeologicalearthworks and new sites to be excavated; (iii) the bidding process of all rehabilitationcontracts for civil works to be procured under this project; (iv) the physical progress of civil works contracts under the pavement rehabilitation component compared with the contractors' work plans; (v) the technical assistance, studies, policy support and institutional developmentassistance, and staff training to be provided under the project; (vi) Bank disbursements and projected disbursement over the next 6 months; (vii) fulfillment of the covenants and audits of accounts (SA and SOEs), and audit reporting; and, (viii) actions taken for the resolution of issues raised by past supervision missions. A brief summary should be added to the report explaining the reasons for any delays or shortcomings in any of the above items and for actions taken to improve progress. 3.16 A mid-term review of all project activities would be conducted jointly by MPWH, MOT, ARC and the Bank within two years of loan effectiveness (see also para 3.18 on project supervision). To facilitate this review the GOJ would prepare a summary report covering all aspects of the project and submit it to the Bank instead of the quarterly report preceding the joint review. At loan negotiations, the Government also agreed to submit to the Bank Part II of the project completion report, prepared in accordance with Bank Guidelines set out in Operational Directive 13.55, Annex A, within six months after the loan closing date. 3.17 Statisticallyvalid transport sector implementationprofiles are difficult to establish for Jordan. However, civil works have generally been completed close to contract schedules; most time overruns have been occasioned by start-up delays (especially associated with procurement issues). Similarly, delays in technical assistance programs have frequently been due to delays in government approval for the use of consultants, particularly where loan funds are concerned. The project is being processed in such a way as to address and to resolve these potential issues prior to Board approval so as to enable the project to start disbursing quickly. The Project Implementation Schedule (Annex 6) shows road works for the Ras El Naqab-Wadi Yutum Road and the first year's periodic road maintenanceprogram starting towards the end of 1993 with completion due end of December 1997. Project closing is scheduled for June 30, 1999 allowing for a one year maintenanceperiod and 6 months for final disbursements. This would give a project duration of 78 months (6-1/2 years). E.

Project Supervision

3.18 Two supervision missions each year would be sufficient for project implementation,except for the first 2 years where three missions each year would be more appropriate. One of these missions would take place in order to also review the subsequent year's road maintenanceand investmentbudget. Over the project execution period this would amount to 14 missions. For the most part, the missions would be staffed by a civil engineer and a transport economist supported by a railway specialist and a human resources and institutionaldevelopment specialist initially. From time to time additional specialists may be required. It is estimated that supervision missions will require approximately 126 staff-weeks or 9 staff-weeks per mission (18 staff-weeks per year with

- 21 -

two missions) including home office preparation and back-to-officereporting. 3.19 Table 3.3 gives staff input in weeks in relation to supervision. In addition to the staff inputs described above there are needs at headquarters for review of general progress reports, audit reports, consultants' inception/draftfinal/final reports, preparation and participation in policy seminars, procurement actions, correspondence, contact with cofinanciers and aid donors, etc. which is estimated to take 3 staff-weeks each for the first two years and two weeks for the remaining years totalling 14 staff-weeks. Total staff-weeks requirements would therefore be 140 staff-weeks. See Annex 9 for a plan for all supervision missions. Table 3.3:

Forecast of Project Supervision Staff-weeks in Fiscal Year

Specialist: Transport/Hwy Specialist Transport Economist Railway Specialist HRID specialist Procurement Specialist

FY93 FY94 FY95 FY96 FY97 FY98 FY99 6 3 3 3 3

Financial Analyst

Total F.

11 8 6 6 2

18

33

9 7 2 4

9 7 4 4

_

2

22

26

8 6

8 6

_

14

14

Total

4 4 2 2

55 41 17 19 3

1

5

13

140

Procurement

3.20 The project components and their estimated costs, and the procurement arrangements for the elements to be financed by the Bank are summarized in Table 3.4. The Bank would finance reconstruction works on Section I of the Ras El Naqab-Wadi Yutum Road and several pavement rehabilitation contracts as well as construction supervision and part of the technical assistance. The other cofinancier (EIB) will have its own procurement requirements and would finance Section II of the Ras El Naqab-Wadi Yutum Road (escarpmentsection). For consultancy assignments under the TA component the Bank would approve the short list of firms before the invitationsfor proposals are sent out. Since the supervision consultants may be asked to review the design documents before tendering, it was agreed at negotiations that the loan agreement would provide for retroactive financing of up to US$500,000 to allow this and other activities to take place before loan effectiveness. 3.21 All works to be financed from the proceeds of the Bank loan would be procured in accordance with the Bank's Guidelines. The Jordanian authorities prefer not to allow price adjustment for local labor in their civil works contracts, due to a number of technical reasons and past experiences in Jordan. As the proposed project includes contracts estimated to cost over US$20 million including contingencies, it was agreed at negotiations that the project would provide an appropriate price escalation clause for four other main inputs (fuel, steel, cement and bitumen). Bidding documents used in the past for ICB in Jordan on civil works contracts are no longer acceptable to the Bank, and several changes to the Jordanian 'Conditions of Contract' and 'Instructions to Tenderers' were discussed and agreed at negotiations. Consulting services financed under the loan, would be procured in accordance with the Bank's Guidelines. All documents relating to procurement of consulting services financed under the Bank loan would be subject to the Bank's prior review.

- 22 -

3.22 All civil works contracts exceeding US$500,000 would be subject to prior review and approval by the Bank. No contracts below US$500,000 are foreseen, except for consulting services. During loan negotiations, agreement was reached with the govermnent on the procurement arrangements. Table 3.4: Summara of Proposed Procurement Arrangements (US$ million) Project Elements Ras El Naqab-Wadi Yutum Rd., Sect. 1

Procurement Method ICB LCB Other 30.40

- -

- -

Not-Bank Financed

30.40

--

(21.20)

(21.20)

Ras El Naqab-Wadi Yutum Rd., Sect. II

- -

- -

- -

Construction Supervision

--

--

1.50 (1.50)

--

- -

- -

0.10

--

- -

Environmental Supervision

- -

Road Pavement Rehabilitation

- -

15.78

- -

(11.00)

Construction Supervision

-- -

-- -

Technical Assistance (Phase I)

- - -

-- -

Note:

28.47

-

-

0.50 (0.50) 0.80 (0.80)

-- - - -

2.50

30.40 15.78 (21.20) (11.00)

28.47 1.50 (1.50) 0.10 15.78 (1, 1.00)

Technical Assistance (Phase II)

Total

Total Cost

2.80 (2.80)

31.07

0.50 (0.50) 0.80 (0.80) 2.50

80.05 (35.00)

Figures in parenthesisare the amountswhich will be financedby the proposedBank loan.

3.23 Procurement for all items under the project would be carried out by the respective beneficiaries (MPWH and ARC) as shown in Table 3.4 above. Both MPWH and ARC have carried out procurement in a satisfactory manner according to ICB rules before (Multi-mode Transport Project). In 1988, the Bank carried out a Local Procurement Assessment study and concluded that Jordan's local competitive procurement rules are acceptable subject to some clarifications being obtained. This was reviewed during negotiations and it was agreed to address current practice of price adjustments and other issues in a Procurement Assessment Study to initiate discussions between the Bank and the Government. There will be no local preference for LCB. Factors for evaluation will be specified in the tender and quantified for comparison. LCB is justified for the road pavement rehabilitation component because of relatively small contracts, scattered location and that the investment that a foreign contractor would have to make in specialized work equipment for asphalt resurfacing, strengthening and pavement reconstructionare already owned by local contractors. However, road pavement rehabilitation contracts above US$5.0 million would utilize ICB procedures. Procurement of consulting services for construction supervision would have to be initiated early to allow the supervision team to review the design and contract documents, take part in tender evaluation and monitor all initial site activities including excavations of archaeological sites. Appointment of the supervision consultant has, therefore, been made a condition of effectiveness for the loan, and this was agreed at loan negotiations. In order not to delay pre-construction activities it was agreed at negotiationsthat retroactive financing of up to an aggregate amount of US$500,000 should be allowed for. The Project Implementation Schedule was also agreed at negotiations and is presented in Annex 6.

- 23 -

3.24

Procurement information would be collected and recorded as follows: (a)

prompt reporting of contract award information by the borrower;

(b)

comprehensivequarterly reports to the Bank by the borrower (assisted by consultants), indicating: (i)

revised cost estimates for individual contracts and the total project, including best estimates of allowances for physical and price contingency;

(ii)

revised timing of procurement actions, including advertising, bidding, contract award, and completion time for individual contracts; and

(iii)

compliance with specified methods of procurement.

G.

Disbursements

3.25

The proposed Bank loan would be disbursed against the project components as follows: Table 3.5: DisbursementsAgainst Project Components

Category (1)

(2)

(i)

Civil Works, Section I of Ras El Naqab-Wadi Yutum Rd.

(ii)

Civil Works Road Pavem. Rehab. Prog.

(i)

Technical Assistance Road Transport Policy Studies

(ii)

Construction Supervision of Civil Works

(iii) Technical Assistance for ARC (3)

Unallocated Total

Amount of the Loan Allocated (Expressed in Dollar Equivalent)

% of Expenditures to be Financed

20,200,000

70%

10,000,000

70%

500,000

100%

2,000,000

100%

300,000

100%

2.000,000 35 000 000

3.26 Withdrawal applications for contracts valued at more than US$100,000 would be fully documented and presented in English for disbursements. Disbursement for contracts valued at US$100,000 or less would be made on the basis of statements of expenditure (SOEs). During negotiations, agreement was reached with the government that documentation to support expenditures financed under SOEs or otherwise will be maintained, in English, by MPWH and made available for review by Bank supervision missions, and annual audit reports will be prepared and submitted in English, by auditors acceptable to the Bank within six months of the end of each fiscal year. 3.27

To facilitate disbursements,the Bank's share of the project would be disbursed through a

- 24 -

Special Account which would be opened in the Central Bank of Jordan by MPWH. The authorized allocation for the Special Account would be US$2.5 million, equivalent to about four months of project expenses financed under the Bank loan. Replenishment of the Special Account would follow Bank procedures. The Special Account would be audited annually by independent auditors acceptable to the Bank. The audit report, in English, would be submitted to the Bank for review and approval within six months of the end of each financial year. During negotiations, agreement was reached with the government on the establishment, operation and auditing of the Special Account. 3.28 A schedule of disbursements, based on a projected effectiveness date of September 1993 is given in Annex 10. It is anticipated that the proposed project will be completed in 72 months from the date of approval or by December 31, 1998 including a 12 months contractor's maintenance period. The loan would be fully disbursed 6 months later or June 30, 1999. H.

Environment

3.29 The proposed project components are not anticipated to occasion any adverse impact on the environment, because the project will basically widen, reconstruct or rehabilitate main roads along and mostly within existing rights-of-way, mainly in desert areas with minimal settlements in the vicinity of the road. Only on the escarpment section of the Ras El Naqab-Wadi Yutum Road will there be minor straightening of sharp curves along the existing road but without departing from the present general road alignment. On the remaining section; improvementworks will be generally close to the alignment of the existing road. Based on this, the proposed project has been placed in the environmental category "B". 3.30 Archaeological surveys have been undertaken to identify problem areas, and five archaeological sites were identified as in need of protective measures to be undertaken before the contractor can start road works. Retroactive financing of site excavations within the amount of US$500,000 agreed at negotiations for consulting work etc. would prevent unnecessary delays. All five sites are located on an 8-km long section of the road at the northern end of the project (escarpment section). To ensure that any other important sites not yet located will not be disturbed during construction, it has been agreed that representatives of the Department of Antiquities shall be present during major civil works. Excavation of sites, environmental monitoring and protection of any cultural property discovered during construction will be carried out as part of the project and funds will be made available by provisional items in the contracts' Bill of Quantities. In the case of a cost over-run for archaeologicalexcavation works, additional funding would be made available by GOJ and this was confirmed during loan negotiations. 3.31 All archaeological rescue work would be included as provisional items in the Tender Documents for the road contracts. The contractor would be responsible for the excavation works, supervised by the Department of Antiquities. This would facilitate coordination and reduce claims for delays. The archaeological surveys carried out by the Department of Antiquities have confirmed that no in-situ conservation measures is required. One site is irreparably damaged by the existing road. No sites are located in a way that would require the road alignment to be adjusted during construction. To ensure adequate monitoring during construction, the Department of Antiquities will be present during excavation and earthworks to ensure that road works stop on sections where important discoveries are made and that appropriate actions to preserve cultural heritage are undertaken. During loan negotiations,the Government agreed to implement the set of measures recommendedby the survey report, in particular: (i)

ensure that the five sites discovered during the archaeologicalsurvey are excavated promptly, and if necessary as part of the contractors work program, paid under the contract;

(ii)

ensure that a suitably qualified representative from the Department of Antiquities is present during major excavation and earthworks;

- 25 -

(iii)

allocate sufficient funds from the government budget for such archaeological monitoring; and

(iv)

ensure that any items of archaeological or cultural importance affected by the project and discovered during construction are protected in consultationwith the Department of Antiquities.

Any costs the contractor may incur related to works or delays caused by any unexpected find would be a project cost and charged to the appropriate provisional item in the road construction contract. 3.32 There are no detailed accident data available on the individual road sections that will be improved under this project. Therefore it is not possible to predict the size or magnitude of the safety improvements the project will most definitely lead to. However, the reconstruction and improvements to the Ras El Naqab to Wadi Yutum Road will eliminateone black spot (associated with fatal accidents) and several safety features have been included in the design of the road. These are the inclusion of climbing lanes to separate slow moving traffic from other vehicles, introduction of a physical median (New Jersey type barrier) to separate traffic flowing in opposite directions and metal guard rails with reflective markers on the escarpment section. Additional safety gains are expected from the reductions in axle load limits that in the past made many of the heavy vehicles unsafe on the road due to improper weight distribution on the axles and unexpected breakdowns. I.

Accounting and Auditing

3.33 The MPWH, MOT and ARC keep separate accounts for all budget items and these provide input for the accounts held by the Ministry of Planning which is responsible for the financial records of those components involving loans and grants from non-government sources. Annual audits of these accounts would be carried out by independentauditors acceptable to the Bank and this was agreed at negotiations. The financial record keeping would include a system of monitoring submission of applications for withdrawal and for Special Commitments and the reconciliation of its records with those of the Bank.

- 26 IV.

ECONOMIC EVALUATION

A.

Introduction

4.1 The economic evaluationpresented here covers the major components of the project for which benefits are quantifiable. These comprise the reconstruction of the Ras El-Naqab to Wadi Yutum Road (JD 38 million), and the rehabilitationof 93-km of priority roads (JD 12 million), which together account for about 95 percent of the total project cost. Components for which no economic evaluationshave been carried out are for technical assistance to ARC (JD 1.5 million), and to the road transport sector (JD 1.4 million). Details of the economic evaluation are in Annex 8 and the following summarizes the key results. B.

Ras El Nagab to Wadi Yutum Road.

4.2 The 71-km Ras El Naqab-Wadi Yutum road section, which includes the steep and tortuous Ras lz`Naqab escarpment, is part of the Desert Highway linking the port of Aqaba with most of the rest of the country. As such it is crucial for much of Jordan's domestic transport but, above all, for its international trade including the very important phosphate exports of which 50 percent are transported by road. Prior to the recent regional crisis the road also permitted the development of the lucrative transit traffic between Aqaba and neighboring countries: it is possible that following the resolution of the crisis, this traffic will again become important. 4.3 Due to a combinationof several factors including inappropriate design, inadequate maintenanceand the very heavy axle loads, the road structure has been severely degraded. As a result the road has reached a level of deterioration that in places may lead to a condition of virtual impassabilitywhich would be disastrous from a commercial and economic point of view; exports of phosphate would be reduced and costs of imported goods in most of the country would increase. Furthermore, as long sections have now reached a stage where reconstruction is required, the road capacity would be severely constrained by the road works during rehabilitation. Consequently, it has been recommended by the consultants employed by the MPWH to undertake the feasibility study and final design, that a new two lane road should be built parallel to the existing road over the relatively flat 41-km from Wadi Yutum to the base of the escarpment, and a widening of the existing two lane road, to provide additional lanes for slow moving traffic, be carried out on the 13-km climb up the valley along Wadi Yutum and on the 14-km escarpment section. During construction work in the escarpment section of the road and in the climb up the Wadi Yutum valley, detours will have to be constructed in order to provide reasonable flows of traffic in both direction. Hence, the old Ras El Naqab Resthouse Road will have to be improved and strengthened so that it may be used as a detour during work on the main road. Economic Evaluation 4.4 Details of the projected traffic flows, vehicle operating cost savings, and the estimation of project economic costs are presented in Annex 8. It is estimated that the project will require 4 years to implement; however, some benefits will begin to accrue by the third year when a significant portion of the road will have been opened to traffic. The without project case, against which the proposed investmentis evaluated, is based on maintaining the road in its present form by carrying out periodic overlays at 6-year intervals. It should be noted that these works do not improve the geometrics or capacity of the road but merely prevent loss of the existing infrastructure. The alternative of reconstructing the existing road was also evaluated and was found to have a lower rate of return (8.8%) due to the cost of detours and the increased implementationtime caused by the need to reroute traffic and minimize disruptions during reconstruction works. Based on these assumptions, the reconstruction of the Ras El-Naqab to Wadi Yutum Road is estimated to have an expected internal rate of return of 14.2 percent, and a net present value of JD 15.1 million at the 10 percent discount rate.

- 27 -

Sensitivity Analyses 4.5 Changes in the project's expected rate of return with changes in key parameters were investigated through both simple sensitivity analyses and through estimation of switching values for key parameters which are subject to significant risk. The sensitivity of the rate of return to a 15 percent increase in cost, a 15 percent reduction in benefits, and a combinationof these, is presented in Table 4.1, and in the latter case the IRR is found to drop to 11.1 percent, which is acceptable given the unquantifiedbut substantial benefits deriving from safety improvements. Switching values were computed for three key factors: success in the enforcement of axle load restrictions, diversion of truck traffic to the Dead Sea Road in 1995, and diversion of light vehicle traffic to the same route. The table below presents the results of the switching value analysis. Parameter

Expected Value

Switchin2 Value

Percent success of Axle Load Restrictions

95%

5%

Truck Traffic Diversion to Dead Sea Road

10%

46%

Light Vehicle Diversion to Dead Sea Road

75%

100%

4.6 The switching value of a parameter in the above table, is the value of that parameter which causes the IRR for the project to drop to 10 percent. In the case of axle load restrictions, 100 percent success is defined as a level of enforcement which causes average truck payloads to decline to below 22 tons from the present average of 37 tons, which is the 0 percent success level. On each of these three parameters, the switching value analysis indicates that there is considerable latitude for change in each taken individually; no analysis was carried out of the joint effect of risk in these parameters as that would require a more exhaustive risk analysis of the project. C.

Road RehabilitationProgga

4.7 MPWH's road maintenancebudget has been inadequate and as a result, insufficientresources have been allocated to routine maintenance, light periodic maintenance such as resealing, and periodic pavement strengthening to maintain the road system's load carrying capacity. In addition, the relaxed axle-load policy has accelerated pavementdeterioration. Consequently, a backlog of deferred road works, including pavement strengthening and rehabilitation works, has developed over the last 10 years. This must now be addressed in the form of a pavement rehabilitation program to prevent a sharp increase in vehicle operating costs and avoid a more expensive reconstruction in the future. The MPWH has through its Road Maintenance Management System (RMMS) so far identified approximately 175-kin of roads in this category which need immediatetreatment at an estimated average cost of US$150,000 per km. It is proposed to finance four high priority road links of this program in the project. The program (Annex 7) is estimated to yield a high Economic Rate of Return since the "do-nothing" alternative would involve an even higher reconstruction cost later to gain basically the same benefits, while road users would continue to incur high operating costs due to high road roughness until the road is reconstructed. This component is estimated to be approximately 24 percent of the total project cost. Economic Evaluation 4.8 Details on the economic evaluation of the road sections proposed to be rehabilitated under the project are in Annex 8. Traffic on these roads are projected to grow at an annual rate of 2

- 28 -

percent. Based on vehicle operating costs estimated for these road sections, total VOC per annum is computed for the with and without project cases. The without project case does not include the cost of major reconstruction, and hence the evaluation is conservative in that the only benefits considered are savings in vehicle operating costs. Rates of return computed for the three road segments and the sensitivity analyses (15 percent increase in cost and 15 percent decrease in benefits) are summarized in Table 4.1 below. Table 4.1 Summary Results of Economic Evaluation Expected Value

15% Incr. in Costs

15% Redn. in Benefit

Combined Case

Ras El Naqab - Wadi Yutum Rd.

14.2

12.8

12.5

11.1

RehabilitationWorks

36.0

32.0

31.4

27.8

Ras El Naqab - Wadi Yutum Rd.

15.1

10.8

8.5

4.2

RehabilitationWorks

25.6

24.3

20.4

19.0

Expected Rates of Return (%)

Net Present Values (mJD)

D.

Technical Assistance Component

4.9 No economic evaluation has been carried out for the proposed technical assistance component which comprise approximately 5 percent of total project cost. However, the component is critically important to improving the efficiency and viability of two important transport sector agencies. V.

PROJECT RISKS

5.1 It is clear from recent experience that external risks exist in the Region, and that no allowance can sensibly be made to guard against delays caused by such factors. The present construction boom in Jordan has increased the contract rates for civil engineering works considerably judging from recently tendered road construction contracts. It is difficult to assess whether this rate increase will continue and the effect on road costs. Present estimates are based on the latest information available to the MPWH regarding contractor rates (Dec. 1992). Enforcement of the axle load regulation is under the Ministry of the Interior, and the police and MPWH together carry out regular axle load controls. However, there are uncertainties as to whether the implementationof the reduction program will be suspended again as it was in January 1992, and for that reason the government agreed during negotiations that continued implementationof the program would be a condition of the loan. 5.2 The macroeconomicdifficulties affecting Jordan have sometimes resulted in difficulties with the availability of local counterpart funds. While there have been some delays, there have never been major or long-lasting problems with the provision of counterpart funds. In the case of the Ras El Naqab-Wadi Yutum Road, the road is of such importance to the economy that we expect it to be given priority by the Government in the allocation of counterpart funds. An assurance to this effect was given by the Government at loan negotiations.

- 29 -

VI.

AGREEMENTSREACHED AND RECOMMENDATIONS

6.1 During loan negotiations, the Governmentand Beneficiaries agreed that the following actions be taken prior to the proposed loan becoming effective: (i)

consultants for the supervision of construction of the Ras El Naqab-Wadi Yutum Road have been appointed (para. 3.14);

(ii)

recruitment of the consultant for the studies of policy and institutional issues in the transport sector has been initiated (paras. 2.10 and 3.7); and

(iii)

the Coordinating Committee for the technical assistance program for the transport sector has been appointed (para. 3.7).

6.2 During loan negotiations agreement was reached with the Government and the Beneficiaries on the following actions: (i)

the borrower shall ensure a gradual reduction in the overloading of trucks according to a phased reduction program that will make 13 tons the legal axle load limit by February 28, 1995;

(ii)

that evidence based on the results of regular axle-load surveys will be provided to the Bank regularly in the quarterly progress reports of the project showing the status of the program for enforcement of the 13-ton axle load limit (para 2.4);

(iii)

GOJ counterpart funding and other financing arrangements remain adequate as agreed (para. 3.13)

(iv)

ICB and LCB procurement procedures will be utilized as agreed and price adjustment clauses satisfactory to the Bank are included in the civil works contracts for the Ras El Naqab-Wadi Yutum Road improvement (para. 3.23);

(v)

terms of reference and work program of the technical assistance teams and construction supervision consultants will be satisfactory to the Bank, and that the Bank shall approve short list of consulting firms to provide technical assistance (paras. 3.6-3.9, 3.14, 3.20);

(vi)

studies of policy and institutional issues in the transport sector would not start before a Coordinating Committee is in place and would be completed and presented to the Bank for review by June 30, 1994. A plan of action based on the studies would be reviewed by the Bank and Bank comments would be taken into account in the plan. Implementationof the action plan would thereafter be reviewed annually as part of the Bank supervision of the project (paras. 2.10, 3.7);

(vii)

the project implementationwill be in full compliance with the recommendations of the archaeological survey recently carried out by the Department of Antiquities, and that appropriate monitoring procedures, general supervision and funding arrangements in this respect would be put in place (paras. 3.30-3.31);

(viii)

a joint review by the Bank and government would be carried out annually of the proposed road maintenance, investment and road rehabilitationprograms for the following year to identify road links in need of periodic maintenanceor pavement strengthening and rehabilitation, and to provide the Government with Bank views on the annual budget allocations. The allocation of sufficient funding for maintenanceis assured by GOJ (paras.

- 30 2.6-2. 10); (ix)

a study of ARC including institutional and financial restructuring and the establishment of a corporate developmentplan is to be completed and presented to the Bank for review by June 30, 1994 (paras. 3.8, 3.9). A plan of action based on the study would be reviewed by the Bank and Bank comments would be taken into account in the plan. The implementation of the action plan would be reviewed anmally as part of the Bank's project supervision;

(x)

investments in new railway facilities beyond that needed for maintenanceof existing facilities will only take place after technical and financial viability has been established based on principles and arrangements acceptable to the Bank including, i.a. contractual arrangements between ARC and JPMC for covering the capital and operational costs of such investments (para. 3.9);

iXi)

MPWH shall calculate the ERR for highway sections proposed to be financed under the Road RehabilitationProgram and only proceed with final design and preparation of bidding documents when the Bank agrees that such a return is expected to be no less than 15 percent; and,

(xii)

GOJ will: (i) submit quarterly Project Progress Reports to the Bank (para 3.15); (ii) prepare Part II of the Project Completion Report according to Bank Guidelines set out in Operational Directive 13.55, Annex A (para. 3.16); and, (iii) furnish the Bank with financial accounts and audits of ARC and MPWH Special Account annually no later than 6 months after the end of the fiscal year (para. 3.15).

6.3 With the understanding indicated above in paras. 6.1 - 6.2, the project would be suitable for a Bank loan of US$35.0 million to the Hashemite Kingdom of Jordan at the Bank's standard variable interest rates for 20 years including a five-year grace period.

- 31 -

ANNEX 1

KINGDOM OFJORDAN HASHEMITE PROJECT THIRDTRANSPORT STAFFAPPRAISAL REPORT Documents in the Project File I.

Ras El-Nagab - Agaba Back Road Junction Highway Feasibility Study (2 Volumes). Jordanian Consulting Engineers Co., Amman, December 1991.

2.

Ras El-Nagab - Aqaba Back Road Junction Highway Tender and Contract Documents (2 volumes, Sections I and II). Jordanian Consulting Engineers Co., Amman, December, 1991.

3.

Agaba Railway Corporation Operations and Management Study Final Report. Austria Rail Engineering, Vienna, July, 1990.

4.

Evaluation of Roads and Maintenance Design for Five Roads in Jordan. Geotechnical Engineering and Materials Testing Co., Amman, December, 1991.

5.

Technical Assistance Component of the Third Transport Project, Project Document, Final Report September 1992. Cowiconsult.

6.

Ras El-Nagab - Agaba Back Road Junction Highway. Contract Conditions Part One and Two. Jordanian Consulting Engineers Co., Amman, September, 1992.

7.

Feasibility Study Reiort. Swaileh - Oueen Alia International Airport Road. Eng. Ahmad Sammour, Ministry of Planning, 1992.

8.

Ministry of Public Works & Housing, Annual Report 1990, (in Arabic Language).

9.

Feasibility Study Renort. Swaileh - Salt Road, Eng. Ahmad Sammour, Ministry of Planning, 1992.

10.

Road Pavement Study. Inception Report. October 1992, Transport and Road Research Laboratory, Crawthorne, United Kingdom.

11.

Preliminary Cultural Resources Impact Assessment for Ras El Nagab - Aqaba Road, Department of Antiquities of Jordan and American Center of Oriental Research in Amman. Amman, March 15, 1992.

12.

Final Report on the Emergency Survey alonz the Ras El Nagab - Agaba Highway Alignment, Department of Antiquities of Jordan. Amman, August 9, 1992.

13.

Results of HDM-III Analysis of Ras El Nagab-Wadi Yutum Road, February 8, 1993.

ANNEX 2

- 32 HASHEMITEKINGDOMOF JORDAN THIRDTRANSPORTPROJECT STAFlFAPPRAISALREPORT THE ROAD TRANSPORT SECTOR 1.

Public Agencies Involved in the Roads Sector

(i)

Ministry of Public Works and Housing

.I The MPWH is responsible for the construction and maintenance of the main (also referred to as trunk and primary), secondary and rural roads throughout the country. This responsibility is carried out under the direction of the Secretary General for Public Works. He is also responsible for administering the construction of government buildings, and is involved in the formulation and admiinlistrationof building codes. The Ministry has a separate semi-autonomous arm, the Housing Corporation, which deals 1.2 with the provision of housing. A third responsibility within the Ministry is the administration of Governmrent tenders, which is carried out by a separate Government Tenders Department. This division of responsibilities is illustrated in Figure 1. The three divisions operate quite independently.

Figur-

I

OrgonizationoI

Structure

of MWH

Mlnit-r Of PubiLc |Wor-ks and Housing|

Director Gener'al

Director GeneralScrtr

Tende-r

Co.-por.tion

Dopertentt

GnrI

Pub]ioWork-

1.3 The Public Works Division is of the most relevance to road operations. The structure of the Division is shown in Figure 2. Building construction responsibilities are largely confined to one department, the Buildings Department (although the Administration, Finance and Follow-Up Departments and Clerical Office will have some involvement). The other departments are exclusively devoted to roads.

- 33 -

ANNEX 2

1.4 The Public Works Division is headed by a Secretary General. He is principally assisted by an Under Secretary, to whom he delegates specific executive responsibilities, and a number of Advisors, who provide him with specialist advice.

Figure 2

Dl

ctI-

Organizotionol

Structur.

of Public Works Dvlslon.

MPWH

An|eens_

OLctlof

PubliIc

~~~AffssLrv

Rsloticns

Fo1o,la.ni. O.p..t~nt Afr..-

ee~~tw

Akn1 *t,otion

B.I din D.p.t..nt|

eentV~t

aI-,in O.'v.Iop.w

*so

t

a. tLsbo-o R....oI

ee

Depertnwt,

I Stsudil

eft 1 Trfi

epa~ I

on.toutuoni

1.5 The Division contains 10 departments at headquarters level, each headed by a Director. The allocation of functional responsibilitiesbetween departments for roads operations at headquarters - :s shown in Figure 2 - is largely self-explanatoryas far as the Financial Affairs, Administration, Laboratories, Workshops, and Maintenance & Traffic Departments are concerned. The Highway Construction Department is mainly concerned with construction supervision; Highway Studies are responsible for design of roads; and the Follow-Up Department operates as a technical audit unit, checking that operations have been carried out correctly. -

District Organization

1.6 There are eight road districts in Jordan, each headed by a DE (District Engineer). The structure of the district organization at Zarqa, which is believed to be typical of the other districts, is shown in Figure 3. 1.7 DEs have an equal status to Directors of Departments at headquarters and report directly to the Secretary General. Districts have responsibilitiesconcerned with the construction of government buildings as well as roads. These responsibilities are carried out by a separate Buildings Section. 1.8 DEs' roads duties are mainly connected with routine and periodic maintenance(R&PM) and asphalt concrete overlays, and recurrent maintenanceon rural roads. Force account workers undertake routine maintenanceon all categories of road, and R&PM on rural roads. Contractors are used to carry out all other work. A workshop is located in each district to service vehicles and equipment used for force account work. All work carried out by contractors is controlled by

- 34 -

Fagur-e 3

O_genlzetion.l

Stru_tiwe

l~~~~~~e-o

Construct l -onch

ll t udu S

l

of District

|

l

|

I

~~~Unit|

sn

ANNEX 2

Erq_mnes

Offie,%

~~~~~~~~~~~~~Dist-tot Enginer|l

EW

Roo

Soo-ton

Roodn B-onoh

l l

mplementotion Ilno

Unit

ll

rulni~~

~ ~ ~~

It

headquarters. Some design work is undertaken for secondary and rural roads by the New Construction Branch of the Roads Section in the districts. 1.9 Municipalities have responsibility for roads within their boundaries, except where these are part of the national road system. It appears that some municipalities have difficulties in meeting their responsibilities e.g. Zarqa, and MPWH voluntarily steps in to undertake maintenance in their stead when requested, if the road is sufficiently important; the Ministry of Finance (MOF) is responsible for overall control of planning and budgeting for expenditure for all operations of MPWH. It also regulates imports, including the collection of import duties and transit fees; the Ministry of Planning (MOP) is involved only with planning and budgeting for projects that have a loan element i.e. normally new construction and rehabilitation of major highways; the Ministry of Interior (MOI) is responsible for the licensing of vehicles, licensing of public transport routes, issuing permits for public transport vehicles, and setting regulations for road safety; and the Public Security Directorate is responsible for implementationof many regulations: driving tests and driving licenses; traffic control; vehicle checks for overloading, safety etc. (ii)

Ministry of Transport

1.10 The MOT (Ministry of Transport), according to Law 42 of 1971, has overall responsibility for regulating the whole transport sector, including roads. The Ministry therefore has the responsibility for setting policies concerning all transport modes and coordinating Government investment. This planning role has not been actively pursued to date. This is due to some degree to the fact that other ministries and agencies in the transport sector are autonomous, with MOT having little or no direct authority over them. MOT therefore largely limits its role to that of regulating private sector activity through licensing, fare and tariff setting, and to advising Cabinet on issues such as the control of relevant imports e.g. trucks, or on axle-load legislation. Its responsibilities concerning roads are carried out by a Road Transport Directorate, which has a complement of four professional staff. 1.11 Its main contact with the road works execution agency, MPWH is in reviewing feasibility studies. This is done through a committeecontaining representatives of MPWH, MOP (Ministry of Planning) as well as MOT.

- 35 2.

The Private Sector

(i)

Consultants

ANNEX 2

2.1 MPWH uses consultants extensivelyto undertake feasibility studies, design and construction supervision. Indeed, such work in connection with construction, rehabilitation and pavement strengthening on trunk roads is undertaken almost exclusively by consultants, with only isolated exceptions. MPWH confines itself to checking the work produced by consultants and undertaking some design and construction supervision work itself for secondary and rural roads. There are some five firms who are fully staffed, equipped and sufficiendy experienced to undertake all categories of work mentioned above, although MPWH has expressed concern about the availability of senior staff amongst consultants to undertake construction supervision. There are also specialist consultants who are available to undertake simple geotechnicalstudies and materials testing. (ii)

Contractors

2.2 MPWH uses contractors to undertake all new construction and rehabilitation on all categories of roads. In addition periodic maintenanceand overlays are carried out by contractors. There are a large number of contractors registered with MPWH, being categorized by their resources to carry out various types and scale of work. Many of the smaller contractors also undertake building work. 2.3 Of the most sophisticatedcontractors capable of undertaking the largest projects, only three survive. Another one present on the most recent register but has failed recently. It is believed that all three road contractors are currently financially viable and have sufficient profitable work to sustain them. 3.

Financing the Roads Sector

3.1 Road users contribute to government revenues through a number of transport related taxes and fees. These include: * * * *

*

fuel taxes on gasoline; annual vehicle license fees; transit fees (through traffic only); vehicle import duties; and overloading fines;

3.2 These charges are collected by a number of agencies (para. 1.9). It is not known how rigorous or efficient these agencies are in the collection of charges. Full cost recovery is a major element in all strategies for sustainable road operations. If road maintenance, road rehabilitation and debt service costs cannot be met from road user charges, these charges will obviously have to be either subsidized from general revenue, by borrowing, or some operations will ultimately have to be left underfunded. 3.3 An important consequence of the lack of cost recovery in the roads sub-sector is that maintenance is underfunded, although this linkage is not straightforward. For instance, distortions and lack of rigor in the planning and budgetary process do not ensure that there is a transparent relationship between maintenanceneeds and budgetary allocation. Nevertheless, it is clear that in the competition for the severely constrained govermnent funds available, maintenance appears to be the category of roads expenditure that loses out. A long term annual budgetary requirement for road maintenancehas been estimated by MPWH at JD 10 million, whereas the 1992 budget allocation (after exceptional items have been excluded) is JD 4 million. However, the actual estimate of road maintenancebudgetary requirements, given the present accuracy of the Maintenance Management System, must be regarded as indicative only.

ANNEX 3

- 36 -

HASHEMITE KINGDOMOF JORDAN TBIRD TRANSPORTPROJECT STAFFAPPRAISALREPORT NEW VEHICLE LOAD LIMITS

Economic Security Commission, Resolution 91/5 dated 5/14/1991 Pursuant to the powers vested in us in accordance with Article 5 of the Directives of the Provisional Directorate for Financial and Economic Affairs No. 2 of 1967, and having reviewed the recommendations of the Financial, Economic and Planning Committee made during the session held on 5/4/1991, we hereby resolve the following: 1. Suspend implementationof Articles 3, 4, 5 and 6 of Regulations No. 36 of 1983 concerning vehicle maximum dimensions, gross weights and horsepower, and Article 5 of Regulations No. 57 of 1977 concerning Highway Traffic Services Charges as of 6/1/1991 until 12/31/1993. II. A.

Net and Gross Weights

Maximum net and gross weights for all types of trucks including tankers shall be as follows: Type of truck

Net weightGross weight tons tons 54 76

1.

6-axle truck and semitrailer

2.

2-axle truck tractor and 3-axle truck trailer 45

66

3.

5-axle truck and semitrailer

45

65

4.

4-axle truck and semitrailer

37

55

5.

3-axle truck and semitrailer

21

35

6.

5-axle tractor and semitr.(one dangle axle) 42

63

7.

3-axle truck and 3-axle truck trailer

54

74

8.

2-axle truck and 2-axle truck trailer

35

51

9.

3-axle truck

28

40

10.

2-axle truck

17

27

Net and gross weights listed in item "A" above in excess of loads authorized per Regulations B. No. 36 of 1983, shall be reduced as follows: -

at a rate of 25 percent as of 1/1/1992; at a rate of 50 percent as of 9/1/1992; and, at a rate of 75 percent as of 5/1/1993;

so that gross vehicle weights will be those specified by Regulations No. 36. of 1983 effective

- 37 -

ANNEX 3

1/1/1994. C. Trucks and tankers violating the provisions of items "A"and "B" above shall be prohibited from entry into the Kingdom or passage on its highways as from 6/1/1991 until 12/13/1993. III.

Violations and Fines

A. Contractors committed to haulage within, to, from, or transmitting the Kingdom, shall be responsible to abide by the provisions stipulated in this Resolution. A truck or tanker owner or driver shall be responsible individuallyand severally with the contracting body for axle load violations and for payment of fines thereof. B. A fine of JD 2.5 shall be imposed on every ton carried by a truck or tanker in excess of the gross vehicle weight authorized per Regulations 36 of 1983 as from 6/1/1991 to 12/3/1993. Such fines shall be collected once each one trip made by a truck or a tanker in accordance with the directives issued by the Minister of Finance/Customs in this respect. IV. Paragraph (E) of (Firstly) in the Commission's Resolution No. 88/4 dated 4/5/1(88 shall be amended to read as follows: "Trucks and tankers violating the provisions set forth in Regulations No. 36 of 1983, shall be prohibited from passage on the highways of the Kingdom as of 1/1/1994." V. A technical committee (with representatives) from the Ministry of Interior, the Ministry of Finance/Customs, the Ministry of Public Works and Housing, and the Ministry of Transport and Communications shall make the necessary arrangements to execute the provisions of this Resolution. VI. This Resolution shall be published in the Official Gazette and come into force as of 6/1/1991.

1)

The coming into force has been delayed and the new date has yet to be announced.

- 38 -

ANNEX 4

HASHEMITEKINGDOMOF JORDAN THIRDTRANSPORTPROJECT STAFFAPPRAISALREPORT Policy Support Technical Assistance for Road Tramport Sector OUTLINE OF STUDIES AND PROJECT MANAGEMENT

1.

INTRODUCTION

1.1 This document gives an outline of the policy support technical assistance to the roads sector. The objectives are to address a number of the policy issues related to cost recovery and the rapid deterioration of the road system, and to design a TA program for improving the institutional capacity and capability of the highway agency to deal with these issues. This constitutes one of the objectives of the proposed Third Transport Project. The document provides, furthermore, outline Terms of Reference for suggested studies to facilitate policy discussions, cost estimates for the studies and proposes administrative arrangements for the technical assistance component of the proposed project. 1.2 The logic underlying the proposed scheme of studies is that there are two distinct study phases. The first phase has to resolve the key policy and institutional issues in the road transport sector. Problems have to be identified and analyzed, options for action reviewed, and finally, decisions made to select an integrated package to provide a solution. Decisions will probably ultimately be required at a high political level and therefore mechanisms will be suggested to keep those concerned in touch with study developments. 1.3 The second phase is concerned with devising detailed arrangements for the implementation of the decisions made at the end of Phase 1. The scope of the work to be undertaken will depend to a degree on the nature of the decisions taken, but a general guide can still be provided at this stage as to the likely content. 2.

PHASE 1: POLICY ISSUES

2.1 There are two studies that comprise this phase. The Road Transport Policy Issues Study and the Institutional Options Study. The studies are inter-dependantand there will have to be close collaboration between the consultants. (i)

Road Transport Policy Issues Study

2.2 Objectives: (i) Selection by GOJ of a cost recovery strategy that will finance the road sector in a better way than is the case today; and, (ii) Selection by GOJ of a road transport regulatory regime, which addresses issues of tariff setting, overloading and penalties, licensing and import controls, and optimizes revenues and economic benefits. 2.3 Output: (i) An Inception Report reviewing: a) current systems of road transport regulation and road sub-sector cost recovery; b) the implications for the road sub-sector of the current policy environment and of ongoing dialogue between GOJ and the Bank; and, c) problems that need to be

addressed. (ii) A Draft Final Report, which would comprise: -

estimates of the volume of revenue that has to be raised to cover all new construction, rehabilitation, maintenance, debt service and administrative costs for roads;

- 39 -

ANNEX 4

alternatives for tax, tariff and toll structure, equitably distributed between different users, differentiated as appropriate between the options considered in the Institutional Options Study. Recommendationswill encompass irnplicationsof axle load legislation in the framework of the conclusions of the Road Pavement Study; specific consideration of the impact of deregulation of the trucking industry on the national economy; recommendationson the most appropriate revenue raising and regulatory regime. And a Final Report, entitled 4Road Transport Policy Report>, incorporating any adjustments resulting from comments received. 2.4

Activities:

-

Separate road user charges from general tax revenues. Review the current structure of road user charges, tariffs and other regulations (axle load legislation, licensing etc.). Identify the objectives underlying that structure. Assess whether objectives are achieved. Investigate the impact on the trucking industry and economy as whole of current regulatory regime. Particular attention to be paid to the impact of road regulations and road tax.:tion system on alternative modes. Identify problems associated with the system of charges and regulations Estimate current receipts from road user charges. Estimate external costs incurred by use of road infrastructure. Estimate current road related expenditures and compare with receipts. Identify and assess the efficacy of other cost recovery measures that are available to the Government. Project, through network modelling techniques, likely future road related expenditures required over specified timescale. Allocate expenditures required according to classificationof road and type of expenditure. Assess options for different cost recovery and regulatory regimes. Make explicit assumptions underlying charging proposals. Under each option allocate all road user charges to a)type of road and b) type of vehicle. Appraise each option, including specific consideration of overall economic impact and public acceptability.

-

-

ANNEX 4

- 40 2.5

Inputs: International Consultants FacilitationSpecialist Project Coordinator Transport Economist Financial Analyst Engineer

Duration Cost (man months) (USD '000) 4

72

4 2 2

72 30 26

Subsistence Airfares Seminar Costs

48 27 5

Sub Total Contingencies

280 30

TOTAL

310

The GOJ will provide office space, equipment and furniture, and transport. (ii)

Institutional Options Study

2.6 Objectives: To analyze all options and recommend alternatives of strengthening the GOJ's road function in a sustainable way. Important considerations that need to be taken into account include: -

clearly defined accountabilityfor policy formulation and implementation; performance standards and budgeting for the roads organization are instituted and monitored; terms and conditions of service to encourage motivation and achievement; transparent accountabilityfor managers; all costs fully accountedfor; comprehensive network-basedprogramming system in operation; planning and budgeting for recurrent and capital spending fully integrated, regardless of whether funds are loans, grants or regular budget funds; effective human resource developmentprograms devised and implemented.

Existing Institutions 2.7 One major issue to be addressed is whether the government machinery, essentially MPWH, either in its current, or a suitably modified form, is able to address the issues that have been set out above. Are the constraints imposed upon MPWH by its status as a government ministry, with its externally prescribed rules and procedures governing almost all aspects of administration, too great to allow these issues to be addressed? Is a government ministry the right institutional arrangement for a productive and highly operational agency without a policy role? 2.8 It might be argued that the implicationsof the objectives set out above actually prescribe the remedies that have to be adopted and that these remedies are contrary to the strengths of the public service system. These strengths are: its tried and tested administrativepractices; its commitmnentto continuity of employment of its workers, thus earning their loyalty; and, the ideals of public service and professionalism, irrespective of personal reward. Are these positive characteristics, as well as

-41-

ANNEX 4

the specific strong points of MPWH mentioned above, with sensible and practical modifications to existing practices and organizational structures, sufficient to meet the stated objectives? The policy reform consultants and the Government will have to consider the scope for modest institutional reform of existing structures as one of the options for institutional change. Another option suitable for considerationis the creation of a semi-independentRoad 2.9 Corporation. The logic behind the creation of such a body is that it would have sufficient organizational autonomy to introduce modern management methods and commercial accounting practices. But GOJ, because of its responsibility for public goods (the road network), would need to exercise ultimate control regarding such matters as it felt appropriate through the articles of incorporation - it could make key appointments, approve the annual budgets, regulate charges, appoint the Board etc. The maximization of use of private consultants and contractors, in the context of the Corporation's freedom to select the most economical means of administration and implementation,would be a likely outcome of the adoption of this option. 2.10 The final option is the creation of a fully autonomous Road Authority under the Ministry of Public Works and Housing. The aim behind the establishment of such a body would be to bring the disciplines of the private sector to the administration of the public road network. The Authority would be fully self-financing. The GOJ would retain full ownership. Government would determine overall objectives, and would appoint the Board to implement them. The Road Authority would adopt all outstanding loans. 2.11 Objective: Selectionby the GOJ of an institutionaloption for undertaking road operations that meets the sub-sector objectives of optimum efficiency, cost recovery and sustainability. 2.12 Output: An Inception Report constitutinga review of current institutional arrangements; implications of the current policy environment; reconnaissance of issues; and plans for the next stage of studies, and a Draft Final Report to GOJ which will comprise: -

options for improvementof the institutionalset-up;

-

analysis of all the options.

2.13 Particular attention will be paid to the role of the private sector, the potential for introducing private sector disciplines into the public sector, coordination of the role of the various entities in road operations, and the scope for the introduction of modern management practices which emphasize accountability, transparency, decentralizationand flexibility. In the selection of the preferred institutional option a heavy weighing will be attached to the evaluation criterion concerned with maximization of the opportunities for cost recovery. A Final Report, modified to incorporate the views of the Government completes the reporting. 2.14

Activities:

-

Investigation of existing organizational arrangements within Government, including local government, to ascertain the extent and nature of existing problems. Give particular consideration to the case for having institutions dedicated to road operations only. Specify the operational deficiencies that have resulted from organizational imperfections. Review the skills and resources currently and potentially present in the private sector with a view to estimating the possible extent of their contribution to institutional capacity. Ascertain the extent to which problems are a result of inherent structural weaknesses. In ascribing causality, care must be taken to distinguish failures in management that could have occurred in any organization, from systemic problems. Assess the quality of policy formulation and its relationship to implementation in the roads sector.

-

-

-42 -

-

-

-

-

2.15

ANNEX 4

Assess the current scope and adequacy of the MMS in the context of a comprehensive network planning system. Appraise the capacity of MPWH to operate and respond to the information that a comprehensive network planning system would generate. Consider the scope for improving performance through modificationsof existing institutions. Gauge the 'room for manoeuvre' allowed by regulations and procedures prescribed by Government. Identify other institutionaloptions that could cope with the institutional shortfalls identified. Compare the advantages and disadvantages of each option according to quantified criteria. In this context, the extent of the contribution of the private sector under each option should be specifically examined. Review the findings of the Road Transport Policy Issues Study regarding the extent of cost recovery required and the efficacy of the specific measures available to collect revenue. Specificallycompare the opportunities for maximizing cost recovery under each option. Give full consideration to the advantages and disadvantages of automatic linking, as compared to earmarking, of revenues and expenditures. Inputs: International Consultants

Duration Cost (man months) (USD '000)

Institutional Planner Transport Economist Financial Analyst Engineer

3 1.5 1.5 2

54 22 24 30

Subsistence Airfares Seminar Costs

35 10 5

Sub Total Contingencies

170 20

TOTAL

190

The GOJ will provide office space, equipment and furniture, and transport. 3.

PHASE 2: IMPLEMENTATIONSTUDIES

3.1 It is proposed that if more than one entity is selected to implement Government policy, each of the following study areas outlined below will be undertaken as a single contract package for each institution. However, whatever institutional option is adopted for implementation, there are likely to be elements of the road sub-sector and regulatory framework that are essential to the successful operation of the concerned entity or entities, which will lie outside their control. Examples of this are licensing arrangements, overloading charges, fuel taxes. If only a single organization is the main implementingagency, then it is obvious that all implementationarrangements can be included as a single consultancy package. If more than one entity is involved, a decision will have to be made regarding the consultancy package which will deal with the aspects of the regulatory and cost recovery framework not within the control of either organization. 3.2 The objective would be to implement decisions reached at the end of Phase 1 in a satisfactory and expeditious manner. The outut would be report detailing plans and programs to implement decisions reached at the end of Phase 1.

- 43 3.3

Activities:

a)

Road Transport Regulatory and Cost Recovery Framework -

-

b)

-

-

Devise formula to be used for the calculation of charges by road agency. Make explicit pricing principles. Devise financing plan, including details of any debts to be assumed. Make explicit assumptions about any government subsidy or subvention, etc. and road user charge(s) levied by the government from which they are derived. Specify any other external financing required. Devise financial accounting system and standards, and auditing arrangements, to be used by road agency. Develop initial operating budget for road agency.

Detailed Organizational Structure and Staffing -

-

d)

Determine road pricing principles and calculation methods. Train relevant staff in road pricing procedures. Calculate detailed prices for all road user charges not under direct control of road agencies. Make explicit assumptions about dedicated revenues to be received by these agencies. Adjust details of regulatory framework regarding axle load limitation implementation, licensing, import controls, etc. to reflect principles agreed in Phase 1. Draft in outline any adjustments to legal instruments of regulation.

Agency Cost Recovery and Financial Accounting Regime -

(c)

ANNEX 4

If direct private sector involvement in ownership or management is required, specify nature of involvementand procedures for engagement with private entities. Define in detail the objectives, targets, responsibilities and area of authority of road agency. If a new institution is to be created, prepare draft of the legal format defining the status and responsibilities of the new institution. Define formal relationships (performance contracts if necessary) with external bodies, especially Government, and incorporate in the relevant legal format, if appropriate. Specify any relevant penalties that can be applied if not complied with. Draw up detailed organizationalplan, indicatingmanpower requirements and their reporting relationships. Outline details of conditions of service, stressing wherever possible, incentives, performance contracts, and flexibility of deployment. Specify the extent of private sector involvementadditional to any direct participation in ownership or management. Specify manpower training needs for both road institution(s) and private sector collaborators. Identify requirement, if any, for external management support or technical assistance. Review accommodationneeds and location of offices.

Network Based Planning -

Conceptualize, design and prepare installation plan for comprehensive network based planning system. The installed system must be capable of generating strategies, plans and budgets which maximize achievementof the objectives of the agency. Single project investment appraisal should be de-emphasized.

ANNEX 4

- 44 -

-

e)

Planning, Budgeting, and Monitoring -

-

-

f)

Identify the external agencies involved in the planning and budgeting process. Devise procedures and measures which minimize their potentially negative impacts on the operation of new systems. Devise procedures which stress interlinkages with network based planning, accounting (particularly cost accounting)and monitoring systems. Integral to system design should be the concept of performance budgeting, that is, placing emphasis on the relationship between financial inputs and physical outputs. Prepare monitoring arrangements which should encompass cost accounting and management information systems and thus reinforce performance budgeting. The utilization of these systems should be a central feature of agency operations. The format of an Annual Business Plan, which incorporates many of the outputs of the above elements, should be prescribed. Specify hardware, software, and installation requirements.

Transitional Arrangements -

3.4

Examine linkages to other relevant operations of the agency, for example, planning and budgeting or cost accounting, and prepare implementationprogram. Identify data needs for operation of the system and devise collection freqluencies, methods and systems. Specify hardware and software requirements of the network based system. Specify manpower requirements for operation of the system and any necessary training requirements. Specifically consider scope for operation and maintenance of the system by external consultants.

Prepare budget catering for setup costs (if any) of either new or restructured agency. Implementationprogram, indicating timescale for introduction of new arrangements.

Inputs.

For Phase 2 activities a), b), c) and d) the estimated costs are: International Consultants Transport Economist/ Project Coordinator Financial Analyst Institutional Planner Transport Engineer PPBM Specialist Computer Specialist Subsistence Airfares

Duration Cost (man months) (USD '000) 8 5 5 3.5 3.5 1.5

150 75 83 45 55 28 55 50

Sub Total Contingencies

541 59

TOTAL

600

Indicative cost estimate for last part of phase 2 is USD 0.4 million (activities (e) and (f) including

-45 -

ANNEX 4

equipment and training). The estimates for Phase 2 may change after execution of Phase 1 when decisions are made on institutional options and policy issues. 4.

PROJECT MANAGEMENT

(i)

Road Transport Policy Seminars

4.1 Inception seminar: Discussions that took place in Jordan prior to preparation of this project document revealed that decision makers had not been significantly involved in any thoroughgoing debate on road transport policy issues. The implicationsof the recent changes in the macroeconomic environment occasioned by structural adjustment policies do not appear to be readily comprehended, beyond a recognition that there is a serious budgetary squeeze. There does not appear to be a wide appreciation of the implicationsof current systems of regulation or an appreciation of the alternatives that are available. The Bank in its turn needs to understand the particular factors operating in Jordan, and the broader political context within which decisions are made. 4.2 It is therefore essential that a policy debate amongst the major actors commences. Phase 1 is designed to enable this to happen, but the project management environment must provide the conditions for engagement of the key actors. It is therefore proposed that a Road Transport Policy Studies Inception Seminar is undertaken in Phase 1. The aim of the seminar will not be to arrive at any conclusions but to sensitize all the actors to the policy considerations connected with road transport. The relevant actors from the Government are the Ministers of Public Works and Highways, Transport, Planning and Finance, together with their top officials. Key representatives of the private sector, particularly from the trucking industry, users of trucking services, consultants, and contractors should also participate. Representativesof the Bank and other major donors should also attend. 4.3 The seminar should be problem orientated. The recommendedformat is that a series of papers will be presented which are deliberately designed to highlight problems and prompt discussion during a session that will follow each paper. It is anticipatedthat the seminar will last for two days. Key issues unearthed in the Inception Reports, together with some preliminary indicationsof alternative means of tackling them, will be presented to the seminar by the two teams of consultants. 4.4 Representativesof the Government and the private sector will present their perception of key issues. Bank staff will provide the Bank perception of its experience in dealing with similar road transport problems, the lessons it has learned, and the implications for Jordan. Both the Bank and Ministry will deal with the overall macro-economicproblems and policies of the Government and their sectoral implications, particularly for cost recovery. 4.5 Policy Action Seminar: The second occasion for the concerted engagement of the actors mentioned above is on the production of the Draft Final Reports by the consultants. The options and the preferred recommendationsproduced by the consultants will be discussed at a seminar. The objective will not be to achieve a final decision but to ensure that there is a full understanding of the implicationsof the options on offer by all parties. It is not absolutely required that agreement is reached regarding a preferred option, although it would obviously assist in the policy dialogue process for a consensus to be achieved. The consultants will thus be appraised of the key concerns of all actors so that Final Reports accommodatethese considerations. (ii)

Timetable for Studies

4.6

The study timetable is illustrated in Figure 1. Phase 1 studies will commence as soon as

ANNEX 4

-46 -

possible after loan commencement. An Inception Report will be produced three weeks after the study has started. The findings of these issues-orientatedreports will be used as the basis for discussions at an Inception Seminar. 4.7 Work on both studies will then continue up to the production of the Draft Final Report at the end of Week 9. Because of the interdependenceof the two studies, it is essential that the teams share information on the options they are prepare for consideration by the Government. Preferred options will be recommended. 4.8 After consideration of the Draft Final Reports by the Government, this being assumed to take two weeks to complete, one of which will involve seminars and meetings at which both study teams attend. the teams will have a further two weeks to harmonize their recommendations and incorporate GOJ's commnents.

Flgwe

I

i Tiot.ble

Ph.,

Weeks ,I,

2,

3'

4,

5 ,

6,

7'

8,

m

Tronsport Sector

91

Policy

to

1112

13,

-cFi

Institutional

Options Inosption SwIner

IR * Inception DFR- Draft

Policy Action Seminar

Report

Final

Report

FR * Final Report

4.9 After completion of the Final Report, furitherapprovals are likely to be required at Cabinet level. Once this has taken place, selection of consultants for Phase 2, which are the implementation studies, can commence. There may be one more contract packages of studies depending on the option chosen. It is not possible at this stage to estimate the timescale because this will depend on the options selected at the end of Stage 1. An indicativeestimate would be at least six to twelve months for any package.

- 47 -

-

ANNEX 4

Coordinating Committee

4.10 Although the Road Sector Seminars will provide the major mechanism for the discussion of issues, there will be a need for consideration of more detailed matters than can be presented to such fora. A Coordinating Committee is appropriate for such purposes. It would be chaired by a senior officer from the Ministry of Planning, and composed of other senior officers from the Ministries of Public Works and Housing, Transport, and Finance, together with representatives from the trucking industry etc. 4.11 The first task of the Committee would be to review the Inception Report and prepare formal comments following the Inception Seminar. During the production of the Draft Final Reports, the Coordinating Committee would review informal working papers and other presentations prepared by the consultants. After the Policy Action Seminar following the production of the Draft Final Report, the Coordinating Committee would be responsible for production of written comments on the draft. The Consultants would then proceed to the production of the Final Report. After the production of the Final Report, it is anticipated that the Coordinating Committee, particularly its public service members, will guide the process of gaining approval for the reports' recommendations by Government, including any necessary references to Cabinet.

- 48 -

Figure

2

ANNEX 4

Project

Administratton

PHASE ONE C,,,',t

Tran-sport U -Ic 0 Seona-s

I

|

Steering Coemittee

Institutional Study

PHASE TWC

Transport Sector Pol icy Study

Implementetion Study

SemlnSteer I

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l Formal

-____ _

--

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at

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-

-

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-

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-

-

-

-

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-

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-

-

-

-

-

Cotc

-

otrc 2

- 49 -

ANNEX 5

HASHEM1TEKINGDOMOF JORDAN THIRDTRANSPORT PROJECT STAFF APPRAISALREPORT

TECHNICALASSISTANCEPROGRAMFOR AQABARAILWAYCORPORATION 1.

BACKGROUND

1.1 The economicand competitiveenvironmentwithin which the phosphaterailway operates, the type of commodityit handles and the technologyit uses shouldensure a leading and dominant role for the ARC as the most efficientand cost-effectivemode of transportof bulk phosphatein Jordan. Such a competitivepositionwould likely be further enhancedwhen the truckershave to shoulder the real economiccost of the road haul includingthe depreciationof the road system asset. While historically the Railway has fallen short of living up to its full potential, its presentannual throughputvolume of around 3.0 million tons remains a reasonableand credibleachievementif the Railway's original 1.5 million ton per year design criteria and its imposed,somewhatisolated and low profile institutional structure, unsupportedby either JPMC or the Governmentare fully factored in. ARC's full value and contributionto the phosphateindustry would emerge immediatelyif its operationswould be su, senly interrupted(or allowedto deteriorate over time), as there wouldbe no alternativemode which could possibly accommodatethis volumewith any degree of cost-effectiveness. 1.2 While the Railway's potentialis clearlydisplayed, immediatemeasuresneed to be undertaken towards improvementof ARC's corporatestructure, operationalefficiencyand financialperformanceto attain its full potential. A review of ARC's operations,operationscontrol, maintenanceand management structure reveal some weakness,largely based on lack of adequatemanagerialand technicalskill and experience. 2.

OBJECTIVE

2.1 Consideringthe above, a comprehensivetechnicaland managementassistanceprogram is needed for ARC with an objectiveto: (i)

address its institutionalissues and assist GOJ in developinga more appropriatecorporate structure fully responsiveto a commercialmandateand financialviability; (policy support technicalassistance)

(ii)

enhance its operationaland maintenancemanagementcapabilities; (institutionaldevelopmenttechnicalassistance)

2.2 While the recommendedprogram will entail both short and long-termpositions and could be designedin various configurations,some of the policy-development,corporatestructure relatedstudies on the one hand, and scope of identificationand detailedneed assessmentrelated activitieson the other, should logicallyproceedthe fieldingof long-termpositions in an IDTA program. The technicaland managementassistanceteam consistingmostly of long-termpositions in responseto the most critical areas of ARC's need, would follow. Althoughrecent investmentsin infrastructureimprovementsare payingdividendsin the form of increasedthroughputvolumes, the state of the Railway's equipment, particularlythat of the motive power fleet, with decliningavailabilityand increasingfailure rates, (indicatorsof both quantitativeand qualitativeshortcomingsin equipmentmaintenance)present the most critical area and the singlebiggest constraintin limitingthe Railway's volume throughput. 2.3

In a decliningorder of priority, extensive input into equipmentmaintenanceand related activities

- 50 -

ANNEX 5

(initially limitedto 24 months, subjectto reviewof progress and reassessmentof need for follow-up)is to be parallelledin a somewhatmore modest involvementin transportation(operations)planning and analysis (12 months) and in the managementand financialcontrol side, by financialsystems development activitiessupportedby managementinformationsystems developmentat the end of the list (12 months). 2.4 To maximizethe effectivenessand impactof the TA team's activities, short-termconsultancy requirementshave been identifiedsupportiveof the Railwayin developingor charting its best course in the market place (developmentof a long-term,comprehensivecorporate plan), or review its maintenance practicesand investmentplans in its infrastructure. To ensure comprehensivenessand full capacityto assist ARC, an additional 12 man-monthsis allocatedfor various short-termspecialistassignmentsto respondto emergingneeds as identified. 3.

SUMMARYOF ASSISTANCEPROGRAMRECOMMENDED

3.1 The recommendedtechnical and managementprogramhas been summarizedbelow, with indicationsof key objectives,durationsand decliningpriorities. Phase I - Studiescover Parts (A) and (B) below with a total of 18 staff-monthsat a cost of about US$300,000includingtravel and subsistence. Phase II - Implementationis assumedto take 102 staff-months,however, this is somewhatdependenton the outcomeof the studies in Phase I. The detailedterms of reference for the Phase I studies is included in this Annex. All the remainingTOR's can be found amongstthe documentson the Project F ,e (Annex 1). Phase I - Studies (18 s/m) A) Policy Support TechnicalAssistance(14 s/m): CorporateDevelopmentand Restructuring Senior InstitutionalDevelopmentOfficer *

To assist in the developmentof and facilitateconsensusbuildingin arriving at an appropriatecorporatestructure and supportive institutionalframeworkfor ARC, consistentwith fully commercial objectives.

Corporate PlanningSpecialist * * *

6 s/m

Developand prepare a comprehensivelong-termCorporate and Market DevelopmentPlan for ARC, consistentwith its market potentialand corporatetargets and objectives,also to be developed. Developa Contract Plan betweenthe government, ARC and JPMC formalizingtheir respectiveobligationsand responsibilities. Developan Enabling ActionPlan that sets out the specificsteps the governmentneed to take in order for the railway to begin operatingas a truly commercialenterprize(changelegislationand regulation,debt restructuring,directivesto be issued, removal of ARC from civil service etc).

8 s/m

- 51-

ANNEX 5

B) InstitutionalDevelopmentand TechnicalRelatedActivities(4 s/m): DetailedReview and Need Identification Senior RailwayMech. Engineerand WorkshopSpecialist(Team Leader) *

Reviewlocomotiveand rolling stock maintenanceand workshop practices.

*

Assessmentof accidentdamagedequipmentand rehabilitation requirements.

Senior RailwayMechanicaland WorkshopSpecialist *

To assess the state of repair of ARC's equipmentfleet, establish shortcomingsin the maintenanceprocess and developbest means for needed improvements.

*

To assess the state of the wreckedand accidentdamaged locomotives with recommendationsfor repair or disposal.

2.5 s/m

1.5 s/m

Phase II. Implementationof Mana2ement/OperationSuDtort(102 s/m): Technicaland ManagementAssistanceActvities and Training 1. Locomotiveand Rolling Stock Maint. and WorkshopManagementand Training Senior Diesel Mechanicaland WorkshopSpecialist(Team Leader)

24 s in

Senior Diesel Electricaland WorkshopSpec.

24 ,/rii

Senior RailwayStores Specialistand InventorySystems Analyst

12 s,'m

*

To increaseavailabilityand improvereliabilityof ARC's locomotive fleet by improvedmaintenancesystemsand practices.

2. Transportation(Operations)Planningand Analysis Operationsand CustomerService Specialist *

12 s/m

To increase ARC's throughputthroughbetter equipmentutilization and to improveits customer serviceorientation.

3. FinancialSystems and Development FinancialSystemsDevelopmentSpecialist *

To enhanceARC's financialcontrol systemsand develop appropriate costing procedures

4. ManagementInformationSystem Development

12 s/m

-52 -

ManagementInformationSystemsSpecialist

ANNEX 5

12 s/m

To developappropriatestatisticaldata generationand processing proceduresand design optimalinformnation and display system for managerialcontrol and decision-making. Short-termConsultancySupport 1. Review PermanentWay Maint. Practices & InvestmentRequirementin Infrastr. PermanentWay Engineer

6 s/m

2. Various Short-termStudies and OperationalSupportActivities Various RailwayProfessionalsand Specialistas defined. *

12 s/m

Total allocation

TOTAL TA SUPPORT

120 s/m

53-

ANNEX 5

Policy Support Technical Assistance for Aqaba Railway Corporation CORPORATE DEVELOPMENT AND RESTRUCTURING Terms of Reference Background 1. The Aqaba Railway Corporation (ARC) is a single purpose single commodity bulk carrier serving the Jordanian phosphate industry. Its infrastructure extends from the mines of Jordan Phosphate Mines Company, Ltd. (JPMC) at Al Abiad and El Hassa at the central planes of Jordan to the port of Aqaba through a 293 km link providing direct rail movement of phosphate by unit trains from the mines to export position. 2. While the ARC is functioning reasonably, though perhaps only at a modest level of efficiency, both operationally and administratively, it is not known for its dynamic, market and commercially oriented thrust, nor as a profit center of the industry it serves, nor is it a money making organi7 iion despite its potential, given its assured market. Despite the basic economic and financial health of the industry it serves, ARC has amassed substantial annual deficits in the last few years, and as a result, being essentially a parastatal organization, has proven to be a drain on the Jordanian Government's (GOJ) resources. 3. The ARC is a legal entity with financial and administrative autonomy under the Minister of Transport and Communications of the GOJ. Its Board of Directors, chaired by the Minister, is appointed by the Cabinet. Presently, its members representing various Ministries (Transport, Planning, Finance and Islamic Wealth) also include one representative of JPMC and the private sector respectively. The Director General of ARC, also a member of the Board, is appointed by the Minister. 4. Inasmuch as ARC is serving a highly profitable industrial enterprise, and is doing it in a competitive transport environment, its present government oriented institutional framework does not represent the best mechanism for its management structure. The public sector's selection and appointment criteria, stable but less assertive civil service mentality, government wage scales, etc., is not the best source for and response to the needs of a production oriented, competitive industrial organization, requiring dynamic, achievement oriented, commercially motivated operations demandiny managerial accountability (and reward). 5. Within the context of the Bank's appraisal of the Third Transport Project, the role, the operating efficiency and financial viability of ARC has been reviewed and requirements for improvements diagnosed. One key area for potential improvement was found to be the Railway's managerial, organization, and above all its institutional structure, with a view to substantial changes in both its structure and control mechanisms, as well as its underlying corporate outlook and philosophy. Obiectives 6. Consistent with the (desirable) long term corporate objectives of the ARC, i.e., a high level of operating efficiency and fully commercial (financial) viability, the Consultant is to undertake all necessary activities to facilitate the development of the best corporate structure responsive to these objectives. In particular, the Consultant is to: *

Review and develop various feasible alternative ways of institutional and financial restructuring of ARC and select or suggest a possible optimal format best responding to

- 54-

ANNEX 5

corporate objectives. *

Research, obtain, documentand disseminateall necessaryand relevant information,and on that basis, initiate and sustain ongoing discussionsat policy level amongst all parties, ministries and institutionsinvolved.

*

Facilitatea consensusbuildingand negotiationprocess and ensure that a rational decision is arrived at and is agreed to by all parties involvedin an appropriatelydocumented fashion.

Scope of Work 7. Without limitingthe generalityof the foregoing,the Consultantshall, inter alia, undertakethe followingtasks and activities: Preliminaries *

Reviewall availableand relevantmaterial on ARC, JPMC and the Jordanian phosphate industry in general.

-

Reviewthe workings,structure and institutionalformat of other similar resource railways around the world for possible illustrationand "case study" use.

-

Consult any possible source of expertiseand pertinentexperienceand note potential relevancies.

-

Travel to Jordan.

Field Work Establishcontactwith and attend introductorymeetingswith all relevantMinistries and organizationsinvolved: -

Ministry of Planning(possiblycoordinatingrole)

-

Ministry of Finance Ministry of Transport

-

Ministry responsiblefor phosphateindustry

-

JPMC ARC

-

Trucking firms involvedin phosphatetransport

-

Other stakeholders

*

Developcontacts with policy makers.

*

Developand discuss with all involvedappropriatemethodologyin undertakingthe consultingwork and ensure adequateand senior professionalparticipationby all relevant and importantorganizations.

*

Establishappropriateregular reportingand assist in the formationof an Inter-ministerial SteeringCommitteeto give guidanceand to ensure progress is maintainedand problems are resolved.

*

Reviewworkingsof the phosphateindustry in general and its transport mechanismin

-55 -

ANNEX 5

particular. Visit all mines, loadingand unloadingsites includingthe port. *

Visit and inspect all relevantfacilitiesof ARC and observe operationsof competingor complimentingtrucking firms, involvedin phosphatetransport.

*

Developa full understandingof all existing institutionalinvolvement,structure, formal and informaleconomicand political interest at play.

*

Reviewand documentall relevantoperationaland financialdimensionsof the phosphate transport sector, its competingmodes and attemptto establishtheir respectiveeconomic and financialcosts in movingthis commodity.

*

Explore other relevantissues, such as potentialcapacities, economiesof scale, service components,market expansion(for other commodities)particularlyas they pertain to ARC and its operatingand financialposition.

*

Consideringoptimalcommercialresults and maximizingfinancialpositionat both industry (JPMC) and corporate (ARC) levels, developcorrespondingorganizational, managementand controllinginstitutionalstructures(likely to be based on principles of private enterprise, and full managerialaccountability)for considerationand adot,ion by the industry.

*

VDevelop and documentspecificplans (and possible variants and alternatives)and institute discussionson that basis by all involved.

*

Identify and list issues(economic,financial,organizational,social or political) which appearto be inhibitingprogress, or are not clearly perceivedor fully understoodand are likely to impair the decision-makingprocess.

*

Facilitaterational and informeddiscussionsby organizingseminars and meetings with senior professionalstaff of the ministries and organizationsinvolvedon subjectspertinent to issues at hand.

*

Undertakeany other professionalwork to enhancethe quality of organizationalreview, restructuringand institution-buildingprocess and the evolvingresults and decisions.

*

Upon consensusand commitmentby all involved, prepare fully documentedand detailed Action Plans for implementingthe restructuringprocess, with targetedactivity and scheduledcompletiondates for each step and phase contemplated.

*

Developmonitorableperformanceindicatorsand set quantified,targetedand dated achievementlevels for implementation.

*

Ensure a coveringmemorandumof understandingor a similar documentand framework is initialedby all concernedMinistries.

ReportingActivities 8. Consultantis to follow reporting requirementsspecifiedby the funding agency involved. To ensure adequateprogress, such requirementis likely to involve: (i) InceptionReport, a short but structuredreview of progress in developinga work plan for the assignmentand confirmationof success in achievingrequiredcooperationand assignedpersonnelfrom all organizationsinvolved. To be prepared and submittedto the funding agencyand GOJ 30 days after arrival in Jordan; (ii) Mid-term

- 56 -

ANNEX 5

Report: a detailedprogress report on achievementsto date halfwayinto the assignmentcomparedto expectationsand work plans. Indicateareas of concernor problem areas; (iii) Final Report: on completionof assignment. Oualificationsand Experience 9. Candidateis to be a senior professionalwith extensive(at least 20 years) involvementin the transport sector in general and substantialexperiencewith the railway industry in particular. His professionalbackground,ideallytechnically(engineering)based, must include transport economicsand financialdisciplinesat an advancedlevel. His railwayexperiencemust entail both line and staff positions at senior managerialand corporateplanningand developmentlevels respectively,with a documentedrecord of achievementin both areas. 10. Incumbentis to have had wide exposureto developingcountriesand related developmentissues through various project involvementswith developingrailways. He is to have demonstratedcapacity to deal with conceptualissues with clarity and comnmensurate skills to interactand communicatewith senior policy and decision-makers,both orally and in concisewritten forms.

-57 -

ANNEX 5

Policy Support Technical Assistance for Aqaba Railway Corporation Contract Plan. Enabling Action Plan and Corporate Development Plan Terms of Reference Background 1. The Aqaba RailwayCorporation(ARC) is a singlepurpose, single commoditybulk carrier serving the Jordanianphosphateindustry. Its infrastructureextendsfrom the mines of Jordan Phosphate Mines Company, Ltd. (JPMC) at Al Abiad and El Hassaat the centralplanes of Jordan to the port of Aqaba through a 293 km link providingdirect rail movementof phosphateby unit trains from the mines to export position. 2. While the ARC is functioningreasonably,though perhaps only at a modest level of efficiency, both operationallyand administratively,it is not knownfor its dynamicmarket and commercial-oriented thrust, nor as a profit center of the industry it serves. It is not a money making organizationdespite its potential and its assured market. In spite of the basic economicand financialhealth of the industry it serves, ARC has amassedsubstantialannual deficitsin the last few years, and as a result - being essentiallya parastatalorganization- has proven to be a drain on the resourcesof the Jordanian Government. 3. Within the context of the Bank's appraisalof the Third TransportProject, the role, the operating efficiencyand financialviabilityand requirementsfor improvementsdiagnosed. Key areas of concern were the need for improvedoperatingefficiencythrough better control and managementof operations and maintenancepractices. ARC's improvedfinancialviabilitywould however require greater commercialorientation, improvedfinancialcontrolsand managementand significantincrease in ARC's capacityto plan and develop its future, fully exploitingits inherent strength in the transportsector and achieveits potential in the market place, both as a transport organizationand a financiallyviable enterprise.

Obiectives 4. Consistentwith long-termobjectivesof greater operating efficiencyand financialviability, the Corporate Planningand DevelopmentSpecialist's (or the consultant)objectivesfor this assignmentwill be to: *

ReviewARC's present position in the market place, and analyzeand identify its full economicpotentialgiven its competitiveattributesin the sector.

*

Developvarious scenariosand possible alternativecorporatetargets with appropriate strategiesto optimize its commercialposition consistentwith prevailingconstraints.

*

Develop,recommendand ensure adoptionof a set of viable corporatetargets with quantifiedobjectivesand defined financialimpact.

*

Developwith ARC assistancean appropriate,comprehensivelong-termcorporate plan includinga Contract Plan between ARC, JPMC and the governmentsetting out the obligationsand responsibilitiesof each.

*

Develop,recommendand ensure adoptionof an Enabling ActionPlan that gives the specificsteps which must be taken by the governmentto make good on each of its obligationsand responsibilities.

-58 -

*

ANNEX 5

Assist in the preparationof supportingOperational,Financial,Investment,Marketing and ManpowerDevelopmentPlans consistentwith the dictatesof the adoptedCorporate Plan.

Scope of Work 5. Without limiting the generalityof the foregoing,the Corporate Planningand Development Specialist(the Consultant)shall, inter alia, undertakethe followingtasks and activities: *

Review, at the macro level, the short and long-termprospects of the Jordanianeconomy, with particular referenceto its exportgeneratingsector and especiallythe key commoditiessusceptiblefor bulk movement,i.e., phosphate,potash, cement, etc.

*

Reviewindustry growth prospects through availableforecasts.

*

Reviewthe state of the bulk transportsector and the likely directionof its development.

*

Reviewand analyzethe competitiveposition of the various modes establishingthe strengths and weaknessesof the rail sector.

*

Reviewvarious capacityconstraintsprevailingwith the various modes.

*

Establishfor the most likely rangeof market share for the railway for the given plant sizes and investmentalternative.

*

Establishpotentialmarket share for the railway, includingpossible other commodities (cement,etc.) requiringplant expansion.

*

Assess,on an incrementalbasis, likely investmentrequirementsto accommodatethe offered traffic and developoptimal investmentopportunities,consistentwith economic and financialrate of return criteria.

*

Present findings, discussalternativescenarios,and developconsensusfor course to be chosento and by the Railway,Industry and governmentofficials.

*

Consistentwith the acceptedand adoptedrole for the railway, formulateconcise corporate objectivesand targets with quantifiedmarket share and financialbottom line figures.

*

Develop,draft and prepare a Contract Plan (CP) betweenthe government,ARC and JPMC being a formal implementingagreementbetweenthe three parties setting out their respectiveobligationsand responsibilities. It states their mutual acceptanceof the entrepreneurialmission and corporateobjectivesof the railway, clarifies the new authoritiesand responsibilitiesof the railwayand stipulatesthe performancelevels expected. It specifiesthe commitmentsto be undertakenby the government, and details the commitmentsby JPMc to amongothers to providecertain quantitiesof phosphate annuallyto the railway for transport to Aqaba, and sets out the time frame for the CP (5 years).

*

Develop,draft and prepare an EnablingAction Plan that developsthe programof specific steps that must be undertakento enable the governmentto make good on each of its promises, and enable the railway to begin operatingas a truly commercialenterprise: necessarylegislationmust be identifiedfor changeor replacement,fundingto be secured, regulationsneed to be changedor replaced,directivesto other relevant authoritiesmust

- 59 -

ANNEX 5

be prepared, all in order to permanentlyremove ARC from the civil service. *

Consistentwith the acceptedcorporateobjectivesand targets, develop,draft and prepare a comprehensivefive-yearCorporate Plan, which is to serve as a model for similar plans in the future to be updatedon a rolling two-yearcyclicalbasis. Corporate plan is to be detailed, analytical,fully quantitativein its descriptionof all relevantcomponents, resourcesand factorsof production.

*

Initiate and assist in the developmentand preparationof various departmentalplans with DivisionalDirectors for their respectiveDepartments,to be consistentwith and supportiveof the strategicCorporate Plan. These plans are to include operational, financial, investment,manpowerdevelopmentand training and marketingplans.

*

Throughoutthe activitiesof the consultingwork, developand increase managerial consciousnessand skill level for quantitativeanalysisand planningby working with and training managers in these endeavors.

Oualificationsand Experience 6. The successfulcandidateis to be a professionalwith extensiveplanningexperiencein the transport sector. He is likely to have qualificationsas a TransportEconomistand Business Administration,with experiencein railwayrestructuring. He is to have a minimumof 15 years working experienceof which at least 10 years would have been spent with the railway industry. 7. Previous workingexperiencein a developingcountryand a developingeconomyis highly desirable. To be successful,the candidatemust have the capacityto communicate,both orally and in writing, in a clear and concisemanner at the highest level of an organization.

-60 -

ANNEX 5

Policy Support Technical Assistance for Aqaba Railway Corporation Short Term Consultancies for Detailed Review and Needs Identification Terms of Reference Review of Locomotive and Rolling Stock Maintenance and Workshop Practices and Assessment of Accident Damaged Equipment and Rehabilitation Requirements Background 1. The Aqaba Railway Corporation (ARC) has acquired a General Electric diesel electric locomotive fleet manufactured between 1976 and 1981. Of the total 29 units procured (8 U-18-s, 3 U18-S, and 18 U-20-s) 25 units remain on ARC's list, although not all of them operational (four having been either written off or awaiting accident damage assessment and repair while some others await parts and heavy repair). As a result, daily availabilities are much lower and substantially below acceptable industry standards and, of greater concern, below requirements of the traffic demand. Supplies of data based on Traffic Department invoices indicate an availability range which was declining from 66% in 1987 to 56% in 1990, with only a slight improvement in 1991 (58.4%). Of equal concern is the unusually high on line, in service failure rate experienced with the locomotive fleet which is increasing and has reached an average monthly figure of 156 failures in the first four months of 1992, seriously impeding the Railway's capacity to meet its operational throughput and revenue potential. 2. While ARC's locomotive (and wagon) running shop facilities were located in Ma'an where all maintenance work was performed, no overhaul was undertaken, as neither the need, (new fleet) nor the facilities were available to ARC up to the late Eighties. To acquire such overhaul capability, which by the end of the Eighties became overdue for all units, ARC has constructed a modern workshop in Aqaba which should be fully equipped and fully operational for overhaul of GE locomotives. 3. Although ostensibly fully operational for some time and despite its undertaking some overhaul activity in the last year, to date, the Aqaba Workshop did not appear to arrest the declining trend in locomotive availabilities and reliabilities. 4. Despite the lack of experience and the absence of acquired expertise by ARC's Equipment Department, no formal or informal training, technical assistance, or manufacturer's presence was evident in the Workshop either at the technical, production planning and control, or at the managerial level. Symptoms of deficiencies of the maintenance and overhaul process could not and are not dealt with in any effective way, with serious impact on ARC's hauling capacity. 5. Remedial action and the development of a framework for transfer of technology and training programs at various levels of workshop activity are imperative if the Railway is to avoid further declines in motive power availabilities. 6. ARC's fleet of covered hopper wagons (4 different types and manufacture) are maintained in Ma'an, apparently without a cyclical and documented preventive scheduled maintenance basis. The wagon fleet has also displayed low availability ratios and increasing incidence of in service failures, which has started to impair traffic flows and is beginning to constrain throughput volumes. One set of the recently acquired wagon fleet has displayed some major structural problems and have been taken out of service, subject to reinforcement of its structural elements. Since its French manufacturer has gone

- 61 -

ANNEX 5

out of business, ARC is attemptingto undertakethese modificationwithin its own shops and facilities at Ma'an. Objectives 7.

The objectivesof the short term study of ARC's mechanicaldepartmentis to: *

assess the state of repair of ARC's locomotiveand wagon fleet

*

establishthe prevailingshortcomingsof the Railway's equipmentmaintenancesystem in general and in particular, the workingof the: -

Locomotive Workshop (Aqaba) Locomotive Running Shops (Ma'an) Wagon Repair Shops (Ma'an)

-

supportingstores facilities(Aqaba, Ma'an)

8. With the aboveframeworkand objectives,reviewthe above maintenancefacilities in terms of adequacyof: -

-

-

-

facilities, layout, workflow, etc. machinery,tools and equipment maintenance procedures and practices production planning and control

assess the technicalcapabilitiesof maintenancepersonnelin quantitativeand qualitativeterms reviewthe administrativeand supervisoryframeworkof the maintenanceprocess, includingits planningand managementendeavors reviewany ongoingvocationaland professionaltraining endeavorsof the MechanicalDepartmentand their responsivenessto the short and long term requirementsof the Railway's motive power and rolling stock maintenance develop the dimensionsof a TA programdesignedto improvethe quantitative and qualitativecapabilitiesof ARC's equipmentmaintenancedepartment, and provide clear definitionof all required componentsof such assistance,which is to include its technical,administrative,planningand managerialendeavors. consistentwith the TA or any other program foreseen, review the outline TOR's for appropriatenessand expandits details in terms of specificobjectives, range of activitiesand scope. Developand define specific input elementswith measurable and monitorableoutput indicators, targetedover the program's time horizon.

9. Assess the state of the wreckedand accidentdamaged locomotiveswith a view to establishing feasibilityof rehabilitationand return to service of some of the wrecked units, while allowingthe scrappingand disposal of others, beyond economicrepair. Within the context of this objective: -

inspect in detail all units not operational identifythose units which couldbe rehabilitatedwithin the limits of technicaland economicfeasibility identify the salvageablecomponentsof units beyond economicrepair develop a preliminaryparts and componentlist requiredfor each unit to be rehabilitated review ARC facilities(Aqaba Workshop)with a view of undertaking loco rehabilitationand heavy repair in terms of: -

shop floor and space requirements

-62 -

-

ANNEX 5

tools, equipment and machinery

appropriatestore support and inventorycontrol review the EquipmentDepartment's manpowercapabilities(quantitativelyand qualitatively)to undertakesuch work, in terms of: the various technicalskill requirements the availabilityof adequateproductionplanningand control list all requirements,includingmeasuresrecommendedto correct shortcomings, to enable ARC to rehabilitateout of service units developa productionplan, with schedulesand completiondates developa detailedpreliminaryparts list and cost componentsaccordingly includingcost of transport developcost of rehabilitationfor each unit with the assistanceof a financialanalyst (if needed) developan economicand financialrate of return for the projectedrehabilitationprogram in comparison with acquisitionof new motivepower units Score

I0.

Without limiting the generalityof the foregoing,the Consultant(s)shall, inter alia, undertakethe tasks in the conductof this diagnosticstudy:

followinig

Preliminaries * * *

Reviewall availableand relevantmaterial on ARC and its equipmentrelated problems prior to departure Developand prepare a preliminaryWork Plan in an outline format to ensure all issues are addressed Travel to Jordan

Field Work *

Establishcontact with and meet representativesof the Ministry of Finance and Ministry of Transportof the Governmentof Jordan in Amman. Discuss work plan and methodologyproposed.

*

Travel to Ma'an and establishcontactwith senior executivesof ARC -

Director General Director, Planning and Training

-

Director, Running and Mechanical(Chief MechanicalEngineer) Variouskey departmentalofficials of the EquipmentDepartment -

*

Chief of Loco maintenance (Running) Chief of Wagon maintenance Chief of Stores

-

visit and assess all relevantfacilities, shops tools, machineryand equipment review equipmentmaintenancepractices, maintenanceproceduresand systems observe and assess quality and control procedures

-

assess stores support facilities

-

assess quality and reliabilityof undertaking

Travel to Aqaba and establish contactwith senior ARC officials: -

Aqaba Area Manager

WorkshopManagerand Key SectionHeads in Aqaba Workshop Chief of Stores, Aqaba

- 63 -

-

-

*

*

ANNEX 5

Undertakea detailed reviewand assessmentof locomotivemaintenancepractices and proceduresas above Undertakea detailedreview of the stores operationand its efficiencyin supportingthe equipmentmaintenanceprocess. Reviewall elementsof the materialsmanagementprocess, particularlythose which might contributeto delays of ready availabilityof materials, i.e.: -

parts identification inventory control and management reorder point and resupply system procurement procedures

-

administrativeand institutionalconstraints(if any)

-

foreign exchange constraints (if any)

Identifyproblem areas and list needs and requirementsin a prioritized manner Developsuggestedor alternativemeans of alleviatingproblem areas Basedon overall assessmentand discussionswith senior ARC officials, develop specificrecommendationsincludingspecific TA program component(if relevant)

Reviewthe state of the inactivefleet (both locomotiveand wagon) due to accident damage Inspectall wreckedand damagedlocos and rolling stock Assessphysicalconditionof each with a view to rehabilitation Developand list requirementsfor rehabilitationincludingpreliminaryspare parts and componentlist Developrehabilitationmethodsand procedures,specifyinglocation, timing, schedulingand resource requirements Prepareoutline TOR's for TA positions (or reviewexisting ones) which will also deal with reporting relationshipsand degree of responsibility(line vs staff position) Reviewinterim findingsand outline of recommendationswith senior ARC executAvesin Ma'an and obtain their consentand commitmentsto the planned program.

D

Review, in broad terms, the interimfindings and recommendationswith Ministry of Transportofficials in Ammanprior to departure. Discuss and resolve any potential problem areas foreseen.

*

Retum to Headquarters

Follow-upWork in H.O. Office * * * * * *

Contact General Electric Headquartersin the U.S. to obtain an appropriateprice list for componentsand parts Consistentwith the developedparts and componentslist for the accidentdamaged equipmentand the obtainedprice list, prepare detailedcost estimatesfor the rehabilitation of identifiedlocomotives Based on prepared estimates,calculateeconomicand financialrate of returns for the rehabilitationprogram Basedon findings of the field work and discussionswith ARC and Govemment officials, prepare final report, includingthe detailedTOR's of the recommendedTA positions Submitdraft final report as specifiedby the funding agency On receiptof comments, finalizereport and submit final report as specified

- 64 -

ANNEX 5

Oualifications and Experience 11. The above assigmnent can best be undertaken by a Team of two senior railway mechanical engineering experts, with extensive experience, primarily with locomotive maintenance, overhaul and rebuild, and thorough exposure to wagon repairs and shop practices, as follows: Senior Railway Mechanical Engineer and Workshop Specialist (Team Leader) (2.5 months) A graduate mechanical or electrical engineer with extensive railway experience (minimum 15 12. years) in locomotive and rolling stock maintenance, workshops and stores procedures, fully familiar with and having worked with GE units. Experience to include program and project management, particularly in railway projects of similar types with the developing railways. Senior Railway Mechanical and Workshop Specialist (1.5 months) An established senior railway locomotive and workshop specialist with at least 15 years of 13. supervisory and shop management experience with a major railway, with exposure to GE units. Experience to include running and workshop (backshop) management, production planning and control in a siieable scale and operation. Overseas experience and project involvement with developing railways is hiiglhlydesirable.

- 65 -

ANNEX 6

HASHEMITEKINGDOMOF JORDAN THIRDTRANSPORTPROJECT STAFFAPPRAISALREPORT IMPLEMENTATION SCHEDULE

1/93 Fiscal Year

6/93

6/94

1993

1994

6/95 1995

6/96 1996

6/97 1997

6/98 1998

IIIIV I IIIII IV I II III IV I 11 IIIIV I II III IV I IIIIIIV RasEl Nagab-Wadi YutumRoad: * Bidding and ContractsAward

l UI

* Construction of SectionI * Construction of SectionII

fljf

IllII llI llIllIlIlIl llIllIlIlIl

llIllIlIl * Recruit Supvn.Cons.&Review Des. 111111 II Bankfinanced * ConstructionSupervision IIIIIII

Bankfinanced ICB

IIIII II IIII IIIUI111 an

RoadRehabilitation Program:

inanced

* Bidding and ContractsAward * Construction

111

* RecruitSupvn.Cons.&Revise Des. 111111 111111 Bankf nanced * Construction Supervision 11IlIlllIllIll

lIlI

1nanced11111

ll lIll

Bankfinai ced

TechnicalAssistance: Policy Supoort- MOT/MOP/MPWH

* RecruitCons. * PhaseI. Transp. Policy Study * PhaseI, Instit. Options Study

l

II lfljjil l flji

Bankfinanced Bankfinanced

lIllIlIllI

* PhaseII,Implementation

ll

GOJfinancedlA

MOT/Aqaba RailwayCorp.

* RecruitCons. * PhaseI. CorporateDev./Restr.

11111 III lflflflj

Bankfinanced

l

* PhaseII. Implem. AgreedPlan

Bank financed components (35m) (US$ million) Total all components (80 m)

GOJ j ncedTA

1.6 1.6 3.3 3.4

3.4 3.4 3.5 3.5

1.9 1.9 1.9 1.9 0.6 0.5 0.5 0.5

0.5 0.3 0.3 0.2

0.4

2.5 2.5 7.2 7.4

7.5 7.5 7.3 7.2

6.0 5.0 5.0 5.0

0.7 0.4 0.4 0.3

0.5

3.3 3.0 0.7 0.7

ANNEX

- 66 -

HASHEMITE KINGDOM OF JORDAN THIRD TRANSPORT PROJECT STAFF APPRAISAL REPORT PAVEMENT REHABILITATION PROGRAM

Tentative Selection of Road Links 1) Swaileh-Airport Road 21 Salt-Swaileh

Length Km 33 5

1991ADT Light

Cost Estimate

Heavy

USSMillion

3600

8.47

11700 2100

0.67

9200

3) Azraq - LkUari(2 links) -

Jafr Jnctn.- Umari

25

1000

1300

2.54

-

Jafr Jnctn.- Azraq (at Juweideh/Zarqa Jnctn.)

30

900

1500

3.39

Other links tbd Total

93km

- 67 -

ANNEX 8

HASEMITE EINGDOMOF JORDAN THIRDTRANSPORTPROJECT STAFFAPPRAISALREPORT

Economic Evaluation 1. The economic evaluation presented here covers the major components of the project for which benefits are quantifiable. These comprise the reconstructionof the Ras El-Naqab to Wadi Yutum Road (JD 38 million), and the rehabilitationof 93 km of priority roads (JD 12 million), which together account for about 95 percent of total project cost. Components for which no economic evaluations have been carried out are for technical assistance to Aqaba Railway Corporation (JD 1.3 million), and to the road transport sector (JD 1.1 million). A. Ras El Nagab to Wadi Yutum Road 2. The 71 km Ras El Naqab-Wadi Yutum road section, which includes the steep and tortuous Ras El Naqab escarpment, is part of the Desert Highway linking the port of Aqahl. with most of the rest of the country. As such it is crucial for much of Jordan's domestic transport but, above all, for its internationaltrade including the very important phosphate exports of which 50% are transported by road. Prior to the recent regional crisis the road also permitted the development of the lucrative transit traffic between Aqaba and neighboring countries: it is possible that, following the resolution of the crisis, this traffic will again become important. 3. Due to a combination of several factors including inappropriate design, inadequate maintenance, and the very heavy axle loads which resulted from the growth in transit traffic, the road structure has been severely degraded. As a result the road has reached a level of deterioration that in places may lead to a condition of virtual impassabilitywhich would be disastrous from a commercial and economic point of view; exports of phosphate would be reduced and costs of imported goods in most of the country would increase. Furthermore. as most of the section has now reached a stage where reconstruction is required, the section capacitv would be severely constrained during the period of rehabilitation. Consequently, it has beeni recommended by the consultants employed by the MPWH to undertake the feasibility study and final design, that a new two lane road should be built parallel to the existing road over the relatively flat 41 km from Wadi Yutum to the base of the escarpment, and a widening of the existing two lane road to provide additionallanes for slow moving traffic should be built on the 13 km climb up the valley along Wadi Yutum and on the 14 km escarpment section. During construction, the existing escarpment section of the road could not continue to carry all traffic and, hence, the old Ras El Naqab Resthouse road will also have to be improved and strengthened so that it may be used as a detour during work on the main road. Existing Road Conditions 4. Analysis of various options for improving the Ras El Naqab-Wadi Yutum Road was carried out using the Highway Design and Maintenance Model, Version 3.0 (HDM-III), Table 8.1 shows a summary of the input data on existing road conditions. A detailed set of input data are provided in the project files (Annex 1: "Results of HDM Analysis for Ras El Naqab-Wadi Yutum Road"). Key aspects of the present situation is a fairly high roughness, particularly in the escarpment section and a high degree of cracking of the bituminous surfacing.

- 68 -

ANNEX 8

Projected Traffic Flows Estimates of traffic to the year 2015 are presented in Table 8.2, which shows the 5. projected evolution of various types of vehicular traffic in vehicles per day (vpd). Future traffic, beyond 1995, on the project road, is strongly dependent on two parameters which could significantly affect the projection. These are: a) diversion of traffic to the alternative Dead Sea Road which is expected to open to traffic in 1995 and would provide another route from Amman to the port of Aqaba; and b) enforcement of the axle load restrictions which would increase truck traffic by reducing average payloads from 37t. to 22t. For the purposes of assessing the expected rate of return for the project it has been assumed that 75% of light vehicle traffic and 10% of heavy vehicles would divert to the Dead Sea Road in 1995. The latter value is low owing to the large majority of truck traffic being for points which are more accessible via the project road. On the likely success of the axle load reductions, it has been assumed that only 5 % of the truck traffic will exceed the new axle load limits as a result of strong enforcement measures adopted by the Government. Both of these parameters have been subjected to a switching value analysis which is presented below. Vehicle Operating Costs 6. Table 8.3 presents the pararneters used in estimating vehicle operating costs (voc) using the Highway Design and Maintenance Standards Model (HDM-III). VOC estimates are made for three sections of the road that have significantlydifferent characteristics (gradients, curvatures), and for the major vehicle types. Since the HDM-III model does not permit the calculation of congestion costs, which are the main benefits from providing four lanes in the two climbing sections. The benefits evaluated only consider savings in vehicle operating costs. Key assumptions made are as follows: a)

the economicprice of fuel is taken to be 165 fils/liter, based on a crude oil price of US$146.5 per ton;

b)

no value of time costs for passengers or cargo is considered; and

c)

average load factors for trucks, based on observed empty movements, were taken to be 0.8 northbound and 0.7 southbound.

Details on other assumptions are in the consultants reports in the project files. Project Economic Costs 7. Financial costs have been converted to economic costs and this essentially required an adjustment to the foreign cost component to reflect the differential between official and market exchange rates, and removal of import duties and taxes. No shadow pricing of labor or other inputs was considered necessary since the Jordanian economy is largely an open economy with considerable mobility of these inputs among the countries of the region. The opportunity cost of capital for Jordan is presently believed to be below 10 % in view of the relatively easy access to European and Middle-Easterncapital markets, and for the purpose of this analysis a 10 % discount rate has been assumed.

ANNEX 8

- 69 -

Economic Evaluation 8. The economic evaluation of the project involved analysis of three scenarios: (a) continuing to utilize the existing road by applying an asphalt concrete overlay at 6-year intervals (designated ALT 1) - the without project case; (b) reconstructing the existing road (ALT 2); and (c) constructing the road on a parallel alignment (ALT 3). Tables 8.4 (a), (b) and (c) show sample outputs of the road condition and maintenancestrategy over the 20-year analysis period under each of these three scenarios. The implementationtime for the reconstruction option (ALT 2) is taken to be longer than for the new construction option (ALT 3) owing to the additional complexity of the works involving rerouting of traffic on detours; ALT 2 is assumed to take 5 years to implement, while ALT 3 is assumed to take 4 years. The without project case, which is ALT 1, assumes an immediate overlay to reduce the present high roughness, and subsequently at 6-year intervals with patching and routine maintenance activities being carried out each year as necessary. Based on these assumptions, ALT 3 was found to have the highest internal rate of return (IRR) which was 14.2%, as compared with ALT 2 which had an IRR of 8.8%. Tables 8.5 (a), (b) and (c) present the cost streams for each of the three scenarios, and Table 8.5(d) shows the comparison of the two project alternatives, ALT 2 and ALT 3, with the without project alternative ALT 1. The new construction alternative, ALT 3, is therefore the most cost effective solution. It should be noted that the investmentcosts of ALT 2 are alr ist as high as ALT 3 due to the high cost of providing and operating detours during the construction period. The proposed project's IRR is therefore 14.2%, and its net present value at a 10% discount rate is estimated to be JD 15.1 million. Sensitivity Analyses Changes in the project's expected rate of return with changes in key parameters were 9. investigated through both simple sensitivity analyses and through estimation of switching values for key parameters which are subject to significantrisk. The sensitivity of the rate of return to a 15% increase in cost, a 15% reduction in benefits, and a combination of these, was calculated and in the latter case the IRR is found to drop to 11.1%. Switching values were computed for three key factors: success in the enforcement of axle load restrictions, diversion of truck traffic to the Dead Sea road in 1995, and diversion of light vehicle traffic to the same route. The following table presents the results of the switching value analysis. Parameter

Expected Value

Switching Value

Percent success of Axle Load Restrictions

95%

5%

Truck Traffic Diversion to Dead Sea Road

10%

46%

Light Vehicle Diversion to Dead Sea Road

75%

100%

The switching value of a parameter in the above table, is the value of that parameter which causes the IRR for the project to drop to 10%. In the case of axle load restrictions, 100% success is defined as a level of enforcement which causes average truck payloads to decline to below 22 tons from the present average of 37 tons, which is the 0% success level. On each of

- 70 -

ANNEX 8

these three parameters, the switching value analysis indicates that there is considerable latitude for change in each taken individually; no analysis was carried out of the joint effect of risk in these parameters as that would require a more exhaustive risk analysis of the project. B. Road RehabilitationProgram 10. MPWH's road maintenancebudget has been inadequate and as a result, insufficient resources have been allocated to routine maintenance, light periodic maintenance such as resealing, and periodic pavement strengthening to maintain the road system's load carrying capacity. In addition, the relaxed axle load policy has accelerated pavement deterioration. Consequently, a backlog of deferred road works, including pavement strengthening and rehabilitation works, has developed over the last 10 years. This must now be addressed in the form of a pavement rehabilitationprogram to prevent a sharp increase in vehicle operating costs and to avoid an expensive reconstruction program. The MPWH has through its Road Maintenance Management System (RMMS) identified approximately 175 km of roads in this category which need immediate treatment at an estimated average cost of US$125,000 per km. It is proposed to finance 93 km of this program in the project. The program (Annex 6) is estimated to yield a high Economic Rate of Return since the "do-nothing" alternative would involve an even higher reconstruction cost later to gain basically the same benefits, while road users would continue to incur hig' operating costs due to high road roughness until the road is reconstructed. This component is estimated to be approximately 24% of the total project cost. Economic Evaluation 11. Tables 8.6 and 8.7 present the economic evaluation of the three road sections proposed to be rehabilitated under the project. Traffic on these roads are projected to grow at an annual rate of 2%. Based on vehicle operating costs estimated for these road sections, total VOC per annum is computed for the with and without project cases. The without project case does not include the cost of major reconstruction, and hence the evaluation is conservative in that the only benefits considered are savings in vehicle operating costs. Rates of return computed for the three road segments range between 33% and 57%; sensitivity analyses (15% increase in cost and 15% decrease in benefits) indicate that the rate of return is likely to be above 27%.

- 71 -

ANNEX 8

Table 8.1 ExIsting Link Characteristics LINK ID : A001 DESCRIPTION RAS-ELNAQA8HIG. LENGTH (KN) 71.0

SECTION NUMBER (PAVED/UNPAVED)

~~~~~~~~~. ............... _...

.

.

.

..

2 (P)

1 (P) --

--

-

--

--

-

3 (P) --

--

-

(KM)

13.6

40.7

16.7

("/MO) (M)

.025 200.0

.025 200.0

.025 200.0

RISE PLUS FALL ("/KN) HORIZONTALCURVATURE (DEG/AN) CARRIAGEWAYWIDTH (M) SHOULDER WIDTH (M) SU-PERELEVATION (X) EFFECTIVE NLUBER OF LANES

2.6 28. 7.2 3.0 .3 2.0

1.1 8. 7.2 3.0 .1 2.0

3.3 40. 7.2 3.0 .5 2.0

PAVD AC 1 0 100. 0.

PAVD AC 1 0 100. 0.

PAVD AC 1 1 100. 120.

3 1.0 3.20 1.08

3 1.0 3.20 1.04

3 1.0 3.20 1.19

54.0_86. 54.0 86.0 54.0 86.0 .0 .0 .0 .0 7.0 19.0 2.0 4.0 3500. 3500. 0. 0.

91.0 91.0 .0 .0 44.3 10.0 6000. 0.

LENGTH ENVIRONMENT MONTHLY RAINFALL ALTITUDE GEOMETRY

SURFACE S-URFACEID CODE SURFACE TYPE NW8ER OF NEW LAYERS NUMBER OF OLD LAYERS THICKNESSOF NEW LAYERS THICKNESSOF OLD LAYERS STRENGTH PARAMETERS OPTION NUMBER BENKELMANBEAM DEFLECT MOD STRUCTURALNUMBER STRUCTURALNUMBER

(MM)

CONDITION _ .TOTA . .ARECRACKE TOTAL CRACKED AREA (X) WIDE CRACKED AREA (X RAVELLEDAREA (X) POTHOLEDAREA (X) MEAN RUT DEPTH (MM) RUT DEPTH STD DEVIATION (MM) ROUGHNESS (81) CONST FAULT (0=NO, 1=YES) HISTORY YEARS FROM LAST PREVENTIVETRNT(PAVED)OR REGRAVELLING(UNPAVED) YEARS FROM LAST SURFACING YEARS FROM LAST CONSTRUCTION

10. 10. 15.

10. 10. 15.

10. 10. 15.

YEAR Phosphete

Cement

T R UC K lIp/Exp

TR A F F I C Other Transit

TOTAL TRUCK*J Light Heavy

Elpty

HUSES

PICK-UP TRUCKS

PRIVATE CARS

GOVERNIENT CARS

TAXI

1991

476

152

530

207

200

222

1755

153

106

318

328

113

1995

682

227

644

669

245

669

3029

263

156

464

4U0

137

204

2000

985

227

822

758

315

806

3780

329

248

748

776

175

332

2005

1126

186

1012

532

404

750

3874

337

404

1208

1248

224

536

2010

1288

152

1247

373

518

766

4196

365

540

1776

1832

286

784

4735

412

720

2608

2692

364

1152

8.9S 1.5 ----

9.92 7.4X

1O.0S 87 .. .

10.02 8.6S -- -.

5.02 O 5. 0 .

1. O." 14 .8

153

106

2015

124

1473

1539

227

874

665

141

pi

Growth 91-00 00-15

8.4X 2.7S

2.52 -4.02

5.02 4.3X

....----- --......---....... ~~~~--

15. 5 -7.7X

......

A. Projection

Assu5ing

Diversion

5.2X 5 1X

8.92 15.42 1. 5 0. 5 --- -- !----

to Dead Sea Road in 1995 bl: Light Veh.

1991 1995

Truck Trfe.

75S 1755 2726

237

39

0

102

318

328

113

141

116

120

137

51

3402

296

62

187

194

175

83

2005

3486

303

101

302

312

224

134

2010

37m

328

135

444

458

286

196

2015

4262

371

1S0

652

673

364

288

318

328

113

141

137

51

{

2000

B. Projection

AssLning

(A) above and Enforcement

1991

of Axle Load Limits

c/ has a Success Rate of: 1755

153

O

952 106

1995

2671

232

39

116

120

2000

3333

290

62

187

194

175

83

2005

3416 |

97

101

302

312

224

134

2010

3700

322

135

444

458

286

196 |

2015

4175

363

180

652

673

............. ........................... ............................................................................................................................................................

heavy trucks are 922 of totat. menerated traffic; Notes: a. Total truck traffic Includes S the Dead Sea Road, is Expected to open In 1995; it is expected b. Nw altternate route betwetn Aqaba and Amn. to this route. (except Govt. cars) and 102 of trucks wilt divert that 75X of light vehilets overaee payload is 37t c. with an axle load limit of 13t, average truck payload is 22t; uneontrotied

.........

Oj

28U1

364 .

i

......

. ----.----

0

ID~~~I

z

z 00

ANNEX 8

- 73 -

Table 8.3 Vehicle Fleet Characteristics and Unit Costs

L.TRUK

BUS

P.CAR

M.TRUK

H.TRUK

.

.......

.......

VEHICLE DESCRIPTIONS .......................

.....

VEHICLE TYPE FUEL TYPE GROSSVEH WGHT (TONS) EQUIVALENTAXLES(EXP=4.0) EWUIVALENTAXLES(EXP=2.0) AVERAGEVEHICLE AXLES PAYLOAD(TONS) DRAG COEFFICIENT AERODYNAMIC PROJECTEDFRONTALAREA HP) DRIVING POWER(METRIC HP) BRAKINGPOWER(METRIC FRATIO(PAVED) FRATIOO(UNPAVED) FRATIO1(PAVED) FRATIO1(UNPAVED) PSYCHSPEED(KM/H, PAVED) PSYCHSPEED(KM/H, UNPAVED) CALIBRATEDENGINE SPEED(RPM) MAX AV RECTVELOCITY(MM/S) FOR SPEED WIDTH PARAMETER WEIBULL SHAPE PARAMETER ENERGYEFFICIENCY FACTOR FUEL ADJUSTMENTFACTOR RECAPCOST RATIO(X) TIRE RUBBERVOLUME(CUOM) BASE NUMBEROF RETREADS CONSTANTTREADWEARTERM WEARCOEFFICIENT CONSTANTSPAREPARTSTERM ROUGHCOEFFSPAREPARTS TERM ROUGH.LIMIT, SPAREPARTSEOU CONSTANTLABOR HOURSTERM EXPONENTIALLABORHOURSTERM ROUGHCOEFF LABORHOURSTERM

3 PETROL 1.00 .00 .00 .00 .00 .45 2.20 85.00 27.00 .268 .124 .000000 .000000 98.30 82.20 3300.00 259.7 .7400 .2740 1.0000 1.1600 15.0 .00 .00 .00 .00 32.49 13.70 6600.00 77.14 .55 .00

5 DIESEL 11.00 .57 .00 2.00 2.30 .65 6.30 100.00 160.00 .233 .095 .000000 .000000 93.40 69.40 2300.00 212.8 .7800 .2730 1.0000 1.1500 15.0 6.85 3.39 .16 1.28 1.77 3.56 10450.00 293.44 .52 .01

7 DIESEL 35.00 15.59 .00 2.00 2.00 .70 3.25 60.00 100.00 .253 .099 .012800 .000000 81.60 71.90 2600.00 194.0 .7300 .3040 1.0000 1.1500 15.0 4.30 1.93 .16 1.28 1.49 251.79 .00 242.03 .52 .00

8 DIESEL 45.00 24.70 .00 2.00 4.50 .85 5.20 100.00 250.00 .292 .087 .009400 .000000 88.80 72.10 1800.00 177.7 .7300 .3100 1.0000 1.1500 15.0 7.60 3.39 .16 1.28 1.49 251.79 .00 242.03 .52 .00

10 DIESEL 50.00 35.56 .00 5.00 13.00 .63 5.75 210.00 500.00 .170 .040 .002300 .000000 84.10 49.60 1700.00 130.9 .7300 .2440 1.0000 1.1500 15.0 8.39 4.57 .16 1.28 13.94 15.65 .00 652.51 .52 .00

40.0 2000. 60000. 10. 1 1 .00 6 1.00

1.3 3000. 80000. 12. 1 1 .00 14 1.00

1.3 3000. 80000. 12. 1 1 .00 14 1.00

1.3 3000. 80000. 12. 1 1 .00 22 1.00

27300.00 124.50 .27 1.25 .00 .00 .00 9.00

39150.00 124.50 .36 1.25 .00 .00 .00 9.00

37800.00 124.50 .38 1.25 .00 .00 .00 9.00

VEHICLE UTILIZATION NO. OF PASSENGERS/VEHICLE ANNUALHOURSDRIVEN ANNUAL KILOMETERSDRIVEN VEHICLE SERVICE LIFE (YEARS) VEHICLE DEPRECIATIONCODE VEHICLE UTILIZATION CODE HOJRLYUTILIZATION RATIO NL4BMEROF TIRES/VEHICLE MAXIMUMPASSABILITY FACTOR

3.2 2000. 30000. 12. 1 1 .00 4 1.00

ECONOMICCOSTS (COST/VEHICLE) NEWVEHICLE (COST/TIRE) TIRES (COST/LABOR-H) MAINT LABOR (COST/CREW-H) CREWTIME DELAY (COST/PASS-H) PASSENGER (COST/VEH-H) CARGODELAY (X) COSTS AWNUALOVERHEAD (X) ANNUAL INTERESTRATE FUEL & LUBRICANTS(COST/LITER)

6150.00 18.00 .21 .00 .00 .00 .00 9.00

48900.00 100.50 .51 .70 .00 .00 .00 9.00

PETROL=

.17

DIESEL FUEL =

.17

Ni

N

Ni

NJ

Ni

0

N

NP

WP

_0W~f

6

J

N

N

N

Ni

NJ

N,

4

'P

N

0i

0

0W N

t _ 8 a - s >n m -R'

N N 0)

N

N

'P W

W

N

'

W

L' LN'P

N

as co_u

0

W

'A P

N

NNN*

NNNNNNNNNPUNNNNNNNNNNNN

ooooooO0

tN At 'OP_

b-

N

'6

0

N-

_

_P opa

PiWl N4-

coc

~~-4'.

-4

..

-

0.

Od

0

r

w O

N

0.

At A

:>

N 0

-W 'P b _ )fo_Nb

->

t'

.

-

-

-

-

N

_

-

'- -

N

0 0 0 0 0 00 0 0 0 0 0 0 00

*o4.t 0

40c

WA

0

N

.44t

.

-oaO

.d..PjFUCO

*3

OhnnWIiU

40

~li

:j

I-j-tN

a.-v

I

*.,

!s

..*

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ft

ANNEX 8

- 75-

Table 8.4 (b) Annual Road Conditions Report

.................. ................

................................. .... .... .................... PAVEDROAD(NEDILM STRENGTHSUBSECTION)

.............................. ............

..................

...........

..........................

END OF YEAR CONDITION ---------------------------------------YEARS SD MEAN AREA AREA TWO- ANNUAL SINCE LAST PERIODC RUT AREA AREA RUT WIDE ALL BEF/ WAY TWO-WAY ---------ROUGNNS MAINT DEPTH DEPTH POTHD RAVLO AFTER SURF MOD CRACKS CRACKS ADT ESA SURF/ APPLO (RI) (U) (MM) IX) MX) CX) CX) REGRVCONSMAINT TYPE SN YEAR (VPD) (THOUS) ........................... ............................... .................. ........ ...... .. .............. -................................................ 6616.2 10.1 45.2 .1 .0 91.9 91.9 AC 3.2 BEF 11. 16. 2622 24072.0 1993 6583.4 10.1 .0 45.2 .0 91.9 91.9 AC 3.2 AFT 7259.5 10.3 46.1 .1 .0 92.7 92.7 AC 3.2 BEF 12. 17. 1Q94 2331 25997.7 7223.7 10.3 .0 46.1 .0 92.7 92.7 Ac 3.2 AFT 7964.9 10.4 47.0 .1 .0 93.4 93.4 AC 3.2 BEF 13. 18. 3058 28077.6 1995 7925.9 10.4 47.0 .0 .0 93.4 93.4 AC 3.2 AFT 8250.0 10.5 47.8 .2 .0 94.1 94.1 AC 3.2 BEF 14. 19. 1Q96 3302 30323.8 8207.6 10.5 47.8 .0 .0 94.1 94.1 AC 3.2 AFT CONS 1933.0 .4 1.3 .0 .0 .0 .2 13.7 ST 1. 1. BEF 1997 3567 32749.7 1933.0 .4 1.3 .0 .0 .0 .2 ST 13.7 AFT 1938.0 .4 1.4 .0 .0 .0 .6 ST 13.7 REF 2. 2. 1998 3852 35369.6 1938.0 .4 1.4 .0 .0 .0 .6 ST 13.7 AFT 1943.0 .4 1.6 .0 .0 .0 1.1 ST 13.7 BEF 3. 3. 1999 4160 38199.2 1943.0 .4 1.6 .0 .0 .0 1.1 ST 13.7 AFT 1948.1 .5 1.7 .0 .0 .0 1.7 ST 13.7 BEF 4. 4. .93 41255.1 2C00 1948.1 .5 1.7 .0 .0 .0 1.7 13.7 ST AFT 1953.3 .5 1.8 .0 .0 .0 2.5 ST 13.7 REF 5. s. 2601 4853 44555.6 1953.3 .5 1.8 .0 .0 .0 2.5 ST 13.7 AFT 1958.5 .5 1.8 .0 .0 .0 3.6 ST 13.7 BEF 6. 6. 5241 48120.0 2002 1958.5 .5 1.8 .0 .0 .0 3.6 ST 13.7 AFT 1963.8 .5 1.9 .0 .9 .0 4.8 13.7 ST BEF 7. 7. 5660 51969.6 2003 1963.8 .5 1.9 .0 .9 .0 4.8 ST 13.7 AFT 1969.3 .5 2.0 .0 14.0 .0 6.2 ST 13.7 BEF B. 8. 6113 56127.2 2004 1969.3 .5 2.0 .0 14.0 .0 6.2 ST 13.7 AFT 1975.0 .5 2.1 .0 54.5 .8 7.9 ST 13.7 BEF 9. 9. 6602 60617.3 2005 1975.0 .5 2.1 .0 54.5 .8 7.9 13.7 ST AFT RESE 1980.8 .5 2.1 .0 89.7 1.9 9.8 ST 13.7 BEF 10. 10. 7130 65466.7 2006 1948.6 .5 2.1 .0 .0 .0 .0 RSST13.7 AFT 1953.7 .5 2.2 .0 .0 .0 .3 BEF RSsT13.7 1. 11. 7701 70704.1 2007 1953.7 .5 2.2 .0 .0 .0 .3 AFT Rss513.7 1959.0 ,5 2.2 .0 .0 .0 1.0 RSST13.7 BEF 2. 12. 8317 76360.4 2008 1959.0 .5 2.2 .0 .0 .0 1.0 AFT RSST13.7 1964.5 .6 2.3 .0 .0 .0 2.0 BEF RSST13.7 3. 13. 8982 82469.2 2009 1964.5 .6 2.3 .0 .0 .0 2.0 AFT RSST13.7 1970.1 .6 2.3 .0 .0 .0 3.3 BEF RSST13.7 4. 14. 9701 89066.8 2010 1970.1 .6 2.3 .0 .0 .0 3.3 RSST13.7 AFT 1975.9 .6 2.4 .0 1.4 .0 5.0 BEF RSST13.7 5. 15. 2011 10477 96192.1 1973.9 .6 2.4 .0 1.4 .0 5.0 RSST13.7 AFT 1982.1 .6 2.4 .0 16.4 1.3 7.1 RSsT13.7 BEF 6. 16. 2012 11315103887.5 1982.1 .6 2.4 .0 16.4 1.3 7.1 RSST13.7 AFT 1988.7 .6 2.5 .0 59.3 3.2 9.7 RSST13.7 BEF 7. 17. 2013 12221112198.5 1988.7 .6 2.5 .0 59.3 3.2 9.7 AFT RssT13.7

....... ...

ANNEX 8

- 76 -

Table 8.4 (c) Annual Road Conditions Report

PAVEOROAD(MEDILM STRENGTHSUBSECTION) ......

...

..

...........................

..

END OF YEAR CONDITION ........-...............--......................... YEARS SD MEAN AREA AREA TWO- ANNUAL SINCE LAST PERICDC RUT AREA AREA RUT WIDE ALL BEF/ WAY TWO-WAY -'-------AFTER SURFMoC CRACKS CRACKS RAVLD POTHD DEPTH DEPTH RWCHGNASNAINT SURF/ ESA ADT APPLD (8I) (MM) (M) (X) (X) (X) (X) REGRVCONSMAINT TYPE SN YEAR (VPD) (THIJS) 1993

.622 24072.0

11. 16.

1994

2831 25997.7

12.

17.

1995

3058 28077.6

13.

18.

1996

3302 30323.8

1.

1.

1997

3567 32749.7

2.

2.

1998

3852 35369.6

3.

3.

1999

4160 38199.2

4.

4.

2000

493 41255.1

5.

5.

2001

4853 44555.6

6.

6.

2002

5241 48120.0

7.

7.

2003

5660 51969.6

8.

8.

2004

6113 56127.2

9.

9.

2005

6602 60617.3

10.

10.

2006

7130 65466.7

1.

11.

2007

7701 70704.1

2.

12.

2008

8317 76360.4

3.

13.

2009

8982 82469.2

4.

14.

2010

9701 89066.8

5.

15.

2011

10477 96192.1

6.

16.

2012

11315103887.5

7.

17.

2013

12221112198.5

8.

18.

REF AFT REF AFT REF AFT REF AFT BEF AFT REF AFT BEF AFT BEF AFT BEF AFT BEF AFT BEF AFT REF AFT REF AFT BEF AFT BEF AFT REF AFT BEF AFT REF AFT BEF AFT REF AFT REF AFT

AC 3.2 AC 3.2 AC 3.2 AC 3.2 AC 3.2 AC 3.2 AC 13.7 AC 13.7 AC 13.7 AC 13.7 AC 13.7 AC 13.7 AC 13.7 AC 13.7 AC 13.7 AC 13.7 AC 13.7 AC 13.7 AC 13.7 AC 13.7 AC 13.7 AC 13.7 AC 13.7 AC 13.7 AC 13.7 RSAC13.7 RSAC13.7 RSAC13.7 RSAC13.7 RSAC13.7 RSAC13.7 RSAC13.7 RSAC13.7 RSAC13.7 RSAC13.7 RSAC13.7 RSAC13.7 RSAC13.7 RSAC13.7 RSAC13.7 RSAC13.7 RSAC13.7

91.9 91.9 92.7 92.7 93.4 93.4 .0 .0 .3 .3 .7 .7 1.3 1.3 1.9 1.9 2.6 2.6 3.4 3.4 4.4 4.4 5.4 5.4 6.6 .0 .4 .4 1.1 1.1 2.1 2.1 3.5 3.5 5.3 5.3 7.5 7.5 10.2 10.2 13.3 13.3

91.9 91.9 92.7 92.7 93.4 93.4 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .8 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 1.3 1.3 3.2 3.2 5.9 5.9

.0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .3 .3 9.8 9.8

44.2 44.2 85.4 85.4

.1 .0 .1 .0 .1 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0

45.2 45.2 46.1 46.1 47.0 47.0 1.3 1.3 1.4 1.4 1.6 1.6 1.7 1.7 1.8 1.8 1.8 1.8 1.9 1.9 2.0 2.0 2.0 2.0 2.1 2.1 2.1 2.1 2.2 2.2 2.2 2.2 2.3 2.3 2.3 2.3 2.4 2.4 2.4 2.4 2.5 2.5

6616.2 6583.4 7259.5 7223.7 7964.9 7925.9 1381.6 1381.6 1385.3 1385.3 1389.1 1389.1 1392.8 1392.8 1396.6 1396.6 1400.4 1400.4 1404.3 1404.3 1408.3 1408.3 1412.3 1412.3 1416.6 .5 1395.8 .5 1399.7 .5 1399.7 .5 1403.7 .5 .5 1403.7 .5 1407.8 1407.8 .5 1412.1 .6 1412.1 .6 1416.6 .6 .6 1416.6 1421.5 .6 .6 1421.5 .6 1426.7 1426.7 .6 .6 1432.4 1432.4 .6

10.1 10.1 10.3 10.3 10.4 10.4 .4 .4 .4 .4 .4 .4 .5 .5 .5 .5 .5 .5 .5 .5 .5 .5 .5 .5

CONS

RESE

- 77 -

ANNEX 8

Table 8.5 (a) Cost Table Alt. 1

YEAR

ROAD CAPITAL COSTS

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

2.045 .000 .000 .000 .000 .000 2.045 .000 .000 .000 .000 .000 2.045 .000 .000 .000 .000 .000 2.045 .000 .000

ROAD RECWRR COSTS

EXISTING GENERATED EXISTING GENERATED VEHICLE VEHICLE VEHICLE VEHICLE NET TOTAL OPERATING OPERATING TRAVELTIME TRAVEL TIME EXOGENOLtS ECONOMIC COSTS COSTS COSTS COSTS COSTS COSTS

.016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016

25.931 24.374 26.831 29.574 32.643 36.084 39.952 38.050 42.059 46.564 51.635 57.357 63.826 60.845 67.597 75.233 83.889 93.715 104.039 98.199 109.777

.000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000

.000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000

.000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000

.000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000

27.992 24.390 26.847 29.590 32.659 36.100 42.013 38.065 42.075 46.579 51.650 57.373 65.887 60.861 67.613 75.249 83.905 93.731 106.099 98.215 109.793

8.179 .000

.331 .000

1208.175 .000

.000 .000

.000 .000

.000 .000

.000 .000

1216.685

DISCOtJNTED ECONOMICCOSTSAT : .0 % 8.179 10.0 X 4.218 12.0 X 3.872

.331 .150 .133

1208.175 420.297 357.246

.000 .000 .000

.000 .000 .000

.000 .000 .000

.000 .000 .000

1216.685 424.666 361.251

TOTAL BENEFITS-COSTS- UNDISCOUNTED: ECONOMIC: FOREIGN:

- 78 -

ANNEX 8

Table 8.5 (b) Cost Table Alt. 2

YEAR

ROAD CAPITAL COSTS

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

7.200 10.800 7.200 7.200 3.600 .000 .000 .000 .000 .000 .000 .000 .000 1.022 .000 .000 .000 .000 .000 .000 .000

....

.....

....

.....

.

ROAD RECURR COSTS .018 .018 .018 .019 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016

EXISTING GENERATED EXISTING GENERATED VEHICLE VEHICLE VEHICLE VEHICLE NET TOTAL OPERATING OPERATING TRAVEL TIME TRAVEL TIME EXOGENOLtS ECONOMIC COSTS COSTS COSTS COSTS COSTS COSTS 25.931 28.541 31.460 34.574 29.117 31.464 33.997 36.734 39.691 42.886 46.339 50.070 54.103 58.462 62.981 68.052 73.532 79.454 85.854 92.772 100.251

...................................... ... ........................

.000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000

.000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000

.000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000

.000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000

33.149 39.359 38.678 41.792 32.732 31.480 34.013 36.749 39.706 42.902 46.355 50.086 54.119 59.501 62.997 68.068 73.547 79.469 85.870 92.788 100.267

...........................................................

TOTAL BENEFITS-COSTS- UNDISCOUJNTED: ECONOMIC: FOREIGN:

37.022 22.000

.341 .000

1106.266 .000

.000 .000

.000 .000

.000 .000

.000 .000

1143.629

DISCOJNTEDECONOMICCOSTSAT: .0 % 37.022 10.0 % 31.133 12.0 X 30.230

.341 .158 .142

1106.266 397.721 340.611

.000 .000 .000

.000 .000 .000

.000 .000 .000

.000 .000 .000

1143.629 429.012 370.982

- 79 -

ANNEX 8

Table 8.5 (c) Cost Table Alt. 3

ROAD CAPITAL COSTS

YEAR . ............

.....

......

...

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ........

..

.....

....

_......

3.840 11.520 15.360 7.680 .000 .000 .000 .000 .000 .000 .000 .000 1.022 .000 .000 .000 .000 .000 .000 .000 .000 ......

. ........

............

.....

EXISTING GENERATED EXISTING GENERATED VEHICLE VEHICLE VEHICLE VEHICLE NET OPERATING OPERATING TRAVELTIME TRAVEL TIME EXOGENOJS COSTS COSTS COSTS COSTS COSTS

ROAD RECURR COSTS ........

....

.018 .018 .018 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 .016 ......

_...

....

....

.....

25.931 28.541 31.460 25.617 27.680 29.905 32.308 34.906 37.712 40.744 44.019 47.559 51.384 55.410 59.865 64.680 69.882 75.504 81.580 88.149 95.249 ..

......

........

.....................

.000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 ...

..

...

..........

.000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 ....

.............

.000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000

TOTAL ECONCIC COSTS

................

......

.000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000

.....................

29.789 40.079 46.838 33.312 27.695 29.920 32.324 34.921 37.727 40.759 44.035 47.575 52.422 55.426 59.881 64.695 69.898 75.520 81.596 88.164 95.265 ..

......

TOTAL BENEFITS-COSTS- UNDISCWUJNTED: ECONOMIC: FOREIGN:

39.422 22.700

.338 .000

1048.083 .000

.000 .000

.000 .000

.000 .000

.000 .000

1087.844

DISCoJNTEDECONOMICCOSTS AT: .0 X 39.422 10.0 % 33.103 12.0 % 32.100

.338 .156 .140

1048.083 376.321 322.281

.000 .000 .000

.000 .000 .000

.000 .000 .000

.000 .000 .000

1087.844 409.580 354.520

.........

-80-

ANNEX 8

Table 8.5 (d) Summary of Costs and Comparisons by Discount Rate

DISCOUNT RATE = CONST ORIG ECO/ RECON LENGTH GEN FIN UPGRD LINK (KM) ALT TRAF CSTS COSTS A001

71.0 ALT1 NO ALT2 NO ALT3 NO

ECO FIN ECO FIN ECO FIN

.00 .00 30.84 .00 32.78 .00

PERIODIC ROUTINE MAINT MAINT COSTS COSTS 4.22 .00 .30 .00 .33 .00

.15 .00 .16 .00 .16 .00

TOTAL CONST & MAINT COSTS 4.37 .00 31.29 .00 33.26 .00

10.00 %

VEHICLE NET OPERATING EXOGENOUS COSTS COSTS 420.3 .0 397.7 .0 376.3 .0

.0 .0 .0 .0 .0 .0

TOTAL COSTS

INTRNAL NET RATE OF PRES RETURN COMPARISON VALUE (X)

424.7 .0 429.0 ALT2 VS ALT1 .0 409.6 ALT3 VS ALT1 .0

-4.3

8.8

15.1

14.2

- 81 -

ANNEX 8

Table 8.6 Vehicle Operating Costs (VOC) for Road Rehabilitation Components

1991TRAFFIC GR. RATE ROADNAME/ VEHICLE TYPE 1. Swaiteeh - Salt Rd (5.0

Cvpd)

9352 2355 1523 686

Pick-up Trucks Buses Heavy Trucks Total .................

2. Swaileh

Airport

22 2X 22 22

..........

-------

7222 2157 1253 2476 Total

108 199 386 578

100 189 347 563

-------

........

TOTAL VOC W/ PROJECT(OGOs JD) 1995 :.2000 :. 2005 :. 2010 : 2015

1995 : 926 1161 783

2203 1022 1282 865

1847 879 1044 763

4866

5372

......

22 22 22 22

108 199 386 578

100 189 347 563

13108 ............

--------

2432 1129 1416 955

2685 1246: 1563 : 1054

5931

6548:

:-------------

2965 1376 1726 1164 7230 ......

4534 .......

2040 : 971 1153 842

2252 : 1072 1273 930

2486 : 1183 1405 1027

2745 1307 1551 1134

5005

5526

6102

6737

: .......-------

:-------:-------

........

................

10169 11228 5596 6179 6306 : 6962 18659 : 20601

12396 6822 7687 22745

40730

49650

-----

44970 :-----:-.......

13686 15111 7532: 8316 8487 : 9370 25112 27726 54818 ......... ---

60523 :----

9416 5315 5669 18175

10396 : 11478 12673 13992 5868 6479 : 7154 : 7898 6259 6910 : 7629 U423 20066 : 22155 : 24461 27007

38575 .......

42589 : .......

47022

51916

57320

.....-------.... -:---

km)

Passenger Cars Pick-up Trucks Buses Heavy Trucks

1520 380 930 1870 Total

...........................

TOTAL VoC WIO PROJECT(OODs JO) 1995 2000 2005 2010.: 2015

km)

.................................

3. Azraq - Umari Rd (55.0

V 0 C (fils/km) W/o Proj:w/ Proj

13916 ..

Rd (33.0

Passenger Cars Pick-up Trucks Buses Heavy Trucks

.................

pa)

km)

Passenger Cars

................

(

22 22 22 22

108 199 386 578

4700 ...............

100 189 347 563

3567 : 3938 1643 1814 7801 8612 23487 : 25931 36498

.........................

40297 .....

......

4348 2003 9509 28630

4801 : 5301 2212 2442 10499 11591 31610 34900

3303 : 3647 : 4026 : 4445 1561 1723 1902 : 2100 7012 : 7742 : 8548 9438 22877 : 25258 27887 30790

44491

49121

34753

..........

54234 ................

38371 ...

..

42364

. .......................

46m

; 4908 2319 10420 33995 51642 ...............................

................ .......... ......

- 82 -

ANNEX 8

Table 8.7 Summary of Costs and Comparisons for Road Rehabilitation Components

YEAR

SALT - SWAILENRD SIAILEN - AIRPORT RD Rehab. VoC Not Rehab. vOC Net SavIngs Fl ows Cost Sav1ngs Flows Cost .1.9. . ... 3...5. ........ ........ ....... ......... ......... 199' 235 -235 2964 -2964 19W4 235 - 235 2964 - 2964 1995 332 332 2156 2156 2201 1996 339 339 2201 1997 346 346 2246 2246 353 2290 2290 1998 353 1999 360 360 2335 2335 2000 367 367 2380 2380 374 374 2430 2430 2001 2002 382 382 2479 2479 2003 389 389 2529 2529 2004 397 397 2578 2578 2005 405 405 2628 2628 2006 413 413 2683 2683 2007 422 422 2737 2737 2008 430 430 2792 2792 2009 438 138 2847 2847 2010 447 447 2901 2901 2011 456 456 2962 2962 2012 465 465 3022 3022 2013 475 1.75 3083 3083 2014 484 484 3143 3143 493 493 3203 3203 2015 .......

.........

....

......

.......

.....

..

........

...

...

..

..

..

......

........

......

.........

2322 57.01

WPV a 101 D.R Intrnt. Rte. of Rtn. ..

....

..

......

AZRA0 - LlARI Rehab. VOC Cost Savings ......... ...2075 2075 1744 1781 1817 1853 1890 1926 1966 2006 2046 2086 2126 2171 2215 2259 2304 2348 2397 2446 2494 2543 2592

RD

..........

.......

........

....

12579 33.11 ..

.

.

.

..

.

.

.

.

..

OVERALLFOR REIiALITATION Ct7fiEliTS lose 15S Incr. 151 Redn. Colbined Case in Cost *mffts Case . . - 6.. . . ..... -5271 -6065 -5274 -6065 -5274 -6065 - 5274 -6065 4232 4232 3597 3597 3672 4320 4320 3672 .09 4409 3747 3747 4497 4497 3822 3822 4585 4585 3897 3897 4673 4673 3972 3972 4770 4770 4055 4055 4867 4867 41137 41137 49965 465 4220 4220 5062 5062 4303 4303 41385 4385 5159 5159 5267 5267 4477 4477 5374 5374 4568 4568 5481 5481 4659 4659 5589 5589 4750 41750 5696 5696 4842 4842 5815 5815 4942 4942 5933 5933 5043 5043 6052 6052 5114 5144 6170 6170 5245 5245 5346 6289 6289 5346

hot FLows .52 -2073 -2075 1744 1781 187 1817 1853 1890 1926 1'66 2006 2046 2086 2126 2171 2215 2259 2304 2348 2397 2446 2494 2543 2592

.....

107410 37.41 .

.

.

..

..

.

.

.

.

.

.

.

.

.........

25640 36.01 .

.

.

.

.

........

24268 32.01 .

.

.

.

.

.........

20422 31.1.4 .

.

..

.

19049 27.81 ..

.

.

.

- 83 -

ANNEX 9

HASHEMITEKINGDOMOF JORDAN THRD TRANSPORTPROJECT STAFFAPPRAISALREPORT BANK SUPERVISION PLAN The following table give staff input in weeks in relation to supervision missions only. In addition there are needs at headquarters for review of general progress reports, audit reports, consultants' inception/draft fmal/final reports, preparation and participation in policy seminars, procurement actions, correspondence, contact with cofinanciers and aid donors, etc. which is estimated to take 3 staff-weeks each for the two first years and two weeks for the remaining years in all 12 staffweeks. The total input is higher than usual in the past, but is dictated by the complex TA component and the relatively compressed implementation schedule for the works components which are partly traversing difficult terrain with relocation of traffic during construction and archaeological sites in need of excavation and general attention in addition to pavement durability problems. All these factors contribute to a requirement for considerable input from specialists.

Approximate Dates

Activities

Expected Skills Requirements

Staff Weeks

April 1993

Supervision Mission: - expedite start-up; discuss and agree on road budget and local fund availability; discuss first year and subsequent years road rehab. program; discuss and agree the setting up of an interministerial coordinating committee; meet the supervision consultant and discuss reporting and archaeological supervision with DOA; initiate selection of short list and bidding for Road Policy Study and ARC Corporate Study; discuss LCB and make needed clarifications; train key local staff in procurement/Bank guidelines.

Highway Engineer Transport Econ. HRID Specialist Railway Specialist Procurement Specialist

15

Supervision Mission: - review road contractors mobilization and discuss supervision and archaeol. monitoring; discuss and agree improvements to detours and traffic regulation during construction in particular measures to improve safety during construction; review work programs and first Progress Report requirements; Review Inception Report of consultant engaged in Transport Policy Study; discuss work of consultant writing ARC corporate plan and restructuring proposal; have meetings with JPMC and agree on project kick-off seminar in Dec. to discuss policy findings and action plans; discuss management assistance to ARC and MPWH implementation plans (Phase 11).

Highway Engineer Transport Economist Railway Specialist HRID Specialist Road Safety Expert

Sept. 1993

l 10

-84 -

ANNEX 9

Approximate Dates

Activities

Expected Skills Requirements

Staff Weeks

Dec. 1993

SupervisionMission:

HighwayEngineer

12

- Take part in a Policy Seminar, (project initiationseminar) Initiate LCB for road pavement rehabilitation;review progress and followup on progress reportingdeficiencies; reviewprogress on main road construction,detour improvements and work of the supervisionconsultants, in particular excavationsof archaeologicalsites. Review ARC policy and fact findingstudies and review financial performanceand corporate and financial modelsfor reconstruction; discuss consultants findingswith coordinatingcommittee and MTC, ARC and MPWH staff.

TransportEconomist Railway Specialist HRID Specialist Financial Analyst

April 1994

Supervision Mission: - discuss and agree on road budget and local funds availability; discussnext year's and subsequentyears' road rehab. program; review road safety measuresrelated to reroutingof traffic; review general progress of contractorsand supervisionconsultantsbased on progress reporting; review TA progress and mobilization of the ARC support to management.

HighwayEngineer Transport Economist Road Safety Specialist

8

Sept. 1994

Supervision Mission: - detailed review of progress on all contracts and overall project status

HighwayEngineer TransportEconomist Railway Specialist

7

Dec. 1994

Supervision Mission: - General review and followup on previous missions; if progress is according to schedule, this mission may be combinedwith the Sep. mission for one visit only

HighwayEngineer TransportEconomist

5

April 1995

Supervision Mission: - discuss and agree on road budget and local funds availability; discuss next year's and subsequentyears' road rehab. program; initiate mid-termreporting and supervisionprogram.

HighwayEngineer TransportEconomist HRID Specialist

8

Oct. 1995

Supervision Mission: - Mid-Termreview; Status and detailed review of all componentsbased on special reporting.

Highway Engineer TransportEconomist Railway Specialist HRID Specialist Financial Analyst

16

ANNEX 9

- 85 -

Approximate Dates

Activities

Expected Skills Requirements

Staff Weeks

April 1996

Supervision Mission:

Highway Engineer

8

- discuss and agree on road budget and local funds availability; discuss next year's and subsequent years' road rehab. program;

Transport Economist

Supervision Mission:

Highway Engineer

- more detailed review; discuss and agree on road budget and local funds availability; discuss next year's and subsequent years' road rehab. program;

Transport Economist

Supervision Mission:

Highway Engineer

- general review and follow up of any problems uncovered during mid-term review.

Transport Economist

Supervision Mission:

Highway Engineer

- general review and follow up of any problems uncovered during mid-term review.

Transport Economist

Final Supervision and PCR Mission:

Highway Engineer

- general review including status on MPWH policy and institutional studies and ARC performance; initiation of PCR drafting by consultants and government.

Transport Economist Railway Specialist HRID Specialist Financial Analyst

April 1997

Oct. 1997

April 1998

April 1999

8

6

6

13

ANNEX 10

- 86 HASHEMITE KINGDOM OF JORDAN THIRD TRANSPORTPROJECT STAFF APPRAISALREPORT DISBURSEMENT FORECAST

Bank Fiscal Year/Quarter FY93 III IV FY94 I II III IV FY95 I II III IV FY96 I II III IV FY97 I II III IV FY98 I TI III IV FY99 I II III IV *)

Approximate Sector Profile 0 3 6 14 30 38 54 62 78 82 90 98 100

Quarterly 2.50 1.50 1.50 2.30 2.30 2.40 2.40 2.50 2.50 2.10 2.10 2.10 2.10 1.25 1.25 1.25 1.25 0.50 0.30 0.30 0.20 0.10 0.10 0.10 0.10

Special Account initial deposit (This may possibly slip into Ist Quarter FY94).

Cumulative

%

2.50 4.00 5.50 7.80 10.10 12.50 14.90 17.40 19.90 22.00 24.10 26.20 28.33 29.55 30.80 32.05 33.30 33.80 34.10 34.40 34.60 34.70 34.80 34.90 35.00

7 11 16 22 29 36 43 50 57 63 69 75 81 84 88 92 95 97 98 98 98 99 99 99 100

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