Report No. PID9383 Project Name Ghana-Road Sector Development Program (@) Region Africa Regional Office Sector Highways Project ID GHPE50623 Borrower(s) GOVERNMENT OF GHANA Implementing Agency Address: MINISTRY OF ROADS & HIGHWAYS Ghana Highway Authority, Department of Feeder Roads, Department of Urban Roads P.O. Box M. 38, Accra, Ghana Contact Person: Mr. A. Beckley, Roads Coordinator Tel: 233 21 66 79 35 Fax: 233 21 66 79 35 Environment Category A (Full Assessment) Date PID Prepared March 13, 2001 Projected Appraisal Date January 8, 2001 (actual) Projected Board Date May 2001 1. Country and Sector Background The transport sector overall accounts for approximately 9% of GDP and generates a significant share of the total budgetary revenues of the Government. Roads are the predominant mode of transportation, currently accounting for 94% of freight and 97% of all traffic movements in the country. The road transport industry, which is dominated by the private sector, has unrestricted entry and competition is prevalent, but its efficiency is constrained by the high cost poor roads impose on vehicle operation. In the past Ghana had acquired a relatively healthy infrastructure base. However, economic crisis and decline during the 1970s and 1980s, combined with weak institutional capacity, led to a deterioration in the infrastructure network and its operations, leaving transporters and producers unable either to expand services to a larger segment of the population or compete effectively in regional markets. In the 1990s the Government embarked on a comprehensive program to remedy deficiencies in the transport sector. Key reforms included restructuring the Road Fund and adoption of the principle that Government's role should be one of regulating, managing and monitoring, not executing, agent. Widespread intensification of the involvement of the private sector followed in areas previously dominated by Government, viz. port operations, maritime trade, and road maintenance. Main issues in the Road Sector Management capacity. The road network is the responsibility of three agencies, all under the oversight of the Ministry of Roads and Highways (MRH): the MRH Department of Feeder Roads (DFR), the MRH Department of Urban Roads (DUR), and the Ghana Highway Authority (GHA). These agencies suffer, in various degrees, from weak management. GHA, the largest agency, has installed management systems that are adequate, but their application is not satisfactory. DFR and DUR need to complete on-going development of their systems and adapt them to the decentralized configuration of the future. Development also is underway of an integrated financial management system for MRH and the three agencies, and for an overall public procurement code to be established and put to use. Government arrears. A particular issue that has its origin in the roads sector involves the substantial sums that the Government owes to contractors for road works carried out in the past. Elimination of these arrears is a prerequisite for proper sector management, and necessary to assure a sound financial platform for the program. Road maintenance funding and management. The structure and operations of the Road Fund were revised in 1996. The Fund's revenues now derive from a fuel levy (about 85%), and various other road related tariffs, such as licensing fees, road and bridge tolls, etc. Collection and disbursement of these revenues are under the authority of the Road Fund Board, which has a majority of private sector stakeholders. Recently there have been setbacks in the form of delayed implementation of approved increases in the levy, as well as a general stretching out of planned increases. This has delayed progress in reducing the maintenance backlog. Traffic Safety. On the entire road network, but in particular on those parts under the responsibility of the GHA and the DUR, traffic safety is a serious problem. Presently, the monetary value of losses due to road accidents is estimated to be 2% of GDP. Accident frequency in Ghana is about ten times the average European level, and there is growing public awareness of the need to take firm action to curb and mitigate the effects of road accidents. Government Strategy: Ghana is one of the pilot countries for the Comprehensive Development Framework (CDF). As part of this effort, a Roads and Transport Strategy was put forward (May 2000), with the following elements: (i) Develop in-country capacity for government institutions and the private sector to coordinate and manage the road network efficiently; (ii) ensure sustainable funding; (iii) base road sub-sector investment decisions on sound socio-economic and environmental principles that are sustainable; (iv) enhance the operational efficiency of the road network to promote economic growth and the delivery of social services; (v) reduce gender, regional and - 2 - socio-economic disparities in access to transport to help achieve poverty reduction, national integration, unity and stability; (vi) integrate the road network with other modes of transport to promote the development of an efficient transport system; (vii) develop a comprehensive road safety program to reduce road transport fatalities; and (viii) mitigate the negative environmental and social impact of road related activities. 2. Objectives The development objective of the Ghana Roads Sector Development Program (RSDP) is to achieve sustainable improvements in the supply and performance of roads and road transport services in a regionally equitable manner. Sustainability involves physical, financial, as well as environmental aspects and is closely related to the success of the institutional reforms and institutional strengthening that are part of the program. Similarly, equitability encompasses geographic disparities largely between the south and the north (the latter roughly comprising the four northern regions of Brong-Ahafo, Northern Region, Upper West and Upper East), disparities of income, disparities between urban and rural areas, and gender inequalities. Some of the disparities clearly overlap, calling for an integrated approach based on the more fundamental objectives of poverty alleviation and economic growth. All types of roads are included: trunk roads, feeder roads, and urban roads. The road works for the program as a whole range from routine maintenance to reconstruction. To achieve better transport services the program extends beyond road conditions to a variety of road safety measures, improved environmental practices, better reporting and information systems, etc. 3. Rationale for Bank's Involvement The Bank's first involvement in the road sector dates back to the 1960's, and includes direct support of physical works programs, as well as assistance in policy reforms and institutional strengthening. The roads sector is well suited for the country and its international partners to work together within the CDF, since the practice of continuous consultation and the perspective of joint decision-making have been in place for several years. Furthermore, the Bank's management of the Sub-Saharan Africa Transport Policy Program (SSATP), a multi-donor collaborative effort in policy reform in the transport sector, will permit the Government to avail itself of assistance in sector policy analysis and reform as well as interaction with, and benefits from, sector experiences in other countries. 4. Description The RSDP presents a three-year integrated approach to road maintenance, construction, and management by MRH, its two road agencies, DFR and DUR, and GHA. Disbursements from the proposed IDA Credit would support the implementation of specific projects and actions within annual RSDP work -3 - programs. The program has the following six components, of which IDA would finance elements of components 2 through 5: Component 1: Routine Maintenance, consisting of patching of potholes; light grading; grass cutting; tree and bush clearing along the roadside; and cleaning of gutters, drains and culverts. It is carried out annually on an average of 27,250 km of all types of roads. Component 2: Periodic Maintenance and Minor Rehabilitation, consisting of spot improvement; repair and resurfacing of short stretches of roads; repairing drains, culverts and slopes; regraveling; and resealing. Component 3: Major Rehabilitation and Reconstruction and Upgrading, consisting of reconstruction of heavily degraded road sections; resealing; upgrading from one surface type to another; placing asphalt concrete overlays; and repair and construction of bridges, culverts, and other structures. Component 4: Traffic Management and Safety, containing strengthening the National Road Safety Commission (NRSC) and the DVLA; developing a comprehensive road safety strategy and implementation program; and setting standards for safety, reliability, and efficiency in the transport sector. Component 5: Institutional Strengthening, containing policy and institutional reforms (including strengthening of environmental management and road safety); studies; training; technical assistance; and provision of buildings, vehicles and equipment. Component 6: Program Operation, covering planning, management, coordination and reporting for the 3-year road development program by the participating agencies. 5. Financing Total ( US$m) Total Project Cost 220 IDA, as part of the total RSDP Program of $1.2 billion. 6. Implementation The MRH will have the overall responsibility for the coordination and management of the program. Each of the implementing road agencies (GHA, DFR, DUR) will make its own internal management arrangements and report, in formats already established and agreed. Implementation will be based on an Annual Work Program and Budget prepared by each agency, and consolidated by the MRH. The GHA Accounting and Management Information Systems Unit (AMISU) will be transformed into a MRH accounting facility to oversee all expenditures in the roads sector, including arrangements for audits, in accordance with systems and procedures acceptable to IDA. A financial/technical audit system introduced under HSIP will be continued and enhanced to - 4 - assess the cost/effectiveness and adherence to agreed work programs for the agencies. A Project Implementation Manual is being finalized which provides the necessary guidelines for all implementing agencies. 7. Sustainability The Government is firmly committed to improving the performance of the sector. To further strengthen the chances for sustainability, the following actions will be taken as needed: (i) transparent use of and predictable supply of funds for road maintenance and their timely disbursements; (ii) effective capacity building; (iii) efficient system for road maintenance planning, programming and supervision (road maintenance planning and programming improvements will be underpinned in part by the three-year rolling RMRP); and (iv) enhancement of regulatory capacity in the administration. 8. Lessons learned from past operations in the country/sector The advantages of a participatory design process. The MRH drew up an overall strategy for the sector, and developed this into strategic plans for each sub-sector. Acceptance of these plans by the public and by particular interest groups was obtained through extensive debate in Cabinet, Parliament, and parliamentary sub-committees, and through outreach activity and stakeholder consultations by MRH. The main lesson learned is that although the process is slow, it is both in accord with Ghanaian tradition, and in the end, more effective than a faster but less inclusive process would have been. The need for donor coordination and consultation. The practice of regular consultations among donors and the MRH, and the annual GOG/donor meeting instituted under the HSIP, and the stakeholder consultations arranged by MRH, have demonstrated the advantage of continuous contact between all actors and interested parties in the sector. The need for comprehensive sector management support. The emergence of the arrears problem shows clearly the need for comprehensive road sector management and transparent reporting. Had those elements been in place, the arrears problem could not have developed. This is a principle reason for adopting the concept of a program rather than multiple projects. The importance of accompanying stable maintenance funding with better programming. The positive experience with the reform of the Road Fund hs been incorporated in the design of the program. The reformed Fund significantly improved revenue- raising immediately upon beginning its work. However, the lack of clear work programs caused a build-up of liquid funds, which were then diverted to other uses, sometimes the payment of arrears. The lesson is that the raising of revenue for road maintenance does not in and of itself insure the maintenance is done. Proper advance work planning and programming must also be present, together with implementation - 5 - capacity in the private sector and managerial capacity in the executing agencies. 9. Program of Targeted Intervention (PTI) N 10. Environment Aspects (including any public consultation) Issues An environmental impact assessment (EIA) of the program was undertaken by international consultants in association with local experts. The EIA concluded that the project is unlikely to have adverse effects on the environment, as it mainly involves the maintenance, rehabilitation and upgrading of existing roads. No new construction is intended, and would only be considered where a linkage to the next level road has been identified as necessary from both a social and commercial standpoint. Negative environmental impacts during the works, such as dust, noise, detours, traffic delays, spoil materials, fumes, construction camps and affiliated services, will be of short duration and will be included in the mitigation plans of the contracting entities. In a very few cases, removal of structures within the road reservation may be required. Positive environmental impacts are expected to be achieved by improved safety designs, including guard rails, barriers, overpasses, sidewalks and road shoulders. Paving of gravel roads will eliminate dust pollution, and improved drainage will reduce exposure of near-by residents to waterborne diseases associated with standing water. Improvements in vehicular controls will address noise and visual pollution issues, reducing road deterioration (through overloading regulations) and thus minimizing the need for extensive road works. Specific projects under the program will be identified on an annual basis and the environmental and social impact of each road will be evaluated individually, in keeping with national environmental assessment requirements, as well as those of the Bank. An acceptable mitigation framework/plan has been discussed and agreed upon, and the required additional costs are reflected in the project costs. Disclosure The EIA was placed in the World Bank InfoShop on November 21, 2000. Copies are also available in the World Bank Field Office in Ghana Project Information Center and the Ghana Ministries of Environment, and Roads and Highways. Public hearings were held in Ghana on November 17 and 21, 2000, and there were four national broadcasts on Radio Ghana, two each on November 25 and December 2, 2000. 11. Contact Point: Task Manager Imogene R. Jensen The World Bank 1818 H Street, NW Washington D.C. 20433 Telephone: 202-473-5550 Fax: 202-473-8326 12. For information on other project related documents contact: The InfoShop -6- The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http:// www.worldbank.org/infoshop Note: This is information on an evolving project. Certain components may not be necessarily included in the final project. This PID processed by the InfoShop during the week ending March 23, 2001. - 7 -