Document of The World Bank FOR OFFICIAL USE ONILY / \ --_ -? 7 T - O. -I _27 - Report No. 6748-YU YUGOSLAVIA STAFF APPRAISAL REPORT SECOND HIGHWAY SECTOR PROJECT September i8, 1987 Country Operations Department IV Europe, 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 authori ,tion. CURRENCY EQUIVALENTS Currency Unit = Yugoslav Dinar (Din) US$1 Din 693k' Din 1 = US$0.0014 Din 1 million - US$1,443 FISCAL YEAR January 1 - December 31 WEIGHTS AND MEASURES m = Meter (3.28 feet) Km = Kilometer (0.62 miles) Kg = Kilogramme (2.2 pounds) ton = Metric tonne (2,205 pounds) PRINCIPAL ABBREVIATIONS AND ACRONYMS USED CEI = Civil Engineering Institute, Zagreb COI Self Management Community of Interest CR0 = Council of Republican and Provincial Road Organizations CYR = Community of Yugoslav Railways EIB European Investment Bank ER = Economic Rate of Return FARP = Federal Association of Republican and Provincial Road Organizations FCTC Federal Committee for Transport and Commurications HDM = Highway Design and Maintenance Standards Model LDR = Less-Developed Republic RME = Road Maintenance Enterprise RO = Road Organization RTO = Railway Transport Organization SDK = Social Accounting Service TYH Trans-Yugoslav Highway vpd = Vehicles per day 1/ July 1987 FOR OICIAL USE ONLY vYUGOSLAVIA STAFF APPRAISAL REPORT SECOND HIGHWAY SECTOR PROJECT Table of Contents Loan and Project Summary I. THE TRANSPORT SECTOR . . .......... . .. . I A. Transport and the Economy .........1 B. Recent Developments ...... . . .... .. 2 C. Sector Issues. ... ...... * 3 D. Previous Bank Transport Projects.. 5 II. THE HIGHWAY SECTOR .. ... . .. .. . ... 6 A. Road Network . . 6 B. Traffic and Road Transport .7 C. Administration... ..... ...... *... 8 D. Planning and Engineering ....... 9 E. Sector Financing and Expenditures ...... 10 F. Construction ... ......... . ....... . 13 G. Maintenance . . .... . ...... 13 H. Training .... 15 I. Traffic Safety . .... . ................ . 15 III. THE PROJECT. ..... ... .. ... . ........ ... 16 A. Background ..... .... . ....... . ......16 B. Project Objectives ................ . . 17 C. Project Description 17..... ....... .. 17 D. Proposed Road Programs............. 18 E. Pilot Road Maintenance Planning System in Croatia 26 F. Equipment ... ..... . .............. 27 G. Technical Assistance and Training Program 27 H. Engineering. .. .. .. ........ .... 28 I. Cost Estimates and Financing 28 J. Implementation ..... .. ........ 31 K. Project Actio;. Plan...... .......... 32 L. Procurement ..... .................... ..... 0.... 33 M. Disbursements .. ... ........ ........ 34 N. Accounting and Audit....... 35 0. Environmental Impact............ 36 This report is based on the findings of an appraisal mission to Yugoslavia in February 1987 composed of Roy Knighton (Senior Transport Economist), Erling Andresen (Highway Engineer) and Sidney Thriscutt (Consultant Highway Engineer). Assistance was provided in the Freparation of the road maintenance management component by William Paterson (Senior Highway Engineer) and in the preparation of the investments and financial programs by Njeri Muhoho (Op-trations Assistant). 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. - ii - Table of Contents (Continued) IV. ECONOMIC EVALUATION ....... ......................... 36 A. General .......... $.......... 36 B. Main Benefits and Beneficiaries ............... 36 C. Economic Evaluation ........... .. ............. 38 D. Project Risk ................................... 39 V. AGREEMENTS REACHED AND RECOMMENDATIONS .............. 39 ANNEXES 1. Previous Projects in Transport Sector ......... 41 2. Proposed Road Programs ..... ................... 47 3. Pilot Road Maintenance Planning System for the Republic of Croatia ................ . 54 4. Project Action Plan ................. **.# ...... 71 5. Project Implementation Schedule .............. 77 6. List of Project File Documents ................ 78 TABLES 1. Status of Road Network Administered by Road Organizations ................. ....... 81 2. Structure of Retail Prices of Gasoline and Diesel Fuel (December 1986) .......................... 82 3. Equipment Available for Maintenance of Yugoslav Road Networke t w o rk... .......... 83 4. Road Maintenance and Toll Equipment - Cost Estimates 84 5. Road and Pavement Monitoring - Equipment Cost Estimates ............... ....85 6. Highway Design Standards ........... 86 7. Disbursement Sch1vdule ....... 87 8. Characteristics o. Road Sections Proposed for Bank Financing ........... .... . ..... 88 MAPS IBRD 17933R - Yugoslavia - European Transport Network IBRD 20377R - Yugoslavia - Second Highway Sector Project (0027h) Text (0030h) Annexes YUGOSLAVIA STAFF APPRAISAL REPORT SECOND HIGHWAY SECTOR PROJECT Loan and Project Summary Borrowers: The Road Organizations (ROs) of Kosovo, Macedonia, Montenegro, Vojvodina and Croatia. Guarantor: Socialist Federal Republic of Yugoslavia Amounts: A total of US$68 million as follows: Kosovo - $6.4 million; Macedonia - $17.9 million; Montenegro - $9.6 million; Vojvodina - $28.2 million; Croatia - $5.9 million. Terms: Each is payable in 15 years including three years of grace at the standard variable interest rate. Project Objectives: The proposed project is aimed primarily at assisting the four Road Organizations (ROs) which were not included in the FY86 First Highway Sector Project (Loan 2715-YU). Although included in the earlier project, Croatia will also participate with an improved road maintenanct management component. The project would support further development and rehabilitation of sections of the Trans-Yugoslav Highway (TYH), rehabilitation of other primary routes, and improved road maintenance operations. It will further consolidate the institution-building efforts started under the First Highway Sector Project with particular reference to investment and maintenance plat,ning, road user charges, and inter-Republic coordination. Together the two sector projects cover the highway sector for the whole country. Project Description: The proposed project will include: (i) a three year (1988-90) time-slice of the investment program of the ROs in Kosovo, Macedonia, Montenegro and Vojvodina; (ii) limited training and technical assistance and the provision of road monitoring equipment to assist the RO in Croatia to set up a pilot road maintenance management system; (iii) a training program for the staff of ROs, maintenance enterprises and engineering - ii - institutions; and (iv) provision of equipment for road maintenance in Croatia. The main emphasis would be on improvements and rehabilitation of the TYH in Vojvodina and Macedonia and the rehabilitation of other primary routes, including sections of the Adriatic Highway in Montenegro and Kosovo. The financing of technical assistance and related equipment in Croatia for the implementation on a pilot basis of an improved road maintenance management system, constitutes a follow up to ongoing studies of road maintenance which have been included under the First Highway Sector Project. The Federal Association of Republican and Provincial Road Organizations (FARP) would act as coordinator for the administration of che loans and as executing agency for training and would be a party to the Loan Agreement. The total cost of the project with contingencies is estimated at US$585 million incluuing about US$136 million for road maintenance, US$111 million for debt servicing by the ROs and about $11 million for administration. The cost of the Bank-financed part of the program is estimated at US$141 million which represents about 45% of construction and rehabilitation investments, during the three-year period 1988-90. The Bank loans totalling US$68 million would cover principally the foreign exchange component (direct and indirect) of high priority investments, selected on the basis of economic and technical criteria. The loans would be apportioned among the borrowers according to an agreed allocation as follows: Kosovo - $6.4 million; Macedonia - $17.9 million; Montenegro - $9.6 million; Vojvodina - $28.2 million; and Croatia - $5.9 million. Benefits and Risks: Removal of bottlenecks on TYH, rehabilitation of the primary road network, which has been neglected in recent years, improved road maintenance procedures and increased maintenance funding, foreign exchange savings and earnings through road improvement, and the policy and institutional measures, amply justify the project. Economic benefits from road improvement and rehabilitation include reduced road user costs and savings from prolonged life of road pavements. Institutional and procedural changes introduced through an improved pavement management system will also result in substantial savings in road user costs anid in future road maintenance costs which would otherwise be necessary. The main risk relates to inadequate and/or infrequent adjustments in road user charges leading to local fu.d shortages. - iii - However, since January 1986 there have been frequent adjustments in road user charges, the most recent on June 12, 1987, which have kept pace with inflation, these adjustments having been agreed under the First Highway Sector Project. Continued and adequate adjustment of the charges would be monitored under both Highway Sector Projects. In addition, the investment and maintenance programs have been tailored to available financial resources and they would be updated and reviewed annually as part of the Project Action Plan, thereby mitigating any problems in local funding. - iv - Estimated Total Road Expenditure (1988- 90): 1/ Local Foreign Total …US$ million New Construction 2/ 56.0 37.4 93.4 Rehabilitation/Betterment 96.2 96.2 192.4 Maintenance 132.3 - 132.3 Equipment - 5.9 5.9 Technical Assistance and Training 1.2 1.2 Administration 11.4 - 11.4 Debt Servicing 7.0 104.4 111.4 Subtotal 302.9 245.1 548.0 Contingeacies Physical 15.0 13.6 28.6 Price 5.7 2.7 8.4 TOTAL J/ 323.6 261.4 585.0 Financing Plan: US$ million Percent Source of Funds Road User Charges (Fuel tax) 231.7 4/ 40 Communities 74.9 12 Republican Funds 70.4 12 Bank Loan (IBRD) 68.0 12 Joint Funds 54.5 4/ 9 Tolls 27.2 4 Tax on Imported Vehicles 27.2 4 Bank Loans 21.2 4 Funds for LDR 5/ 8.0 2 Vehicle Registration Fees 1.9 1 Total Financing Plan 585.0 100 1/ Total planned expenditures for four participating Republics/Provinces (Vojvodina, Macedonia, Montenegro and Kosovo) and cost of equipment, technical assistance and training for Croatia; base costs at mid-June 1987 prices. 2/ Include expenditures on Kuzmin-Sasinci section in Vojvodina during last quarter of 1987. 3/ Including duties and taxes, estimated at about US$100 million. 4/ Includes 1987 funds to meet expenditures on the Kuzmin-Sasinci section. 5/ Federal Funds for Less-Developed Regions. Estimated Disbursements: IBRD FY 1988 1989 1990 1991 1992 --US$ million … Annual 19.8 23.1 15.3 8.3 1.5 Cumulative 19.8 42.9 58.2 66.5 68.0 Economic Rate of Return: Road improvement and rehabilitation: average 232 for Bank-financed items. 1/ Includes expenditures on Kuzmin-Sasinci section in Vojvodina during last quarter of 1987. I. THE TRANSPORT SECTOR A. Transport and the Econoy 1.01 Because of its location, Yugoslavia is an important crossroads, with its transport system traditionally providing access to the sea for a number of central European countries as well as connections for international traffic betweer Western Europe, Greece and the Middle East (Map IBRD 17933R). The main aorthwest-southeast corridor following the Sava/Danube Plain, shared by the Trans-Yugoslav Highway (TYH) and the main trunk railway route, serves the major centers of population and economic activity in the country. The transport network is extensive and diversified and comprises about 118,000 km of roads, including 48,000 km of primary and main regional roads, 9,400 km of rail lines, 7 main ports, 15 airports and a sizeable network of inland waterways. The transport system is administered by independent transport authorities in each of the eight republics and provinces which make up the Yugoslav Federation (Map IBRD 20377R1). Although the system is well developed, its growth has slowed in recent years. 1.02 Since 1980, Yugoslavia has experienced a considerable slowdown in the economy, partly due to external factors such as increases in oil prices in 1979 and a slump in the world economy, and partly due to domestic factors such as high inflation which increased from about 40% in 1981 to about 902 in 1986. During the period from 1981 to 1986, it is estimated that the economy ,rew at less than 1% annually compared with a rate of 5% to 6% per year throughout the 1970s. The combination of high inflation and a rapidly increasing debt service burden through depreciation of the Dinar exchange rate, has severely limited development of key sectors of the economy. Current prospects call for a slow growth recovery during the 1986-90 Plan with emphasis on improving Yugoslavia's comparative advantage. The Government's strategy centers mainly on increasing exports to earn foreign exchange, restructuring the economy and improving the systems for resource allocation and use, all of which have implications for the transport sector. Balance of payments have recently shown a current account surplus, estimated at US$400 million for 1986, and the Government is forecasting increases of around 3% during 1987 in both industrial ..nd agricultural outputs. 1.03 The Yugoslav authorities have long recognized the importance of the transport sector in the growth of the economy and its role in achieving balanced regional development. More recently, the impottatice of the sector has been highlighted by the need to increase foreign exchange earnings through tourism and the growth of exports, the sector providing considerable support in these areas. However, despite the importance of the sector to the economy, the share of transport has declined from about 152 of total investments during the 1976-80 Plan to less than 10% during the 1981-85 Plan. This reduction has been felt largely in the curtailment of the program of road construction commenced ,uring the 1976-80 Plan. - 2 - Despite lower growth forecasts, continued investments are required in the transport sector in order to alleviate bottlenecks in the main road and rail networks, and to strengthen the existing infrastructure. This is reflected in the recent resolution on the implementation of the 1986-90 Development Plan. B. Recent Developments Traffic Growth 1.04 As a result of the decline in the economy, total freight traffic in all modes increased at only 1% a year between 1980 and 1985, compared with over 5% annually between 1970 and 1980. Passenger traffic similarly increased at less than 2% a year over the same period, compared with over 6% a year in the 1970s. From 1980, road freight and passenger traffic stagnated, and then declined in 1983 and 1984 due to fuel shortages, followed by rationing. When rationing ceased in January 1985, road freight traffic showed an immediate increase of up to 5% per year on m.st routes. While road traffic stagnated during 1980-84, rail traffic continued to show modest increases of 2 to 3% per year, although freight traffic has not increased in the past two yeatrs. Road transport is the most important mode in Yugoslavia, handling about 45 billion ton-km or 60% of total freight traffic and about 32 billion passenger-km or 65% of total passenger traffic handled by common carriers. Investment Trends 1.05 Since 1980, investment levels in most sectors of the economy have fallen in real terms by more than 30%, reflecting the combined effects of high inflation and an increasing debt service burden. Investments in the transport sector during the 1976-80 Plan period were about US$6.5 billion, with about US$3.9 billion (60%) for roads and US$1.7 billion (26%) for railways. During the 1981-85 Plan, however, transport investments fell by about 35% to US$4.3 billion approximately, and this fall was accompanied by a marked shift away from roads and into railways. Table 1.1: Investment in Transport 1976-85 1976-80 - - 1981-85- US$ million % US$ million X Road Infrastructure1' 3,881 60 2,039 47 Railways 1,695 26 1,397 32 Other2' 924 14 864 20 Total 6,500 100 4,300 100 1/ Excluding debt servicing 2/ Estimates for other modes Source: Federal Committee for Transport and Communications and mission estimates - 3 - 1.06 While railway investment has remained substantially at the same level over the past decade, equivalent to about US$1.4 billion during the 1981-85 Plan, expenditures on road infrastructure, including maintenance, fell to about US$2 billion, or about half the level attained in the previous Plan. The increased investment in railways has been supported by regular increases in rail tariffs, but funding for roads has been allowed to fall, since timely adjustments for inflation have not been made in roa(1 user charges - a specific tax on fuel which provides about half the total road subsector funding. During the plan period, therefore, revenue from road user charges failed to keep pace with inflation at the very time wlhelt road authorities had to allocate an increasing share of their funds to cover a growing servicing liability on foreign debts, following depreciation of the Dinar. This underfunding came at a time when there were still major bottlenecks in the road network, and a growing need for micdernization, rehabilitation and more intensive maintenance of the existing roads and bridges. C. Sector Issues Modal Investment Balance 1.07 The imbalance between investments in the various transport modes is a fundamental issue affecting the transport sector in Yugoslavia. At present, there is a clear tendency to give priority to development and modernization of the railways, a policy which is inconsistent with the relative share and growth of traffic in each mode and the condition of the existing infrastructure. The Bank is encouraging the various at'thorities involved to achieve a better balance in modal investments by means of a detailed review of road and rail investment programs in those republics and provinces where the Bank is lending. Also, the Bank, with the cooperation of the Federal Committee for Transport and Communications (FCTC), has proposed the preparation of a Transport Sector Memorandum that will give a comprehensive nationwide overview of the sector and contain an analysis of investment programs. The FCTC has started to collect data necessary for this transport sector work, including details of modal investment programs in each Republic and Province. By continuing the sector lending approach in highways, emphasizing investment and maintenance planning, together with an appropriate road user taxation policy, the proposed project is consistent with the objective of achieving a better balance in transport investments. Pricing 1.08 Development of a tariff and pricing structure, which provides for efficient use of the transport network, constitutes a second issue in the sector. During the early 1980s, although increases were made in railway tariffs (para 1.06), these failed to keep pace with the high rate of inflation, so that compensation levels I' paid to the railways 1/ These are paid by organisatiors and enterprises using the railway as compensation to the railways for low fare and tariff levels. -4- increased. Similarly, there was a time lag in adjusting road user charges and the revenue was not always wholly allocated to roads (para 1.06). For these reasons, in early 1983, a commitment was included in the Letter of Development Policy under the First Structural Adjustment Loall (SAL I) providing for regular adjustments of railway tariffs and road user charges and for the allocation of road user revenue to road expenditures. This approach was fairly successful. The Government agreed to raise railway tariffs by at least 6% in real terms each year during the period 1985-1990 with a view to eliminating compensation payments to most railway enterprises by the early 1990s. The same commitment was later included as a specific covenant under the Sixth Railway Project, and since loan effectiveness in July 1984, the railways have raised tariffs generally in line with this formula. For road transport, however, the situation has been less satisfactory. While vehicle registration fees and overall pricing and taxation of motor fuels are set at realistic levels and are comparable with most western European countries, the lag in adjusting road user charges for inflation has had a major impact on the levels of construction and maintenance in the road network. -' A specific covenant was therefore included in the First Highway Sector Project (FY86) to provide for regular adjustments of road user charges in line with inflation and, as a result, the position has now improved. Four increases in road user charges were made during 1986 which kept the charges slightly ahead of inflation. The next significant step will be the -pproval by the Federal Executive Council of a draft Social Compact on roads, which defines policies for road user charge adjustments. The Social Compact policies are based primarily on the findings of a Road User Charges Study financed under an earlier Bank project and are acceptable. Through an Action Plan, the proposed project is designed to support several key features of road user taxation as proposed under the Social Compact (para 3.33). Efficiency 1.09 The need to improve efficiency in the transport sector is a general issue which is being actively pursued by the various transport authorities. Bank support for this objective, was provided under the Fourth Railway Project with the introduction of action plans for railway operations, including targets for operational efficiency. Over the years there has been a gradual improvement in wagon and locomotive utilization. Amongst other items, there is now a need to adopt a phased program to rationalize locomotive maintenance in order to achieve economies of sca..e and increased locomotive availability. 1.10 The organization and operation of the road transport industry is to be reviewed as part of the forthcoming Transport Sector Memorandum (para 1.07). Particular attention will be paid to the large own-accomnt trucking fleets, which appear to operate at lower efficiency levels than the for-hire trucking fleets and privately owned trucks (para 2.06). In the area of road maintenance, federal, republic and provincial governments are keen to improve the efficiency of road maintenance operations by better planning and improved maintenance procedures. The proposed project supports this objective through the pilot road maintenance planning system in Croatia (paras 3.17 and 3.18). 1/ User charges are not ad valorum, and therefore do not automatically keep pace with fuel price increases. -5- Coordination 1.11 Finally, an over-riding issue relates to the need to improve coordination in the transport sector among the eight Republics and Provinces and to provide for a national perspective in transport planning and operations. Since the mid-1960s, there has been a gradual transfer of authority to the republican/provincial transport agencies, thereby increasing the number of decision-making bodies and making transport planning and coordination more difficult. In supporting transport infrastructure development, the Bank has emphasized the need for improved coordination between sub-sectors at regional and national levels as well as the need to develop adequate institutions and an appropriate policy framework. At the national level, the Bank has encouraged and supported the establishment or strengthening of important planning and coordinating institutions. These include the Community of Yugoslav Railways (CYR), which covers the overall coordination of railway planning and operations, and the Council of Republican and Provincial Roads Organizations (CRO), which was established in the early 1970s to cover the nationwide standardization of engineering and design criteria in the highway sub-sector as well as such other matters as highway safety. In 1983, a new coordinating body, known as the Federal Association of Republican and Provincial Road Organizations (FARP), was established, with broader responsibilities for overall planning and monitoring of developments related to road infrastructure and traffic. The First Highway Sector Project (FY86) supported the initiative by defining a general work program to be undertaken by the organization. The proposed project will continue this support by providing an updaLad work program designed to strengthen FARP's coordinating role (para 3.33, and Annex 4). D. Previous Bank Transport Projects 1.12 Over the past 24 years, the Bank has played an active role in developing Yugoslavia's transport system through a series of 23 loans for highways, railways and ports totalling US$1,349 million equivalent (Annex 1). Through these loans, the Bank has emphasized improvements to the policy framework in the sector and the strengthening of project preparation and investment planning capabilities. The main emphasis in highways has been the improvement of key links in the primary road network, including many sections of the TYH, the country's principal transport artery (para 1.01). The Project Completion Reports (PCR) for the Seventh, Eighth and Ninth Highway Projects indicate that they substantially achieved their main objectives (which included improved planning and project prenaration capabilities), were relatively free of major problems, and were completed according to schedule. The Tenth Highway Project initiated sector type lending in the less developed regions, an approach which has permitted greater flexibility to adjust to current lower levels of roads expenditures. The subsequent Eleventh Highway Project focussed entirely on improvements to the TYH in Slovenia, Croatia, Serbia and Vojvodina. A combined PCR on the Tenth and Eleventh Highway Projects indicates that these projects suffered delays in implementation because of shortages of local funds, brought about by a downturn in the economy at that time (para 1.02). After inclusion in the Bank's Special Action Program in 1983, actual implementation from 1983 onwards was close to the two year extended schedule. The First Highway Sector Project (FY86), the twelfth operation for roads comprises a sector lending approach across four Republics with - 6 - the aim of not only financing construction and rehabilitation but also addressing planned development of the roads network, investment and maintenance planning, road user charges and inter-Republic coordination. The proposed project will have similar objectives for the other four Republics and Provinces and will extend support into the critical area of road mainitenance planning (para 3.02). The Bank is also participating in local road improvements and maintenance as part of the Kosovo and Montenegro Regional Development Projects. 1.13 Seven loans totalling $491.2 million have been made for the railway sub-sector; five of these were for investment in modernization and one loan was for the construction of the Belgrade-Bar line. An additional loan for $14 million was made for reconstruction following the 1979 earthquake in Montenegro. 1.14 In the ports sub-sector, a loan of US$44 million was made for the Port of Bar in Montenegro. This project was nearing completion when the port was severely damaged by the 1979 earthquake. Rehabilitation has now been completed with a loan of US$30.1 million. A ports sub-sector survey tias also been carried out with the Bank's encouragement. The study was conducted by local consultants financed by the Yugoslav Association of Seaports and has indicated priorities for future port development in the country. The study will be reviewed during 1987 as part of the proposed sector work program. II. THE HIGHWAY SECTOR A. Road Network 2_01 Yugoslavia's road network comprises some 118,000 km of roads of w'hich about 16,000 km are primary roads and 32,000 km are regional roads (Tables 2.1 and 1). During the period from 1970 to 1980, the length of the paved network doubled and now accounts for 57% of the total. Table 2.1: Road Network (Km) Republic/Province Paved Gravel Earth Total Slovenia 8,890 5,223 - 14,113 Croatia 19,952 7,749 968 28,669 Serbia 15,165 6,816 6,738 28,719 Bosnia-Hercegovina 9,535 8,791 2,264 20,590 Montenegro 2,414 1,432 299 4,145 Vojvodina 4,752 189 1,192 6,133 Macedonia 4,461 1,369 4,587 10,417 Kosovo 1,830 1,658 1,470 4,958 Total 66,9Q9 33,227 17,518 117,744 Source: FARP 2.02 Modernizationi of the network continues to be a major priority for the republics and provinces. In the more developed areas of the country, tit- primary focus is on eliminating the major bottlenecks, par'icularly on the TYH, while in the less developed areas the main focus is on upgrading and modernization of the basic primary network (para 3.05). Maintenance has been generally satisfactory, but has suffered recently be' ause of budgetary constraints. In addition, as much of the paved network is still relatively recent, routine rehabilitation programs have not been a major part of the road investment progrars. However, in 1986 it was estimated only 55% of the primary network and 37% of regional roads were in good or fair condition, the overall average being about 40%. Clearly, increasing attention must now be paid to strengthening road maintenance operations and to establishing rehabilitation and pavement strengthening schemes in order to preserve the existing infrastructure. 2.03 The TYH system provides the backbone to Yugoslavia's highway network and is a vital link between Western Europe, the Balkans and the Middle East (para 1.01 and Map 20377R)). Although some 500 km of the 1,170 km of TYH have been improved over the past decade or are currently under construction, it is estimated that a further 360 km could be justified for upgrading to four-lane standard during the coming decade. Of these sections, about 130 km will be improved during the period 1987-89 with financial assistance provided by the European Investment Bank (EIB) and the Bank. The sections covered by this program incluue a start on the critical TYH sections in Slovenia between Ljubljana and Zagreb and the continuation of improvements eastwards in Croatia and westwards in Vojvodina. Beyond this program, a further 230 km of high priority TYH sections in Slovenia, Croatia and Vojvodina would remain for improvement in the medium-term with implementation continuing beyond 1990. B. Traffic and Road Transport 2.04 Average traffic levels on primary roads are about 4,200 vpd with a range from about 500 vpd to over 12,000 vpd on four lane sections of the TYH. It is estimated there are about 10,000 km of roads with traffic levels of over 3,000 vpd and it is in this group of roads that there are the major needs for modernization and rehabilitation. Average traffic levels on regional roads are about 1,300 vpd with a range from less than 500 vpd to about 5,000 vpd. Although traffic levels had fallen in recent years, particularly for passenger cars which were affecteG oy fuel rationing, they have shown a steady increase over the past two years at about 5% per year (para 1.04). Traffic levels are expected to continue increasing in the next few years at a modest rate of about 3 to 4% per year. 2.05 Road transport has developed rapidly over the past 20 years with the passenger car fleet increasing at over 20% per year through 1980 while the number of heavy vehicles increased at about 9% per year. However, there has been little growth in the vehicle fleet in recent years. The total fleet was estimated in 1985 at about 3.1 million vehicles, excluding motorcycles and agricultural tractors. Buses are estimated at 26,000 vehicles and trucks at about 247,000 vehicles. The total truck capacity is estimated at about 2.6 million tons of which just under 70% is operating on own-account, mainly for large commercial enterprises. Public freight transport services are provided by about 300 specialized transport enterprises with a total truck fleet of some 54,000 vehicles and which account for about 25% of total capacity. There is also a growing number of private owner-operators with a total of about 17,000 small trucks with an average capacity of about 7.5 tons and which account for abot't 5% of total truck capacity. 2.06 Of the total road freight traffic of about 45 billion ton-km, own-account operations handle about half the total, the public transport enterprises about 47% and private trucks only 3%. The public transport enterprises appear to be run quite effectively with high load factors of about 75%, the trucks avet"aging about 45,000 km per year with average hauls of 124 km. On the other- hand, load factors for both private truckers and the own-account fleets are in the range of 50 to 60%, the trucks averaging only 25,000 km per year over average hauls of about 40 km. Both own-account operators and private trucking serve mainly a local collection and distribution function, the longer haul traffic being captured mainly by the well-organized public transport enterprises. Public road passenger services outside the urban areas are provided by a large number of specialized enterprises which handled some 32 billion passenger-km in 1985. Load factors on these services exceed 80% and the average haul is about 30 km. 2.07 Road transport tariffs are not regulated but are set by the transport enterprises and operators based on market forces, taking in account recommended tariff levels proNided by the Yugoslav Association of Road Transporters (para 2.10). An analysis of the road transport industry, including measures needed to improve data collection, as well as means for improving efficiency in road transport operations, will be included in the Bank transport sector review scheduled for 1988 (para 1.07). 2.08 Vehicle regulations in Yugoslavia are primarily safety-oriented and focus on speed and load limitations. The maximum legal axle loading is 10 tons on a single axle and 16 tons on a tandem axle for all primary and regional roads. Transport enterprises are generally well managed, so that truck overloading is not a common problem, although it does take place. The proposed project will provide equipment to investigate the extent and scale of overloading and to provide valuable axle load data for the pilot maintenance planning system in Croatia (para 3.20 and Annex 3). 2.09 Yugoslavia has a small automotive industry producing or assembling vehicles. Apart from agricultural tractors, where output rose by about 70% between 1975 and 1985, production figures have remained steady or even declined over the past decade. Excluding tractors, bicycles and motorcycles, vehicle production in 1985, the last year for which figures are available, was about 250,000 units, of which 230,000 were cars. Cars are exported to several European countries and about 40,000 units per year are now also exported to the United States. C. Administration 2.10 Over the years, there has been increasing decentralization of the responsibilities for highway administration which is now located firmly in the eight Republics and Provinces. Centrally, there is a Federal Committee for Transport and Communications responsible for common policy and - 9 - regulatory matters such as vehicle regulations, road user taxation and the international aspects of highway administration and road transport. In addition, overall coordination and monitoring in road planning and development is provided by FARP (para. 1.11). Road transport enterprises and operators form part of the Yugoslav Association of Road Transporters which provides information on the transport market, recommends tariff levels and acts as a lobbying body with the Federal Government and the republics and provinces. 2.11 At republic and province level, there are eight Road Organizations (ROs) responsible for the primary and regional roads in the network, amounting to some 48,000 km in all. These ROs deal with policy and financial matters in construction and maintenance, interpreting and administering the decisions of the Republic and Provincial Assemblies. ROs do not have the facilities to undertake detailed design and investigations themselves, nor to carry out the work required. Design, investigations and even supervision of large works are done by staff of engineering inatitutes, while the work itself is done by a number of self-financing road construction and maintenance enterprises. The ROs are established as self-management communities of interest (COI), and are governed by road assemblies, made up of representatives of various groups with an interest in roads, such as transport companies, industrial enterprises, agricultural cooperatives and professional and road user associations. Executive boards are responsible for day-to-day operations and preparation of highway investment and maintenance programs. Details of roads administration vary between Republics and Provinces, especially in respect to the way in which the almost 70,000 km of local roads are improved and maintained. Annex 3 provides more detailed information on administration of the road network in one republic (Croatia). 2.12 Through their long association with Bank-financed highway projects, the ROs have developed adequate capabilities for the preparation and implementation of projects according to acceptable criteria and procedures. The overall investment planning approach introduced under the First Highway Sector Project served to strengthen planning procedures and to improve the balance between new investments, rehabilitation and maintenance. The proposed project will build upon and extend this *ipproach to all areas of the country. D. Planning and Engineering 2.13 Proposals for road improvements come from the various interests that use the network, from members of the road assembly, and from within the ROs themselves. Standards of road maintenance are laid down in detail in the laws and regulations of the Republics and Provinces. From these sources, Five Year Highway Plans are prepared by the ROs for consideration and adoption by the Republic and Provincial assemblies in coordination with plans from other sectors. Resource constraints and high rates of inflation have made it more difficult to meet all demands, and the 1981-85 Plan had to be substantially revised by ROs and assemblies at mid-term due to rapidly changing economic conditions. Investment plans are now reviewed and updated annually by ROs, who apply strict economic criteria in their selection of components for the Five Year Plan to ensure that the best use is made of scarce resources. - 10 - 2.14 Pre-investment studies of highway projects are gen3rally commis- sioned by ROs from local engineering institutes (para 2.11), and in the Bank's experience these feasibility studies are usually satisfactorily done. Subsequent design and supervision which is usually contracted out by ROs to engineering institutes, is also generally satisfactory, and to acceptable standards. E. Sector Financing and Expenditures FinancinA 2.15 Road expenditures are financed at the republican and provincial levels from earmarked sources which include taxes on fuel, vehicle registration fees and road tolls, as well as from contributions made available by community work organizations, republican/provincial budgetary allocations, and from bank loans. The less-developed areas, particularly Kosovo and Montenegro, also receive small amotnts from the Federal Fund for Less Developed Regions (LDR). In most republics and provinces, revenue from vehicle registration fees is used to finance local roads. For primary and regional roads, revenue from the road user charge now represents about 50% of total funding for the highway sector, funds frc'n foreign and local loans about 15%, republican/provincial budgetary allocations about 12%, contributions from community work organizations 8% and the remainder from vehicle registration fees, highway tolls and taxes on foreign vehicles. The chart below shows the sources of funding. Sources of Highway Funding / 'oaduser charges also accruetd' fr fin f s ! I __ . 1 . 1 K~taxs o and Provincial /,,,iif,, 12% cnrbto$ 1/ Road user charges also accrue to a 'Joint Fund' for financing the TYH. - 11 - During the 1980s, the ability of ROs to fund a reasonable level of investment in upkeep of the network has declined mainly because of the lag in adjusting the road user charges for inflation. In addition, despite the earmarked nature of the revenue raised by the road user charge on fuel, the republican and provincial governments had previously allocated part of the revenue to other sectors, and this triggered the commitment included in SAL I in early 1983 (para 1.08). By the end of 1984, all the republics and provinces had reverted to an earmarking of over 95% of the road user charge for road expenditures. Of the current price of gasoline of Dinars 240 per liter (US 53 cents per liter or US$2.00 per US gallon), the road user charge represents about 15%, sales tax 21% and other specific taxes 21%. The current price of diesel fuel is Dinars 192 per liter (US43 cents per liter or US$1.62 per US gallon) of which the road user charge represents 14%, sales tax 19% and other specific taxes 23% (Table 2). Currently, Dinars 12.6 per liter of both gasoline and diesel are earmarked for road maintenance which is estimated to provide some Dinars 75 billion (US$160 million) annually for this purpose. This represents an average of about US$3,300 per kilometer for primary and regional roads which is a substantial improvement over the low levels of maintenance funding which have been experienced since 1983 (paras 2.18 and 2.24). 2.16 At the time of a substantial increase in the road user charges in December 1986, the Yugoslav authorities decided to give increased emphasis to a 4,500 km E-route (European) network of common interest to the republics and provinces, with the main priority being the completion of the Trans-Yugoslav Highway (TYH). As from the beginning of 1987, seven Dinars from the road user charges on gasoline and diesel fuel, representing 19% of the gasoline charge and 25% of the diesel charge, are accruing into a special Federal account, which would be used primarily as counterpart financing for foreign loans for improvement of TYH. This represents an interesting development for planning and administration of the highway network in that it constitutes a first step towards a Federal highway system of primary international and inter-regional routes. Expenditures 2.17 During the 1976-80 Plan, annual expenditures on primary and regional roads, including debt servicing, averaged US$900 million with a maximum of about US$1.1 billion in 1979. Since then, total expenditures have declined steadily in real terms and have averaged about US$640 million annually during the 1981-85 Plan (para 1.06). Debt servicing has increased from less than 20% of total expenditures during 1976-80 to about 36%, and is now the major single item. Details are as follows: - 12 - Table 2.2: Expenditures on Roads (US$ million - current prices) 1976-80 b 1981-85 b Investments New Construction 2,619 58 1,045 33 Rehabilitation 299 7 192 6 Maintenance 515 11 674 21 Debt Servicing 626 14 1,153 36 Other 448 10 128 4 Total 4,507 100 3,192 100 2.18 While total expenditures on the highway network have decreased by about 30X during 1981-85 compared with 1976-80, the main reductions have been felt in new construction, which fell to only 40% of its previous level. During 1981-85, there was a decline in rehabilitation while maintenance expenditures had fallen to about US$1,900 per kilometer in 1985 compared to US$2,800 per kilometer at the end of the 1976-80 Plan. Due to inadequate maintenance allocations the condition of the road network has gradually deteriorated, particular the regional roads. 2.19 The following table summarizes annual expenditures on roads during the period from 1981 to 1986 as well as sources of financing. Table 2.3: Annual Expenditures on Roads: 1981-86 (US$ million - current prices) 1981 1982 1983 1984 1985 1986 New Construction 386 225 140 174 147 100 Rehabilitation 28 21 36 51 56 120 Maintenance 206 170 90 115 93 120 Debt Servicing 318 285 247 151 152 160 Other 57 27 20 12 12 15 Total 995 728 533 476 460 515 Highway Sector Financing: 1981-86 (US$ million - current prices) 1981 1982 1983 1984 1985 1986 Regular Sources Road User Charge 418 352 308 274 211 260 Registration Fees 47 42 32 34 37 40 Tolls 19 18 15 17 24 35 Tax on Foreign Vehicles 5. 4 8 14 15 35 Subtotal 489 416 363 339 287 370 Communities/RAP Budgets 214 126 81 61 84 95 Fund for LDR 14 8 3 3 4 5 Loans 278 178 86 73 85 45 Total 995 728 533 476 460 515 - 13 - 2.20 The marked decline in the amount of the road user charge was only partly due to the effects of inflation (para 1.06). The imposition of fuel rationing in 1983 and 1984 caused a decrease in consumption, although this effect was removed in January 1985. However, the increases made in road user charges during 1986 (para 1.08) have helped to reduce the downward ,rend in funding. In addition, other road user taxes, such as vehicle registration fees, tolls and taxes on foreign vehicles, have continued to show regular increases since 1983. In 1986, expenditures on rehabilitation and maintenance increased and are now expected to gradually return to more acceptable levels. F. Construction 2.21 There are about 50 road construction enterprises in Yugoslavia compared to half that number about 20 years ago. Some of these are quite large and have been successful in winning international contracts in other countries. The value of road construction and rehabilitation executed by the eight ROs in 1986 is estimated to about US$200 million. 2.22 The quality of construction work is generally good. Road construction and improvement is normally executed by means of unit price contracts. In the highly competitive environment, very few foreign contractors secure work in Yugoslavia. During the Tenth Highway Project, only two foreign contractors requested prequalification, one was prequalified, but did not submit a bid. In the Eleventh Highway Project, six foreign firms requested prequalification, of which four were prequalified but only one submitted a bid. Only one foreign contractor has participated in Bank financed projects in Yugoslavia, and then as a joint-venture partner with a local firm, thus confirming the competitive spirit and general ability of the domestic industry. G. Maintenance 2.23 While ROs are responsible for policy, program preparation and financing of road maintenance (paras 2.11 and 2.12), since 1974, road maintenance is being carried out by 42 self financing road maintenance enterprises (RMEs), plus five special enterprises dealing only with maintenance of motorways, tunnels and major bridges. Under agreement with the ROs, these 42 RMEs are responsible for the maintenance of all primary and regional roads (about 48,000 km), plus in Croatia and Slovenia, some 22,000 km of local roads. In other republics and provinces, the local roads are maintained by local communities. Many RMEs evolved from the road construction enterprises set up during the construction boom of the 1970s, and their performance as maintenance organizations is variable. When construction work was pleatiful, those enterprises which undertook both construction and maintenance, tended to neglect the latter in favour of the former. Recently passed laws now prohibit the RMEs from taking on construction work. 2.24 The typical RME is required to maintain about 2,000 km of road, and hzas one employee for each 3.3 km of road, with a range, varying from less than two kilometers per employee in two republics/provinces to eight kilometers per employee in Slovenia where more modern technology is used. Procedures vary from place to place, but in all republics/provinces, RMEs are used to maintain roads, and the amount and type of maintenance to be - 14 - performed is specified in the government regulations. Maintenance is planned under the Five Year programs by ROs (para 2.13), and when funds are restricted, as they usually are, RMEs are excused by the RO concerned from a part of their legal obligations to maintain the roads to the set standards. Emphasis is placed on road user safety, so that when funds are low and once fixed costs are met, priority is given to clearing obstructions, snow clearance and repairing failures which constitute a danger to traffic. As a result, timely pavement strengthening is not carried out, and small failures are not repaired before they become large and a danger to traffic. The maintenance norms defined in government regulations are reasonable, and if the funds were available to carry out the work specified, roads would be kept in good order if they were already in sound condition. Deterioration has taken place since 1980, however, and with the new roads built in the 1970s reaching the end of their design lives, this process must be expected to accelerate unless more resources can be put into pavement strengthening. The 1986 Study on Pavement Maintenance and Rehabilitation, carried out by Government, found that overall, 18% of primary and regional roads required base repairs and resurfacing, while 12% required complete reconstruction, indicating that about one third of the road network is in urgent need of major maintenance or rehabilitatior.. Allocations to road maintenance should be increased to about US$190 million annually or about US$4,000 per kilometer (para 2.25). Current revenue from road user charges will provide about 80% of these needs, provided regular adjustements are made in the future for inflation (para. 2.15). 2.25 Target figures for road rehabilitation and maintenance were agreed under the First Highway Sector Project for the four ROs in Serbia, Slovenia, Bosnia-Hercegovina and Croatia. These targets relate to the period 1986-89, and are designed to bring routine and periodic maintenance funding to an appropriate level by the end of that period, and to rehabilitate some 3,100 km of roads in those four Republics. Average maintenance expenditures would be increased gradually to reach about US$3,800 per kilometer in 1989, ranging from US$3,100 per kilometer in Bosnia-Hercegovina to about US$4,900 per kilometer in Slovenia. During supervision of the project, annual investment programs will be reviewed to ensure that no uneconomic investment is included, and that correct emphasis is given to maintenance and road rehabilitation, in line with the agreed targets. This same approach will be adopted in the proposed project for the four remaining ROs, i.e. Vojvodina, Macedonia, Kosovo and Montenegro. Appropriate adjustments in road user taxation are included in the Federal Guarantee Agreement and are part of the Project Action Plan (paras 3.28, 3.32 and 3.33). 2.26 The Government's 1986 study of roads and bridges investigated over 4,400 bridges in six Republics, and found that 40%o of them, although basically sound, required some structural repairs, while a further 21% had serious structural defects and required strengthening or even replacement. Rehabilitation and strengthening of bridges was incladed in the First Highway Sector Project for the four Republics involved, and is to be included in the proposed project as part of rehabilitation. The project will include provision of specialised equipment to improve the speed and accuracy of bridge condition evaluation, and training in bridge management and maintenance (paras 3.19 to 3.22). - 15 - H. Trainig 2.27 Yugoslavia is a country with well-developed educational and voca- tional training institutions. The highway sector is staffed with competent professionals and technicians. There is, however, need to constantly update the knowledge and skills of engineers and managers, particularly in specialized fields, to provide economists with training in transport topics and in the preparation of feasibility studies, and to introduce and disseminate information on the latest techniques in road maintenance planning and management. Once trained, Yugoslav personnel put their skills to effective use, and adapt their system to appropriate technologies and methods of analysis. Currently, regular training courses are provided to the ROs and RMEs by the three main engineering institttes while the RMEs themselves provide on-the-job training in road maintenance operations. 2.28 Since the Fifth Highway Project, all Bank-financed projects have included training elements of three types: (i) short term fellowships and seminars abroad for engineers and economists; (ii) on-the-job counterpart training with consultants in the preparation of feasibility studies; and (iii) seminars and courses in Yugoslavia. The Tenth and Eleventh Highway Projects also included ttaining components designed to improve management of the road network and traffic safety. In October 1981, CRO, in cooperation with the Bank and the USA Institute of Transport Engineers, organized a four day International Highway Safety Conference, and FARP has organized seminars in Yugoslavia and overseas study tours in highway management and design for traffic engineers and senior executives. These training components have been particularly successful in developing a sound capability for the preparation of feasibility and design studies, including the complex methodologies required for multilane controlled access facilities. 2.29 Under the First Highway Sector Project, the training effort is concentrated on road rehabilitation and maintenance, and this emphasis will continue under the proposed project, with the main emphasis being on rationalization and optimization of road maintenance under conditions of restricted funds (para 3.22). I. Traffic Safety 2.30 The traffic accident rate in Yugoslavia is considerably above that in some western European countries, as shown in the following table: Fatalities per year per million motor vehicles (1980-83 Average) Yugoslavia 1,650 Greece (the next highest 1,100 European country) West Germany 450 Great Britain 320 - 16 - Possible reasons for this high rate are increasing congestion on the roads, (particularly during the all important tourist season) and the growing number of new, and hence inexperienced, drivers. While the number of vehicles registered increased 16 times between 1960 and 1980, the length of improved roads increased only nine times. New drivers are coming on to the roads at the rate of about 200,000 a year, and the number of foreign v0-icles entering the country each year is now about 15 million. 2.31 Total fatalities peaked at about 5,500 in 197' and 1978, daopping to 4,850 in 1980 and 4,300 in 1984. Injuries in traffic accidents average about 58,000 per year. Accident rates are particularly high on unimproved two lane sections of the TYH, and improvement to four lane standards will reduce the accident rate. The Tenth and Eleventt Highway Projects included highway safety components, including: (i) procurement of safety equipment and equipment for accident studies, analysis and monitoring; (ii) technical assistance for accident data collection and analysis, and for improving design standards; and (iii) safety training. From the reducing trend in fatal accidents over the period of these projects, it may be that the assistance provided is having some effect. A particular concern of the ROs in the field of road safety is the number of skidding accidents that take place, especially on tourist routes following summer showers. The proposed project will supply road condition monitoring equipment to identify skidding "black spots", so that remedial measures can be taken, and appropriate road surface retexturing equipment will also be provided (para 3.20). III. THE PROJECT A. Background 3.01 The Yugoslav authorities continue to emphasize the development of the transport sector to support the development of the economy and the economic integration of the various regions. Following several years of economic stabilization, resumption of economic growth and development of foreign trade and tourism will depend largely on an adequate and well maintained highway network. With increasing restrictions on funds in recent years, at a time when much of the road network is aging and nearing the limit of its design life, there is a need to support adequate levels of road rehabilitation and to increase the efficiency of road maintenance operations through proper planning and budgetting of limited resources. The First Highway Sector Project, for which the Loan Agreement was very recently signed, has as objectives to continue the Bank's long-term strategy to assist and foster sound, planned development of the highway network, and to consolidate institution building efforts, particularly in the fields of maintenance planning, road user charges and inter-Republican coordination. The proposed project will extend these objectives to the remaining four Republics and Provinces. The project represents the continuing response to the Govermnent's and the Bank's priority objectives in the road subsector. - 17 - B. Project Objectives 3.02 The principal objectives of the project are: (a) to consolidate and extend past efforts to improve investment planning, concentrating on achieving a balanced program between new investments and adequate road rehabilitation and maintenance and to remove major bottlenecks in the network; (b) to improve the cost-effectiveness of road maintenance operations; (c) to encourage a sound road user taxation policy which will ensure adequate funding for road construction and maintenance programs; and (d) to strengthen inter-Republic coordination in highway matters. C. Project Description 3.03 The project includes the following: (a) the 1988-9C 'ighway development programs of the ROs in Vojvodina, Macedonia, Montenegro and Kosovo (paras 3.06 to 3.16); (b) a training program for the staff of ROs, maintenance enterprises and engineering institutes and planning equipment for the ROs in Vojvodina, Macedonia, Montenegro and Kosovo for setting up road data bases (paras 3.20 to 3.22); (c) technical assistance and training and provision of road monitoring equipment to assist the Croatia RO to set up a pilot road maintenance planning system (paras 3.17, 3.18, 3.21 and 3.22); (d) provision of equipment for road maintenance in Croatia (para 3.19); and (e) technical assistance to FARP for project preparation and planning (para. 3.21). 3.04 During negotiations, the project objectives and description were confirmed. 3.05 The main focus of the programs in Vojvodina and Macedonia is on improvements and rehabilitation of the TYH. The TYH is a link in the major transport route between western Europe, the Balkan area and the Middle East and improvements to TYH will therefore facilitate international transit traffic and thus have a far-reaching impact beyond the borders of Yugoslavia. In Montenegro, emphasis is on removing bottlenecks on the Adriatic Highway and rehabilitation of bridges. In the less developed province of Kosovo, the main focus is on rehabilitation of existing primary routes, no1'Luding part of the Adriatic Highway, and construction of a new 5 km by-pass near Pristina to replace an existing gravel road. Croatia has - 18 - been selected to set up a pilot road maintenance management system which could, under a later project, be extended to cover the whole country. A financing plan has been drawn up for each Borrower and sources of funds identified for all planned expenditures (para 3.27). Agreements have been reached with each Borrower on the selection of subprojects for Bank participation. Details of the road sections proposed for Bank financing are shown in Table 8. In addition, the 1988-90 road programs include subprojects financed by local resources. A summary of the individual road programs, with financing plans and proposed Bank participation, is given in the following sections. D. Proposed Road Programs 3.06 The three year roa onstruction and rehabilitation program of Vojvodina, Macedonia, Montenegro and Kosovo is shown in Table 3.1 below and the .otal road program cost is summarized in Table 3.11. The individual investment programs are given in paras 3.07 to 3.16. Table 3.1: Three Year Road Construction and Rehabilitation Progra Year Total Republic/Province 1988 1989 1990 1988-1990 - Km - Km Vojvodina: New construction 31 11 11 53 Rehabilitation 80 160 130 370 Macedonia: Rehabilitation 200 180 180 560 Montenegro: Rehabilitation 60 50 50 160 Kosovo: New construction 5 5 Rehabilitation 50 70 60 180 Totals: New Construction 31 16 11 58 Rehabilitation 390 460 420 1270 Vojvodina 3.07 Vojvodina's three year program and financing plan from 1988 to 1990 are summarized in Table 3.2, as well as actual expenditures for 1986 and estimated expenditures for 1987 in current Dinars-'. The road investment and maintenance program for Vojvodina as a whole has been reviewed, and found acceptable. 1/ Conversion to US Dollars is at varying rates over the period to take account of price contingencies. - 19 - Table 3.2: Province of Vojvodina Road Investment Program and Financing Plan Actual Proaram 1988 90 Total Total Bank 1986 }/ t87 1/ lEa 19a9 199 19i88-9Q 1988-90 - - Din. m ----- ------------------ --- ---US$ m- - (a) Investment and Maintenance Program New Construction 3.097 22,000 2/ 57,632 32,852 24,464 114,948 74.0 23.5 2/ Rehabilitation 4,658 6,687 14,539 46,582 54.789 115,910 56.1 4.4 Maintenance 4,104 6.825 18,073 32.267 52,900 103,240 50.8 Administration 75 210 304 491 732 1,527 0.8 Debt Servicing 3L853 82Q00 14.148 23.298 38.72S 76.171 Total (a) 15,787 44,622 104,696 135,490 171,610 411,796 219.5 27.9 (b) Equipment, Technical Assistance and Training Planning Equipment 127 - - 127 0.1 0.1 Technical Assistance 77 123 200 0.1 0-1 Training _77 121- Q LA QI Total (b) 281 246 - 527 0.3 0.3 Total (a) and (b) 15,787 44.622 104,977 135,736 171,610 412,323 219.8 28.2 Total US$ million 41.7 56.3 87.6 71.2 61.1 219.8 219.8 (c) Financing Plan Rd. User Charge (Fuel Tax) 10,552 20,250 39,737 66,991 104,748 211,476 105.6 Tolls 1,893 4,540 6,818 11.334 17,488 35.640 17.9 Tax on Foreign Vehicles 851 1,898 2,977 4,962 7,646 15,585 7.8 Commnuities 918 900 5,206 8,486 13,556 27,249 13.6 Joint Funds 3,842 24,435 26,710 18,709 69.853 41.1 Foreign Loans (IBRD/EIB) 1.573 13.200 25.804 17.253 9.463 52.520 3. Total (c) 15,787 44,622 104,977 135,736 171,610 412,323 219.8 Total USS million 41.7 56.3 87.6 71.2 61.1 219.8 219.8 1/ 1986 and 1987 shown for comparison only. Z/ Includes expenditures on Kuzmin Sasinci section in Vojvodina during last quarter of 1987. July 1987 - 20 - 3.08 The Bank loan would finance the foreign exchange component of: (i) a 31 km section of TYH between Sacinci and Kuzmin (Map 20377R1); and (ii) a slice (about 15%) of Vojvodina's road rehabilitation program. The Bank participation in the Vojvodina program is shown in Table 3.3: Table 3.3: Province of Vojvodina Bank Participation in Road Program Roads Local Foreign Total Local Foreign Total F.E. Bank … Din, m -.…US$ m.-------- US$ m. Sasinci - Kuzmin (TYH) 33,453 22,302 55,755 35.2 23.5 58.7 40 23.5 (30.8 km) Rehabilitation 5,557 5,557 11,114 4.4 4.4 8.7 50 4.4 (50 km) Equipment, Tech. Assist. and Training - 527 527 - 0.3 0.3 0.3 TOTAL 39,010 28,386 67,396 39.6 27.9 67.5 28.2 3.09 The 31 km Sacinci-Kuzmin section of TYH proposed for improvement would, when completed, together with the 30 km financed under the Tenth and the Eleventh Highway Projects and the 4.5 km Sacinci-Ruma section financed by EIB, provide a 66 km continuous four lane highway from the Serbian border to Kuzmin. The project improvement would involve the construction of two additional traffic lanes and the reconstruction of 24 km of the existing two lane limited access road. The project includes two grade separated interchanges, at Sremska Mitrovica and at Kuzmin. The interchange designs conform with the guidelines established by the Toll Study financed under the Eleventh Highway Project. The rehabilitation program to be assisted by the Bank will provide for asphalt concrete overlays on about 50 km of primary and regional roads. Macedonia 3.10 The investment and financing plans in current Dinars for the Macedonia RO for the period 1988-90, with estimated actual expenditures for 1986 and estimated expenditures for 1987 are shown in Table 3.4. Rehabilitation includes a limited amount of improvement, such as minor alignment changes and easing of curves. The road investment and maintenance program for Macedonia as a whole has been reviewed and found acceptable. - 21 - Table 3.4: RCj.bIiCOf Macedonia Road Inye m n1 Program and FtnnIng Plan Actual Program 1988 90_ _ Total Total Bank 1986 1/ 1987 I/ 198 198 !990Q Mt8 9 1988 90 Din m. US$ m. (a) Investmgnt and Maintenance Program Rehabilitation 2,660 17,400 41.341 73,341 76,144 190,750 100.1 17.6 Maintenance 2,242 10,060 17,293 31.862 47,450 96.605 48.0 Administration 392 2,290 3,317 5,325 7,931 16,573 8.4 Debt Servicing 3.958 4QQ 11.744 17-945 28.076 57.76S L_ Total (a) 9,252 38.150 73,695 128,397 1S9,601 361.693 185.7 17.6 (b) Eaul omnt. Technical Assistance and Training Planning Equipment 205 205 0.1 0.1 Technical Assistance 123 183 306 0.1 0.1 Training _ 123 183 306 W.1 0.1 Total (b) 451 366 817 0.3 0.3 Total (a) and (b) 9252 38,150 73,695 128,848 159,967 362,510 186.0 17.9 Total US$ million 24.4 48.1 61.5 67.6 56.9 186.0 (c) Financing Plan Road User Charge (Fuel Tax) 5,507 13,725 23,70S 39,962 62.484 126,151 63.0 Tolls 2,550 3.686 5,918 8,812 18,416 9.3 Tax on Foreign Vehicles 1,236 3,260 5.052 8,676 12,920 26,648 13.4 Republican Funds 1,315 11,092 18,002 32,245 30,402 80,649 42.8 Communities 805 7.523 1S,898 24,380 29.528 69,808 36.6 Loans 1. Local 137 2. Foreign (IBRD/EIB) 2M2 _3 7.32 17.667 1.824 40.84 21.0 Sub-total Loans 389 7.35,2 17.Fit 15A821 40.84Q 21.0 Total (c) 9.252 38,150 73,695 128,848 1S9,967 362,511 186.0 Total US$ million 24.4 48.1 61.5 67.6 56.9 186.0 1/ 1986 and 1987 shown for comparison only. - 22 - 3.11 The Bank loan would finance the foreign exchange component of the rehabilitation of (i) an 80 km two-lane section of the TYH between Gradsko and Gevgelija (Greek Border) and (ii) an 88 km section of the primary road between Skopje and Ohrid (Map IBRD 20377R1). The Bank participation in the Macedonian investment program is shown in Table 3.5: Table 3.5: Republic of Macedonia Proposed Bank Participation in Road Program Roads Local Foreign Total Local Foreign Total F.E. Bank -Din. m.-------- -------US$ m.------- US$ m. Gradsko-Gevgelija 13,756 13,758 27,514 8.8 8.9 17.7 50 8.9 (80 km) Skopje-Ohrid 13,492 13,494 26,986 8.6 8.7 17.3 50 8.7 (88 km) Equipment, Tech. Assist. and Training - 817 817 0.3 0.3 0.3 TOTAL 27,248 28,069 55,317 17.4 17.9 35.3 17.9 3.12 Improvements to the Gradsko-Gevgelija trunk route and the road from Skopje to Ohrid through Kicevo include replacement of weakened pavement areas with asphalt overlays. Montenegro 3.13 Table 3.6 shows actual expenditures for 1986 and the estimated expenditures for 1987 on roads in Montenegro and the proposed investment program for 1988-90, with the su-porting financing plans expressed in current Dinars. The road investment and maintenance program for Montenegro as a whole has been reviewed and found acceptable. - 23 - Table 3.6: Republic of Montenegro Road Investment Program and Financina Plan Actual Program 1988-90 Total Total Bank 128 I/ ima 1/ I2& lfim 199 1988-90 1988-90 -- Din. m ---------------------- - - ----------US$ m.-- (a) Investment and Maintenance Proram Rehabilitation 3,027 3,980 10,784 21,015 28,423 60,222 30.1 9.3 Haintenance 2.060 4,950 7,544 12.476 20,085 40,105 20.0 AdmInistration 107 256 382 633 962 1,978 1.1 Debt Servicing 3A2 6 i.4f 12.688 20143 30205 63.03fi 3 Total 8,894 15,646 31,398 54,267 79,675 165,341 83.1 (b) Eguiwgmnt. Technical Assistance and Training Planning Equipment - - 128 - - 128 0.1 0.1 Technical Assistance - - 77 123 - 200 0.1 0.1 Training - - 77 123 200 0-1 DJA.. Total (b) 281 246 - 527 0.3 0.3 Total (a) and (b) 8,894 15,646 31.679 54.513 79,675 165,868 83.4 9.6 Total US$ million 23.5 19.7 26.4 28.6 28.4 83.4 (c) Financina Plan Road User Charge (Fuel Tax) 3,096 4,900 9,600 16,191 25,324 51.115 25.5 Comminities 2,326 4,690 7,992 13,478 20,159 41,629 20.9 Fund for LOR 1,363 1,370 3,325 5.103 7,185 15,613 8.0 Republican Funds 2.083 4,686 7,791 12,621 18,426 38.839 19.7 Foreign Loans (IBRO) 26 2.971 7-120IJL8l L.51 1672 2IZ Total (C) 8,894 15,646 31,679 54,513 79,675 165,868 83.4 Total USS million 23.5 19.7 26.4 28.6 28.4 83.4 _/ 1986 and 1987 shown for comparison only. 3.14 The main emphasis of Bank participation in the Montenegro program would be to finance the foreign exchange cost of the rehabilitation of about 90 km of the two lane Adriatic Highway between Kolasin, Ivangrad and the Serbian Border (Map 'IBRD 20377R). In addition, a 320 m. steel bridge on the River Tara at Durdevica would be rehabilitated. The plan calls for repairs to abutments and piers weakened by deterioration including cleaning and protection of reinforcement, replacement of old deckplates and asphalt paving. The proposed Bank participation in the investment program is shown in Table 3.7: - 24 - Table 3.7: Republic of Montenegro Proposed Bank Participation in Road Prograsn Roads Local Foreign Total Local Foreign Total F.E. Bank Din. m. ----- --- US$ m. ------- US$ m. Adriatic Highway 17,716 17,716 35,442 8.6 8.6 17.2 50 8.6 (90 km) Tara Bridge 1,172 1,172 2,344 0.7 0.7 1.5 50 0.7 Rehab. (360 m.) Equipment, Tech. Assist. and Training - 527 527 - 0.3 0.3 0.3 TOTAL 18,888 19,415 38,303 9.3 9.6 19.0 9.6 Kosovo 3.15 The investment program and financing plan in current Dinars for the Kosovo RO for the period 1988-90 as well as actual expenditures for 1986 and estimated expenditures for 1987 are shown in Table 3.8. The program has been reviewed in detail with the RO and found acceptable. - 25 - Table 3.8: Province of Kosovo Road Investment Program and financing Plan Actual Program 1988-1290 Total Total Bank 1986 1/ 1§Q7 1/ 12MA 1989 122 128l.8-90 19a8-90 ---- -- Din. m.- ------------------------ --------US$ m.--- ((a) Indvestmet and Maintenance Pronram New Construction - 2,433 - - 2.433 2.0 0.8 Rehabilitation 1.931 4,570 11,252 19,533 25,434 56,219 28.7 5.3 Maintenance 1,513 4,240 6,146 9.868 14.696 30.710 15.6 Administration 100 390 561 901 1,342 2,804 1.4 Oebt Servicing 1.572 4.60 S.8492 8.977 12.818 Z.7644 14,J _ Total 5.116 13,230 26,241 39.279 54,290 119,810 61.9 6.1 (b) EnuiZMnst. Technical AssistAnce And Training Planning Equipment - 127 - 127 0.1 0.1 Technical Assistance - 77 123 - 200 0.1 0.1 Training 77 1M MQQ QL1 Dl, Total (b) - 281 246 - 527 0.3 0.3 Total (a) and (b) 5.116 13,230 26,522 39,525 b4,289 120,337 62.2 6.4 Total USS million 12.8 16.7 22.1 20.7 19.3 62.2 (c) financ1ng Plan Road User Charge (Fuel Tax) 2.325 5,200 10,382 17,502 27,372 55,256 27.6 Vehicle Registration Fees 102 420 720 1,216 1.857 3,793 1.9 Tax on Foreign Vehicles 480 1,350 2.254 3,801 6,026 12.081 6.0 Provincial Fund 1.152 4,310 4,420 S,567 3.694 13,681 7.9 Other 858 270 1.451 2,353 3,769 7,573 3.8 Loans 1. Local 199 1,680 3.031 5,553 9,537 18,121 8.8 2. Foreign (IBRD) 4- _264 3.5.'3 2.034 9831 i.1 Sub-total Loans 1922 l.68n 7295 9.086 ]I.5S1Z 27.592 1. Total (c) 5.116 13,230 26.522 39,525 54,289 120,336 62.2 Total USS million 12.8 16.7 22.1 20.7 19.3 62.2 1/ 1986 and 1987 shown for comparison only. 3.16 The proposed Bank loan would finance the foreign exchange component of: (rehabilitation) (i) a 35 km section of the east-west route M-9 from Velika Slatina to Dolac between Pristina and the border with Montenegro; (ii) a 19 km section of the north-south route M-22-3 from Leposavic to the Serbian border at Jarinje; (iii) a 9 km section of the north-south Adriatic Highway route M-2 from Doganovic to Kacanik near the Macedonian border; and (new construction) (iv) a 5 km road section on route 2-120 from Lebane to Milosevo (Map IBRD 20377R). The proposed loan participation in the Kosovo road investment program is shown in Table 3.9. - 26 - Table 3.9: Province of Kosovo Proposed Bank Participation in Road Program Roads Local Foreign Total Local Foreign Total F.E. Bank --------Din. m.…--- -------us$ m.------- US$ m. V. Slatina-Dolac 4,959 4,959 9,918 3.1 3.1 6.2 50 3.1 (35 km) Laposavic-Jarinje 2,302 2,302 4,604 1.5 1.4 2.9 50 1.4 (11 km) Doganovic-Kacanik 1,360 1,360 2,720 0.9 0.8 1.7 50 0.8 ( 9 km) Lebane-Milosevo 1,460 973 2,433 1.2 0.8 2.0 40 0.8 ( 5 km) Equipment, Tech. Assist. and Training - 527 527 - 0.3 0.3 0.3 TOTAL 10,081 10,121 20,202 6.7 6.4 13.1 6.4 E. Pilot Road Maintenance Planning System in Croatia 3.17 The project will provide support and assistance to set up a practical road maintenance planning system in Croatia, which would later be extended to the other republics and provinces of Yugoslavia. The objective is to establish a simple management system for the rational planning of road maintenance, taking into account the availability of funds, and the characteristics of the roads network and its traffic. The existing maintenance system in Croatia and the rationale for the proposed maintenance management system are discussed in Annex 3. 3.18 Initially, a central planning and information system will be introduced which, based on evaluation of the network condition and the funds available for maintenance, will prescribe intervention levels and appropriate remedial actions for the various road classes and traffic levels. This would allow FARP and the ROs to revise the maintenance norms upon which maintenance programs are now estimated (paras 2.13 and 2.24) to ensure that available funds are used in the best possible way. The system will also indicate desirable funding levels for road maintenance, and the costs which the community has to bear as a result of restricted funding. The cost of the Croatia road maintenance planning system in current Dinars during the period 1988-90 and the proposed loan participation in the system are shown in Table 3.10. During negotiations arrangements for the proposed road maintenance management system in Croatia was discussed and confirmed. - 27 - Table 3.10: Republic of Croatia Prgoosed Bank participation in Pilot Road Maintenance Planning System Total Total Bank 1989 1990 198R-9p2U_ 12988-90 --- Din m ------------- ---------US$ m.-- Road Maintenance Equipment - 9.286 - 9,286 4.8 4.8 Planning Equipment 845 - - 845 0.7 0.7 Technical Assistance 182 291 473 0.3 0.3 Training _6 142 A.- O.1 Total 1,027 9,673 142 10,842 5.9 5.9 F. Equipment 3.19 In order to support the pilot road maintenance management system in Croatia, US$4.8 million of road and bridge maintenance equipment will be procured under the project (Table 3.10). The project also provides for automatic toll equipment for the Zagreb-Luzani section of the TYH. Details are shown in Table 4. During negotiations the list of road and bridge maintenance and toll equipment was discussed and confirmed. 3.20 Road maintenance planning equipment (US$700,000) additional to that already available in Croatia, will be procured to set up and operate the Croatia road data bank for the maintenance management system, and to analyze the data collected. Similar planning equipment (US$400,000) will also be procured for Vojvodina, Macedonia, Montenegro and Kosovo, and FARP, to enable them to start setting up road data bases during 1988 based on experience gained in Croatia. The equipment includes skid resistance survey equipment and pavement retexturing equipment to help reduce the high incidence of skidding accidents (para 2.31), and axle weighing equipment (para 2.08). Details are given in Table 5. During negotiations the list of road monitoring and planning equipment for road maintenance management was discussed and confirmed. G. Technical Assistance and Training Program 3.21 Technical assistance under the project will concentrate on the pilot road maintenance management system in Croatia with the objective of ensuring that the system is well designed and implemented and that the experience in setting up the system is disseminated to the other Republics and Provinces. The Civil Engineering Institute (CEI), Zagreb, under contract to the Croatia RO will act as consultants in setting up the pilot maintenance management system in Croatia, and 60 man-months of consultancy services are provided to cover phases I and II. In order to identify future road maintenance needs that would form the basis for a comprehensive maintenance project to cover all eight republics and provinces, 80 man- months of technical assistance to FARP is included for project preparation and planning. This work would be undertaken by local consultants. - 28 - 3.22 An estimated 65 man-months of foreign training is to be provided to cover highway maintenance management, bridge management and maintenance and traffic management and safety. An overseas seminar is proposed for staff in Croatia concerned with setting up the pilot system followed by a short assignment by one foreign consultant in Croatia . Local seminars on the results of the pilot system will be organized by FARP for the benefit of staff from other ROs, CEIs and RMEs who would later be concerned with setting up maintenance management programs in the other republics and provinces. The aim is, by the completion date of the project, for staff in Croatia responsible for operating the maintenance management system to be trained and experienced in this work, a cadre of maintenance engineers to have had foreign training in various specialized aspects of maintenance and traffic safety, and staff from other ROs in Yugoslavia to have had basic training in the requirements for planning and setting up a road maintenance management system. During negotiations, details of the training and technical assistance program were discussed and confirmed. H. Engineering 3.23 All feasibility studies of project components have been completed, with the exception of the rehabilitation program for Vojvodina. Preparation of studies was in line with guidelines established under previous Bank-financed projects. Virtually all engineering has been completed for the first year program and for the TYH section in Vojvodina. The detailed engineering has been undertaken by Yugoslav engineering institutes to design standards satisfactory to the Bank (Table 6). Construction supervision would be performed by the same institutes under contract t. the Road Organizations. The data used in the preparation of the project and the source material are listed in Annex 6. t. Cost Estimates and Financing 3.24 Cost estimates for the road investment programs have been prepared by the ROs concerned in consultation with local institutes and are based on recent cost experience with similar works. Cost estimates for the TYH sections in Vojvodina are based on detailed engineering while the estimates for other Bank-financed sections included under the first year of the project are based on preliminary engineering design carried out for the feasibility studies, both with unit rates according to recent work experience. The cost of overseas training is based on a man-month rate of US$3,500, including travelling and per diem, plus course fees where appropriate. The estimated costs of short term expatriate consultants and local consultants services are based on prevailing rates. Cost of equipment is based on recent manufacturer's quotations and recent bidding experience on Bank-financed projects for similar equipment. - 29 - 3.25 A 10% physical contingency has been added to the cost estimates for road construction. Price contingencies have been estimated assuming local price increases of 70% in 1988, 55% in 1989 and 45% in 1990, and international price increases of 1% in 1988, 1989 and 1990. The foreign exchange component of civil works has been estimated assuming, as in earlier projects, that local contractors would win the awards of construction contracts after international competitive bidding. For rehabilitation and betterment works, the higher proportion of bitumen quantities in the works compared to new construction gives a higher foreign component of 50%. 3.26 The cost estimates and Bank participation in the project covering the five republics and provinces are summarized in Table 3.11. Table 3.11: Program Cost Estimates and Financing Plan " Local Foreign Total Local Foreign Total Din m. US$ m. ------- Items New Construction 33.3 22.3 SS.6 56.0 37.4 93.4 Rehabilitation 57.2 57.2 114.5 96.2 96.2 192.4 Maintenance 78.7 - 78.7 132.3 - 132.3 Equipment 3.5 3.5 - 5.9 5.9 Technical Asst. and Training 0.8 0.8 - 1.2 1.2 Administration 6.8 6.8 11.4 - 11.4 Debt Servicing 4.3 62.Q 66.3 7.0 104.4 111.4 Subtotal 180.3 145.8 326.2 302.9 24S.1 548.0 Contingencies Physical 7.4 8.9 16.3 15.0 13.6 28.0 Price 429. 357.0 786.6 S.i7 2.7 8.4 Total Program 617.3 511.7 1,129.02/ 323.6 261.4 585.0 2/ Financing Plan: Road User Charges (Fuel tax) 463.3 3/ 231.7 3/ Communities 146.3 74.9 Republican Funds 133.2 70.4 Bank Loan (IBRD) 100.0 68.0 Joint Funds 54.2 3 54.5 3/ Tolls 54.1 27.2 Tax on Foreign Vehicles 54.3 27.2 Foreign Credits 26.1 12.4 Local Bank Loans 78.1 8.8 Funds for LDR 15.6 8.0 Vehicle Registration Fees 3.8 1.9 1,129.0 585.0 C/ Comprises (a) 1988-90 programs for Vojvodina, Montenegro, Macedonia, and Kosovo (Annex 2. Tables 1-4) (b) last quarter 1987 estimated expenditures Kuzmin-Sasinci road construction Vojvodina (c) cost estimates for equipment, technical assistance and training for Croatia I/ Total rounded. l/ Includes 1987 funds to meet expenditures on Kuzmin-Sasinci section. - 30 - Agreements have been reached with each Borrower on the selection of subprojects for Bank participation. In addition, the 1988-90 road programs include subprojects financed by local resources. With contingencies, the total cost of the 1988-90 road programs in Vojvodina, Macedonia, Montenegro and Kosovo, (including 1987 Vojvodina expenditures on TYH) is estimated at US$579.1 million with a foreign exchange component of US$256.0 million. New construction under the programs is estimated at US$103.7 million, and rehabilitation at US$214.8 million, with a combined foreign exchange component of US$149.1 million. Road maintenance costs and administrative costs are estimated at US$146.2 million. Debt servicing is estimated at US$ 111.4 million. Additional costs for road maintenance equipment as well as planning equipment, technical assistance and training for the Croatia RO are estimated at US$5.9 million. The total cost of Bank-financed items in the road program for 1988-90 including equipment, technical assistance and training is estimated at US$140.9 million. The proposed Bank loan of US$68.0 million, would finance the foreign component of the Bank-financed roads, the foreign cost of equipment and 100% of technical assistance and training. The loan would be apportioned as follows: Kosovo US$6.4 million, Macedonia US$17.9 million, Montenegro US$9.6 million, Vojvodina US$28.2 million and Croatia US$5.9 million. Table 3.12 summarizes the Bank-financed program. During negotiations, the project cost estimates were confirmed. Table 3.12: Summary of Bank Participation in Road Programs Roads Local Foreign Total Local Foreign Total Bank Loan -------Din. m.--- ---us$ m.---- -us$ mu TYH New Const. 1/ 33,453 22,302 55,755 35.2 23.5 58.7 40 23.5 Road Rehabilitation and Betterment 60,312 60,312 120,624 36.6 36.6 73.2 50 36.6 By-pass (Lebane- Milosevo) 1,460 973 2,433 1.2 0.8 2.0 40 0.8 Sub-Total 95,225 83,587 178,812 72.9 60.9 133.8 45 60.9 Equipment - 10,747 10,, .7 - 5.9 5.9 100 5.9 Technical Assist. - 1,217 1,217 - 0.7 0.7 100 0.7 and Training - 982 982 - 0.5 0.5 100 0.5 TOTAL 95,255 96,533 191,758 72.9 68.0 140.9 48 68.0 ======~--- ---=== = = == = = _= == === 1/ Includes expenditures on Kuzmin-Sasinci section on Vojvodina during last quarter of 1987. - 31 - 3.27 A financing plan has been drawn up for each republic and province, and sources of funds identified for all the planned expenditures (Annex 2, Tables 1-4). Revenue from the road use charge contained in the fuel price will provide between 31% and 51% of the total, with an overall average of about 40%. Contributions from republic and provincial work organizations and communities will provide an average of 12%, varying from nil to 25%. Other sources of funds (48%) include registration fees, tolls, taxes on foreign vehicles, Republican funds, the Federal fund for LDR and bank loans. Of the total foreign exchange cost of new construction and rehabilitation, estimated at US$149.1 million, at least 75% is expected to be met from: (i) the Bank loan; (ii) possible loans from EIB for improvements to primary routes; and (iii) revenue from entry permits of foreign vehicles. The balance of foreign exchange cost, principally for rehabilitation works, would be covered by domestic sources. During negotiations, the investment and financing plans were discussed and confirmed. 3.28 The Federal Government is aware that periodic adjustments are required to road user charges in both gasoline and diesel fuel in order to ensure adequate financing for road construction, rehabilitation and maintenance (para 1.08), and target figures for road maintenance and rehabilitation have been confirmed (Annex 3, Table 4). The increases in road user charges will be examined and reviewed as part of each annual review of the program under the Action Plan (para 3.33). During negotiations assurances were obtained from the Federal Government that road user charges will be adjusted as necessary to ensure adequate financing for the road investment and maintenance programs (para. 5.03). In addition, the Republican and Provincial Governments have approved the investment and financing plans, including providing a commitment to allocate road user revenues to road expenditures in order to provide adequate funds for the programs (para. 5.05). J. Implementation 3.29 The ROs of the five participating Republics and Provinces are the Borrowers under the project and are responsible for the execution and management of their road programs with construction supervision subcontracted to Yugoslav engineering institutes which designed the project roads (para. 3.23). Bids for the first contract was invited in May 1987 in Vojvodina with a contract award in September 1987. Bids would also be invited between November 1987 and February 1988 in Macedonia, Montenegro and Kosovo leading to contract awards by about March 1988. All projects would be completed by December 1990 providing one year for completion of works beyond the implementation schedule target date of December 1989 (Annex 5). The first phase of the Pilot Road Maintenance Planning System in Croatia commenced in May 1987. The second stage would develop all elements of the central system in tandem with the introduction of a maintenance management system within selected RMEs and would commence in late 1987. The RO in Croatia, assisted by the Civil Engineering Institute (CEI) in Zagreb, would operate the proposed system. The CEI has recently established a Maintenance and Rehabilitation Division with four staff to handle work in this field, and one engineer from CEI has recently attended a two week training course run by the Bank in Washington on the use and operation of Highway Design and Maintenance Standards Model (HDM) III. - 32 - 3.30 FARP will act as fiscal agent for the project and as liaison on project-related matters between the Borrowers and the Bank, and will coordinate requests for reimbursement/disbursement from the Bank. FARP would furnish to the Bank progress reports and progress charts in July and October of each year. FARP will also be responsible for liaising with the Federal Government on matters related to road user charges and for overall coordination in the implementation of the training program and for the procurement of planning equipment. FARP is already staffed by an acting secretary (transport economist), a senior highway engineer and a traffic engineer. In order to strengthen its coordinating role, FARP intends to hire additional staff during 1987/88 including a second economist, an accountant, a lawyer and two technical staff with computer experience. During negotiations, reporting arrangements were discussed and confirmed. 3.31 Specific road sections to be improved during subsequent years will be prepared on a continuous basis in time for approval by the Bank and for inclusion in the annual programs. Feasibility studies for all Bank-financed sub-projects and all other major investment items would be reviewed by FARP prior to submission of summary sheets to the Bank according to agreed procedure. Assurances were obtained from the Borrowers that they will execute the project in line with the implementation schedule and in accordance with the provision of the Project Action Plan (para. 5.02 (b)). Such information will be made available to the Bank by April 30 of each year together with the preliminary updated investment and financing plans so that the programs can be firmed up for the following year by November 30. The criteria for Bank approval of sub-projects are that: (i) the quality of preparation and analysis must be acceptable to the Bank; (ii) the Economic Return (ER) of investment is at least equal to 122; and (iii) implementation would not be started before the optimal year. During negotia' drances were obtained that, prior to bidding, FARP will submit t fy data on individual project road sections for the Bank's approval, ding to agreed procedures and criteria set forth in the Action Plan. K. Project Action Plan General 3.32 The Action Plan shown in Annex 4 constitutes a comprehensive record of project objectives and activities, including what action has already been taken, as well as timing and responsibilities relating to various steps and actions to be taken during project implementation. The Action Plan provides for: (a) agreement on the overall investment and maintenance programs, including annual review and updating; (b) a general framework for adjustments to road user taxation; (c) specific measures for implementing improved road maintenance strategies; (d) an action program for FARP, with the aim of improving overall coordination, monitoring and reporting; - 33 - (e) procurement and administrative arrangements for the project; and (f) provisions for further training in the field of management and design of maintenance projects. 3.33 As part of the provisions of the Action Plan, the investment and financing plans would be updated on an annual basis in consultation with FARP and, beginning in 1988, would be submitted in draft for m by April 30 for the following year for the Bank's review and comment. The final programs would be agreed by November 30 of each year and the ROs would reflect the final investment programs in their annual budget (para. 5.01 (c)). In line with the key features of the draft Social Compact for Roads (para. 1.08), the Action Plan supports equity in the recovery of road infrastructure costs from road users as well as the need to maintain taxation levels in real terms. The Action Plan will also encourage a simplification and standardization of vehicle registration fees, including restructuring charges to reflect road costs for particular vehicle categories. During negotiations, the contents of the Action Plan and the proposed road investment and financing plans, including the road maintenance and rehabilitation targets, were discussed and confirmed. The project implementation schedule was also discussed and confirmed. L. Procurement 3.34 Prequalification of contractors for works to be put to ICB (para. 3.35) took place in February 1987 using the same prequalification procedures and forms as agreed to under the First Highway Sector Project (Loan 2715-YU). Bidding documents for ICB are based on the Bank's sample document and have been reviewed and approved hy the Bank. 3.35 Civil works for Bank-financed items over US$3.0 million (totalling US$104.5 million) for the improvement and rehabilitation of the TYH in Vojvodina and Macedonia and the rehabilitation and betterment of primary roads and bridges, as well as road maintenance equipment would be procured through ICB in accordance with the Bank's Guidelines for Procurement. Due to its specialized nature, procurement of the planning equipment totalling US$ 1.1 million would be through international shopping with individual items not exceeding US$150,000. 3.36 Civil works for contracts under US$3.0 million (totalling US$29.4 million) for the road rehabilitation program and the TYH new construction in Kosovo would be procured by contracts through LCB. The total estimated value is distributed as follows: Vojvodina, US$8.7 million; Montenegro US$7.9 million; and Kosovo US$12.8 million. These works are scattered and there is a need to encourage competitive bidding procedures for road rehabilitation work. The Bank has reviewed and commented on the Yugoslav local procurement laws and regulations. These procedures were found to be generally satisfactory. However, although the participation of foreign contractors in LCB procedures is allowed under Federal law, it is not provided for specifically in the Republican and Provincial laws. during negotiations, assurances were obtained that, under LCB, foreign - 34 - contractors would be allowed to bid and import the necessary materials and equipment (5.01(d)). 3.37 Selection of consultants in setting up of the Pilot Road Maintenance Planning System in Croatia will be made by the RO in accordance with the Bank's Guidelines for the use of consultants. The selection of consultants in the other Republics and Provinces would also be in accordance with the Bank guidelines for use of consultants. 3.38 All contracts for the procurement of civil works and goods estimated to cost over US$50,000 would be subject to the Bank's prior review and approval. This review would cover about 952 of Bank-financed procurement. The balance of contracts would be subject to random post review after contract award. Table 3.13 Procurement Analysis ' Project Item ICB LCB Other Total Cost … ------- (US$ million) --------- New Road Construction 58.7 *2' 2.0 43.0 103.7 (23.5) (0.8) (24.3) Road Rehabilitation 45.8 27.4 141.6 1/ 214.8 (22.9) (12.2) (36.6) Road Maint. Equipment 4.8 (13.7) 4.8 (4.8) (4.8) Planning Equipment 1.1 4 / 1.1 (1.1) (1.1) Training 0.5 0.5 (0.5) (0.5) Technical Assistance 0.7 " 0.7 (0.7) (0.7) 109.3 29.4 186.9 325.6 6 Financed by Bank (51.2) (14.5) (2.3) (68.0) - Costs include estimated contingencies. 2/ Includes expenditures on Kuzmin-Sasinci section in Vojvodina during last quarter of 1987. 3' For local financing following local procurement procedures. 4/ Specialized equipment to be procured through international shopping. -/ Employment of consultants. 6/ Not including debt service, administration and maintenance totalling about US$259 million in whose financing the Bank is not participating. Note: Figures in parentheses indicate amounts to be financed under the proposed loan. M. Disbursements 3.39 Disbursement would be made on the following basis: (a) Civil works: 452 of total expenditures for new construction and 50% of total expenditure for rehabilitation; (b) Equipment: 1002 foreign expenditures; 100% of local expenditures (ex-factory cost) and 60% of local expenditures for other items; and - 35 - (c) Training and Technical Assistance: l00% Retroactive financing in an amount not exceeding US$8.0 million would be provided for civil works on road construction in Vojvodina for which payment is made between July 1, 1987 and loan signature (paras. 3.29 and 5.04). 3.40 Disbursements would be made against Statement of Expenditure (SOE) for eligible expenditures under contracts valued at $50,000 equivalent or less. Supporting documentation for these would be retained by the Borrowers and made available for review by the Bank during supervision. The annual audits of the project accounts would include a separate opinion on the disbursements made under the SOE procedure. All other disbursements would be made against normal documentation submitted to the Bank. 3.41 In order to expedite project execution, Special Accounts would be opened at a commercial bank acceptable to the Bank with an aggregate authorized allocation of $6.0 million (four-month average of eligible expenditures). The documentation for replenishment requests would follow the same procedures as in paragraph 3.40. In addition, monthly bank statements of the Special Account would accompany replenishment requests. 3.42 The closing date of the Bank loan would be December 31, 1991. The disbursement schedule shown in Table 7 has been developed from the implementation schedule shown in Annex 5 and assumes the project would be effective by January 1988, and would be completed by December 31, 1990. Disbursements on loans under the previous Sixth, Seventh, Eighth and Ninth Highway Projects have averaged only four years, a rapid rate of disbursement compared to the average profile for 21 transport projects in Yugoslavia, which is 6-1/2 years. These highway projects were not affected by local funding problems which subsequently slowed disbursements on the Tenth and Eleventh Highway Projects. However, following the revision of the timetable of these projects, disbursements proceeded genes.ally in line with the revised implementation schedule, and covered 4-1/2 to 5 years. In view of this and the intended close monitoring by means of the updating and submission of annual programs in accordance with the detailed Action Plan and agreed adjustments to the road user charges, disbursements should closely follow the planned implementation schedule. On this basis, disbursements under the project have been forecast over about 4-1/2 years after the Board date. The estimated disbursements from the proposed loan are shown in Table 7. During negotiations, the disbursement schedule was confirmed. N. Accounting and Audit 3.43 As a Community of Interest (COI), the form of each RO's accounts, as with all Yugoslav enterprises, is prescribed by law. The accounting department of a typical COI is well organized and have a staff of eight to ten, headed by a director. 3.44 In each republic and province the accounting and financial system is arranged for separation of responsibilities. A separate account is kept for each subproject. The account records the budgeted sum for the investment and the total committed (by contracts) as well as expenditures. All major investments, as those in the proposed Bank project, are required - 36 - to be registered with and audited by the social Accounting Service (SDK) and the sources of funds must be identified and the funds assured before work may commence. Information registered with SDK includes a detailed analysis of the estimated cost. A main part of the audit function of SDK is to ensure that funds are used only for purposes for which they are registered. 3.45 Agreements were reached with each of the ROs rega. ing the form and timing of financial reports to be rendered annually to the Bank to give information required on project expenditures, financing resources and Bank loan disbursements. Assurances were obtained that arrangements would be made with SDK by each RO for the audit of the Special Account and Statement of Expenditures for the submission to the Bank, within six months after the end of each financial year. 0. Environmental Impact 3.46 The project is not expected to have any significant adverse environmental or sociological effects. There is little habitation along the alignment of the existing TYH road section in Vojvodina to which two additional lanes will be added and for which the rigth-of-way was acquired prior to 1982. All other sections involve improvements following existing alignments and there will be little need to secure agricultural land for right-of-way. Reduction in noise and air pollution will result to the extent that traffic congestion along the project road sections will be obviated. With the rehabilitation work following the existing alignment wild lands are not affected. Similarly, no cultural properties are affected by the works. IV. ECONOMIC EVALUATION A. General 4.01 Detailed feasibility studies have been completed for a substantial part of the road investment programs in the four Republics and Provinces included in the project. These studies cover all major construction items as well as part of the routine rehabilitation programs which constitute a minimum requirement for the more heavily-trafficked routes. The investment and maintenance programs are considered to be appropriately balanced and their general economic viability has been confirmed. In addition, the project is designed to promote a systematic selection of sub-projects under the later years of the investment plan and to provide for adequate rehabilitation and maintenance programs. B. Main Benefits and Beneficiaries 4.02 One of the aims of the project is to improve traffic conditions on two heavily-trafficked TYH sections, namely the E-70 route in Vojvodina between Sasinci and Kuzmin (30.8 km) and the E-75 route in Macedonia between Gradsko and Gevgelija on the Greek border (80 km). The TYH investments under the project will account for about 44% of that portion of the investment programs in which the Bank will participate. Because of the inter-regional character of TYH, road improvement will benefit primarily - 37 - long distance traffic linking Yugoslavia's main centers of population and economic activity. In addition, as the major transport route between western Europe, the Balkan area and the Middle East, improvements to TYH will facilitate international transit traffic an, thus have a far-reaching impact beyond the borders of Yugoslavia.. Following the accession of Greece to the European Economic Community, the international importance of TYH has been greatly increased. However, because of traffic congestion, permits for transit traffic are currently restricted by the Federal Government and there is considerable potential for further growth in international traffic. The main benefits of the TYH program will be in savings in transport costs which will accrue directly to a wide variety of road users from various sectors of the economy and from a range of income groups throughout the country. Because road transport enterprises in Yugoslavia are competitive and well-managed, the transport cost savings would be passed on to producers and consumers. Similarly, benefits for international traffic will ultimately accrue to Yugoslavia in the form of revenue collected through transit traffic agreements authorized by the Federal Government and partly through the participation of international traffic in Yugoslavia's foreign trade. As the bulk of international traffic on TYH carries the country's exports and imports, the inclusion of transport cost savings as a surrogate for other more indirect benefits is justified. Finally, although transport cost savings for pure transit traffic may not be recuperated entirely through transit fees, this traffic represents less than 52 of total commercial traffic and its exclusion would not affect the viability of the sections considered. The provision of specialized maintenance equipment for TYH will ensure adequate traffic service during periods of severe winter weather and reduce costly delays to traffic. 4.03 The road rehabilitation and betterment programs financed under the project will provide substantial benefits to road users on many heavily-traf'icked primary and regional routes, linking important urban centers as well as industrial and agricultural areas. The program includes rehabilitation of about 90 km of the E-65 Adriatic Highway route in Montenegro and Kosovo. These sections are also part of routes which carry heavy volumes of international tourist traffic during the summer months. The main benefits of the rehabilitation program will be in reduced transport costs which follow from improved driving surfaces as well as avoided stepped-up maintenance costs which would otherwise be necessary to maintain existing roads in serviceable condition. Benefits from the improvement of a 5 km gravel route between Lebane and Milosevo near Pristina in Kosovo will provide a 19 km distance saving for through traffic travelling between the E-80 Nis-Pristina route and the E-65 Adriatic Highway leading from Pristina to Skopje. Finally, the rehabilitation of the 360 meter Tara River Bridge in Montenegro will generate user cost savings through the elimination of severe operating restrictions on the bridge as well as provide savings in maintenance costs. The effects of a possible failure of the bridge in terms of the cost to diverted traffic, in an area where there are few alternative routes, as well as the cost of reconstruction of the bridge, have not been included. 4.04 As a whole, the Bank-financed road sections under the investment programs will yield annual savings in foreign exchange of at least US$15 million in the form of avoided expenditures on fuel and reduced vehicle operating costs. In addition, the savings in road user costs - 38 - through improved road maintenance operations will also generate foreign exchange savings. Moreover, taking into account the role of roads in transit and foreign trade and tourism, improvements to TYH and other key primary routes are expected to provide further contributions to the country's foreign exchange earnings. 4.05 The project will also contribute in a significant manner to improvements in good maintenance management, as well as provide attention to such issues as investment planning, maintenance allocations, road user charges, and inter-Republican coordination. Through the implementation of improved maintenance of the road network, substantial savings will accrue not only to road user but also to the Republican and Provincial authorities in the form of avoided reconstruction of primary roads. In turn, these savings will ultimately benefit the general population by increasing the financial resources available for other purposes. C. Economic Evaluation 4.06 In developing the four overall investment programs, all major components have been evaluated by the ROs and projects were ranked, taking into account available financial resources. Several alternative solutions were considered for major investment plan items such as rehabilitation of the existing road, with a comparison of 10 year and 20 year pavement lives, minor or major changes in alignment, stage construction of four-lane facilities and detailed analysis of interchange and intersection designs. ERs have been estimated for all sub-projects planned for Bank-financing during the first year of the project, as well as for many items planned in subsequent years. Project costs are based on substantially completed detailed engineering for most road sections, and include costs of right-of-way, engineering and supervision. The ERs are based on estimated savings in vehicle operating costs, travel time costs and maintenance expenditures, taking into account base-year traffic levels and projected traffic growth. After the elimination of fuel rationing in January 1985, traffic on most routes has increased annually at about 5% in 1985 and 1986. It is assumed to continue increasing by 4% per year through 1990, falling again to 3% in the longer term, these modest rates being in line with the forecast growth of the economy (para 1.04). 4.07 Details of the road sections proposed for Bank-financing are shown in Table 8. The TYH section between Kuzmin and Sasinci (30.8 km) in Vojvodina, which will be improved to four-lane limited access standards, shows an ER of 15%. The alternative reviewed for this section was for a 20-year pavement design as a 10-year stage construction alternative and did not show a higher ER. The other sections comprising mostly rehabilitation with 10-year pavement designs, shows ERs ranging from 25% to 50%. The Tara bridge rehabilitation in Montenegro shows an ER of 15% while the 5 km by-pass section near Pristina in Kosovo shows a high ER of about 60%. All sections yield acceptable first-year benefits in excess of 10%. The overall ER for the proposed Bank-financed sub-projects is estimated at about 23%. Even under pessimistic assumptions such as a 10% increase in costs combined with a 10% decrease in benefits, all sections show acceptable ERs above 12%. 4.08 Under the sector project, the Bank will be participating in about 47% of planned new investments (excluding maintenance) during the period - 39 - 1987-89. Of the total investments planned in the four Republics and Provinces, rehabilitation and minor betterment amounts to about 802 with about 20% allocated to new construction. The rehabilitation and betterment components would provide ERs of at least 25%. In addition, the improved maintenance programs would yield substantially higher ERs, probably on the order of 50Z and up. As maintenance programs account for about 25% of total expenditures on roads, a conservative estimate of the ER of the four investment and maintenance programs as a whole would be in the range of 30%. D. Project Risks 4.09 The main risk in the impl..nentation of the project relates to the availability of local funds. Should local funds fall below the program requirements, there is a risk that the investments might be delayed and su1stantial benefits to the economy foregone. However, the programs have been closely tailored to available financial resources and the annual reviews under the project of both the investment and financing plans should mitigate any problems in local funding. In the event that local funflL were restricted, it is expected that the Bank-financed sub-projects would receive the highest priority thus ensuring their timely completion. V. AGREEMENTS REACHED AND RECOMMENDATIONS 5.01 During loan negotiations, assurances were obtained from the Borrowers that they will: (a) submit through FARP, a summary of the data on individual road sections for the Bank's approval, according to agreed procedures and criteria set forth in the Action Plan (para. 3.31); (b) execute the project in accordance with the provisions of the Project Action Plan (para 3.33); (c) update the investment and maintenance programs annually and review them with the Bank, including reflecting the final investment programs in the RO's budgets (para. 3.33); and (d) under LCB allow foreign contractors to bid and import necessary material and equipment (para. 3.36). 5.02 The Project Action Plan is mentioned in the Loan Agreement (para. 3.33). In addition, in view of the role of the Federal Government in adjusting road user charges, the current policy of the Federal Government to adjust road user charges in line with inflation was reiterated in the Federal Guarantee Agreement together with an undertaking to adjust road user charges to ensure adequate financing for road investment and maintenance programs (para. 3.28). 5.03 Agreement to the investment and financing plans by the Republican and Provincial Government authorities, including a commitment to allocate road user revenue to road expenditures, was obtained (para. 3.28). 5.04 Retroactive financing would be provided up to US$8 million for Vojvodina to cover expenditures on the Kuzmin-Sasinci section of TYH between July 1, 1987 and the date of loan agreement signature (para. 3.39). - 40 - 5.05 With the agreements reached on the above, the project would be suitable for five Bank loans totalling US$68 million apportioned among the five separate borrowers, namely, the Road Organizations of Vojvodina, Macedonia, Montenegro, Kosovo, and Croatia. C027h - 41 - ANNEX 1 Page 1 of 6 YUGOSLAVIA STAFF APPRAISAL REPORT SECOND HIGHWAY SECTOR PROJECT Previous Projects in Transport Sector Previous Projects 1. The Bank has lent US$1,345.6 million net of cancellations to the transport sector to date, including US$749.8 million for twelve highway projects, US$488.3 million for seven railway projects, US$42.4 million for the Bar Port Project, and US$6'i.1 million for earthquake rehabilitation assistance for restoring damaged roads, railways and a port in Montenegro. In addition, the Bank has loaned US$106.7 million net of cancellations for two pipeline projects. Highway Projects 2. The First Highway Project (Loan 344-YU), US$35 million) in 1963 financed the completion of the coastal section of the Adriatic Highway (422 km) and parts of the Belgrade-Nis road (174 km). The Second Highway Project (Loan 485-YU, US$10 million), financed in 1967, was for the improvement of 367 km of roads connecting the Zagreb-Belgrade highway via Sarajevo and Tuzla with the Adriatic highway. Both projects were completed within the original cost estimates and agreed time schedules. The Third Highway Project (Loan 608-YU, US$30 million), financed in 1969, and comprising about 120 km of roads in Croatia, Macedonia and Slovenia, was completed in August 1974 with a 20-month delay, primarily due to delays in completing an access road. This project had an 8% cost overrun because of inflation and foreign exchange adjustments. The Fourth Highway Project (Loan 678-YU, US$40 million) was financed in 1970 for the construction of about 220 km of roads in Bosnia-Hercegovina, Kosovo, Montenegro, Serbia and Vojvodina. Because of expropriation problems in the section of Bosnia-Hercegovina, the project was completed in December 1V7) witLh an 18-month delay. There was a 12% cost overrun due to iiuflation and foreign exchange adjustments. The Fifth Highway Project (Loan 751-YU, US$35 million) became effective eight months late in 1973 due to Government administrative delays. The project comprised 153 km of roads in Kosovo, Macedonia and Slovenia, procurement of US$1.7 million worth of engineering equipment, consultant's services and a staff training component to improve highway planning and project preparation. The engineering equipment was been delivered and the consultant's services were completed satisfactorily. The staff training component was delayed because of difficulties encountered in securing training of candidates in the head office of foreign consultants and in foreign institutes and because of language problems (insufficient candidates proficient in English). Consequently, a restricted program was adopted. Because of the delay in - 42 - ANNEX 1 Page 2 of 6 training, the project was completed by the end of 1977, involving a delay of about 15 months. This project had an 82 cost overrun because of the combined effect of inflation and foreign adjustments. 3. The loan for the Sixth Highway Project (Loan 990-YU, US$30 million) was made in 1974. The project financed six road sections in Bosnia-Hercegovina totalling 150 km, the training of transport economists and road engineers, and US$1.1 million worth of engineering and laboratory equipment. The loan for the Seventh Highway Project (Loan 1143-YU, US$40 million) was made in 1975. The project comprised about 90 km of road construction in Slovenia, Serbia and Montenegro, and US$0.1 million worth of technical assistance to improve preparation of highway feasibility studies and to provide a related training program. The project was completed by the end of 1979. The Eighth Highway Project (Loan 1377-YU, US$56 million) was made in 1977. The project comprised about 130 km of roads in Serbia, Bosnia-Hercegovina, Macedonia and Kosovo, studies by consultants of road user charges and rail costs and technical assistance for the preparation of a highway master plan for Kosovo. The road works were completed and the loan closed in 1981 and US$0.1 million cancelled from the Bank loan. Both the Seventh and Xighth Highway Projects focused on improving sections of the Trans-Yugoslav Highway (TYH), which was to become the primary objective of later projects, while at the same time promoting regional development by improving selected regional roads in lesser-developed areas. The Ninth Highway Project (Loan 1535-YU, US$80 million) was made in 1978. The project comprised construction of four highly congested sections of TYH in Slovenia, Croatia and Serbia, totalling about 86 km, and the procurement of equipment for maintenance and for monitoring loadings of vehicles using the primary highway network, including TYH. All road works were completed by January 1982 and the final delivery of highway maintenance equipment and weighing scales was made in December 1982. 4. The loan for the Tenth Highway Project (Loan 1678-YU, US$148 million; US$147.5 million net of cancellations) was made in April 1979 and became effective in August 1979. It comprised the first phase (a three-year tranche from mid-1979 to mid-1982) of the 1979-85 highway sector programs of five participating Republics and Provinces. Although progress was variable among the borrowers, most construction contracts suffered delays of one to two years due to a shortage of local funds. Construction was essentially completed by mid-1984, but the loan closing date was postponed to June 30, 1985, to allow for completion of the training component and procurement of equipment. The project also included an updating of the Road User Charges Study, financed under the Eighth Highway Project. The loan for the Eleventh Highway project (Loan 1819-YU, US$125 million) was made in April 1980 and became effective in August 1980. It comprised construction of six sections of the Trans-Yugoslav Highway (TYH) with controlled access facilities in four Republics and Provinces, totalling about 164 km, and the procurement of highway maintenance and road monitoring equipment, technical assistance, a highway safety program and the preparation of a Toll Study. Although execution - 43 - ANNEX 1 Page 3 of 6 was delayed by up to two years because of the shortage of local funds, most construction items were completed by the revised loan closing date of June 30, 1985 and US$0.1 million was cancelled from the Bank loan. The Tenth and Eleventh Highway Projects were both implemented during a period of economic difficulty and budgetary reductions. Because of the severe shortage of local funds, both the Tenth and Eleventh Highway Projects were included under the Bank's Special Action Program in mid-1983. The investment plans were revised, and the projects were then implemented as planned, albeit with a two year delay. Re-estimated economic returns for both projects were satisfactory. Several institutional improvements were incorporated in the project including preparation of guidelines for toll facilities on TYH, a highway safety program, and training. 5. A loan for a Highway Sector Project (Loan 2715-YU, US$121.5 million) was made in 1986. The project finances a time slice of the road investment/maintenance program of f,u. Republics with the emphasis on removal of bottlenecks, rehabilitation, and completion of the basic network. The project also emphasizes investment planning, increased allocations to road maintenance operations, sound financial planning under conditions of budgetary constraint, and strengthening of the new coordinating body for roads (FARP). Project preparation was delayed due to slowness in reaching agreement on the Republics to be included in the project, the composition of investment plans, and delays in adjusting road user charges. Following negotiations, project signature was delayed about six months due to Government delays in providing bank guarantees to the borrowers. Following substantial increases in road user charges during 1986 which exceeded actual inflation, the project was signed in February 1987 and became effective in July 1987. Railways 6. The First Railway Loan was made in 1963 (Loan 316-YU, US$35 million) to finance the conversion of the 195 km Sarajevo-Ploce line to standard gauge, with electric traction and modern signalling and telecommunications. The project was substantially completed and put into operation in 1970, with a delay of four years. 7. The Second Railway Loan (Loan 395-YU, US$70 million) was made in 1964 to help finance the modernization of 1,509 km of main lines traversing Yugoslavia from the Austrian and Italian borders to the Greek border. It included electrification, signalling, telecommunications, and the improvement of six key marshalling yards. This project ran into major difficulties because after the 1965 political and economic reforms the railways' internal funds fell substantially below expectations, and also because of deficiencies in project planning and preparation which resulted in an underestimate of quantities and of time needed for completion of such an extensive project. With hindsight, this was too ambitious a project in relation to the railways' resources. The Bank loan was fully disbursed in 1972. The project was refinanced from the fourth railway loan and was - 44 - ANNEX 1 Page 4 of 6 completed in 1981 at a total cost of about US$410 million, over twice the original cost estimate. 8. The Third Railway Loan made in 1968 (Loan 531-YU, US$50 million) helped to finance construction of 370 km of the Belgrade-Bar line, with electrification, signalling and telecommunications for the entire 475 km line. This was a project of great technical complexity involving the construction of over 300 tunnels and several major bridges. The civil works were satisfactorily constructed by local contractors. Completion was originally scheduled for 1973, but geotechnical and other construction difficulties delayed the opening of the line until 1976, and the project was completed in 1978. Technical problems and inflation aggravated by delays raised the cost of the project to US$422 million. 9. Because of problems on the second project, the Bank, in agreement with the Yugoslav authorities, unidertook a comprehensive study of the railways with the assistance of consultants. This prepared the ground for the Fourth Railway Project (Loan 1026-YU, US$93 million), agreed in 1974, under which the Bank's loan was allocated to the completion of the 1964 Modernization Program and to "Related Investments" needed to maximize its benefits, all to be completed by the end of 1976. However, in contrast with earlier projects which consisted only of investments to which the Bank loan had been allocated, the fourth project was defined as the totality of the railways' investments in 1974-76, whose cost was estimated at US$1,138 million. The Bank loan thus amounted to about 12% of the cost of the project. Agreement was reached on measures to help overcome the railways' financial problems, principally through tariff increases. An important feature of the project was the preparation of comprehensive Action Plans which, given Yugoslavia's decentralized system, were designed to contribute to a common understanding of objectives and responsibility by all concerned. Only about two-thirds of project investments were executed under the project; however, they were reasonably balanced to maximize system effects, and the remainder were included in the 1976-80 Investment Plan. Execution of Bank-financed "Related Investments" was substantially better (about three quarters). Except for the section from Skopje to Gevgelija on the Greek border, the electrification of the main line traversing Yugoslavia was completed during the period of implementation of the project. Works were completed satisfactorily and the loan was closed in 1981; US$0.3 million was cancelled from the Bank loan. 10. The Fifth Railway Loan (Loan 1534-YU, US$100 million; US$99.5 million net of cancellations) was made in 1978. The project consisted of a three-year (1978-80) portion of the eight railways' investment plans. Its principal objective was to further improve the efficiency and the competitive position of the railways though 1,285 km of track overhaul or reconstruction, 93 km of route conversion from single to double track, electrification of 314 km, equipping of 53 km with modern signalling, installation of automatic block on 434 km, technical assistance and staff training. Ninety percent of the project was completed on schedule, and the economic return was re-estimated to be 18% against 15% estimated at appraisal. Tariff covenants were not fully complied with due - 45 - ANNEX 1 Page 5 of 6 to unexpected inflation, but this situation improved under the Sixth Railway Project. The Community of Yugoslav Railways (CYR) was successfully strengthened under the project. 11. The Kosovo Railways Project (Loan 1977-YU, US$34 million) was mnade in 1981. The Project included reconstrucion of the Kosovo Junction, signalling and telecommunications improvements, procurement of rolling stock, and training and technical assistance to improve management and freight operations. The project was completed two years behind schedule in early 1987, due primarily to managerial inefficiencies including procurement delays. The economic return is expected to be lower than estimated at appraisal, but still greater than 102, due to a shortfall in traffic. US$2.9 million in project funds were cancelled due to appreciation of the US dollar. The loan was closed in December 1986. 12. The Sixth Railway Project (Loan 2336-YU, US$110 million) was made in 1983. The project consists of a four year time slice (1983-86) of four RTOs investment plans, including the overhaul of 545 km of track, signalling and telecommunications on about 320 km of line, electrification of the Bosanski-Novi Knin line, spare parts tor locomotives, and technical assistance and training. Project effectiveness was delayed by one year due to delays in increasing tariffs, but the project is now proceeding on schedule and within the cost estimate. The RTOs have complied with the tariff covenant since effectiveness, leading to a reduction on compensation payments by the Republics/Provinces. The project is expected to be completed in 1988. Port of Bar Project 13. The loan (Loan 1060-YU, US$44 million) was made in 1974 to finance port development and related railway facilities. All works have been completed and the loan was closed in 1981 and US$1.6 million was cancelled from the Bank loan. The PCR indicated that despite the delays in the development of traffic following the 1979 earthquake, the project represents a significant contribution to the economic development of southern and eastern Yugoslavia. However, the port is somewhat over-designed for present traffic levels and as a result the economic return is marginal. Earthquake Rehabilitation (Transport Facilities) 14. The Montenegro Rehabilitation Project for Earthquake Damage, Roads (Loan 1759-YU, US$21 million) was made in 1979. The project was satisfactorily completed on schedule at the end of 1982. The Montenegro Rehabilitation Project for Earthquake Damage, Ports (Loan 1768-YU, US$50 million) was made in 1979, and the final equipment deliveries were made in 1984. US$19.9 million were cancelled from the loan due to appreciation of the US dollar. The Montenegro Rehabilitation Project for Earthquake Damage, Railways (Loan 1769-YU, US$ 14 million) was also made in 1979. It comprised repair and restoration of railway facilities damaged by the earthquake and the expansion of railway yards at Bar and Titograd. Project completion was delayed due to the fact that much more time than - 46 - ANNEX 1 Page 6 of 6 anticipated has been necessary for design and geological works, while the need for work under traffic has also hampered progress. The project was completed by the end of 1984, and a remaining balance of US$0.04 million was cancelled. MMQ ~ ~ - - - 47 - ANNEX 2 Page 1 of 3 YUGOSLAVIA STAFF APPRAISAL REPORT SECOND HIGHWAY SECTOR PROJECT Proposed Road Programs Vojvodina 1. The RO in Vojvodina is responsible for 88 km of expressway on the east-west international route E70 between Serbia and Croatia, 1,395 km of primary roads and 1,651 of regional roads (Table 1). Traffic on 561 of the primary roads exceeds 3,000 vpd, while on regional roads the volume of traffic over 3,000 vpd is only 22%. Pavement on 77% of primary roads and 61 of regional roads is over 15 years old. Present maintenance expenditures are on the average about US$3,300 per km per year with a planned increase to US$4,920 yearly (July 1987 prices). In order to catch up on some of the backlog and maintain the road network in a satisfactory service condition, the RO should on the average carry out about 120 to 130 km of rehabilitation per year (Annex 3, Table 4). The planned budget provides for this. 2. The TYH in Vojvodina is 88 km long connecting the borders of Croatia and Serbia with traffic volumes of about 12,000 vpd with a peak in the tourist season over 22,000 vpd. The Tenth Highway Project financed the north-south E-75 highway from Novi Sad to Feketic (43 km) and a east-west section of TYH from the Serbia border to Popinci totalling (8.7 km). The The Eleventh Highway Project financed a 17 km extension of TYH from Popinci to Ruma. 3. Details of the three year road investment and maintenance program are shown in Annex 2, Table 1. Planned expenditures on new construction, rehabilitation and maintenance during 1988-90-' are expected to average about 40.8 billion dinars annually at July 1987 prices (US$68.6 million). The road program continues to emphasize improvements to TYH which accounts for about 50% of planned expenditures, the remainder being allocated to rehabilitation and maintenance of existing roads. Macedonia 4. The RO of Macedonia is responsible for 967 km of primary roads and 2,896 km of regional roads (Table 1). About 311 of the network has traffic volumes in excess of 3,000 vpd. Primary roads are 82% paved, while two thirds of regional roads have modern pavement. About 65% of the road network is over 15 years old and requires rehabilitation. During the last decade, road development plans were mainly concerned with the expansion of 1/ Also includes expenditure on Kuzmin-Sasinci section during last quarter of 1987. - 48 - ANNEX . Page 2 of 3 the network of regional roads to serve key areas of development in the Republic. Although some expansion of the network will still be made to provide needed links, the emphasis is now being turned to the consolidation of previous investments in terms of maintenance and rehabilitation of existing roads. 5. In the proposed program, maintenance and rehabilitation of the existing road network would be increased substantially. The average maintenance expenditures in 1986/87 were only on the order of US$2,290 per km while average rehabilitation expenditures in the same years amounted to the equivalent of about 100 km. The project aims at increasing r9utine maintenance to about US$4,260 per km by 1990 and providing rehabilitation of about 180 km per year (Annex 3, Table 4). 6. Details of the investment program and financing plan are shown in Annex 2, Table 2. Planned expenditures on rehabilitation and maintenance during 1988-90 are expected to average 28.9 billion dinars annually in July 1987 prices (US$48.6 million). Montenegro 7. The RO of Montenegro is responsible for a relatively small network of 1,722 km comprising 843 km of primary roads and 879 km of regional roads (Table 1). Over 20% of this network is gravel surfaced, including about 100 km of primary roads, many of which are carrying traffic volumes in excess of 400 vpd. Much of the primary network was completed during the 1970s with Bank assistance under the Seventh and Tenth Highway Projects and additional support was provided through an Earthquake Rehabilitation Loan for roads. Because of the recent age of much of the paved network, pavement condition is generally good, except along the older Adriatic Highway, the main primary route linking the coastal area with Titograd and the interior. The rehabilitation of this route is of high priority under the proposed investment plan for roads during the period through 1990. 8. The proposed road investment program in Montenegro during 1988-90 focusses upon a modest program of rehabilitation of roads and bridges in the primary network and urgent rehabilitation of an old 320 m. long bridge. The program is drawn from the projects identified in the highway master plan which was prepared under the Tenth Highway Project. High priority is being given to adequate maintenance expenditures which averaged US$ 3,000 per km in 1986/7 and would rise under the project to about US$4,050 per km by 1990 (Annex 3, Table 4). These are reasonable levels considering the average traffic volumes on primary and regional roads which are in the range of 1,500 to 2,000 vpd. Annex 2, Table 3, shows estimated expenditures on roads in Montenegro in 1986/7 and the proposed rehabilitation and maintenance program during 1988-90 and the supporting financing plan. Expenditures during the three year period are expected to average about 9.8 billion dinars annually in July 1987 prices (US$16.5 million) with the emphasis on rehabilitation and maintenance of the existing network. - 49 - ANNEX 2 Page 3 of 3 Kosovo 9. The RO of Kosovo is responsible for 571 km of primary roads and 1,194 km of regional roads more than half of which are gravel roads (Table 1). About 222 of the network has traffic volumes in excess of 3,000 vpd. Primary roads are 93% paved, while 62% of regional roads have modern pavement. Only 27% of the pavement is over 15 years old but much of the network shows signs of maintenance neglect, in particular shoulder widths in many places have deteriorated and pose serious traffic hazards. Improved routine maintenance is urgently needed. 10. The Bank's most recent participation in Kosovo was under the Tenth Highway Project (Loan 1678-YU) when a three-year program focussed on the construction and improvement of 148 km of inter-regional roads and 181 km of regional roads. Due to the shortage of local resources, 44 km of locally financed roads were deleted from the three-year program. However, urgent rehabilitation of three major bridges on the Titova Mitrovica-Ribarice section of the E-65 Adriatic Highway, was added to the program. The average estimated maintenance expenditures in 1986/7 were about US$2,500 per km and would be increased by 1990 to about US$4,700 per km. The rehabilitation budget in 1986/7 provided for rehabilitation of about 35 km of roads. Under the project, the level of rehabilitation would increase to some 50 to 70 km per year (Annex 3, Table 4). 11. The road investment program and financing plan for the period 1988-90 as well as estimated expefnditures in 1986/7 are shown in Annex 2, Table 4. Planned expenditures on new construction, rehabilitation and maintenance are expected to average about 9.0 billion dinars annually in July 1987 prices (US$15.2 million) with the main emphasis on rehabilitation and maintenance. Om 2 - so - 01190g.AVIA STAFF 8865158) ROM06 stem0 "lofty2 SECI PROJECT )nve,tseot Progr and fP in6oI4 Pio Province of Oovojdoas ForeIg toc9ihge 10*-OPsw.-... Total Total Amt i986 ~ oi?/ 108 too9 logo im"-I* tws.0 05$4 million (a) Iasetmot Program *d CaEooos A. ON820180 IRIESTIOTS 1. Eleventh Higbw!', Project (110) 14. 2. 018 11 (TYRl) 2.217 - . Sub-Toto1 086016 IIIISTIE8S 2.231 Physical ceotlogeocies. . Price Coettogmeos-- Sut-lotal INCL.UDING C0811I00RC161 2,731 - . 8. PROPOSED PO gm18 Loki 1. Ktozul-SatlocI - 22.000 16,687 - 16,68 28.0 40 21.3.!! 2. llehaOilitetieo - . 2,104 2.478 . 4,662 2.8 50 3.9 Sub-Total POOPOSE OR SW880 LO68 22,000 16.021 2,428 - 21,359 35.9 . 257 Physical Contlogenc lv't- 1,407 248 . ,13S 3.6 . 2.6 Price Cootiogeoces . 1,278 6,137 - 7,415 0.2 . 0, SubtTotal INCLUDING8. COPIXG8KC1ES 22.050 42,036 8,663 10,880 30.2 - 27.9 C. OTit 14OESTIE8TS 1. uriool-Croatia Border . 9,185 8,188 4,931 22,064 38.6 40 I0.4 2. Rehabl.lusotiool8etterment .6060 4,000 2,352 0,w5 6,29 18.104 32.3 so 16.2 Ottr costs 886 2,687 1,891 1,981 1,09 5,922 10.0 so 0.0 Sub-lotol 0O86 189S18681S 88 6,682 13,528 18,732 14,801 48,140 80,8 38.6 Physical Continganicits - - 1.15 1,873 1.488 4,014 0.1 3.2 Price Contingencies - . 15,254 48.886 82'm8 127.105 1.4 0.6 Sob-total IX61.0D186 COPI6806CICS 66 6,687 30,130 70,671 70,253 179,959 90.4 40,9 0. 8811IT681N(E AND0 OTHR 1. OOIUTEIA8CE 4,102 6,825 8,025 0,52 10,926 70,725 50.0 2. 1061NIST9AT10N 25 210 1SO 161 101 452 0.8 . 3. DEBT SERVICING foreign 3,853 8.850 6,986 7,190 7.590 22,148 37.2 110 37.2 Sob-Total ESOT SERVICING 3.853 8,960 6,986 7,186 7,80 22,140 37,2 27.7 Sob-Total MA1NTENANCE AND O11ER 12,60 8,900 18,081 12,241 19,076 62,377 68.0 17.2 Price Cootlioocles . - 18,484 38,816 73,28 128.582 1.4 0.6 Sob-Total INCLUINGl1 CMT1A8Cl0S 12,600 15.835 32,52S 56,067 92,367 180,106 09.4 37.8 E. E(8UIPWEU, TECHNICALASISTANCE68( T 18816N8 1. PLANNING CQUJIPIO8r 63 . 63 0.1 19D 0,1 2. TEONINCAI. A55I56A5 38 36 78 0.1 18.3 0,1 3. TRA11180 38 A6 78 0,1 18.3 0.1 Sub.-Total EQ6IPM8T. TECHNICAL1 A551 TM66 . 3 76 - 21-4 0,3 0.3 Price Coeclogecies - . 142 170 - 312 .- Sub-Total 1iL061.010 CTI80CI6S 281 246 - 527 0,3 Total 86A61.180 C051 15,787 44,62 46,608 30.526 33,850 122,000 20.2 99.3 Physical Contingencies . - 3,240 2,223 1,488 6.849 11.7 G.2 Price Contingencies 5 3,138 93,889 138,166 20.294 3.0 1,4 Total PR80 COSTS 1578 44,822 104,027 135,736 121,610 412,323 21.0, 10669 (b) Ploaancloo PI" 810 User Charg (fuel Tax) 10,512 70,25 38,237 46.001 104,748 211,476 106.6 Tolls 1,853 4.540 6,018 11.334 12,488 35,880 17.9 Tax0 a o6tn F ebIdeYcls 851 1,880 2,977 4.62a 7,646 15,185 7.8 Coazotieo 918 500 5,208 0.486 13,654 22,24 13,4 Joint Funds . 3,882 24.435 28,710 18,705 66,683 41.1 Foreign Credits 1,673 13.200 26,804 17,253 9,463 82,870 33.8 Total 1I0651T61 COSTS 16.787 44,822 104,877 135,736 171,610 412,323 2198 Rtat. Costs ISiattlm teo84 been developed fron Jlim 158 bas, costs. Price coeting04ieO hove been estimated ausmiog totemoational inflation rates of 38 inI M582 IS in 1088 and P en. d local inflation rates of 70 in 190* v. 450 In 1089 an 105. ,y loclodos eopsiituren on Knfli-Saoinci section In Voisodlo. darIng last Oharter of Of 108. 2/ Ctittsiltin toaled (roovt. $[nHStifOWAIO 60 I9840oflt P?OWa 14m Ftn10081 Plot: fresloco of NacedOlIla ~~welo ..1966840...,. Total Total Abolut 080 19W? 180 1989 189 1898.8 1WOW8 U0$ xi1IIio ............... D n ----------------- A. 081400IN l'8I 60 .340 E- . Smbobulh. M0I80 INV8ST1E6T1 1,340 . . Physicsl Contnllgencies .. - . . Price ContinenatcIies- . Sub-Tots) I0CL18119 C40NtIOMIICS 1.340 - 8, PROPOSED FOR &W LOAN I. Gre*.ko tesgolija . 4.740 4,740 . 9,481 13.9 so 8.0 2. Sko03e-Kice"o-Obrd 4,649 4.649 - 9,298 18.6 so 7.8 Sob-Total P8080100 FOR SW0 LOU - 838 9.320 . 18.780 31.6 18.8 PhIysical Cootin~rnIcet . - 9 m3 I .828 5.7 1.8 Price Contingencies 10.680 23.234 . 3384? 0.3 0.2 Sub-Totol 1110CL11I18 COOTI800CIOS - - 0.17 33,983 . 4.100 38,0 17.6 C. 0THER 1N8E316E11$ I. M1: SkOoPJ-Pet.onc - 3.484 - 3,494 3.8 so 2.9 7. Rehab6. Otbe sftiotle 1. 320 17,400 9.108 7,601 14,28 31,066 St.? so 20.1 S.b-Total OT608 1880S198913 1,330 l7,40 9,1to8 11.09 14,387 34.880 S8.1 4.0 PFltycal Ceottegencies 817 1,118 1,430 3.488 3.8 2.9 Price ContetIgmeoes . 13,338 27,472 40,471 88.233 1.1 O'S Sub-Total 1601.0016 CO9TIIE6CIES 7,32 17,400 .2044 39,88 26,144a 130,210 88.0 37.4 0. KMINT6AICE MI? 011106 1. 981818060 3,242 10,060 8.540 ,980D 8,800 28,140 47.3 - Z. 008161NS19T10 392 ,210 1,838 1,038 1,638 4,914 8,3 3. DE61 SERVC01C6 Local 60 20D 140 140 140 420 0.7 foreign 3,68 6,200 5,03 8,378 6,689 10.896 28.1 100 30.1 Sub-Yotat DE6T 80891C180 3,838 0,400 3,789 3,818 3,78 17,118 28.8 0.1I lob-total 68181084600 AIM OT110 8,392 20,780 18,87? 18."? 17.37 60.170 84.4 289.1 Price Cootlogoocies . 16,377 38,134 60,220 120. 773 1.3 0.4 Sub-TotAl INCLtUDING CONTINGENCIES 8,392 20,750 323,34 38,133 83,487 110,99 481.7 78.8 E. E00U86081, T00181C A1SSISTAIE I MIN81618 I. PL.0RI103 093184811 - 3 - 43 0.1 100 0.1 2. n0cntcoz. Ass:sroAt 38 38 78 0.1 100 0.1 3. T8A16198 38 38 78 0.1 100 0,1 Sob-Total EQUIP0., TEC1. ASS. & T16A1610 in - 13 70 214 0.3 0.3 Pr-ice Cotinencies~1 312 29 802 . Sob-Totat I601.081X8 OTII388Cl0S . . 41 304 817 0.3 0.3 Tot.1 BASEL1NE COSTS 8,232 38,180 34,838 37,840 31,609 103,738 174.3 73.7 0112.11.1 Coatlogoolos - 1,863 2,068 1,430 8,334 9,0 4.8 PrIc# Cvotratlg.cleo 37,306 89,218 128,928 283,481 2.7 1.1 TItol PROGR*1 COSTS 822 34.130 73,883 128,84 13,9687 382,810 184.0 78.6 (6) fioooclro 010o 8044 to. Cl.erg (F.e TaYU) 8,007 13,734 23.703 39,562 62,484 178,181 63.0 Tolls . 2,550 3.064 8.818 8,812 18,410 9.1 lo 0m Fweaigo Vehilces 1,238 3,20 8,053 8,678 12,20 21.848 13.8 0.0,0100*, loter,et1o Fund 1,313 11,08 18,003 32,248 30,402 6O6'w 42.8 Camuelties84 7,533 13,88 24,38 2,528 89,004 18.8 Fort 19 Crodfts ..J- 4392 J4043 15X12 40,88. U23. Sut,-1t4tl CREDITS 389 7,333 17.087 13.921 40,840 31,0 Intel 8,252 38.130 73,888 128,648 189.887 383.S10 18.0 Note. 0341, lsitlct km ban 60.1 406196 FroS ame. 1go7 6806 coOt,. price cotltllgenclao 661664 .1t1.ted asins1114 4ltrOtIemalw i61l*011 retail of is In 1088, 188 896 1900, .18 local toflolaic ratn of 708 1I. 1408l, 838 la 189 VW1 450 in18900. .0,1, 14 YUGOSLAVIA STAFF APPRAISAL REPORT SECONl HIGNiAY SECTOR PROJECT Investment Program and financing Plan. Republic of Intearo Foreign Exchange 1988-90-... Total total Amount 1986 1987 1988 199 1990 1988-90 1988-90 US11$ million .......... ...... ..._ ......... ....... ...... ....... -.... ......... .......... .......... . --.--. ---.------ Din million ---------------------- (a) Investnent Progra end Exgenses A. PROPOSED FOR 81SW LOAN 1. Kolasin-Serbian Border - 2,240 3.654 3.262 9,156 15.4 SO 7.7 2. Tara Bridge Rehabilitation - - 378 420 - 798 1.3 So 0.O Sub-Totel PROPOSED FOR 8B LOAU - 2,618 4,074 3,262 9,ff4 16.7 8.4 Physical Contingencies - - 262 407 326 995 1.7 0.8 Price Contingencies - - 2,992 10.089 13,785 26,827 0.3 0.1 Sub-Total INLUDING CTINUGElCIES 5 - S,832 14,571 17,373 37,776 18.7 9.3 8. OTNER INVESTIEMNTS I. Reh abilitation/Satterment 3,027 3.980 2,223 1.802 2,079 6.100 10.3 SO S.1 ___.... ._._... .-_____ ---- _..___.... Sub-Total OliER INVESTMENTS 3,027 3,980 2,223 1.802 2,075 6,100 10.3 S.1 Physical Contingencies - - 222 180 207 610 1.0 0.S Price Contingencias - - 2,507 4,462 8,768 19,737 0.? 0.1 Sub-Total INCLUDIr CONTINGERCIES 3,027 3,980 4,992 6,444 l,OSO 22,447 11.45 5.7 C. MINTENANCE AND OTHER 1. MIINTENANCE 2,060 4,950 3,729 3,837 4,148 11,711 19.7 - 2. ADNINISTMTIDN 107 2S6 189 195 199 582 1.0 - 3. DEBT SERVICtNG ........... ........... Local 778 960 876 1,070 1,261 3,207 5.4 . Foreign 2,922 S,900 9,389 9,125 4,977 15,491 26.0 100 26.0 Sub-Total DEBT SERVICING1 3,700 6,460 6,265 6,199 6,238 18,698 31.4 26.0 Sub-Total MINTENANCE AN0 OITER S,867 11,666 10,179 10,227 10,585 30,992 52.1 26.0 Price Contingencies - - 10,435 3,02s 40,667 74,127 0.8 0.4 Sub-Total INCLUDING CONTIIGENCIES S,867 11,666 20,614 33,262 51,292 105,119 92.9 26.4 0. EQUtIPINT, TECHNICAL ASSISTAWCE S TRAINING 1. PLANNING EQUIPIET - - 63 - 63 0.1 100 0.1 2. TECHNICtAL ASSISTANCE - 38 38 - 76 0.1 0D0 0.1 3. TRAINING - - 38 38 - 76 0.1 180 0.1 Sub-Total EQUIP., TECH. ASST. & TRAINING - - 139 76 - 214 J.3 0.3 Price Contingencies - 142 170 - 312 __ __.. ---- .. ....__ ...... ....__ ......__ __ _ Sub-Total INCLUDIN CONTINGENCIES - - 281 246 - 927 0.3 0.3 Total "ASELINE COSTS 8,894 15,646 15,159 16,178 19,922 47,260 79,4 39.8 Physical Contingencies - 484 588 534 1,609 2.7 1.3 Price Contingencies - - 16,036 37,742 63,220 117,003 1.3 0.6 Total PRO_R COSTS 8,894 19,6'6 31,679 54,913 79,675 165,868 83.4 41.7 __n. n...n .. . ._ .... ... . ._ . .f.fi *tf _...... _ (b) Financing Plan Road Uw Charge (Fuel Tax) 3,096 4,909 9,600 16,191 2S9324 S9,llS 25.5 COAnities 2,326 4,690 7,992 13,478 20,199 41,629 20.9 Fund for LOA 1,363 1,370 3,325 5,103 7,185 15,613 8.0 publicen Contribution 2,083 4,686 7,791 12,621 18,426 38,839 1.7 Foreign Credits 26 - 2,971 7,120 8,981 18,672 9.3 _.___ ____ __ __ ~..... ...____. ...... . ____ Totl INVESTIUNT COSTS 8,894 19,646 31,679 12,621 79,679 165,868 83.4 Nte Cost esttimtes have bean daeloped fre June 1987 base costs. Price contingencies have ben estimted essuning itrnational inflation rates of 1% in 1988, 1989 and 1990, and local inflation rates of 7Dt In 1988 and S% In 1989 and 45t I 1990. July 1se? -53- YU009LAIA StAff APPRAISAL IPA SECON 11Willy SETSP PROECT investment Program end Financing Plan:z Province of Kplov* foreign Euchange Total Total AmDui 1988 1987 1988 1689 199 1988.90 19818-90 II iS$ million 01) Invsetient ProVen and EgsoesO A. PROPMOS FOR RAlK LOU6 1. Doginovic4Kacanik 490 420 - 910 1.5 so 0.8 2. V. Slatinam-olac - - 1,680 798 840 3,318 9.8 s0 2.8 3. Leposavic-Jartine - . 812 728 - 1,940 2.6 so 1.3 4. Lebane Milosevo - 1,92 1.8 40 0.7 Sob-Total PROPOSEO FOR8 MU3 LOAN1. 4,07 1946 840 6,860 11.9 5.6 Physical Contingncies - * 407 194 84 686 1.2 0.8 Price Contiagenis . 4,594 4.819 3,590 12,963 0.1 0.1 Sub-Tota 1INCLUOINIO CONTINGENCIES is 907 6,960 4,474 ¶0,989 12.8 6.3 S. OThER INVESTMENTS I. Rehabilltation/Betterment 1,931 4,970 2,069 3,s19 3.93s 9,520 18.0 90 8.0 Sub-Total OTHER tNvEST1NTS 1,931 4,570 2,089 3.91 3,939 9,920 16.0 8.0 Physical Contingencies - 207 39 394 992 1.6 0.8 Price Contingentcies . - 2,333 8,706 16,631 27,670 0.3 0.? Sub-Total INCLUDING COiITIN6ENCtts 1.831 4,970 4.609 12.973 20,980 38,142 17.9 9.0 C. MAINTENANCE AND 0THER 1. MINTINANCE 1,513 4,240 3,039 3,039 3,035 9,106 19.3 2. ADNIIIISTIATIOI 100 390 277 271 277 832 1.4 3. DEBT SERVICING Locial 110 290 210 210 210 630 0.9 Foreign 1,422 3,740 2,678 2,590 2,437 7,664 13.1 100 13.1 Sob-Total O68T SERVICING 1,672 4,03 2,888 2,76 7,647 8.296 14,0 13.1 Sub-Total AINTENAW ANC D o3 11 3,185 4,030 8,201 2,073 9,960 18,234 30.7 13,1 Price Contingencies - - 6,396 13,673 22,896 42,925 0,9 0.2 Sub-TOta INCLUtNg COTIITIGNCIES 3,185 8,660 12,557 19,746 28,896 61,199 31.2 13.3 0. EQUIPIE3IT TECHNICAL ASSISTANCE & TPAININO I. PLANINGs EQuipl(N - 63 - . 63 0.1 100 0.1 2. TECNiRICA AssIsTANC .38 38 - 76 0.1 100 0.1 3, TRAINING 38 30 76 0.1 100 0.1 Sub-Tota EQUIP, 16E11. ASSt. & TRAINING I 3 76 - 214 0.3 0.3 Price Contingencies - 142 170 312 - Sob-Total INCI.UOINS ~~~TlhISENClES - - ~ 281 246 - 27 0.3 0.3 Total BASELINE COSTS 9,~~~~~6116 13,230 12,482 11,810 10,735 34,828 98.9 26.8 PAyical Contingencies - - 614 946 478 1,630 2.8 1.4 Price Contingenies . 3,429 27,389 43,077 83,871 0.9 0.4 Total P80O68 COSTS 9,116 13,230 26,S22 3,9.29 94,289 120,337 62.2 78,6 (b) Vinancino Plan Roa Use Cha" (Puel Tea) 2,329 9,200 10,382 17,902 27,371 99,296 27.6 Vehitle Registration Fee 102 420 72 1,215 1,837 3,793 1,9 Ta GOn Fareige Vehicle 430 1,350 2,264 3,801 6,026 12,081 6.0 0001blican Intervention Fund 1,192 11.310 4,420 5,96 3,694 13,881 7.9 Other 68 270 1,451 2,354 3,770 7,579 3.8 Credit* Local 199 1680 3,031 9,953 9,537 18,121 8.8 Foreign - 4,264 3,533 2,034 9.830 6,2 Sob-Total CREDITS 199 1680 .2,29 9,006 11,571 22,991 19,0 Total 9,119 13,230 26,522 39,529 94,20 120,337 62.2 ote: Coats eatimsates hav be develope fron June 196 ben costs. Price contingetnce hav been estlonted #%asseing i,tarnationl inflation, rates of IS in 1968, 1969, #Ad 198 and local inflation rate$ Of 7 01i 1988, 9 in 1989 and 49 1 inow9. July 1ts? - 54 - ANNEX 3 Page 1 of 7 YUGOSLAVIA STAFF APPRAISAL REPORT SECOND HIGHWAY SECTOR PROJECT Pilot Road Maintenance Planning System for the Republic of Croatia A. The Road System and its Maintenance 1. The road network of Croatia is made up as follows Motorways 199 km Magistral (primary) Roads 4,335 Regional Roads 9,263 Local Roads 13,228 Total 27,025 km Under Republic of Croatia Road Law No. 29 of 1984, responsibility is given to the Road Maintenance Enterprises (RMEs) for the following activities connected with the road network: inspection; maintenance; preservation of roads; traffic safety; technical administration; toll collection; preparation of technical documents; and making proposals for future maintenance activities. Guided by decisions of the General Assembly of the Republic of Croatia, the Republic Roads Assembly is responsible for making policy decisions relating to roads and for providing funds. The Roads Assembly has about 120 members representing groups having an interest in roads, such as transport and commercial enterprises, agricuAltural cooperatives, and professional and road user associations. The executive arm of the Roads Assembly is the Roads Organisation (RO), set up as a self managing community of interest to see that the decisions of the Assembly are carried out. Day-to-day contact between the Assembly and the RO is by means of executive boards. The Ministry of Transport, under the General Assembly, is responsible for inspection of the activities of the RO and of RMEs, and both are also subject to the normal government financial audit regulations. In addition, the eight regional and more than one hundred local assemblies have technical members who can, and do, subject the work of RO and RMEs to scrutiny to ensure that public and community funds are correctly used. 2. There are 13 RMEs in Croatia responsible for the maintenance of all primary, regional and local roads, unlike the other Republics and Provinces (except Slovenia), where local roads are maintained by local communities. There are also three special maintenance enterprises in Croatia, one responsible for motorway maintenance, one for maintenance of the Ucka Tunnel, and one for maintenance of the Krk Bridge. In Zagreb, SOUR Ceste Hrvatske is a technical association to provide coordination between all RMEs in Croatia. Each RME is thus responsible for the maintenance of about 2,000 km of roads. The typical RME is divided into - 55 - ANNEX 3 Page 2 of 7 three sections, and each section has four to six depots (stacionari), which maintains 100 to 150 km of road. Depots have a small staff of about 25 and some light equipment, tools and one or two trucks. Heavy equipment is held at section or RME headquarters. Details of the staff and equipment in Croatian RMEs is shown in Table 1 of this annex, and the administrative hierarchy is illustrated in Chart 1 of this annex. 3. The Regulations for the Maintenance and Preservation of Public Roads (1985) stipulates in detail what maintenance shall be done and its frequency. It also lays down how soon repair must be done after a failure appears, and the frequency of road inspections. Each year, RMEs submit estimates of funds required to carry out a work program for all classes of roads based on these maintenance norms. RO then compiles budget estimates from RME estimates, and calculates average 'per kilometer' rates of maintenance funding for different classes of roads (motorway and primary, regional, and local). The Republic Roads Assembly reviews the budget request and revises the amount, usually downwards, according to the funds available. Currently, 562 of the 'norm' rate has been allocated, and ROs per kilometer rate for the various road classes is reduced accordingly. 4. Since RMEs have a legal obligation to maintain roads under the Republic of Croatia Road Law No. 29 of 1984, if sufficient funds are not available for the purpose, RMEs are excused a part of their obligation according to set priorities which ensure that fixed costs and routine maintenance affecting road user safety are attended to first, and therefore other works such as those needed to prolong pavement life. Hence, the result of a continued shortage of road maintenance funds is that operations such as pavement strengthening to prevent failure, roadside drainage, and shoulder maintenance tend to be neglected. Also, small pavement failures may not be attended to until they become large enough to be a traffic hazard, when they are repaired, but at higher cost than need be. 5. Under the 1985 Regulations, all roads are inspected at least annually by the Ministry of Transport, RO and RMEs, and their condition is rated in a five point index, as follows: 1 - Good condition 2 - Satisfactory Condition 3 - Bearable condition 4 - Poor condition 5 - Unusable. Remedial action is recommended for each condition, varying according to traffic volumes. The Government's 1986 Road Maintenance Study reported road conditions as shown on Table 2 of this annex, but the most recent data indicate that at present, 5,386 km, or 40% of the primary and regional network, require resurfacing or rehabilitation, and this figure is growing by about 131 a year. Since 1982, only 3% o0 the backlog has been resurfaced or rehabilitated each year. This increasing backlog of untreated roads and the low level of maintenance funds is obviously cause for concern, and has given rise to the proposal to set up a maintenance management system in Croatia. - 56 - ANNEX 3 Page 3 of 7 6. If the full funding according to maintenance norms were provided, and if the network were in good condition, funds would, on the basis of local estimates, be sufficient for all routine maintenance and minimum periodic maintenance. However, the backlog of rehabilitation is now estimated to be about US$380 million, and the First Highway Sector Project has a target for Croatia of about US$100 million for rehabilitation over the period 1985 to 1989. Hence, about 252 of the backlog can be eliminated under the First Highway Sector Project, and improved maintenance management should help to eliminate the remainder over a number of years. B. The Objectives of a Maintenance Management System for Croatia 7. The primary objective is that maximum benefit should be obtained from the scarce funds available for road maintenance, and that a rational basis for determining the appropriate funding level and allocations should be established. It is the intention to develop a method for setting realistic maintenance norms for incorporation in the Regulations, say for a five year Plan period, so that norms are commensurate with the funds likely to be available for the period. This method would also indicate the most effective maintenance policy to be followed in respect of the criteria for maintenance, resurfacing and rehabilitation, and therefore also the basis for allocating funds by work categories and regions. The method proposed would also quantify the costs to the community (principally to road users) of reductions in the road maintenance funds provided. 8. A further objective is to improve the utilization of maintenance funds by the RMEs, by providing them with a means to decide priorities for work and to assist with preparation of their work program and in the management of resources. In order to achieve these objectives, reliable information is necessary, and a subsidiary objective is therefore to improve and strengthen the existing roads inventory and monitoring ability of RO in Croatia. C. Outline of the Proposed Scheme 9. Based on discussion with the RO, RMEs and the CEI, a two level scheme is proposed. At the Republic level, there would be a cential planning and information system for evaluating and setting the maintenance norms, funding levqls and funding allocations. At the RME level, there would be a maintenance management system, operated by the RME and drawing upon the central information system, for preparing annual work programs and for managing resources. An activity outline of the scheme is shown in Chart 2 of this annex, together with indications of the responsibility for, and frequency of each step. Details of the scheme are given in the following sections. Central Planning and Information System 10. The purpose of the central system is to optimize the overall maintenance policy of the republic, based on an evaluation of the condition of the network and the funds available. The maintenance policy would be prescribed in a set of pavement condition intervention levels and - 57 - hNNEX 3 Page 4 of 7 appropriate remedial actions dependent upon the class of road and traffic. The policy could thus form the basis for revision of the part of the Regulation governing maintenance norms, made in conjunction with long-term planning, such as the 5-year funding levels. The system would also indicate desirable funding levels and the social costs of reduced funding. 11. The primary component would be a network-policy analysis model, for which the World Bank's Highway Design and Maintenance Standards model (HDM-III) is proposed. The model evaluates the economic benefits of a maintenance strategy by a life-cycle simulation of pavement condition, maintenance costs, and savings in road user costs, for an array of strategies and road links. The model would be operated by a special unit in CEI with an initial staff of three. This unit would act on behalf c the RO in developing maintenance norms for proposal to the Republic Assembly in long-term planning. It would also act on behalf of the RME's annually in compiling the total annual program for approval by the RO. 12. A complementary information system would comprise a central data bank anid a service for special monitoring surveys of the network and other data collection. Both these would be based at the CEI in Zagreb, where the creation of a road inventory has already begun. The data bank would be accessible to other users such as the RMEs and the RO, and a network-system of communication, like that shown in Chart 3 of this annex, is a probable option if the district (RME) management system is microcomputer-based. Procurement is under way for the central computer that would operate both the planning model and the data bank. In ensuring a well designed system, consideration should be given to the quality and effectiveness of existing Road Maintenance management systems in other countries. In particular, the compatibility of a suitable system for micro-computer/mini/main frame utilization should be thoroughly examined as well as an assessment as to whether the main parameters work effectively in a similar environment. 13. A summary of data currently included in the inventory is given in Table 3 of this annex. The pavement condition and traffic flow records, which are time-variant data that will be collected approximately annually from monitoring surveys, would be stored differently in the new system to permit historical trends and maintenance effects to be evaluated. The present 5-class generalized index of pavement condition is inadequate for the network-policy analysis, and so additional data on roughness condition, and pavement strength would be collected through regular monitoring surveys with special equipment. The potential for adaptation of the existing index, and the scope of additional data needs is one of the first priorities of the study, since excessive data collection may cause unnecessarily high running costs. For example, it is recommended that pavement deflection tests (with a deflectograph) be limited to sample inventory measurements, and applied in detail only at Lne design investigation stage when a road section has been designated for rehabilitation. Roughness data are essential to the analysis, and additional equipment and international calibration procedures are to be implemented. Full axle loading spectrum data are to be collected by two transportable weigh-in-motion systems. Other traffic and accident data, collected by the Traffic Institute, will also be stored in the data bank. - 58 - ANNEX 3 Page 5 of 7 District Maintenance Management System 14. At the district level, the RMEs are responsible for road maintenance to the community assemblies in the Enterprise 'district'. For routine maintenance, the needs are identified through frequent inspections, and repair is managed by individual methods; it needs to be established whether or not any formal systemization (e.g., computerization) would improve the efficiency of the present methods. 15. Periodic maintenance needs however are based on the twice-yearly (or annual) official condition survey, from which data are processed largely by hand. The proposed system would provide for computer-assisted data processing, and the Maintenance Programming Model would analyze that data for the district-network, and prepare the annual work program proposal according to the current republic maintenance norms and funds allocations. The software for the data processing and Maintenance Programming models would need to be developed locally, though examples may be found elsewhere. Computerization, while desirable, is not essential, and manual processing alternatives could be developed. 16. A Resource Management model, which would assist the RME in preparing equipment, material and labor estimates, and assist in the general administration of deployment, maintenance, spares and performance of equipment, is a possible further feature of the district system. This model, and other possibilities such as financial management, are primarily software features which may be added to the system, as and when they are desired. 17. The district system therefore needs a flexible configuration, permitting greater or lesser degrees of computerization according to the needs of the individual RME. This will be an important consideration to be made during the course of developing the system. D. Scope of Work and Implementation Phases 18. It is anticipated that the systems would be developed in three phases and the objectives of each are outlined below. Detailed definition of the scope would be made in individual terms of reference prepared at the inception of each phase. Phase 1 19. General objective: An evaluation of the data currently available for the network, and a preliminary application of the proposed central planning model to evaluate present maintenance norms and tentative new norms. (a) Quantify the existing generalized (5-class) pavement condition classification of the network in physical measures, and evaluate its reliability for network analysis; - 59 - ANNEX 3 Page 6 of 7 (b) determine, using the current statistics of network condition quantified in physical measures, the optimum maintenance policy and funds allocation for the republican network under planned 1988 funding, and compare these against the current maintenance norms, and the optimum required level of funds; and (c) eva'luate and recommend, based on the above findings, the data collection procedures and scope of regular network monitoring that are appropriate to the needs of both the central planning system and a district management system. Phase II 20. General objective: The development of all elements of the central planning and information system and of the district regional management system, with procurement of equipment and pilot implementation of the system. (a) Evaluate and procure equipment for network monitoring, the central information system and pilot district management system (in accordance with Phase I recommendations); (b) complete development of a central road data bank, and collect data for a sample of the republican network under the new requirements of the central planning system (e.g., axle loading, roughness condition); (c) complete the development of the central planning system, and re-evaluate the maintenance norms and funding allocation for the republican network, using the completed system and sample data collected under (b), for possible application to the preparation of the 1989 program; (d) develop all elements of a district/regional management system to be operated by the Road Maintenance Enterprises, which would facilitate (i) the preparation of annual work programs in accordance with the norms set by central planning, (ii) the management of resources, and (iii) data processing. (it is envisaged that the system would ideally, but not necessarily operate on a microcomputer with suitable software for each function); (e) plan, and implement in a pilot region, the hardware for microcomputer-based system for a sample of RMEs, appropriate for the application of the district management system of (d) above, and compatible for the communication (and coordination) within the immediate financial or administrative region, and with the central data bank; - 60 - ANNEX 3 Page 7 of 7 (f) review the institutional framework of the planning process, including the organizational structures of the Central Road Organization, the Institutes and RMEs, with intention of maximizing the efficiency of the new planning and management systems; and (g) initiate the development of a bridge inventory-and management system. Phase III 21. General Objectives: Full implementation of the central planning and district management systems throughout the republic. (a) Implementation of the district/regional management system in all RMEs; (b) Extension of the network monitoring and central information system to full coverage of the republican network; (c) Formal implementation of the central planning system to determine (a) the maintenance norms which are to replace those laid down in the Regulations for the Maintenance and Preservation of Public Roads (1985). and (b) the funding allocations to construction, maintenance and rehabilitation, for each financial region. Timetable, Costs and Priorities 22. Estimated Estimated Timing Period Start End Phase I 9 months 4/87 12/87 Phase II 2-2.5 years 7/87 12/89 Phase III 1-2 years 7/89 12/90 23. Detailed costs of establishing and operating the system cannot at present be reliably estimated, since they will depend on the findings of Phase I. Costs of the necessary equipment have been included in the project estimates, and 60 man months of consultancy assistance have been included to cover Phases I and II. This is in addition to the services at present given by CEI to RO Croatia. 24. As normally used, HDM III, which is proposed as the means to determine the maintenance policies, will suggest a strategy based on minimum total travel cost over the life cycle. There is a possible conflict here with government policy in the past of giving priority to the safety of the road user, and these different points of view should be discussed and evaluated as far as possible during Phase I. Draft Terms of Reference for Phase I, the Preliminary Study oi Network Policy and Funding, are attached to this Annex as Appendix 1. 61 - ANNEX 3 - 61 - APPENDIX I Page 1 of 3 Pilot Road Maintenance Planning System in Croatia Phase I - Preliminary Study of Network Policy and Funding: Draft Terms of Reference A. Background 1. These terms cover Phase I of the development of a maintenance planning system for Croatia. Phase II will cover full development and pilot implementation of the system, and Phase III would complete the implementation. B. Objectives 2. The purpose of the first phase is to provide a quick preliminary evaluation of maintenance policy in Croatia for possible application in the 1988 program, and to facilitate the development under Phase II of the full management system by making a trial demonstration of the proposed central planning model and parts of the information system. Specific objectives include: (a) To quantify the existing generalized 5-class condition classification of the network in physical terms and evaluate its reliability for network analysis; (b) to determine, using current statistics of network condition quantified in piysical measures, the optimum maintenance policy and allocations for the Croatian network under planned 1988 funding, and to compare these with current maintenance norms and the unconstrained optimum level of funds; and (c) to facilitate Phase II by evaluating pilot tests of procedures and making final recommendations of the scope and procedures to be used for data collection in the proposed system. C. Scope of Work and Methodology 3. The work is to comprise the following components, with final details to be submitted in the Inception report: (a) Selection of two samples of the network; a primary sample of approximately 400 km total length of highway sections in one administrative region, providing approximately uniform sample sizes in each of the 5 condition classes and each of the 3 classes of road (main, regional and local); and a secondary sample of 50 to 100 km total length of road sections distributed uniformly in the 5 condition classes, and located in one or two administrative regions which differ distinctly from the region of the primary sample. - 62 - ANNEX 3 APPENDIX 1 Page 2 of 3 (b) physical measurement, on the sample sections, of roughness (using a Bump Integrator trailer calibrated in accordance with acceptable guidelines), surface condition (including separate measures of cracking, rut depth, patching and potholes), pavement strength (using a standardized deflection test) and other nominal pavement characteristics); (b) statistical evaluation of the 5 condition classes in terms of the physical measures, and testing for significant difference in the quantification of the classes across road class or region; (c) evaluation and development of final recommendations on the scope and procedures to be used for measuring pavement condition, road roughness, and pavement strength, under the proposed management system; (d) implementation of the Highway Design and Maintenance Standards model (HDM-III) and inception of a three-person unit for operating the model and implementing the network maintenance analysis; (e) preparation of input data for the HDM III model to represent the Croatian paved road network (based on the network samples, and available statistics of network condition, traffic and inventory); (f) formulation of, and analysis using the HDM-III model of, a variety of maintenance options as applied to the Croatian paved road network (for this pilot study, the analysis should include not less than 50 combinations of maintenance option and link-type); (g) comparative economic evaluation of the results from the HDM III analysis, reaching preliminary conclusions on the optimum set of maintenance strategies to be applied to the network under the funding levels proposed for 1988, on the comparison with current maintenance norms, and an the cptimum level of funding for 1988. D. Reporting and Timetable 4. Details of the final study plan and staffing, and initial progress should be presented in an inception report. A final report summarizing the results and conclusions should be presented within 9 months of contract effectiveness, and preferably by December 15, 1987. A preliminary timetable is attached. YUGOSLAVIA STAFF APPRAISAL REPORT SECOND HIGHWAY SECTOR PROJECT TENTATIVE WORK PROGRAM FOR PHASE I, 1987 PROJECT SCHEDULE (MONTH) I ITEM j JAN FEB 1 MAR APR J MAY J_JUN JUL |AUG | SEP L OCT | NOYV| DEC | I I I I I 1 I II I I I I CONTRACT PROPOSAL/SIGNING I I===== I I I I I I 1 I I |DETAILED PLANNING I I 1 . i I I I I I I I I ~I I I I I I I I I I I I I PREPARATION OF PRCEDURES I I I I I I I I I I I i ANO EQUIPMENT I I I ==== I I I 1 1 I I I l ~ ~ ~~I I I I I I I I I I I I I I I I I I I I I i I I I I |SELECTION OF SECTIONS 1 I I ======== 1 I I I I I I I ~~~~~I I I I I I I I I 1 I I> |EASUREMENTS I I I I = ====-= I I I I I I I I I I i I I I I I I I I I I ANALYSIS OF DATA I i I I i I ================ 1 I I I I I I I I I I i I I I I I | NETWORK ANALYSIS j I 1 ===== I 1 === I=== I=== I ======== I - INSTALL HDM III . . . ++ | I . I I I | - ESTABLISH 3-PERSON I I I I I I I I I I I AINALYSIS/ADVISORY UNIT I I I I I I I I I I I - PREPARE INPUTS I | . .. . I I z - CONDUCT ANALYSIS | I I I I I I I I | - I I Z mz - EVALUATE POLICIES | I I I I I I I+++++1 -'t w CL x IF I I I I I Io X W FINAL REPORT I I I I I | 12/15187 | I I I I I I I I I I I I I l I I I I I I I I I I I 1 1 1 April 1987 - 64 - ANNEX 3 Table 1 YUGOSLAVIA STAFF APPRAISAL REPORT SECOND HIGHWAY SECTOR PROJECT Road Maintenance Enterprises in Croatia: Staff and Equipment Staff Office staff in RME headquarters 390 Field staff 4,882 Total staff: 5,272 Equipment: No. held: Asphalt pavers 40 Asphalt mixer 28 Crushers no data Compressors 57 Rollers, various types 244 Graders 63 Loaders 88 Trucks 705 Light p.u. trucks no data Passenger cars no data Snow removal equipment 9 Scarce: 1986 study on Maintenance of Roads and Rehabilitation of Bridges, and mission estimates. - 65- ANNEX 3 Table 2 YUGO6AVIA STAFF APPRAISAL REPORT SECOND HIGHNAY SECTOR PROJECT Condition of Main and Regional Roads in CroatiA MAIN ROADS Pavement Type Condition / Total (kms) 1. 2. 3. 4. 5. Asphalt 397.3 964.8 1694.0 969.0 217.7 4243.7 Cement Concrete 23.0 23.0 Stone Setts 0.2 1.9 2.1 Broken Stone 7.5 11.5 7.5 66.5 Total Main Roads; 4335.3 REGIONAL ROADS Asphalt 262.2 1985.0 3278.3 1603.0 290.3 7418.8 Cement Concrete 5.0 5.0 Stone Setts 2.5 3.0 5.5 Broken Stone 13.5 129.0 100.5 1591.1 1834.1 Total Regional Roads: 9263.4 Total Main and Regional Road Network; 13598.7 Percent of network in each Condition: 4.8 21.8 37.8 19.8 15.8 lOO.O I/ Conditions defined as follows: 1. Good condition with no visible signs of failure. 2. Satisfactory condition with slight deformation or rutting. 3. Bearable condition, with failures reducing average speed by up to 15%. 4. Poor condition, with pronounced failures and speeds reduced by up to 30K. 5. Unusable, with widespread failures and speeds reduces by 50% or more. Source: 1986 study on Maintenance of Roads and Rehabilitation of Bridges. ANNEX 3 - 66 - Table 3 YUGOSLAVIA STAFF APPRAISAL REPORT SECOND HIGHWAY SECTOR PROJECT Summary of items currently included in Road Inventory Data Bank of Croatia The inventory comprises thirteen logical records as follows: 1. Road node network: route number and type, node numbers (geographical grid identification), section number and name, administrative location (republic to community levels), connections, junctions, section length. 2. Curvature: radius of curvature, transition curve clotoid parameter. 3. Levels: altitude (to 0.01 m precision, thence gradients). 4. Carriageway: usage type, in-section position. number of lanes, width. 5. Shoulder: type (shoulder, curb, ditch, channel) position, width. 6. Slope: type (cut, fill, ditch, wall), position, level and width differences. 7. Structures: type (culverts (2), bridge, viaduct, tunnel, gallery, underpass), construction (slab-top, beam, arch, pipe), material, length. 8. Equipment: station, type (railing, barrier, sign, bus station, fuel station, parking), position, type of traffic sign, value on sign). 9. Boundary: type (city, community, organization, association). 10. Installation: station, type (road, railway, electricity, telephone, gas, oil), position, subtype (local, regional, main, 1- or 2-track, etc.), level (above, at, or below terrain). 11. Visibility: station, position. 12. Pavement: station, type, years (of construction, rehabilitation and surfacing), deflect (type, position, area and severity), comment. 13. Traffic: station, count number, counter type, location name, annual average daily traffic, summer average daily traffic. Note: All records include node and section identification, and date of recording, in addition to the listed items. - 67 - ANNEX 3 Table 4 goAd Maiptenange And Rehabilitation Program TArar.os Average Budget Allocations per Kiloomter Estimated Estimated (June 128a gricesl moil 19^6 * 19|7 i2Q I=t i9 MaitennceProgramt Vojvodina: Diners 1.350.000 1.900.000 2.930.000 2.930.000 2.930,000 U05 3.380 3.190 4.920 4.920 4,920 Macedonia: Dinars 580.000 1.860.000 2.210.000 2.540.000 2.S40,000 USs 1,4S0 3.130 3,720 4.260 4.260 Montenegro: Dinars 1.200.000 1.800.000 2,160.000 2.230.000 2,410,000 US$ 3,000 3,030 3.640 3.750 4,050 Kosovo: Dinars 860.000 1,500.000 1.720.000 1.720,000 1.720,000 uS$ 2,150 2.520 2.890 2.890 2.890 Annual Program and Budget Allocations Estimated Estimated (June 1988 grices) Unit 11182 1112JIB1i1 Rehabilitat1On/ Vojvodina: KM 80 80 80 160 130 Oinars million 4.660 5.200 10.500 17,000 14.300 Macedonia: Km 50 140 200 180 180 Dinars million 2.700 12,900 18,600 16,700 14.300 Montenegro: Km so 50 60 50 SO Dinars million 3,000 3,200 4.800 s,900 5.300 Kosovo: Km 30 40 50 70 60 Dinars million 1.900 3.100 S0OSO 5.500 4.700 I/ Road Organizations under Project. Source: Road Organization and Mission estimates July 16. 1987 YUGOSLAVIA STAFF APPRAISAL REPORT Second Highway Sector Project General Assembly of the Republic of Croatia | Ministry of Ministry of Crocftia Roods ||Regionol Assemblies| Flnonce Transport Assembly | o & ssmle Financial Audit Inspection of Policy & of all Government activities of Finance Institutons RO. Annual inspection of road network with RO & RME's Executive C Boards CD Croatia Roads Organization Cii Eniern 13 Rood Mdintenonce Cinstite Zogmerhgb E-nterprlsr3s & 3 Specill Institute Zagreb | ~~~~~~~~~~~~Mdntenonce Enterprses Carry out design, Responsible for Inspection, investigation & maintenance. preservation, supervision of troffic safety, technical ti large works admlnlstration toll rl X collection, technicol I w documentoaion & informnaion of the maintenance program. Source: Misson. World Bank-31126:1 - 69 - ANNEX 3 Chart 2 YUGOSLAVIA STAFF APPRAISAL REPORT Second Highway Sector Project DECISION FRAMEWORK AND ACTIVITY FLOW FOR COMBINED CENTRAL PLANNING AND AREA MANAGEMEW SYSTEMS FOR ROAD MAINTENANCE MANAGEMENT IN CROATIA ftod Inv entoprt P Crlerlaorms'i' Condition Survey'o Set f3cla bs f ot Traftic Counh' 11 Republe Netwof2 I HDM-1eI roetwork Desirabl Strendgrd' 4oiicyMod k Mintdy Cosom Set Maintenance ro Funding inteaeentaon Con*aMnts' bt Cleuranormsg Managemen Laov urm equpen-t | Funds AJbokn 1g by berion &a Stegorvi a CondNotone t by RougShness' Strength' Prepa3re Annual worke Maintena nce nprogram' Programmingt D a) Rehabit311iouln Model b) Resurfocing c) RAine Mmintinrnce RoadIAdm1s Wr d an-I22 | Resouroe Nmpesd'maentcon management ¢ oorEupet Modei b Enterp.rise' etn is Notes Action by 'ReP3uix Government (with pbie Federol inputs) 2<>M"iiEtnearing Instrue. or Trdfti instwtu 'Road Malntenonce Enterprises3 ARood Administration World fiani-3111261 - 70 - ANNEX 3 Chart 3 YUGOSLAVIA STAFF APPRAISAL REPORT Second Highway Sector Project A PROPOSAL FOR LINKED-NETWORK SYSTEM OF MICROCOMPUTERS FOR MAINTENANCE PLANNING IN CROATIA RELATIONAL CHART OF ORGANIZATIONS AND COMPUTER HARDWARE RME RME CENTRAL PO RME RME LJ // PLANNING UNIT (HOM-III) SERVICE RME CEi t ORGANIZATIONS (INSTITUTES) " / \) ~~~~~NETWORK SURVEY RME ~ta TAFIC SURVEY j ~~~~~~~~RME RzMM RME> C |WRPRGA \ I REGION I APPLICATIONS MANAGEMETNT PACKAGES (SOFTWARE) Notes Action By RME &P 1) PR 0 Roads Organization of Croatia 2) RME - Road Maintenance Enterprise 3) CEI a Civil Engineering Institute. Zagreb 4) D - Microcomputer Terminal 5) - - Computer Network Unk Sources Civil Engineering Institute Proposal World Bank-31 126 3 - 71 - ANNEX 4 YUGOSLAVIA page 1 of 6 SECOND HIGHlAY SECTOR PROJECT Project Action Plan Objectives Activity Action Taken Action to be Taken Responsibility/Timing 1. Improve Investment Preparation of well balanced Prepared for Slovenia. Implementation with annual ROs and FARP; 1987-1989 Planning/Financial investment/maintenance Croatia, Serbia, and updating and review with Discipline through program to be updated Bosnia-Hercegovina under Bank. the end of the annually the First Highway Sector current five-year Project (Loan ?715-Yu) plan (1986-1990) Increase allocations for Agreement on overall Approval of investment and Republican/Provincial road rehabilitation and scope/content of investment financing plans by Governments and ROs; pavement strengthening and maintenance plans in Republics and Provinces. 9/87. four R/Ps. Plans were finalized at negotiations. Plans to be updated ROs, Republican/Prov. (Annex 2 - Tables 1 -4). annually and reviewed with Governments. Annually Average annual expenditure Bank and agreed work during period June- levels as fol'ows (June programs to be reflected November for 1988, 1989 1987 prices). in RO's annual budgets. and 1990. - Vojvodina. YO 37 billion of which 50 S for TYHN remainder for rehab. and maint. - Macedonia, YO 29 billion with emphasis on rehab. and maint. - Montenegro, YD 10 billion for rehab. and maint. - Kosovo, YD 9 billion for rehab. and maint. Authorities wish to give 13.6 dinars/liter now Improvement of priority Federal Govt., FARP, priority to 4,500 km E-route accruing from road user sections of TYH in ROs; 1987-93. network of comnon interest charges to provide Joint Slovenia, Croatia and to all R/Ps with main financing and counterpart Vojvodina (approx. 350 km) emphasis on completion of funds for TYH. during next 7 years. TYH (1170 km). - 72 - ANNEX 4 Page 2 of 6 ObJectives Activity Action Taken Action to be Taken ResponsibilitylTimina 1. (continued) Allocation of resources for joint financinq of TYH under First and Second Hiqhway Sector Projects and FIB III Loan. Increase allocation for road Agreement reached under Monitor development. ROs and FARP; lQR7-9n maintenance. First Huy. Sector Project Update information to increase maintenance annually. allocation in participa- tinq republics. Highway Maintenance Study. Traffic data and network RAs, Institutes and FARP First report completed, inventories to he used durina lPi(7. which outlines maintenance to define rehabilitation and rehabilitation needs. and maintenance needs. Specific tarqets for ROs; IlQ187 maintenance and rehabili- tation of network defined at appraisal (Annex 3, Table 4) Selection of road sections Aqreement reached on Bank Biddinq documents by ROs; q/lQ47. for Bank financing. participation in investment 9/1987 for first year proqrams. Feasibility program items. studies and detailed cost estimates available for most subprojects. Detailed designs reviewed by Bank. Preparations of sub-projects Methodologies agreed under Studies to consider ROs and FARP; l987-Qn. for inclusion in investment First Highway Sector appropriate ranqe of prograns. Project. alternatives and selection of optimal solution for all major investment plan items. The followinq proposed %ub-orojects to be investments in Macedonia prepared and selected and Monteteqro have been accordinq to aqreed deferred: Titov Veles - methodoloqy and criteria. Prilep, Bitola - Ohrid, Niksic By-pass. The criteria for Bank approval of sub-projects are (i) quality of ore- Daration acceptable; (ill ER at least lI; and (iii) implementation rat started before optimal year. ANNEX 4 Page 3 of 6 Objectives Acti'ity Action Taken Action to be Taken Responsibility/Timing 2. Road User Taxation Improve equity in recovery Road User Charges Study Implement recommendations. Federal Govt., of road infrastructure cost completed in 1981 Republics, ROs and FARP; from road users. Draft Social Compact on 1987-1990. roads (1986) which defines policy of cost recovery by road users. The Federal Government is Adjustments in road user Continue to monitor the FARP, Federal Government periodically increasing road charges over 18-month movement in the producer 1987-89. Commitment to user charges (RUC) contained period to July 1, 1987 pricei, index for adjust road user charqes in fuel prices consistent have provided overall industrial production. for inflation to be with the und.ertaking in the increase in revenue Maintain taxation levels reiterated in Federal letter of Development approximately in line with in real terms. Guarantee Aqreement. Policy, dated May 23, 1983 inflation. relating to SAL I ('.oan 2326-YU) and covenant in Fede-al Guarantee Agreement fo rirst Highway Sector Project. As of January 1987, over Contitwue to allocate road Republican/Provincial 95% of revenue from road user revenue primarily to Govts., FARP; 1987-89. user charge allocated to road expenditures. FARP road expenditures. to monitor allocation by R/Ps. Appropriate structure for Heavy vehicles do not cover Examine simplification FARP, road user taxes. their share of and harmonization of Republican/Provincial infrastructure costs. vehicles registration Governments, 1987-90. fees among R/Ps including ,estructuring charqes to reflect road infra- structure costs. Data provided by FARP on FARP to undertake analysis FARP; 1987-88. road user taxation include: of road user charqes as follows. - A sunmary of the proposals on road user taxation - estimate costs included in the new Social attributable to road use. Compact on Roads which is presently being considered - allocate these costs to by the Federal Executive the principal categories Council. of vehicles. - Existing fuel price - estimate total road user structure for gasoline and revenues accruing from diesel fuel. each vehicle category above general tax rate of - Structure of vehicle about 201. registration fees by type - compare revenue to - 74 - ANNEX 4 Page 4 of 6 Objectives Activity Action Taken Action to be Taken Responsibility/Timing of vehicle for each corresponding costs. republic. - detemine to what extent - Structure of taxes on tax structure should be foreign vehicles. changed and/or simplified. - Average level of road tolls - determine extent to which by type of vehicle per heavy vehicles do not kilometer for each cover their share of republic/province. infrastructure costs. - Total road fuel consumption by republic/province in 1985 (gasoline and diesel). - Number of vehicles registered in each republic/province by type of vehicle. - Estimate of total revenue in 1986 by republic/province for each of the above road user tax elements. - For each republic and province a breakdown of the road network by traffic range and road category/surface condition. 3. Increase efficiemcy Achieve g9eater efficiency Authorities recognize need Allocations to road ROs; 1987-90 of road mintenance. and better use of ,esources. to improve efficiency of maintenance to be road maintenance. increased progressively. Implement improved road maintenance strategies. Aqreement on pilot Preliminary evaluation of Croatia RO and maintenance planning intervention criteria and Institute; 1987 (to be program in Croatia. funding allocation for operational by May Croatia RO participated in Croatia network using HDM 1987). Bank HDM seminar in Model (Phase 1). November 1986. Draft TOR prepared and Set up simple management Croatia Road Institute; list of support equipment system for planning 1987/88 (to be defined. periodic maintenance operational for 1989 programs in Croatia (Phase program). 11). Several ROs establishing Road data base to be used ROs, FARP and road data base. Traffic to plan rehabilitation and Institutes; 1987-90 monitoring equipment maintenance works. procured under previous projects. - 75 - ANNEX 4 Page 5 of 6 Objectives Activity Action Taken Action to be Taken Responsibility/Timing Cmnplete procurement of ROs and FARP, 1987 equipment for traffic monitoring and road inventory purposes. Improve monitoring of road Croatia RO and Civil maintenance activities Engineerinq Institute; (quality and cost) and 1987-89. provide feedback to planning system. Road maintenance study - Review design FARP and Institutes began in May 1985. First standards particularly 1987-88 report defined overall for rehabilitation. maintenance and rehabilitation needs. - Examine possibility of FARP and Institutes Analysis to continue on introducing surface 1987-88 specific topics. dressing of lower traffic roads. - Extend experience of FARP, Institutes and PNS in Croatia to ROs; beqinning in 1989. other ROs. - Explore possibility of Croatia RO and FARP; competitive bidding 1987-89 for maintenance werks. 4. ImProve coordination Need to strengthen Agreement to include a Review need for additional FARP; 1987 and overall coordinating .ole of FARP in revised specific action staff and proceed with mnitoring. setting standards and program under project. recruitment including a uniform procedures. second economist, General action program for accountant, lawyer and two Reexenine FARPs terms of FARP included under First computer specialists. reference. FARP's Highway Sector Project. responsibilities should include. inter alia: (a) Review of annual and Feasibility study Review need to update 1974 FARP, Institutes; 1988 medium-term investment methodologies established feasibility study and maintenance plans under previous Bank methodology for new prepared by the projects. construction projects. individual road organizat on; Prepare new simplified methodology for (b) Collection of data on rehabilitation and FARP, Institutes; 1988 investments and pavement strengthening maintenance and (HOM type application). continuous monitoring of develogmerts in these areas; - 76 - ANNEX 4 Page 6 of 6 Objectives Activitj Action Taken Action to be Taken Responsibility/Timing (c) Analysis of road user charges and level of TYH Master Plan prepared in Update TYH Master Plan FARP, Institutes; 1487 infrastructure costs 1977. Study. covered by revenue from such charges; (d) Application and revision Prepare Master Plan for FARP, Institutes; 1988 of uniform design 4.500 km E-route priority standards in the network including Adriatic construction and Highway. maintenance of roads and all related structures; Nationwide toll study Monitor implementation of FARP, Institutes; prepared in 1982. toll system and level of 1987 - 90. (e) Application and periodic tolls. review of uniform standards and pricing for highway toll system; (f) Application of uniform Draft TOR to be prepared FARP, Bank; 10/1987 standards related to covering; improved highway safety; * Highway safety * Axle loading/pavement (g) Implementation of design. improved methodologies for technical and economic analysis of highway projects; and (h) Acting as fiscal agent FARP is establishing a Procurement of computer FARP. ROs; 1987 - 89. for the disbursement and nationwide road deta base. equipment under First repayment of foreign and Second Highway credits and maintaining Sector Projects. detailed records of expenditures on projects partly financed by foreign sources. Development of simple FARP, ROs and standardized systems by Institutes; 1988 each RO using micro-computer technology. Equipment to be provided under project. Agreement to monitor road Prepare and implement FARP, 1988 user taxation and make system for continuous recomnendations to Federal analysis and updatinq of Government. road costs and road user charges. S. Training Local and foreign seminars Agreement to focus traiaing Three-year program of FARP. Institutes; and conferences. on road maintenance needs. training to be prepared by 1987-90. FARP/ROs. Institutes to focus technical training on rehab1 itation/maintenance and pavement design. - 77 - ANNEX 6 YUGOSLAVIA STAFF APPPAISAL REPORT SECOH HIGHWAY SECTOR PROJECT tiuplemeftation Schedule IRESPONSI- FY387 I FY88 I - FY89 IFY90 FY 91 ACTIVITY BISITY * S§8............... ...9 I C _9__ Signature Gsovt./W8 aI I I Effectiveness jGovt./iI 0 I I Closing Date W18I I I I I I FIRST TRARCHE I I I I I I I I I VO.JVODINA I I I I I I I I I I I I I P.Q. Advertising IGovt. I Bid Period IGovt. j I xxIlx I I I I I I I I II I I Evaluation IGovt./we I I ixxxI I I I I I I I Award and M4obilization IContractor I I XXI I Construction. I I I I I I I I I I I I *Sacinci-Kuazmin IContractor ..... I....I....I....I....I...... I...... tMCEtlONIA: P.Q. Advertising Govt. I Bid Period Gsovt. I I I l=I I I I I I I I I I I Evaluation IGovt./WE * Award and Mobilization Contractor I I I I I Construction. * Skopje..Ohrid IContractor ..... .....I.....I....*~.. . . I..... .... • Gradsko-Gevgelia IContractor ...... ..... . .....I.... . I..I...... MMiTENEGRO;II I I I I I I I I I I P.Q. Advertising IGovt. I Bid Period Govt. ...... I I I I I I I Evaluation G6ovt./Wl .j I I I I I I Award and Mobilization IContractor I I I I I I I I I I I I I I I I Construction: *Kolasin-SrBorder II I I .... ............. ..........- *Tara Bridge Rehab. ......I ...... . I.....- I......I KOSOVO;II I I I I I I I II I I II P.Q. Advertising Govt. is I I I I I Bid Period Contractor II I . Evaluatio, IGovt./Wd .j I I I I I I Award and M4obilization IContractor I I I I I ConsteuctisnI I I I I I I I I I I I I I II * V. Sl4tina-Dolac IContractor ...... ..... ..... ........ I • Laposavic-Jarinje IContractor I I . I.......I... ... ... . . .I. ...... • Doganovic-Kaicanic jContractor I I ...j. I... ...........I • Lebane-Milosevo IContractor ......I .............. I I SECONO TRANCtIEI I I I I I I I I I I I I I I (ALL BORROWERS) I I I I I I I I I I I I I I Review with Bank IGovt./WB *SI I Approval Icovt./1 I I I I i I IIs Bid Period Contractor I I I I I I I I I I I I I I Evaluation IGovt./WB I I I I I I I I I I I I I Award and M4obilization Contractor I I I I I I I~ Rehab./Bettermxent I Contractor ...I..I I I .I. I..... .... TECHIICAL ASSISTANCE I I I I I I I I I I I I I Setting ups I Pilot Road mainten- II I I I I I I I I I I I I I I I ance Planning System I I I I I I in CroatiaII I I I I I II I I I I II finalize TOR IGovt./WB IxIXI Prepare Proposal jConsultant I XXI Recruit Consultants IGovt./lds I Ix I I I I II I I Executioni Phase I Consultanit I I X I I ( I-I I.....IIII Execution Phase It Consultant ......I ......-...I... g1......~ Execution Phase III IConsultant ...... I....I I....I .....I. . . ....... Scheduled ...... o Actual AxXIX 0 - 78 - Annex 6 Page 1 of 3 YUGOSLAVIA STAFF APPRAISAL REPORT SECOND HIGHWAY SECTOR PROJECT Related Documents and Data Available In the Proiect File A. General Reports and Studies on the Transport Sector 1. Yugoslavia: Development with Decentralization - World Bank Country Economic Report, 1975, Ch. 7, "Infrastructure-Transport," pp 166-178. 2. Guidelines for Highway Feasibility Studies, 1975, Vols 1 and 2, Dorsch Consult in association with Louis Berger, International, Inc. 3. Yugoslavia Transport Sector Memorandum (White Cover), April 1978. 4. Yugoslavia and the World Bank, Ch. 3, "Assistance to the Transporta- ti n Sector," pp 21-28, September 1979. 5. Road User Charges Study - Summary, CRO, Ljubljana, December 1981 6. Road User Charges Study, Updated Main Report (Serbo-Croatian), CRO, Ljubljana, December 1981. 7. Study of Tolls and Toll Facilities on TYR (Final Report), Belgrade Road Institute, March 1983. 8. Yugoslavia: Transport Sector Investment Review (White Cover), May 19, 1983. 9. Yugoslavia: Transport Sector Strategy Paper (Yellow Cover), February 16, 1984. B. General Reports and Studies Relating to the Project 1. Information on Trans-Yugoslav Highway Construction, Council of Republic and Provincial Roads Organizations, Ljubljana, April 1976. 2. General Study of Trans-Yugoslav Highway, 1st Report, Council of Republican and Provincial Road Organizations, Ljubljana, August 1977. 3. Research Study on the Development of Cargo Transportation between Europe and the Near East, Dorsch Consult consulting engineers, May 1977. 4. Study to Determine European Community Interest in the Construction of the InnViertel and Pyhrn Autobahn in Austria (partial transla- tion), Plana and Bisig, Hamburg 19?8. - 79 - ANNEX 6 Page 2 of 3 5. Pyhrn Autobahn Traffic Study (partial translation), Prof. G. Steierwald et al, Vienna 1981 6. Yugoslavia; Proposed Highway Sector Project - Foreign Exchange Component Civil Works, October 16, 1985. 7. The Study on Maintenance of Roads and Rehabilitation of Bridges on Road Network of Yugoslavia, Ist Report, May 1986. 8. The Study on Maintenance of Roads and Rehabilitation of Bridges on Road Network of Yugoslavia, 2nd Report, July 1986. 9. Socio-Economic Relations and Organizational Problems of the Yugoslav Highway Maintenance and Protection System, Mile Cvetanovski, Ph. D. Econ., SID, 1984. Self Management Community of Interest for Roads, Vojvodina: 10. Croatia Border-Sasinci, Feasibility Study, October 1986. 'I. Croatia Boruer-Sasinci, Annex 1, New Analysis of Future Traffic Prediction, November 1986. 12. Preliminary information for Assessment of Sections for Rehabilitation as per Second Sectoral Loan, February 1987. Self Management Community of Interest for Roads of Macedonia: 13. Skopje-Tetovo-Ohrid, Feasibility Study, October 1986. 14. Skopje-Tetovo-Ohrid, Annex 1, November 1986. 15. Skopje-Tetovo-Ohrid, Engineering Plans and Goods and Materials Information, 5 Volumes, March 1987. 16. Gradsko-Gevgelija, Feasibility Study, October 1986. 17. Gradsko-Gevgelija, Annex, November 1986 18. Gradsko-Gevgelija, Engineering Plans and Soils and Materials Information, 3 Volumes, December 1986. Self Management Community of Interest for Roads, Montenegro: 19. Rehabilitation Study of the Existing Adriatic Road on the part: Kolasin - Ivangrad-SRS Border and Reconstruction of the Bridge over the Tara River on the section Djurdjevic-Tara-Pljevlja, September 1986. - 80 - ANNEX 6 Page 3 of 3 20. Rehabilitation Study of the Existing Adriatic Road on the part: Kolasin - Ivangrad-SRS Border and Reconstruction of the Bridge over the Tara River on the section Djurdjevic-Tara-Pljevlja, Study Up-dating, January 1987. 21. Review of Construction and Rehabilitation of Adriatic Highway Stage 1 from Kolasin to Serbian Border, February 1987. 22. Klisuri-Kolasin, Structural Protection Works, ("Galeries"), Technical Documentation, 1985. 23. Kolasin-Ribarevina, Technical Solutions on the Pavement Rehabilitation, 3 Volumes plus Summary in English, June 1987. 24. Durdevica - Tara Bridge, Technical Documentation, 2 Volumes, January 1985. 25. Plasnice Bridge, Technical Documentation, May 1987. 26. Skakavac II Bridge, Technical Documentation, 2 Volumes, June 1987. Self Management Community of Interest for Roads, Kosovo: 27. Feasibility Study of Rehabilitation and Construction of Roads in SAP Kosovo, October 1986. M-2, Doganovic-Kacanik M-9, Velika Slatina-Dolac M-22.3, Leposavic -Jarinje R-120, Lebane-Milosevo 28. Feasibility Study of Rehabilitation and Construction of Roads in SAP Kosovo, Annex for Section of road R-120, Lebane-Milosevo, November 1986. 29. Lebane-Milosevo, Construction Drawings, Horizontal and Vertical Profiles and Construction Details, July 1979. - 81 - Table I YUGOSLAVIA STAFF APPRAISAL REPORT SECOND HIGHWAY SECTOR PROJECT Status of Highway Network Administered by 1/ Republican and Provincial Road Organizations - (km) 3,000 Poor 15 yrs Republic Paved Gravel Total vpd S Surface X age I Slovenia Primary 1,170 -- 1,170 783 67 158 14 1,060 91 Regional 2.825 872 3.697 237 6 1.240 44 63 Total 3,995 872 4,867 1,020 21 1,398 35 3,385 70 Croatia Primary 4,465 69 4,534 3,440 76 1,187 27 2,424 52 Regional 7,423 1.800 9,263 1.400 15 1.893 20 4,861 51 Total 11,888 1,909 13,797 4,840 35 3,080 23 7,285 51 Serbia Primary 3,307 57 3,364 2,000 59 1,550 47 1,C60 49 Regional 4.290 4.290 8,580 2.580 30 1.267 30 4,290 50 Total 7,597 4,347 11,944 4,580 38 2,817 37 5,940 5O Bosnia-Hercegovina Primary 3,360 293 3,653 1,620 44 850 25 1,015 28 Regional 1.950 1.900 3.850 100 3 450 23 550 14 Total 5,310 2,193 7.503 1,720 23 1,300 24 1,565 21 Montenegro Primary 743 100 843 240 28 135 18 528 63 Regional 574 305 879 100 11 242 42 360 41 Total 1,317 405 1,722 340 20 377 29 890 52 Vojvodina Primary 1,363 32 1,395 776 56 105 8 1,080 77 Regional 1.489 162 1.651 364 22 330 22 96 6 Total 2,852 194 3,046 1,140 37 435 1S 1,176 39 Macedonia Primary 796 171 967 563 58 219 28 615 64 Regional 1,853 1.041 2.896 633 22 690 37 1,886 65 Total 2,649 1,214 3,863 1,196 31 909 34 2,501 65 Kosovo Primary 530 41 571 323 57 58 11 161 28 Regional 744 450 1.194 70 6 323 43 317 27 Total 1,274 491 1,765 393 22 381 30 478 27 TOTAL 36,882 11,621 48,507 15,229 31 10,697 22 23,760 49 .s...... so..... ...ss... ....a.s.s ......55 . sss .. 1/ Excluding earth roads. Source: FARP, November 1986 - 82 - Table 2 YUGOSLAVIA STAFF APPRAISAL REPORT SECOND HIGHWAY SECTOR PROJECT Structure of Retail Prices of Gasoline and Diesel Fuel (December 1986 - Dinars per liter) --- Gasoline --- ------- Diesel 1/ ----- 86 Oct. 98 Oct. 0-1 D-2 D-3 1. Refinery price 66.052 73,918 61.633 60.846 60.152 2. Profit 8.231 9.225 7.661 7.559 7.471 3. Sales tax 49.947 50.776 36.365 36.603 36.533 4. Republic/Province Reserves 3.733 3.773 1.818 1.838 1.851 5. Road User Charge 36.283 36.271 27.196 27.364 27.602 a) Road maintenance 12.785 12.550 12.696 12.864 13.102 b) Withdrawal foreign loans 10.000 10.000 5.000 5.000 5.000 c) Repayment foreign loans 6.500 6.721 2.500 2.500 2.500 d) TYH construction 7.000 7.000 7.000 7.000 7.000 6. Foreign exchange risk in oil industry 13.150 12.000 7.300 7.200 7.200 7. Support export industries 39.651 44.787 41.926 41.683 41.470 8. Search for crude oil services 6.751 8.090 6.901 6.708 6.519 9. Support coal mining 1.200 1.200 1,200 1.200 1.200 Retail price 225.0 240.0 192O0 191.0 190.0 1/ Three grades of diesel fuel. Source: Federal Committee for Transport and Communications March 1987 - 83 - Table 3 YUGO9LAVIA STAFF APPRAISAL REPORT SECOND HIGHWAY SECTOR PROJECT EquipMent Available for Maintenance of the Road Network. Bosnia* Kosovo Vojvodina _erceovina Monteneoro Croatid Macedonia Slovenia Serbia Prov. Province Total Asphalt Pavers 17 n.a. 40 n.a. n.a. 35 n.a. n.a. 92* Asphalt Mixers 16 3 28 4 nil 27 2 8 88 Crushing Equipment 12 3 n.a. nil 2 .2 1 1 31* Compressors 19 5 57 4 10 32 1 22 150 Rollers 126 6 244 24 62 n.a 8 45 515 Graders 44 6 63 6 23 57 5 10 214 Loaders 64 13 88 14 31 113 4 5 332 T.-ucks 337 40 705 80 337 709 29 31 2268 Light Vehicles 119 39 n.a. 35 47 n.a. 10 58 307* Cars 45 10 n.a. 30 103 n.a. 5 40 233* Snow Removal Equipment 3 25 9 5 27 n.a. 4 3 76* Sign making Equipment 6 1 n.a. 6 15 17 1 6 52* n.a.- no data available * - incomplete total. Source: Government Study on Maintenance of Roads and Rehabilitation of Bridges, July 1986, Table 4. - 84 - Table 4 YUGOSLAVIA STAFF APPRAISAL REPORT SECOND HIGHWAY SECTOR PROJECT Road Maintenance and Toll Equipment - Cost Estimates Estimated Unit Total Cost Description Units Price (US$) (US$) 1 2 3 4 _ - 1. Equipment for removal of corroded or damaged concrete areas 1 400,000 400,000 2. Equipment for bridge structure inspection 1 500,000 500,000 3. Surface retexturing machine 2 35,000 70,000 4. Asphalt cutter, 100 cms width 3 90,000 270,000 5. Axle load weighing scale 5 15,000 75,000 6. Heavy duty Tractor with Power Take-off 16 50,000 800,000 7. Arm with mowing attachment 14 22,000 308,000 8. Arm with ditch clearing attachment 10 25,000 250,000 9. Rotary mowing machine 4 15,000 60,000 10. Road surface brush 16 7,000 112,000 11. Tunnel lining washing brush 1 20,000 20,000 12. Traffic signal and guardrail washing brush 4 15,000 60,000 13. Rotary salt distributor 12 10,000 120,000 14. Snow plough 12 5,000 60,000 15. Rotary Snow Plough Attachment 4 25,000 100,000 16. Rotary Plough Attachment for Road Shoulders 2 40,000 80,000 17. Garbage cleaner 5 4,000 20,000 18. Asphalt cutter Equipment for automatic toll system on the Zagreb-Luzani highway 1 60,000 60,000 19. Control station 4 75,000 300,000 20. Equipment for exit lane 12 40,000 480,000 21. Equipment for entrance lane 10 22,000 220,000 Sub-total: US$4,365,000 Spares for above 435,000 TOTAL US$4,800,000 Note: 1.2. Items 7 through 17 are attachments for Item 6, and to complement similar equipment already in the fleet. Source: Estimates from Croatia RO. -85- Table 5 YUGOSLAVIA STAFF APPRAISAL REPORT OF A SECOND HIGHWAY SECTOR PROJECT Road and Pavement Monitoring - Equipment Cost Estimates 1. Croatia Road Organization Us$ Roughness calibration profilers 2 no. 14,000 Vehicle for roughness and skid resistance measurement 100,000 Sensor for roughness survey 40,000 Skid resistance survey equipment 80,000 Data processor for Lacroix Deflectograph 16,000 Transportable weigh-in-motion device for axle load surveys, 2 no. 70,000 Bridge inspection vehicle 120,000 Microcomputer hardware, 6 no. 120,000 Repairs and spares for existing equipment 70,000 Spares and consumable items for new equipment 70,000 Total for Croatia: 700,000 2. Equipment to FARP and the Road Organizations of Voivodina, Macedonia, Montenegro and Kosovo to commence data collection US$ 400,000 Total: US$ 1,100,000 Source: Mission Estimates - 86 - Table 6 YUGOSLAVIA STAFF APPRAISAL REPORT SECOND HIGHWAY SECTOR PROJECT Highway Design Standards PRIMARY ROADS REGIONAL ROADS Type of Moun- Moun- Terrain Unit Flat Hilly tainous Flat Hilly tainous Design Speed km/hr 100- 100- 80- 80- 80- 40- 120 120 100 100 100 80 Maximum gradient X 2.0 6.0 9.0 2 6 9 Road Width m lx7.5- lx7.5- x1.5- lx7.5 1x7.0 1x6.0 (min.) 2x7.5 2x7.5 2x6.0 Width of Emergency Lane m 2.5 2.5 Width of Shoulder m 2x1.3 2x1.3 2x1.05 2x1.3 2x1.3 2x1.05 Horizontal Curves m 450 450 250 250 250 45 minimum 750 750 450 450 450 250 Vertical Curves Summits m 12,000 12,000 7,000 7,000 7,000 3,000 minimum Sags m 8,000 8,000 5,000 5,000 5,000 2,000 minimum Maximum Single Axle Load Ton 10 10 10 10 10 10 Type of Wear- ing Surface - Asphalt/ Asphalt/ Asphalt/ Asphalt/ Asphalt/ Asphalt/ Concrete Concrete Concrete Concrete Concrete Surface Surface Surface dressing dressing dressing Structures - designed in compliance with DIN 1072 standard. - 87 - TABLE 7 YUGOSLAVIA STAFF APPRAISAL REPORT OF SECOND HIGHWAY SECTOR PROJECT Disbursement Schedule IBRD Fiscal Year Cumulative Disbursements and End of Quarter at End of Quarter (US$m Equivalent) FY88 December 31, 1987 6.0 March 31, 1988 12.9 June 30, 1988 19.8 FY89 September 30, 1988 26.7 December 31, 1988 33.5 March 31, 1989 38.2 June 30, 1989 42.9 FY90 September 30, 1989 47.6 December 31, 1989 52.3 March 31, 1990 55 * 2 June 30, 1990 58.2 FY91 September 30, 1990 61.1 December 31, 1990 64.0 March 31, 1991 66.0 June 30, 1991 66.5 FY92 67.0 September 30, 1991 67.5 December 31, 1991 68.0 July 1987 - 88 - TABLE 8 YUGOSLAVIA STAFF APPRAISAL REPORT Of SECOND HIGHWAY SECTOR PROJECT Characteristics of Road Sections Proposed for Rank-financing 1/ 3/ 4/ Type of 1985 Traffic (ADT) Opening VOC 21 Construction Cost Economic Road Section Improvement Pass.Car Buses Truck Total Year Reductions Total Per Km Return 1 -- US$ m--- Vojvodina Kuzmin-Sasinci; 4-lane limited (30.8 km) access 7,080 500 4,420 12,000 1990 13% 50.0 1.6? 15 Macedonia Gradsko-Gevgelia- TYH (83.8 km): Gradsko-Negot i no (16.0 km) Rehabilitation 2,040 130 1,430 3,600 1989 14% 2.6 0.16 26 Negotino-Demir Kapija (16.8 km) Rehabilitation 2,970 140 1,090 4,200 1989 14% 3.2 0.19 ?8 Demir Kapija-Udovo (22.4 km) Rehabilitation 1,800 100 1,050 2,950 1989 14% 4.5 0.20 26 Udovo-Gevgel ia (28.6 km) Rehabilitation 2,200 140 1,660 4,000 1989 14% 4,8 0.17 30 Skopie.Ohrid (93.7 km): Skopje-Tetovo (3S.S km) Rehabilitation 2,400 290 1,760 4,450 1989 11% 5.3 0.15 29 Gostivar-Kicevo (42.8 km) Rehabilitation 1.200 170 680 2,050 1989 14% 7.4 0.17 27 Kicevo-Ohrid (15.3 km) Rehabilitation 800 90 S10 1,400 1989 12% 2.1 0.14 25 Montenegro Kolasin-Serbia- Border (122 km):i' KolasiI-Ribarevina (43.6 km) Rehabilitation 3,770 210 1,075 5,055 1989 9% ?.6 0.12 SO Ribarevina- Ivangrad (28 Im) Rehabilitation 1,130 240 1,140 2,510 1989 8% 5.9 0.22 ?7 ivangrad-Serbia Border (50.4 km) Rehabilitation 870 120 420 1,420 1989 9% 6.0 0.18 ?R Tara-Durdevica Bridge (360 dq)& Rehabilitation 390 35 230 655 1989 34% 1.3 n.a. 1S Kosovo V. Slatina-Dolac (35.2 km) Rehabilitation 3,350 205 1,250 4,800 1989 14% 5.3 0.15 31 Lapostvic-Jarinje (19.2 km) Rehabilitation 2,000 230 930 3,160 1989 14% 2.4 0.13 29 Doganovic-Kacani k (9.3 km) Rehabilitation 3,750 330 1,650 5,730 1988 14% 1.4 0.16 35 Lebane-Milosevo (S.4 kA) Upgrading/New Existing Traffic Bypass 2'45 50 95 390 1988 n.a. 1.7 0.34 61 Diverted Traffic 7' 920 220 460 1,600 Total 1,165 270 5-5S 1,990 Overall Ecoonmic Return 23 1/ Traffic increased on most routes by about 5% annually in 1985 and 1986; annual traffic growth rates: 4% 1986-90; 3% from 1991; foreign traffic on THY assumed to increase at 7% annually. 2/ Vehicle operating cost reductions in opening year. 3/ Excluding physical and price contingencies. 4/ Excluding induced traffic; time savings generally represent 10% to 15% of benefits on rehabilitation sections. 6/ Preliminary estimates of scope of rehabiltation on each subsection. 6/ Benefits based on avoided congestion related to operation of existing bridge. 7/ Traffic uh1ch would be diverted to new facility (19 km distance savings for through traffic). Source: Road Organizations and mission estimates. tbx~~~~~~~~~~~~~~~~~~~S o F N^ fA tqORWA( AtSlo(kholm 0 A .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.,g A Copenhager, * U S S R , U N IT t r&* @: MAMo Y BCGdSLAVIA \ C MONAd,O I P r o . M AR4lB.N GAR AA V4go I- AA7r4 iTALY / 0 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~A. aG Ag0tAS D>sor rl7n o' _UGAf 0 / , 0 Bo TiraneA 0. |Serrt t '- 5 /tA ooa*Ahn ~~~~Mo&rd Bar~~~~~~~~~~~~~A BNA *°~ 0Gronoda Algrers, 0 Numle Rrrgben 4;SPAINOnfnlre PORTUGALn *o, 0 > S \M4tTA CR01r CosobbIorso~ * .kse°,2*s ; \ \ f i M < kM 1 Trolh - ir P A I N mew~~~~~~~~~~~~1"OI Abad ,J Co,dobo, 0Ahcome Pale-00.~~~~)* Malogo~~NKBe.gs IBRD 17933R QSer n8nd 40 S0' 800 ELUROPEAN TRANSPORT NETWORK Main atterial routes between westerr, onld central Europe the Balkans and miadle East Major highwO3ys Malor railroads Major r,vers mosco9 £* A4rports Ports 01 pipelines . EElevation above 1000 rmeters 600 500 400 300 20( 100 0 0 100 200 300 400 '/ ~ ~ ~ ~~~~<77IT '' ;°°+7¸'-'~ APv} MILES KILOMETERS Kt'o.kkr :Ths,$ap -has been ivetJsped t it, rho tblstd fV* s si# existrvei 1 thE Cor, asvee ot the Wrede's and,s ea,sr. o Ste it ernel use of The Wold Se* end rhe NWetnSt rm-e C"rpotPoDn The dwenoenmatOns sd SWd t bda.e, ts sho*n on rhs mop do not °nepopets.ss itteS on ohe pert of The hted Ban end Mthe 1ettelon f&IS e rCs,to,poStn 5xV rQnlt eo the 1ie st tus 0l ant teItory or fary endorse f of sicceptarsa of such br crd*les 'I~~~~~~~~~~~~~~~~~~~~~Q gosto. Os~~~~~~~~~~~~~ ,'t Odesso ' ' i Kiosnodo, , - , N~~~~~~~ A,st,~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~sS., sese ~~~,om. ue . \ 4'Jorno ~ ~ ~ (re% USSR ,YPRU5 -to0 5 R ~~~~~,.> s*Mebi u; F9 -, y-! ' '%i~ts "' ~ 5~ YiAN / S A Ml, RFPuBUIC Btse ' RAREUBl OF , D s - S R A N A1t$fl i (AB1 -3 IPA Z - To1lAv," setn, APRIL 1985 14. 1Iv ' - A U ST RI A 2 44' '~~IE-Splt ;- NOc Y U G O S L A V I A ~ krktso.¢ SECOND HIGHWAY K.d e>= 0- i SECTOR PROJECT Kdte< }! Project: ;_ >~ - Proposed TYH Sections < . ....c. Other Sections br.k Bridge C Pilot Road Maintenance Management System (Crootia) European Highways Other Class I Highways .;a -- Completed Sections of TYH EIB, TYH Projecfs First Highwoy Sector Project a-~~~~~~~~~~~~~~~~~~~~~~~~~. I Trans Yugosloyia Highwoy Corridor - Roilwoay wl ' ,,OA,, I&t,,,s v Boundaries of Republics and Autonomous Provinces W-, cd MetU f.a, International Boundaries ..d . tl W. b% 4 + Airpo0rts W 1 ofW"SO we 9 Ports fia1 20 10 to 0 S0 r 70 4a s%' W c Rivsers bIOt£S' '°* t 14- t' IBRD 20377R / b ~~~~~~~~~l.: St R.t H u N G A R Y / y \,_t >R OM AN IA; o~~~~~~W 3t Z, seN~~~~~~~~~~~~~~~~~~~~~~~~~( Al *}{s5i t1 Ai ,4,,4 sosos 3R O M A N I A ' ,f t rkCJ 1b . < 4 s : T~~~~~~~~~~~~~~~~~~~~~~ A y ,5N WNtwoc \ as-e]HS ) 1, .i b~~~~~~~~~~~~LBANIZ- o tf 5 [ \ ; + \ X 4 5 5 ~~~~~~~~~~~~~~~~GREECE i7 N O V~~~~~~~~OI SAD $ 5 t2- I \s *tko.Polodko ( V tt A kv1a /VfSoInd. 2W(^c v.ore . , $ sc ( o l a5 < ts^sire } ) a; ') K } ¢ l ~ jY .. 'di Dubstali tX \ < J s_ X S > sEt4< t 7REECE /