AFRICAN DEVELOPMENT BANK Language : English Original … · african development bank language :...

52
AFRICAN DEVELOPMENT BANK Language : English Original : English APPRAISAL REPORT MBABANE BYPASS ROAD PROJECT (TWO INTERNATIONAL ROADS PROJECT PHASE 2) KINGDOM OF SWAZILAND INFRASTRUCTURE DEPARTMENT October, 2003 NORTH, EAST & SOUTH REGION

Transcript of AFRICAN DEVELOPMENT BANK Language : English Original … · african development bank language :...

AFRICAN DEVELOPMENT BANK

Language : English Original : English

APPRAISAL REPORT

MBABANE BYPASS ROAD PROJECT

(TWO INTERNATIONAL ROADS PROJECT PHASE 2)

KINGDOM OF SWAZILAND

INFRASTRUCTURE DEPARTMENT October, 2003 NORTH, EAST & SOUTH REGION

TABLE OF CONTENTS Page

PROJECT INFORMATION SHEET, CURRENCY AND MEASURES, LIST OF ABBREVIATIONS, LIST OF TABLES, LIST OF ANNEXES, EXECUTIVE SUMMARY, PROJECT MATRIX (i-viii)

1. ORIGIN AND HISTORY OF THE PROJECT 1 2. THE TRANSPORT SECTOR 2 2.1 The Transport System 2 2.2 Transport Policy, Planning and Coordination 2 3. THE ROAD SUB-SECTOR 4 3.1 The Road Network, Vehicle Fleet and Traffic 4 3.2 The Road Transport Industry 4 3.3 Road Administration and Training 5 3.4 Road Planning and Financing 6 3.5 Road Engineering and Construction 7 3.6 Road Maintenance 8 4. THE PROJECT 11 4.1 Project Concept and Rationale 11 4.2 Project Area and Beneficiaries 12 4.3 Strategic Context 13 4.4 Project Objective 14 4.5 Project Description 14 4.6 Environmental Impact 15 4.7 Project Costs 16 4.8 Sources of Financing and Expenditure Schedule 16 5. PROJECT IMPLEMENTATION 18 5.1 Executing Agency 18 5.2 Institutional Arrangements 18 5.3 Supervision and Implementation Schedules 18 5.4 Procurement Arrangements 19 5.5 Disbursement Arrangements 21 5.6 Monitoring and Evaluation 21 5.7 Financial Reporting and Auditing 21 5.8 Aid Coordination 21 6. PROJECT SUSTAINABILITY AND RISKS 22 6.1 Recurrent Costs 22 6.2 Project Sustainability 22 6.3 Critical Risks and Mitigating Measures 22

7. PROJECT BENEFITS 23 7.1 Economic Analysis 23 7.2 Sensitivity Analysis 25 7.3 Social Impact 25 8. CONCLUSION AND RECOMMENDATION 27 8.1 Conclusions 27 8.2 Recommendations 27 ---------------------------------------------------------------------------------------------------------------- This report has been prepared by Messrs. H. Nyame-Mensah (Chief Transport Economist), S. B. Turay (Principal Transport Engineer), W. Soliman (Principal Environmentalist) and T. Fadayomi (Principal Socio-Economist) following an appraisal mission to Swaziland in September 2002. The project was re-appraised in April 2003, and updated in July 2003. Any matters relating to this report may be referred to the authors or Mr. J. Rwamabuga, (Manager, ONIN.3 ext. 2181) ---------------------------------------------------------------------------------------------------------------

i THE AFRICAN DEVELOPMENT BANK

TEMPORARY RELOCATION AGENCY (ATR) ANGLE DES TROIS RUES: AVENUE DE GHANA,

RUE PIERRE DE COUBERTIN, RUE HEDI B.P. 323 - 1002 TUNIS BELVEDERE

TUNISIA Tel: (216-71) 832 713

FAX: (216-71) 333 680/ 253 304

PROJECT INFORMATION SHEET The information given below is intended to provide some guidance to prospective suppliers, contractors, consultants and all persons interested in the procurement of goods, works and services for projects approved by the Board of Directors of the Bank Group. More details and guidance should be obtained from the Executing Agency of the Borrower. 1. COUNTRY - Kingdom of Swaziland 2. PROJECT TITLE - Mbabane Bypass Road Project (Two International Roads Project Phase 2) 3. LOCATION - Hhohho Region 4. BORROWER - Government of the Kingdom of Swaziland 5. EXECUTING AGENCY - Roads Department Ministry of Public Works and Transport, P.O. Box 58 Mbabane, Swaziland Tel: (268) 404-2321 Fax: (268) 404-2364 6. PROJECT DESCRIPTION - The project consists of:

a) Upgrading 5-km of existing two-lane paved road and construction of 6-km road to 50-mm thick asphalt concrete dual carriageway (2x7.0-m lanes per direction) and 2.0-meter wide paved shoulder on each side of the Mbabane Bypass (total length 11 km);

b) Consultant services for the

supervision on the above civil works; and

c) Project audit services.

7. TOTAL COST: - ZAR 463.45 million Foreign - ZAR 373.68 million Local - ZAR 89.77 million

ii

8. ADB LOAN - ZAR 373.68 million 9. OTHER SOURCES OF FINANCE

Government of Kingdom of Swaziland - ZAR 89.77 million 10. DATE OF APPROVAL - December 2003 11. EST. STARTING DATE OF PROJECT: - Civil Works, AND DURATION Jan. 2004, 24 months 12. PROCUREMENT: International Competitive Bidding (ICB) for the civil works using Advance

Procurement Action (APA) and pre-qualification of contractors from member countries of the ADB Group in accordance with the Bank’s ‘Rules of Procedure for Procurement of Goods and Works.’

13. CONSULTING SERVICES REQUIRED AND STAGE OF SELECTION:

Consultancy services will be required for the supervision of civil works and project auditing. Procurement will be in accordance with Bank’s ‘Rules of Procedure for Use of Consultants’. The selection of the supervision consultant will be through retention of the consultant that updated the feasibility study, prepared the detailed engineering designs, currently undertaking the pre-contract services for pre-qualification and tendering; as well as supervising the Mbabane-Ngwenya road of the on-going Two International Roads Project (Phase 1). The procedure for evaluation and selection of the audit firm will be based on comparability of technical proposals and least cost consideration. The contract would be for one year with renewable option for retaining the same consultant for auditing the project during implementation.

iii

EQUIVALENTS AND ABBREVIATIONS CURRENCY EQUIVALENTS (May 2003 Exchange Rates)

UA 1.0 = ZAR (or SZL) 10.0472 UA 1.0 = USD 1.38391

WEIGHTS AND MEASURES

1.00 meter (m) = 3.281 ft. 1.00 kilometre (km) = 0.621 mile 1.00 square kilometre (km2) = 0.386 square mile (mi2) 1.00 hectare (ha) = 2.471 acres 1.00 kilogram (kg) = 2.205 lbs.

FISCAL YEAR 1st April - 31st March

ABBREVIATIONS

ADB = African Development Bank ADT = Average Daily Traffic APA = Advance Procurement Action BADEA = Arab Bank for Economic Development in Africa CMP = Environmental Comprehensive Management Plan CRE = Chief Roads Engineer CTA = Central Transport Administration EA = Executing Agency EIRR = Economic Internal Rate of Return ESRA = Economic and Social Reform Agenda EU = European Union GOS = Government of the Kingdom of Swaziland GSI = Grade Separated Interchange HDM = Highway Design and Management Model ICB = International Competitive Bidding JIBAR = Johannesburg Inter-Bank Agreed Rate JICA = Japan International Co-operation Agency KF = Kuwait Fund MOF = Ministry of Finance MEPD Ministry of Economic Planning and Development MPWT = Ministry of Public Works and Transport NEPAD = New Partnership for African Development NDS = National Development Strategy NPV = Net Present Value NTP = National Transport Policy PSIP = Public Sector Investment Program PRSP = Poverty Reduction Strategy Paper RD = Roads Department RMS = Road Maintenance System RSA = Republic of South Africa RSC = Road Safety Council RTD = Road Transportation Department SADC = Southern Africa Development Community SATCC = Southern African Transport and Communication Commission SEA = Swaziland Environmental Authority TA = Technical Assistance UNDP = United Nations Development Programme VOC = Vehicle Operating Cost VPD = Vehicles per Day

iv

LIST OF TABLES Table No Title Page 3.1 Road Budget 1996/97 – 1999/00 (SZL Million) 7 3.2a Fund Allocation (in SZL Million) 10 3.2b Planned Road Activities (km) for Proposed Budget 10 4.1 Summary of Overall Project Costs 16 4.2 Financing Plan by Component 17 4.3 Financing Plan by Source 17 4.4 Expenditure Schedule by Category (ZAR million) 17 4.5 Expenditure Schedule by Source (ZAR million) 17 5.1 Summary of Procurement Arrangements 19 7.1 Economic and Sensitivity Summary 25

LIST OF ANNEXES Annex No Title No of Pages 1. Project Location Map 1 2. Organograms of MPWT and Roads Department 2 3. Bank Group Financed Operations 1 4. Environmental Mitigating Measures 2 5. Detailed Cost Estimates and Category of Expenditure 1 6. Project Implementation Schedule 1 7. Economic Evaluation 4 8. List of Annexes of Project Implementation Document (PID) 1

v

EXECUTIVE SUMMARY 1. Project Background

In order to achieve the complete development of the MR3 corridor, the GOS, the

Bank and other donors have been financing the Manzini-Matsapha-Mbabane-Ngwenya road. The Bank and the European Union financed the Matsapha to Mbabane road that was completed in 1999. Between 1999 to date, the Bank and the GOS have been financing the Mbabane-Ngwenya road as part of the Two International Roads Project. The implementation of the proposed project will provide the vital link towards enhancing regional integration through development of the east/west corridor, which forms part of Swaziland’s commitment to the SATCC protocol. The New Partnership for African Development (NEPAD) also encourages the development of regional corridors.

Originally, the Two International Roads Project as approved by the Bank in 1994

consisted of the rehabilitation and upgrading of the 19.3 km long Mbabane-Ngwenya road with the first 11.5 km rehabilitated and upgraded to a dual carriageway and the upgrading of the 47.2 km Luyengo-Sicunusa gravel road to a paved road. With respect to the Mbabane-Ngwenya road, the project currently consists of the construction of 14.3 km dual carriageway between SCOT Junction in Mbabane and Ngwenya with a pair of lanes of 3.7m wide and 2m paved shoulders per carriageway; 19.7 km of service roads together with four grade separated intersections (GSI). Due to financial constraints, 5 km of the road was deferred for later construction. These modified components have been completed since June 2003 and is in warranty period. Phase 2 is to focus on this deferment, specifically on the SCOT Junction (Km 0 to km 5) of the Mbabane-Ngwenya road, and SCOT Junction to Mangwaneni Intersection (6 km) MR3 (i.e, Mbabane-Manzini road) in order to fill in the missing link on the Matsapha-Mbabane-Ngwenya corridor. In effect, the Mbabane Bypass is the missing link between Mbabane and Nkoyoyo (a total length of 11 km). 2. Purpose of the Loan

An ADB loan of ZAR 373.68 million (UA 37.19 million) will meet part of the cost of the civil works and supervision of the civil works, and entire project audit services. 3. Sector Goal and Project Objectives

The project will contribute towards achieving the sector goal by providing an efficient and cost-effective transport system for both national and international traffic with the country. The project objectives are to: (i) improve the quality of road transport services levels; and (ii) reduce vehicle operating costs on the Mbabane Bypass. 4. Brief Description of the Project

In order to achieve these objectives, the project will focus attention on the upgrading of 5-km of the existing two lane paved road and construction of 6-km of road to dual carriageway standards including ancillary structures. 5. Project Cost

The total cost of the project is estimated at ZAR 463.45 million (net of taxes and

duties), out of which ZAR 373.68 million (81%) would be in foreign exchange requirements and ZAR 89.77 million (19%) in local cost requirements.

vi

6. Sources of Finance

ADB will finance 81% (ZAR 373.68 million) of the total project cost and the GOS contribution will be 19% (ZAR 89.77 million), plus taxes and duties. 7. Project Implementation

The Ministry of Public Works and Transport through the Roads Department will be

responsible for the implementation of the project. 8. Conclusions and Recommendations

The proposed project is in conformity with the Bank Group’s country strategy and the

transport sector policy as well as the country’s National Development Strategy.The Mbabane Bypass will foster better transport service levels and serve the most industrialized corridor in Swaziland and international route linking Swaziland, Republic of South Africa and Mozambique. The project is technically feasible, economically viable, and environmentally sustainable. Using only quantifiable economic benefits, the project yields an economic internal rate of return of 20.3%, which is satisfactory for this type of investment.

It is recommended that an ADB loan not exceeding ZAR 373.68 million (UA 37.19 million) be granted to the Government of the Kingdom of Swaziland for the purpose of implementing the project as described in this report and subject to the conditions in the loan agreement.

vii

KINGDOM OF SWAZILAND MBABANE BYPASS (TWO INTERNATIONAL ROADS PROJECT PHASE 2)

PROJECT MATRIX

Design Team: NYAME/TURAY

Narrative Summary (NS) Verifiable Indicators (VI) Means of Verification MoV) Important Assumptions 1. Sector Goal 1.1 To provide efficient and cost effective transport system for both national and international traffic within the country.

1.1 Increase in the upgraded

roads in Swaziland by 10% in 2006.

1.2 Overall growth in traffic by 4%.

1.3 Improved socio-economic welfare conditions in the country.

1.1 Annual road construction and

pavement evaluation statistics from MPWT.

1.2 Traffic statistics; and annual transport statistics.

1.3 Data on industrial, agriculture and allied developments published by Department of Statistics.

(Goal to Super Goal)

2. Project Objective 2.1 To improve the quality of transport service levels and reduce vehicle operating costs on the Mbabane Bypass.

2.1 Vehicle Operating Cost

(VOC) reduced by about 30% when the road is opened to traffic in 2006.

2.2 Average roughness about 3,000 mm/km throughout the life of the road up to 2026.

2.3 Average travel time on the road reduced by about 40% compared to base case.

2.1 Calculate VOC using HDM

model. 2.2 Measure road roughness using

RMS model. 2.3 Traffic counts and travel time

survey data on project road.

(Project Objective to Goal) 2.1 Political and economic

stability and increased investment in the country.

2.2 Government’s

commitment for successful project implementation.

2.3 Future vehicle growth

rates will be maintained.

3. Outputs: 3.1 A completely upgraded dual

carriageway of 50-mm thick asphalt concrete (2x7.0-;m lanes per direction) and 2.0-meter wide paved shoulders on either side of the Mbabane Bypass (11 km long).

3.1 Total length of 11-km of

paved dual carriageway incl. ancillary structures completed by 2006 on the Mbabane Bypass

3.1 Quarterly Progress Reports

(QPR). 3.2 Supervision Reports (SR). 3.3 Project Completion Reports

(PCR). 3.4 Annual Audit Reports (AR). 3.5 Quality of Roads Dept.

(Output to Project Objective) 3.1 Availability of resources

for maintenance/rehabilitation after construction from Government Budget.

4. Activities/Components Civil Works 4.1 Advertisement (GPN and SPN). 4.2 PQ of contractors 4.3 Issue and receipt of tenders. 4.4 Evaluation, approval, negotiation and award of contract. 4.5 Civil works. Supervision of Civil Works 4.6 Approval, negotiations and award of contract. 4.7 Supervision of Civil Works. Audit Services 4.8 Shortlist of consultants 4.9 Issue and receipt of RFP 4.10 Evaluation, approval, negotiation and award of contract. 4.11 Audit services

Inputs/Resources Appraisal Cost Estimates

(ZAR million) INPUTS Category Cost 4.1 Civil works 369.59 4.2 Supervision 24.00 4.3 Audit 0.60 Total Base Cost 394.19 4.4 Contingencies - Physical 39.42 - Price 29.84 Total 463.45 RESOURCES (ZAR million) Source Total ADB 373.68 GOS 89.77

Total 463.45

4.1 Appraisal estimates 4.2 QPRs 4.3 SRs 4.4 PCRs 4.5 Audited accounts 4.6 Disbursement records

(Activity to Output) 4.1 All procurement actions

are on schedule. 4.2 Payments for invoices are

not delayed. 4.3 Effective supervision by

the Bank, MPWT and consultant.

viii

Year Swaziland AfricaDevelo-

ping Countries

Develo- ped

CountriesB asic Ind icato rs Area ( '000 Km ²) 17 30 061 80 976 54 658Total Population (m illions) 2001 0.9 811.6 4,940.3 1,193.9U rban Population (% of Total) 2001 29.6 38.0 40.4 76.0Population D ensity (per Km ²) 2001 54.0 27.0 61.0 21.9G N I per C apita (U S $) 2001 1 450 671 1 250 25 890Labor Force Partic ipation - Total (%) 2000 37.0 43.1 … …Labor Force Partic ipation - Fem ale (%) 2000 25.8 33.8 … …G ender -R elated D evelopm ent Index Value 1999 0.575 0.476 0.634 0.916H um an D evelop. Index (R ank am ong 174 countries) 1999 113 n.a. n.a. n.a.Popul. L iv ing Below $ 1 a D ay (% of Population) 1995 … 45.0 32.2 …

D em ograph ic Ind icatorsPopulation G row th R ate - Total (%) 2001 1.4 2.4 1.5 0.2Population G row th R ate - U rban (%) 2001 4.4 4.1 2.9 0.5Population < 15 years (%) 2001 41.4 42.4 32.4 18.0Population >= 65 years (%) 2001 3.5 3.3 5.1 14.3D ependency R atio (%) 2001 81.6 85.5 61.1 48.3Sex R atio (per 100 fem ale) 2001 77.5 73.9 103.3 94.7Fem ale Population 15-49 years (% of total population) 2001 24.2 23.6 26.9 25.4Life Expectancy at B irth - Total (years) 2001 40.6 52.5 64.5 75.7Life Expectancy at B irth - Fem ale (years) 2001 40.9 53.5 66.3 79.3C rude B irth R ate (per 1,000) 2001 33.8 37.3 23.4 10.9C rude D eath R ate (per 1,000) 2001 21.2 14.0 8.4 10.3Infant M ortality R ate (per 1,000) 2001 91.0 79.6 57.6 8.9C hild M ortality R ate (per 1,000) 2001 165.3 116.3 79.8 10.2M aternal M ortality R ate (per 100,000) 1998 230 641 491 13Total Fertility R ate (per w om an) 2001 4.5 5.1 2.8 1.6W om en U s ing C ontraception (%) 1989 19.8 … 56.0 70.0

H ealth & N utrition Ind icatorsPhys ic ians (per 100,000 people) 1999 8 37 78 287N urses (per 100,000 people) 1990 168 106 98 782Births attended by T rained H ealth Personnel (%) 1998 69 38 58 99Access to Safe W ater (% of Population) 1993 43 60 72 100Access to H ealth Serv ices (% of Population) 1999 55 62 80 100Access to Sanitation (% of Population) 1993 36 60 44 100Percent. of Adults (aged 15-49) Liv ing w ith H IV/AID S 1999 25.3 5.7 … …Incidence of Tuberculos is (per 100,000) 2000 635 105 157 24C hild Im m unization Agains t Tuberculos is (%) 2000 90 63 82 93C hild Im m unization Agains t M easles (%) 2000 80 58 79 90U nderw eight C hildren (% of children under 5 years) 1999 10 26 31 …D aily C alorie Supply per C apita 1999 2 698 2 408 2 663 3 380Public Expenditure on H ealth (as % of G D P) 1998 2.7 3.3 1.8 6.3

Education Ind icato rs G ross Enrolm ent R atio (%) Prim ary School - Total 1998 116.0 80.7 100.7 102.3 Prim ary School - Fem ale 1998 112.0 73.4 94.5 101.9 Secondary School - Total 1996 54.4 29.3 50.9 99.5 Secondary School - Fem ale 1996 51.7 25.7 45.8 100.8Prim ary School Fem ale Teaching Staff (% of Total) 1998 75.2 40.9 51.0 82.0Adult Illiteracy R ate - Total (%) 2001 19.7 37.7 26.6 1.2Adult Illiteracy R ate - M ale (%) 2001 18.7 29.7 19.0 0.8Adult Illiteracy R ate - Fem ale (%) 2001 20.6 46.8 34.2 1.6Percentage of G D P Spent on Education 1998 6.6 3.5 3.9 5.9

Environm ental Ind icato rsLand U se (Arable Land as % of Total Land Area) 1999 9.8 6.0 9.9 11.6Annual R ate of D efores tation (%) 1990-95 … 0.7 0.4 -0.2Annual R ate of R efores tation (%) 1981-90 … 4.0 … …Per C apita C O 2 Em iss ions (m etric tons) 1997 … 1.1 2.1 12.5

Source : Com piled by the S tatis tics D iv is ion from ADB databases; UNAIDS; W orld Bank Live Database and United Nations Population Div is ion.Notes: n.a. Not Applicable ; … Data Not Available.

C O M PA R A T IV E SO C IO -E C O NO M IC IN D IC A T O R SSw aziland

Infant M ortality Rate ( P er 1000 )

65

70

75

80

85

90

95

1993

1994

1995

1996

1997

1998

1999

2000

2001

S w aziland A frica

GNI per capita US $

0

500

1000

1500

20001992

1993

1994

1995

1996

1997

1998

1999

2000

Swaziland Africa

Population G row th Rate (%)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1993

1994

1995

1996

1997

1998

1999

2000

2001

Swaziland Africa

111213141516171

1993

1994

1995

1996

1997

1998

1999

2000

2001

S w aziland A frica

L ife Exp ec tancy a t B irth (Y ears )

1. ORIGIN AND HISTORY OF THE PROJECT 1.1 Swaziland has strong linkages with the Republic of South Africa (RSA) economy in the trade, transport, communications, investments, energy and finance sectors. The proposed project, which is a link of the entire Matsapha-Mbabane-Ngwenya road (i.e., Road No. MR3) is one of the most heavily trafficked roads in Swaziland and serves as one of the most important links with RSA. The entire corridor (including the proposed project) is also part of the main east/west transport corridor in the country linking Ngwenya, Mbabane, Manzini and Lomahasha. This corridor is also designated as a Southern Africa Development Community (SADC) regional road, which is not only an extremely important link in Swaziland road network but also an important international road linking both RSA and Mozambique. The proposed project, therefore, will not only contribute towards the benefit of the population of the area but also will have an important regional impact with a view to promoting long-term collective, self-sustaining and integrated social, cultural and economic development with its two neighbouring countries, particularly RSA. The New Partnership for African Development (NEPAD) also encourages the development of regional corridors. 1.2 In order to achieve the complete development of the MR3 corridor, the Government of the Kingdom of Swaziland (GOS), the African Development Bank (ADB) and other donors have been financing the Matsapha-Mbabane-Ngwenya road. The ADB and the EU financed the Matsapha to Mbabane road, which was completed in 1999. From 1999 to date, ADB and GOS have been financing the Mbabane-Ngwenya road as part of the Two International Roads Project. The implementation of the proposed project will provide the vital link towards enhancing regional integration through development of the east/west corridor, which forms part of Swaziland’s commitment to the SATCC protocol. 1.3 Originally, the Two International Roads Project as approved by the Bank in 1994 consisted of the rehabilitation and upgrading of the Mbabane-Ngwenya road (19.3 km) with the first 11.5 km upgraded to a dual carriageway, and the upgrading of Luyengo-Sicunusa gravel road (47 km) to bitumen standards. With respect to the Mbabane-Ngwenya road, 5 km of the road was deferred for later construction due to financial constraints. The civil works on the Mbabane-Ngwenya road were completed in June 2003. The road is under maintenance defects liability period. The construction of the Luyengo-Sicunusa road was completed in May 2002. 1.4 During a Bank mission to Swaziland in November 2001, the GOS indicated its desire for ADB to continue to help in the development of infrastructure in the Kingdom. The main project indicated to the Bank for finance for the year 2002 was Phase 2 of the Two International Roads Project as a follow up to the current ongoing Two International Roads Project. Phase 2 is to focus on this deferment, specifically on the SCOT Junction (Km 0 to km 5) of the Mbabane-Ngwenya road, and SCOT Junction to Mangwaneni Intersection of MR3 (i.e, Mbabane-Manzini road) in order to fill in the missing link on the Matsapha-Mbabane-Ngwenya corridor. In effect, the Mbabane Bypass is the missing link between Mbabane and Nkoyoyo (a total length of 11 km). 1.5 At the request of GOS, an ADB mission visited Swaziland in February 2002 to prepare the project. The GOS has updated all the studies and detailed designs on the Mbabane Bypass. Based on a request from GOS, an Advance Procurement Action (APA) has been approved by the Bank to initiate procurement activities of the civil works. The APA approval document was distributed to the Board for information before presenting the project to the Board. The tendering process is on going and the deadline for bid submission for the civil works is November 15, 2003. This appraisal report is based on the consultant reports as well as mission findings in the field that took place in August/September 2002. In April 2003, a reappraisal mission was undertaken in order to take into account modifications to the proposed new alignment. Subsequently the report was updated during a mission in June 2003.

2 2. THE TRANSPORT SECTOR 2.1 The Transport System 2.1.1 General: The transport system in Swaziland is made up of about 3,108 km of roads, 298 km of railway, an international airport at Matsapha and 11 airstrips. The transport system constitutes a vital link and service provider in the national economy. In 2002, transport and communications contributed about 5.1% to GDP. Government expenditure in transport continues to average about 12.73 % for the last five years. In 2002/03, 29.4% of the capital budget was allocated to transport totalling SZL 340.7 million with much of the finance going towards road development. 2.1.2 Roads: Roads are by far the most dominant mode of travel in Swaziland. The classified road network is about 3,108 km. This is made up of approximately 1,117 km (36%) of paved roads and about 1,991 (64%) of gravelled roads. The unpaved road network has recently increased by approximately 400 km of new roads and a further 200 km is presently being prepared for gazetting, which after their inclusion will bring the total length of the proclaimed road network to about 3,200 km. This network does not, however, include about 1,500 km of existing feeder roads, or farm to market roads, which are currently maintained by Roads Department (RD). 2.1.3 Air Transport: Air transport services are provided through one international airport at Matsapha, and eleven (11) other airstrips. Of the 11 airstrips, two (2) are government owned, two (2) are private and licensed; and the rest are private but unlicensed. There are two (2) scheduled operators: AirLink Swaziland (partnership of GOS and South Africa Airlink), which operates the Manzini-Johannesburg route; and Swazi Express, which operates the Manzini-Durban/Maputo routes. There is also one light charter operator, a flying school based at Matsapha. In 2001, there were about 64,162 passenger movements and air cargo (i.e., freight and mail) of about 171,000 tonnes handled. In 2002, there were about 50,833 passenger movements and 263,200 tonnes of air cargo handled. 2.1.4 Railway: The railway is 298 km and it is made up of an east-west line linking Matsapha (the industrial site of Swaziland) on the western border and Goba in the east. At Goba the rail line interfaces with Mozambique railway providing a connection to the Port of Maputo. A north-south line, which links Mananga Bordergate in the north to Lavumisa in the south, overlaps with the east-west line between Mpaka and Phuzumoya. The major commodities transported are sugar, pulp, molasses, fertiliser, petrol, cement, citrus fruit, timber, and general goods. The bulk of the rail traffic is transit traffic from RSA and Zimbabwe and represents more than 70% of the total traffic by rail. Rail traffic originating in Swaziland consists largely of exports, which in 2000/01 totalled approximately 600,000 tonnes. The total traffic including transit traffic for that year was 4.4 million tonnes. In 2001/2002, the total freight was about 744,544 tonnes. The overall condition of the railway infrastructure (i.e., rolling stock and track) is not in good condition and is a major concern. Improvement to the infrastructure by Swaziland Railways through the rehabilitation of the east-west line is on going and about 40% of works have been done with completion scheduled for December 2004. 2.2 Transport Policy, Planning and Coordination 2.2.1 Policy: The overall transport policy and vision in Swaziland is to establish a transport system that provides a safe, efficient, cost-effective, and fully integrated infrastructure and operations to best meet the needs of customers, promotes economic and social development, and is environmentally and economically sustainable. The policy commits the GOS to create an enabling environment to best serve the needs of the transport stakeholders in Swaziland. In this role the

3 Government intends to refocus its primary role to that of policy and strategy formulation and regulation of the sector with a reduced direct involvement in operations and the provision of infrastructure services. Most of transport infrastructure is to be run on a commercial basis. The Government intends to establish sustainable sources of finance. The principle of user charging will be used either from direct or indirect sources. Government is aware of its responsibilities to provide socially necessary infrastructure in rural areas, and to ensure improved mobility and accessibility. The GOS will continue to secure adequate and consistent funds for improved services in the rural areas but in all cases the return on investment must be justified financially and economically. 2.2.2. The road sub-sector policy and strategy as articulated in the National Transport Strategy (NTS) is on strengthening the institutional capacity of the Ministry of Public Works and Transport (MPWT), reforming the institutional environment, and establishing new financing mechanisms for road development. NTS provides a guide for the operations of the sector in order to effectively support the Government's overall plans and objectives. To implement the policy, a comprehensive implementation strategy has been developed to clearly define the responsibilities and procedures for effective co-ordination of investment and the provision of transport services. Of importance is that the policy addresses issues of providing the enabling environment to the private sector, attracting private sector finance and investment, encouraging partnerships with the private sector and participation of stakeholders in the operations of the sector. 2.2.3. Planning and Coordination: MPWT plans and co-ordinates investment in the transport sector. The other core ministries involved in transport planning and investment are the Ministry of Economic Planning and Development (MEPD) and Ministry of Finance (MOF). Basically, the MPWT through its Planning Unit (PU) does the control and management of transport investment. All development and capital projects in transport sector are initiated by MPWT, reviewed by MEPD for their viability, and then transmitted to MOF for securing funds from domestic or external sources. The NTP that stipulates the goals and objectives of the sector guides plans for the transport sector. These plans are prepared by each sub-sector in collaboration with the PU of the MPWT and are submitted annually to MEPD for inclusion in the National Development Plan (NDP), which is a three-year rolling plan. Projects are developed in accordance with priorities articulated in the Sector Development Plan (SDP). The plans themselves are prioritized according to the 2022 Vision of the National Development Strategy (NDS): a 25-year vision for the GOS setting the key macro-economic and sector strategies. 2.2.4. At the top of the Government agenda are projects that are geared towards poverty reduction, employment generation and HIV/AIDS. Under the transport sector, such projects will be in the feeder roads system, which provide access to the rural areas, and also for rural travel and transport. For regional integration and trade, priority is given to those roads that connect Swaziland to the sub-region especially those in the regional trunk road network. 2.2.5. For the road sub-sector, the MPWT through the RD has the responsibility for the planning, construction and maintenance of the road system. A 10-year investment program for the construction of roads is developed from which projects are programmed and submitted to the Government for finance each year. Planning, co-ordination and management of road transport investment are reasonably good, taking into account the human resources constraints in MPWT and the MEPD. To augment the institutional capacity of the RD, the Bank and other donors have provided Technical Assistance (TA) and training. This assistance will, among other things, strengthen the management, planning and supervisory skills of RD. 2.2.6. The PU of MPWT coordinates planning of capital projects so that activities and funding are integrated and support each other in a procedural manner. The PU is also responsible for

4 coordinating the activities of other transport parastatals like the Swaziland Railway (SR), the Airlink Swaziland and the Central Transport Administration (CTA). These parastatals make their own corporate plans and MPWT helps in the soliciting of funds for capital projects and in supervising their activities. 3. THE ROAD SUB-SECTOR 3.1 Road Network, Vehicle Fleet and Traffic 3.1.1 Swaziland has about 3,108 km of classified road network under the control of the RD of MPWT. In addition to the classified roads, there are about approximately 1,500 km of feeder roads, which are currently un-classified but have recently been put under the responsibility of MPWT by the Government. RD has carried out a condition survey of the paved road network in 2001. Around 60% of the paved road network is in good condition, 25% in fair condition and 15% is in a poor state. 3.1.2 Vehicle ownership rate though rising fast at an average of 4.8 percent per annum is still low at about 10 vehicles per 1,000 of the population. Majority of the Swazis use public transport. The new registration of private vehicles in the country was 4,747 in 2001. The total private fleet in 2001 is about 92,564 vehicles. There is no good statistics of the Government vehicle fleet except those kept by CTA. In 2001, there were 4,579 government vehicles compared to 4,047 in 2000. These include 2,720 light motor vehicles; 350 heavy goods vehicles, 232 buses; 274 tractors; 340 motorcycles; 248 caravans and trailers; and about 415 other vehicles. The vehicle fleet is relatively young (i.e. 5-8 years). 3.1.3 RD undertakes a programme of manual counting of traffic on the majority of the country's roads. The traffic distribution in 2002 reveals that 23% (i.e., 663 km) of the entire road network carries about 1,000 vpd and another 24% (i.e., 735 km ) of the network carry in excess of 500 vpd. Annually, the traffic on the entire road network totals approximately 3.11 million vehicle-km. The Mbabane-Matsapha-Manzini road continues to have the highest traffic volume with about 19,870 vpd and growing at an annual rate of 6.3%. The Mbabane area has the highest average daily traffic (ADT) and contains about one third of all the roads in Swaziland. This is followed by Manzini area. 3.2 Road Transport Industry 3.2.1 Nearly all passengers are conveyed by road so are goods transported within Swaziland. The bus, the private car and taxis are the main modes. Overall there are about 695 minibuses and 405 buses in Swaziland, with Manzini having the highest. The buses (28-70 capacity) are mainly used for long distance and inter-urban travel; while the mini-buses (capacity 10-15) are used for intra-urban transport. Ownership of the passenger transport is in the hands of relatively small-scale indigenous private operators who operate without subsidy from the Government. The bulk of the road freight operations is done by well-established multinational companies based in Swaziland. Several smaller operators are able to carry out specific contracts but these are short-term. It is estimated that the local freight operators have less than 30% of the market. In 2002, it was estimated that about 210 road-freight companies were registered and additional 238 for hire "bakkies" (pickups). Most of the cross border freight traffic is to and from RSA. 3.2.2 The Road Transportation Department (RTD) of the MPWT in consultation with the private operators sets passenger fares and other tariffs. The tariffs are competitive and are based on the cost of operating vehicles taking into account the condition of the roads and other factors. The

5 fares are based on the vehicle operating costs for different vehicle types and road types. Freight fares are negotiated between the customer and the operator and are competitive. RTD is responsible for registration, licensing and inspection of vehicles and drivers. The vehicles and drivers are licensed and processed in Mbabane as well as designated district centers. RTD has implemented a new computerized vehicle registration and permit issuing system in Swaziland under an ADF grant during the implementation of the Transport Sector Project. Existing registered vehicles were identified, inspected and new registration documents provided. 3.2.3 Road accidents are 132 fatalities per 100,000 people. The major causes of accidents are attributed to drivers losing control (25%), driver error of judgement and negligence (22%), over-speeding (18%) driver inattentiveness (18%), misjudging clearance distance (13%) and influence of alcohol (4%). Police enforcement with regard to traffic control and axle load control is weak but improving. A Road Safety Council (RSC) comprising 10 members has been established and public education campaign is an on-going effort. The mandate of RSC is to guide the Government and the public on road safety aspects by developing, monitoring and updating a national long-term program for the improvement of road safety through symposia, lectures and broadcasting. The council also monitors and evaluates the effectiveness of programs and strategies of responsible agencies and report annually to the Minister of MPWT. 3.2.4 The construction of the first weighbridge in Swaziland has been completed at Matsapha and it is operational. Overloading control campaigns are continuing using portable weighbridges. The Bank will continue to monitor implementation of the road safety measures through regular supervision missions. 3.3 Road Administration and Training Road Administration 3.3.1 MPWT is responsible for the overall control and management in the transport sector including the roads administration. The existing organisational chart of MPWT is presented in Annex 2. Through the RD, MPWT takes the responsibility for the development and maintenance of the gazetted and feeder roads. MPWT is responsible for the overall coordination of the activities in the transport sector, including direct responsibility for planning the sector activities, control of civil aviation, as well as the enforcement and administration of all road traffic regulations, which is exercised through RTD. 3.3.2 RD’s main pre-occupation include the programme of road construction, rehabilitation and maintenance in order to ensure that the road network is of adequate and acceptable standards. The main activities for the next two to three years are the rehabilitation of existing bitumen roads, and upgrading of gravel/bitumen roads to acceptable bitumen standards. For road transportation administration, the emphasis will be on the installation of computerization system for vehicle registration and drivers license and installation of weighbridges at border crossings in order to minimise the damage from heavy trucks from cross border traffic. The on-going loan savings from the Bank-funded Transport Sector Project will be utilised in these activities. Training 3.3.3 There are no existing facilities for training civil and mechanical engineers in Swaziland. The University of Swaziland does have a faculty of engineering that currently offers electrical engineering. At the technician level, the Swaziland College of Technology (SCOT) implements a 3-year diploma course in civil engineering. Hitherto the practice has been that the few mathematics and physics students went overseas to pursue engineering degrees.

6 3.3.4 MPWT attempts to solve the problem of the shortage of engineers in Swaziland has been to include some form of Technical Assistance (TA) in the financing of road projects. The idea being that in addition to monitoring and supervising work being undertaken by contractors and consultants, the TA will also train Swazi engineers to take over their functions along the line. This has not worked out satisfactorily. Therefore under the Transport Sector Project financed by the Bank, the GOS took a big step to train 38 engineers overseas for both the use of the MPWT and the economy of Swaziland at large. Out of this, 34 successfully graduated and have returned to Swaziland. 14 male and 2 female engineers are currently working with MPWT. Under the direction of the Chief Roads Engineer (CRE), the engineers have complete control of their respective assignments, some of which include project coordination. 3.3.5 Irrespective of the quality of training obtained at the academic institutions, there is need for on-the-job training by the RD at the recently completed Roads Training Centre (RTC). Under the same Transport Sector Project, grant money was given by the Bank to build the new RTC. Since its completion a number of courses have been run both for the new graduates and the local construction industry. 3.4 Road Planning and Financing Road Planning 3.4.1 The Planning and Development section of RD is responsible for the planning and economic analysis of road programs. Planning activities include the collection of traffic count data, identification and programming of capital projects, preparation and review of economic feasibility studies, construction materials testing and analysis. 3.4.2 The planning section evaluates identified road project proposals in-house. The proposals are checked against the national goals set in the NDS 3-year Development Plan and other development criteria. The projects are then prioritized for inclusion in a road investment program. This program is then submitted to the MEPD. If the program is adopted through an inter-ministerial committee, then it is submitted to the MOF to determine the level and sources of funding on the basis of budget realities. Road Financing 3.4.3 Road financing is mainly from the Government recurrent and capital budget and from external sources especially for upgrading and rehabilitation of new roads. For the five years 1996/97 to 2000/2001, where statistics are available, it is evident that some the budget set aside for capital expenditure has been under utilized (Table 3.1) The main reason has been the capital works which took place during this period and the under utilization relates to the delays associated with the implementation and the backlog in disbursement to contractors. The situation has improved since 2000. More resources have to be devoted to the capital budget and these are being absorbed. It is clear that in addition to donor sources, the GOS has devoted a lot of resources to improve roads.

7

Table 3.1: Road Budgets 1996/97 – 2000/01 (SZL Million)

Capital Budget Recurrent Financial

Year Budgeted Expenditure % Under or Over Budgeted Expenditure

% Under or

Over 1996/97 111.2 109.0 -2.2 27.7 28.7 + 1.0 1997/98 114.2 107.4 -6.8 29.9 29.4 -0.5 1998/99 186.2 162.9 -23.3 41.9 41.9 0.0 1999/00 262.7 265.6 +2.9 61.5 61.5 0.0 2000/01 244.2 272.0 + 27.8 70.3 70.3 0.0

Source: Road Department; MPWT, September, 2002. 3.4.4 The current budget has SZL 218 million available for the upgrading of gravel to paved standards in the 2002/03 financial year. About SZL 72.8 million has been made available for scheduled maintenance and recurrent works. This level of funding is reflected in the fairly good condition of the road network in Swaziland. 3.5 Road Engineering and Construction Road Engineering 3.5.1 The Design Section of RD is responsible for the survey, design preparing tender documentation for road projects. It is also responsible for standards and the design of manuals and matters relating to road reserves and control of access. The Principal Roads Engineer heads the Design Section and report to the CRE. The section is divided into three functional areas of Road Design, Survey, and Bridges. An engineer heads each section. 3.5.2 Swaziland, as member of the SADC, follows the SATCC specifications in road design and construction. Basic engineering designs are standardized following long standing research and field-testing. The information and data continue to be updated according to latest research and information. Due to the shortage of experienced engineers, the section has limited capacity to undertake design work and most of the assignments are contracted out to consultants. 3.5.3 The Materials Section of the MPWT undertakes soils and materials investigation/testing as well as the quality control of selected construction and periodic maintenance works. The section is not only concerned with roads but is responsible for quality control of other operations of the MPWT. Though the Materials Section is performing satisfactorily, it has limited capacity and as such most of the work in major design and site supervision services are given out to consultants. Road Construction 3.5.4 Road construction in Swaziland is the responsibility of MPWT through the RD. Private contractors under the supervision of MPWT, do most of the major construction work. The construction and improvements of districts roads are undertaken by direct labor. There are under the RD, re-gravelling units, one rehabilitation unit, one bitumen re -sealing unit, a bridge/maintenance unit, a road sign manufacturing unit and a culvert pipe-manufacturing unit to assist in its direct labor activities. 3.5.5 Road construction and manufacturing industry is still in its infancy in Swaziland. The country depends mainly on external expertise for the execution of major engineering, construction, rehabilitation and periodic maintenance works. Some assistance and training were given to the indigenous engineering and construction industry under the Bank financed Transport Sector project. With the training of 34 engineers under the same project, it is envisaged that the

8 environment for both consultant and civil works contracting would change in the future as some gain experience and venture into these avenues. 3.5.6 The local construction industry is estimated to contribute about 11,000 people. This figure does not include the foreign work force who are engaged in major road works and other civil engineering works. In addition to the private sector, the Government also employ a significant amount of people in the construction fields. The MPWT registers the local contractors according to capability. There is no registration for consultants. In 2001, there were 118 building contractors registered out of which 86% were Swazi owned. There were 159 electrical contractors with 84% being Swazi owned. In addition, there are 10 civil engineering contractors executing civil/road works of which 2 are Swazi owned. 3.5.7 The GOS through the NDS has identified the construction industry as a sector to be nurtured and developed for the indigenous Swazi to participate. The GOS since 1993 has taken the initiative to organise the local construction industry. This has been done through the encouragement for the local contractors to bid for small works and also to form associations for large works. In addition the Road Training Centre has organised seminars for the local contractors. The MPWT intends to form a secretariat to organise the contractors. A National Construction Industry Policy has been submitted to the GOS by the MPWT for consideration. 3.6 Road Maintenance Organization 3.6.1 The maintenance needs of the road network are budgeted for under the conventional two types of road maintenance: routine maintenance activities and periodic maintenance activities. Routine maintenance consists of all the activities of the road network (cleaning side drains and ditches, control of vegetation, care of road signs and traffic signals, etc.,). Periodic maintenance is the intermittent carrying out of road surface treatments such as re-gravelling of unpaved roads or sealing of paved roads. 3.6.2 MPWT through the RD is responsible for the routine and periodic maintenance of the classified road network. The RD undertakes its maintenance activities through its headquarters at Mbabane, four (4) Districts Depots (Mbabane, Nhlangano, Siteki, and Lubuli) and fifteen (15) Road camps located throughout the country; together with 4 Construction Units (presently based at Mbabane, Manzini, Nhlangano and Siteki) and several small specialized operations such as sign shop and a pipe factory. For administrative purposes and regionalisation of maintenance, the maintenance activities for the four districts are organized around two regions: a northern region comprising of Mbabane and Siteki Districts and headed by Senior Roads Engineer (Maintenance), SRE(M); and a southern region comprising Nhlangano and Lubili Districts also headed by a SRE (M). 3.6.3 There are about 400 people employed by RD in its depots and road camps to carry out routine road maintenance activities and about an additional 500 are allocated to the construction units primarily for periodic maintenance on sections of the network. These employees are supported with construction equipment, transport and office facilities. The total cost of the employees in combination with the annual value of their support is roughly in the range of SZL 30-35 million. RD currently spends a further SZL 40-50 million each year on contracted out maintenance activities. In keeping with the overall Government policy, RD is making increasing use of the private sector for activities such as resealing of paved roads, re-gravelling of unpaved roads, road marking, and maintenance of selected road reserves. The objective of out sourcing

9 periodic road maintenance activities has been completely achieved by the RD as from the 1997/98 financial year and the system of contracting appears to be working. 3.6.4 To improve the management of road maintenance activities, the RD has established a computerized Road Management System (RMS) comprising a road management data base system (dROAD), a Geographic Information System (arcView) and an asset management system (dTIM) for analyzing and reporting maintenance and rehabilitation needs. The RMS is helping RD in the planning, programming and budgeting of periodic maintenance. Provided that the system recommendations are reasonably observed and the budgets are granted, the management of road maintenance in Swaziland can in the future continue to be bright.

Funding 3.6.5 While external sources are tapped to finance capital road projects, the GOS mainly depends on its recurrent budget to finance road maintenance activities. Road users in Swaziland contribute in various ways to Government revenue. These include the payment of custom duties and sales taxes on vehicles, fuel, lubricants, spare parts as well as expenditures on vehicle licensing, registration and road worthiness certificate. Apart from duties on fuel, vehicles, spare parts and tires; sales taxes on vehicles, spare parts and tires; revenues from other sources have remained fairly stable over the years. 3.6.6 About 85% of a typical recurrent maintenance budget is spent directly on the road surfaces or on the maintenance of aids to traffic such as traffic signals, street lights, street signs and guard rails. The remaining 15% is used for network management matters. Virtually each of the recurrent budget is spent on contracted out activities and the value received is much higher than from the routine maintenance budget expenditure which are mostly consumed by the RD direct labor workforce. 3.6.7 Up to and including 1997 the recurrent expenditure saw some under-expenditure of the budget amounts provided. After this date, the recurrent budget has been increasing and this has been well absorbed for maintenance purposes. This under utilization stemmed mainly from the inability of RD to cope with the resources that normally become available especially during the end of the year. The GOS has taken steps to ameliorate the situation by re-organizing the maintenance activities of RD, by using private contractors and by basing maintenance on the RMS. This approach has enabled RD to utilize the recurrent budget efficiently. In general, it can be said that the recurrent budget is fairly sufficient for maintenance of the current road network. 3.6.8 The RMS output for 2002 indicates the current funding scenario for funding levels and maintenance policies. Using a maximum allowable budget of SZL 314.5 million for 2000/01, SZL 70.3 million is allocated to recurrent works (blade, re-gravel, fog spray, reseal and rehabilitation) and SZL 244.2 million for capital works (upgrade and pave). An annual increase of 5% has been given to the budget since 2000. 3.6.9 Tables 3.2a and 3.2b show the proposed annual expenditure on the allocated budget for the years 2002-2006. Consistently for the five-year period, on the average about SZL 283 million would be spent on road development and maintenance. This is translated into on the average about 1,082 kilometers of maintenance, upgrading and rehabilitation of roads. For a country of the size of Swaziland, it can be said that the budget and the activities for the next five years is reasonable and the government allocation of resources is reasonable. The GOS contribution for the proposed Mbabane Bypass has already been allocated in the 2003 government capital budget. To further consolidate and preserve the integrity of funding for the road sector, the GOS has taken positive steps through institutional changes on its own initiative.

10

Table 3.2a: Fund Allocation (in SZL million)

Year Blade Re-gravel Upgrade to Pave

Periodic (Reseal & Fog spray) Rehabilitation Total

2002 1.90 5.88 217.92 7.28 25.77 258.75 2003 1.90 15.46 217.26 10.48 44.15 289.25 2004 1.90 16.84 217.66 17.21 36.13 289.73 2005 1.90 8.22 217.24 4.49 57.79 289.64 2006 1.90 7.09 216.48 12.20 50.25 287.91 5 Yr. Avg. 1.90 10.70 217.31 10.33 42.82 283.06

Source: Road Department; MPWT

Table 3.2b: Planned Road Activities (km) for Proposed Budget.

Year Blade Regravel Upgrade to Pave

Periodic (Reseal & Fogspray)

Rehabilitation Total

2002 746 93 109 44 46 1038 2003 489 258 109 71 77 1004 2004 466 281 109 106 63 1025 2005 609 137 109 178 102 1135 2006 628 118 109 275 77 1206 5 Yr. Avg. 588 177 109 135 73 1082

Source: Road Department; MPWT 3.6.10 In the past three years, GOS has reinforced and consolidated the funding, management, administration and control of the road sector. In order to initiate the implementation of one of the key policies contained in the NTP, and a commitment by the GOS to regional transport reform agenda, a study was undertaken to determine the feasibility of restructuring the RD and the establishment of a Roads Authority (RA) for the management and financing of roads in Swaziland. This study followed the approval by the Cabinet in 1999 to investigate the feasibility and implications of setting up RA, Road User Charges (RUC) and a designated Road Fund (RF) in Swaziland. 3.6.11 The following key elements of the road reform program have been presented to cabinet for approval. The program includes the creation of RA to be responsible for road management and outsourcing of execution functions; RF and related mechanisms; retention of the laboratory as well as the traffic counting and surveying capacity in the RA; development of a pilot contractor to do maintenance and limited construction work; development of a pipe and sign factory and the retention of the Training Center within the MPWT. 3.6.12 To make sure that a restructured road sector is financially sustainable, a road user charge approach has been proposed through the RUC model for Swaziland. The major instruments identified are the fuel levy, license fees, cross border charges and fines from overloading. It has been proposed that initially only the recurrent maintenance and traffic management costs are included while the capital expenditure on new links and capacity expansion can be phased in over time. The details of these reforms have been submitted to the cabinet for approval and implementation in 2004. The Bank will follow up these developments through regular supervision missions.

11 4. THE PROJECT 4.1 Project Concept and Rationale 4.1.1 A cardinal concept and rationale behind the initiation of the project and its design to a dual carriageway is to bring positive impacts in the form of enhancement to safety for vehicles and pedestrians as well as improve business/developmental opportunities in terms of the employment, convenience, and linkages to regional development. The proposed project fits within the Bank’s strategy and the framework of the Government’s transport policy to improve accessibility to industrial and agricultural settings and also to construct international roads thereby promoting regional integration and trade. The project is designed to assist a proportion of the population through increased access to markets and basic social services at lower costs, facilitate and improve traffic movements to and from the region, reduce vehicle operating costs and maintenance costs, stimulate the agricultural sector and introduce opportunities for economic growth. 4.1.2 The existing Mbabane Bypass road, which is a two-lane road, is congested particularly with heavy vehicles. There is a need to upgrade the Bypass to a dual carriageway so as eliminate the transportation bottlenecks (such as congestion) currently experienced on the road. The Bypass will be upgraded to similar geometric standards like the contiguous sections between Nkoyoyo and Ngwenya, and between Mbabane and Manzini. 4.1.3 The current design concept is for the carriageway and the shoulders to be of asphalt concrete surfacing. This will enable high traffic volumes along the project road to be catered for with a view to reduce congestion/queuing of vehicles and accidents. The dual carriageway will improve pedestrian, vehicle and livestock safety. The sealed carriageway provides a durable and smooth riding surface thereby lowering vehicle operating costs and maintenance costs and also minimizes moisture ingress into the pavement from surface runoff. Road furniture and ancillary structures (such as pedestrian footbridges bridges, bus bays, Grade Separated Interchanges - GSI, service roads to link to the GSIs, access roads rerouted to tie with GSIs, etc.) have been provided to enhance level of service and safety aspects on the Mbabane Bypass. The designs adopted for the dual carriageway comply with MPWT and also Southern Africa Transport and Communications Commission (SATCC) design standards for harmonization. 4.1.4 In order to cater for traffic loadings, the design of the pavement structure was based on sub-grade evaluation of California Bearing Ratio (CBR) tests taken along the road alignment after soil sampling and compaction tests. The cumulative traffic loading over a 20-year design period was estimated at 7.0 million Equivalent Standard Axle Loads (ESAL). To accommodate the traffic loading over the design life of the road, a pavement structure for the dual carriageway consists of 50-mm asphalt on 150-mm crushed stone base on 250-mm cement stabilized sub-base on 300mm selected sub-grade. The pavement layer thickness for the service/access roads consists of 40-mm asphalt concrete on 125-mm crushed stone base on 250-mm cement stabilized sub-base and 300-mm selected sub-grade. The embankments are designed based on the soil stability analysis taking into account the materials available along the road. 4.1.5 Construction of the Bypass has been accorded high priority by the GOS considering the rapid deterioration that is taking place due to the increased traffic volumes on the road. The engineering designs of the road were reviewed and found to be appropriate both by GOS and the Bank. The engineering designs take into account sub-grade conditions, availability of local construction materials and projected traffic during the design life of the road. The recommended technical solutions are found to be sound and most economical.

12 4.1.6 The Bank Group operations in Swaziland total about UA 225.48 million, net of cancellations. About 74% percent of this amount has already been disbursed. The transport sector is the largest beneficiary with 60% of the portfolio, followed by agriculture (20.2%), public utilities (10.5%), social sector (6.5%) and industry (2.8%). The overall disbursement rate in the transport sector stands at about 88%. More specifically, the Bank’s total commitments in the transport sector in Swaziland have aggregated to UA 127.79 million, spanning ten operations comprising seven projects and three studies (Annex 3). Except for the on-going Two International Roads Project, all other transport operations have been completed and the Bank’s Project Completion Reports (PCR) has been undertaken for five of them. 4.1.7 The transport sector projects achieved their goals of providing high quality roads to rural areas of the country and connecting the major population and economic centres, thereby contributing towards rural development. Traffic volumes and growth rates after construction exceeded appraisal expectations. In addition, the Bank played key roles in the areas of aid coordination, co-financing and institutional development. 4.1.8 The main lessons on past performance of Bank funded transport sector operations in Swaziland are: (i) changes in designs during project implementation which has often led to cost overruns; and (ii) actual counterpart contributions towards project costs have always been higher than envisaged at appraisal thereby reducing Bank contribution. The first lesson is mitigated in this project by allowing GOS to carefully check, scrutinize, evaluate and select the cost-effective option that is comprehensive and addresses GOS needs and appropriate for project implementation. The preparation and appraisal of this project has been exhaustive. Within the body politic of Swaziland, the consultations have been massive. The identification, preparation and appraisal process have enabled GOS to consult stakeholders in the formulation of the proposed project. The result being that future changes will be kept to a minimum. This contrasts with previous Swaziland experience in road construction where there had been various design changes and increase in project scope leading to cost increases. It is envisaged that the rationale and concept behind this project will bring less design changes in the implementation stage. Furthermore, the Bank has been organizing seminars/workshops to familiarize GOS with the Bank’s procurement and disbursement procedures on the basis of need in order to minimize the past delays. 4.2 Project Area and Beneficiaries 4.2.1 Mbabane is situated at an altitude of 1200 metres above mean sea level and has a mild climate. The estimated population of Mbabane is 91,000 and growing at approximately 6% per annum. The Mbabane Bypass passes through the urban area and would service residential and industrial areas including schools, clinics, dispensaries and recreational facilities, shopping centres, small scale engineering/metal/carpentry works) as well as His Majesty’s official residence. Of greater importance is that the Bypass road provides a relief link between Swaziland and RSA, and effectively links Swaziland to other neighbouring countries of Lesotho, Botswana and Mozambique. 4.2.2 The Mbabane Bypass services the most densely populated and economically developed corridor of Swaziland. The road is a section of the Manzini-Ngwenya road (61 km), which links Swaziland to RSA at Ngwenya. The road also links Mbabane (the capital) to Manzini, the commercial centre and largest city in the Kingdom. Mbabane is the capital and the centre of administrative and political power. The city provides employment to more than 70,000 Swazis who would directly benefit from the Mbabane Bypass in terms of travel time and safety. The road also serves the main tourist and social infrastructure situated in Ezulwini valley and it is the gateway to RSA, which is the largest trading partner. To summarise, the Manzini-Mbabane-

13 Ngwenya road corridor provides access to a number of economically active people living in its area of influence for jobs in Mbabane, Manzini and Matsapha. The road makes proximity to employment by taxis, cars, and kombis possible to enable workers undertake the journey to and from work in a safe, fast and reliable manner. 4.2.3 Matsapha and Manzini are the other two towns that would benefit from and be influenced by the Bypass. Matsapha is the largest industrial concentration of activities in the Kingdom and is located midway between Mbabane and Manzini. Matsapha is the centre for the manufacture of textiles, metal works, food processing, footwear, paper mills, engineering works, beer and beverage processing, building and construction, electrical, pharmaceutical etc., and provides employment to more that 15,000 Swazis. 4.2.4 In addition to above, two developments along the project road are the Makholokholo Township Development (MTD) financed by the World Bank through the Urban Development Project and the Ngwenya Industrial Estate (NIE) financed by the GOS; would benefit from implementation of the project. About 10,000 people are expected to be housed in MTD. MTD project is aimed at upgrading and eliminating informal settlements in Swaziland and thus uplifts the people’s standard of living. The first phase of MTD will comprise the construction of 329 family dwelling units for the middle- income group (income of SZL 3,000 per month) and it is expected to be complete by 2005. The second phase will be completed in 2008 and will comprise the development of 250 units for low-income earners with incomes of SZL 2,000 per month. The NIE project is on-going and the first phase, which involved the construction of roads, sewage, and connection of water infrastructure, have been completed. The target industries are light manufacturing and processing, especially the textile industries aimed at African Growth Opportunity Act (AGOA) export. The envisaged 300 factories are expected to employ 60,000 people. Traffic to be generated by the establishment and using the project road is estimated to reach an ADT of 11,000 with 7% of this being heavy goods vehicles. 4.3 Strategic Context 4.3.1 The GOS recognizes that development of urban and rural roads can impact on economic growth and poverty reduction. This is because not only are people employed in their own areas exclusively, they are also trained in construction works so that they can be gainfully employed elsewhere. Swaziland is a landlocked country and roads of international character (such as the one proposed under this project) improve transport service levels between Swaziland and its neighboring countries thereby contributing towards the promotion of regional integration and trade. It is in this context that GOS is committed to the implementation of this project with the goal of improving the road transport operating efficiency, providing access to industrial/employment areas and also linking to neighboring countries of Mozambique and RSA. 4.3.2 The project is consistent with the Bank Group intervention strategy in the transport sector as contained in Country Strategy Paper for Swaziland (2001-2003) and updated in 2002. The main thrust of the Bank’s medium-term lending programme in Swaziland is to support GOS agenda to reduce poverty through projects and programmes aimed at sustainable growth, employment creation and human resources development. The strategy also recognises that private sector development is an important component of the drive for poverty reduction, in that with the appropriate incentives and environment in place, private business would create new jobs as well as enter into partnership with government to invest in the development of economic and social infrastructure. Under Bank financing, the projects that offer good prospects of achieving these objectives are likely to emanate from infrastructure development (including the expansion of national and international roads, which inter-link production centres and marketing outlets), agriculture and rural development, and tourism activities with the aim of bringing basic and

14 essential services closer to the people. The proposed project is expected to contribute to the achievement of the foregoing objectives. 4.4 Project Objectives

The overall sector goal is to provide efficient and cost effective transport system for both

national and international traffic within the country. The objectives of the project are to improve the quality of road transport service levels and reduce vehicle operating costs on the Mbabane Bypass. 4.5 Project Description 4.5.1 The project comprises the following components:

(i) Upgrading 5-km of existing two-lane paved road and construction of 6-km road to 50-mm thick asphalt concrete dual carriageway (2x7.0-m lanes per direction) and 2.0-meter wide paved shoulder on each side of the Mbabane Bypass (total length 11 km);

(ii) Consultant services for the supervision of the civil works; and (iii) Project audit services.

A brief description of the overall project components is given hereunder.

(A) Civil Works 4.5.2 The Mbabane Bypass (11 Km) is a section of the Manzini-Mbabane-Ngwenya road. The project is sub-divided into two sections. The first section is between Nkoyoyo and SCOT Junction (5 km in length). This part of the project follows the existing MR3, which is a two-lane paved road. The second part of the project is between SCOT Junction and Mangweneni Intersection of the MR3 (6 km). This part of the project follows a new alignment to the west of MR3 road. In order words, the proposed Mbabane Bypass (11 km) will be upgraded/cpntructed to a dual carriageway to link the contiguous dual carriageways between Nkoyoyo and Ngwenya, and between Mbabane and Manzini. 4.5.3 The construction of the Mbabane Bypass includes improved horizontal and vertical alignments, a new and adequate pavement structure, rehabilitation and /or construction of additional drainage structures, installation of roadside furniture to address road safety aspects, and the provision of road signs and pavement markings. Detailed surveys and engineering investigations were carried out along the chosen route before finalizing the geometric designs to minimize construction costs and maximize economic benefits. Detailed engineering designs were carried out for the preparation of construction and bidding documents. 4.5.4 The Mbabane Bypass will be constructed to the same standard as the contiguous dual carriageway between Nkoyoyo and Ngwenya. The civil works on the Mbabane Bypass also include the construction of six GSI, ten footbridges, single slope median barrier and street lighting along the full length of the road plus access roads. Every footbridge will be associated with two bus bays, sited within 50 meters. A design speed of 80 km/hr has been adopted for the Mbabane Bypass as the terrain is generally difficult.

15 4.5.5 About 130 pre-cast concrete culverts averaging about 900-mm diameter and 4 box concrete culverts have been provided for in the design to handle the expected discharges. Box culverts will have adequately sized reinforced aprons and wing walls to reduce scour problems at inlets and outlets. Longitudinal drains (side drains, median drains, cut-off drains, mitre drains, etc.) will be lined with concrete and subsurface drains (with 150-mm diameter perforated pipes) installed in deep cuttings along the road. Road signs and markings for the safe and efficient movement of traffic will be provided. The signage includes regulatory, warning and guide signs. Standard painted pavement markings are provided for the delineation of traffic lanes. Guardrails will be installed at high embankments, GSIs and culvert approaches for safety reasons. (B) Consultant Services for Pre-Contract Services and Supervision 4.5.6 An experienced firm of consultants on behalf of the Executing Agency will undertake pre-contract and supervision services of the civil works. The responsibility of the consultant will include the following: assisting the Executing Agency in tendering and tender evaluation process, contract award process for the civil works, review of land acquisition requirements, administer the construction contract, inspect the works, supervise the necessary quality control testing performed by the contractor, track the progress and the cost, preparation and submission of monthly, quarterly and final completion reports, and maintain close relation with the Executing Agency and relevant ministries. A detailed description of the services of the consultant will be contained in the respective contract agreements. (C) Project Audit Services 4.5.7 A firm of external auditors appointed by the Auditor General’s Office will provide audit services for the overall project. The purpose of the audit is to ensure that proceeds of the loan are utilised solely for the purpose for which they are intended. The selected auditor shall verify periodically the project accounts in relation to the works executed and report to the project management. In addition, the auditors shall also take into account the Bank’s requirements while conducting the physical/financial audit of the components involved in the project.

4.6 Environmental Impact 4.6.1 Because of the fact that one section of the project entails new construction in an urban setting, the project was reclassified environmentally as Category I according to the Bank’s 1992 Environmental Guidelines. Summary of the EIA and the relocation plan has been prepared and circulated to the Board (ADB/BD/IF/2003/132) and posted on the Bank Public Information Center. Swaziland has well-developed environmental and social assessment guidelines that are overseen by Swaziland Environmental Authority (SEA), which pays regular surveillance visits to ongoing projects to assess compliance with the approved Environmental Comprehensive Management Plans (CMP). An Environmental Impact Assessment (EIA) study was carried out, which showed that the project would have minimal negative environmental impacts. These impacts would be taken care of through the application of the mitigation measures during construction and operation of the project. The project involves the relocation of around 106 homesteads involving about 1350 people. The Government has prepared a Full Resettlement Plan (FRP) in line with the Bank’s Involuntary Resettlement Policy and Guidelines. 4.6.2 The project main positive impacts are enhancement of safety for vehicles and pedestrians, improved business opportunities, increase in employment opportunities, increased convenience, induction of development of local communities in Motjane and Ngwenya, and contribution to regional and national development. Other negative impacts during pre-construction include minimal displacement of people and loss of business, risks to natural habitats, soil erosion and

16 siltation, noise, dust, and visual impairment. Some inconvenience is also possible during road operation due to noise from fast moving vehicles, risks to aquatic habitats caused by run-off from exposed surfaces, and safety of animals, humans and vehicles due to increased traffic flow. Impacts and relevant mitigation measures are presented as part of the Environmental and Social Management Plan summary in Annex 4. 4.6.3 Following the policy of SEA, a CMP has been developed. The implementation of the CMP (which is a legal binding document in Swaziland) will be a loan condition. The CMP includes findings of both the EIA and FRP. A summary of the CMP is presented in Annex 4. In addition the project-affected people would be compensated. A loan condition to this effect is included. 4.6.4 The overall responsibility of supervising and monitoring the environmental aspects of the project will be the responsibility of RD and assisted by the supervision consultant. The SEA, as part of its regular activities, will be involved in the monitoring of the construction activities in order to ensure that proper environmental mitigation measures are employed. The supervision missions of the Bank will validate and crosscheck whether the agencies responsible for environmental management and monitoring have ensured that the mitigation measures have been carried out. The mitigation measures have been included in the design of the project. For the mitigating measures to be adhered to by the contractor, the supervision consultant will ensure that the civil works contract reflects the mitigating measures during construction. 4.7 Project Costs The project cost has been estimated from quantities and unit prices prepared by the design consultants. The total cost of the project is ZAR 463.45 million (UA 46.13 million), net of taxes and duties. These costs are based on April 2003 prices and are derived from consultants’ reports and on-going contracts. A physical contingency of 10% and a price contingency of 3% per annum on foreign exchange and 7% on local cost have been allowed. A summary of the cost estimates is given in Table 4.1 and the detailed cost estimates are presented in Annex 5. The foreign exchange content amounts to about 81 percent. This results from the fact that all fuel, lubricants, steel, cement, machinery and equipment as well as skilled manpower required for execution of the works have to be imported. The local cost components comprises construction of labour camps, development of quarry sites and borrow pits and their corresponding environmental mitigating measures, and compensation of property loss due to realignment of the road.

Table 4.1: Summary of Overall Project Cost

ZAR (million) UA (million) Component

F.E L.C Total F.E L.C Total % FE Civil Works 299.83 69.76 369.59 29.84 6.94 36.79 81 Supervision 21.60 2.40 24.00 2.15 0.24 2.39 90 Audit Services 0.60 - 0.60 0.06 - 0.06 100 Total Base Cost 322.03 72.16 394.19 32.05 7.18 39.23 82 Physical Contingencies 32.20 7.21 39.41 3.20 0.72 3.92 82 Price Contingencies 19.45 10.40 29.85 1.94 1.03 2.97 65 Total Project Cost 373.68 89.77 463.45 37.19 8.93 46.13 81

4.8 Sources of Financing and Expenditure Schedule 4.8.1 ADB and GOS will jointly finance the project components. ADB will provide 100 percent of the Foreign Exchange (F.E.) requirements for the project amounting to a total of ZAR 373.68 million (UA 37.19 million). GOS will provide 100 percent of the local cost (L.C.) requirements of the project amounting to ZAR 89.77 million (UA 8.93 million), and all taxes and duties. In

17 summary, ADB will finance 81 percent of the total project cost and GOS will finance 19 percent of the total project cost. The financing plan by component is presented in Table 4.2 and the financing plan by source is presented in Table 4.3. The provisional list of goods and services is attached as an Annex 5.

Table 4.2: Financing Plan by Component (ZAR) million)

ADB GOS Total Component

FE LC Total FE LC Total FE LC Total Civil Works 299.83 - 299.83 - 69.76 69.76 299.83 69.76 369.59 Supervision 21.60 - 21.60 - 2.40 2.40 21.60 2.40 24.00 Audit 0.60 - 0.60 - - - 0.60 - 0.60 Contingencies 51.65 - 51.65 - 17.61 17.61 51.65 17.61 69.26 TOTAL 373.68 - 373.68 - 89.77 89.77 373.68 89.77 463.45

Table 4.3: Financing Plan by Source

ZAR (million) UA (million) Source

F.E. L.C. Total F.E. L.C. Total %

ADB 373.68 - 373.68 37.19 - 37.19 81 GOS - 89.77 89.77 - 8.93 8.93 19 Total 373.68 89.77 463.45 37.19 8.93 46.13 100

Expenditure Schedule 4.8.2 The provisional expenditure schedule and its source of finance are shown below in Tables 4.4 and 4.5, respectively.

Table 4.4: Expenditure Schedule by Category (ZAR million)

Category 2004 2005 2006 Total A. Civil Works 173.88 195.61 65.21 434.70 B. Consultancy Services

11.26 11.26 5.63 28.15 - Supervision -Audit 0.20 0.20 0.20 0.60 Total 185.34 207.07 71.04 463.45

Table 4.5: Expenditure Schedule by Source (ZAR million)

Source 2004 2005 2006 Total ADB 149.44 166.96 57.27 373.68 GOS 35.90 40.11 13.76 89.77 Total 185.34 207.07 71.04 463.45

4.8.3 The principal terms of the loan are as follows:

i) Loan Amount : ZAR 373.68 million ii) Currency : South African Rand (ZAR)

iii) Type of Loan : Fixed Interest Rate Loan

iv) Interest Rate : Equal to Base Rate plus the Bank’s funding cost margin

plus a market risk margin of one basis point per year of maturity plus one half of one per cent (0.50%).

v) Commitment Fee : 0.75 per cent per annum on the un-disbursed amount commencing 60 days after the signature of the loan agreement. The Borrower may be eligible for a waiver of

0.50 per cent.

18

vi) Loan Maturity : The loan will have a maturity of twenty (20) years inclusive of a four (4) year grace period.

vii) Loan Repayment : The loan will be repayable in thirty two (32) equal and

consecutive semi-annual instalments commencing on the loan repayment date immediately following expiration of the grace period.

5. PROJECT IMPLEMENTATION 5.1 Executing Agency

MPWT through RD will be the Executing Agency (EA) for the project. RD has

successfully implemented 12 Bank-funded transport operations and its performance can be judged as satisfactory. In recent years, RD performance in the execution of projects has substantially improved with the training of 34 graduate engineers. In particular, RD has benefited from the execution of road rehabilitation projects and capacity building component under the Transport Sector Project financed by the Bank. Currently, RD is implementing the on-going Two International Roads Project and the use of savings under the Transport Sector Project. Both projects are progressing satisfactorily. Based on the foregoing, RD has sufficient experience and capacity to carry out the responsibilities for the execution of the components proposed in the project. 5.2 Institutional Arrangements

In order to ensure proper coordination, monitoring and supervision of implementation, it will be necessary for RD to designate one of its engineers with the requisite qualifications and experience to act as project coordinator. The coordinator will be a civil engineer with a minimum of 5 years experience in project management. His/her duties will include assistance in the preparation of progress report, processing of payment certificates and the preparation of the Borrower’s PCR. The assigning of an engineer for this purpose acceptable to the Bank has been included as a loan condition. 5.3 Supervision and Implementation Schedules 5.3.1 An experienced firm under a unit price contract will undertake the construction works. The construction period for the Mbabane Bypass will be 24 months. The commencement of the civil works is expected to be in January 2004 and its completion in December 2005. A one-year maintenance defects liability period will follow at the end of the construction activities. 5.3.2 A reputable consulting firm on behalf of the EA will supervise the civil works under a lump sum contract. The pre-contract consultancy services for the Mbabane Bypass will commence three months prior to commencement of the civil works and thereafter supervision of the civil works will last up to the end of the maintenance defects liability period (i.e., December 2006). Day-to-day supervision of each road will be the responsibility of the Resident Engineer of the consultant with appropriate staff based on site. The respective supervising consultant will also be responsible for the preparation of monthly and quarterly progress reports of the project. 5.3.3 A summary of the tentative implementation schedule is given below and more details are provided in Annex 6.

19 Loan Processing Activity Action/Agency Target Date Board Presentation ADB December, 2003 Schedule of Civil Works Activity Action/Agency Target Date Advance Procurement Action General Procurement Notice Issued

MPWT/ADB MPWT/ADB

August, 2002 (Approved) 16th October, 2002 (Done)

Specific Procurement Notice (SPN) Issued MPWT/ADB November, 2002 (Done) Pre-qualification Report Approved MPWT/ADB August, 2003 (Done) Tenders Invited MPWT August, 2003 (Done) Tenders Received MPWT November, 2003 (Ongoing)Evaluation, Approval and Award MPWT/ADB December, 2003 Contract Awarded GOS December, 2003 Commencement of Works MPWT January, 2004 Completion of Works MPWT December, 2005 End of Maintenance Period MPWT December, 2006 Schedule of Supervision Negotiation and Draft Contract Approval MPWT/ADB August, 2003 (Done) Consultant Appointed GOS December, 2003 Consultant Services Commenced MPWT December, 2003 Consultant Services Completed MPWT December, 2006 5.3.4 One launching mission of 2 person-weeks will be undertaken within a month after the Bank has declared the loan effective. Overall supervision by the Bank will amount to 8 person-weeks of two field supervision missions per year. Desk supervision in ATR (Tunis) for review of documents, reports and disbursement issues will take additional 4 person-weeks per year. 5.4 Procurement Arrangements 5.4.1 Procurement arrangements are summarised in Table 5.1. All procurement of goods, works and consulting services financed by the Bank will be in accordance with the Bank’s ‘Rules of Procedure for Procurement of Goods and Works’ or, as appropriate, ‘Rules of Procedure for the use of Consultants’, using the relevant Bank Standard Bidding Documents.

Table 5.1: Summary of Procurement Arrangements (ZAR million)

ZAR (million) Category ICB Short-list Other** Total

Civil Works 434.70 (348.38) - - 434.70 (348.38) Supervision Consultancy - 28.16 (24.70) 28.16 (24.70) Audit Services - 0.60 (0.60) 0.60 (0.60)

Total 434.70 (348.38) 0.60 (0.60) 28.16 (24.70) 463.45 (373.68) Note: * - Figures in brackets are the amounts financed by ADB. ** Contract Extension Civil Works 5.4.2 Procurement of civil works components will be carried out under International Competitive Bidding (ICB) procedures. One such contract following ICB procedures will be awarded for the civil works component and is valued at ZAR 434.70 million. Pre-qualification of contractors has been completed and tendering is on-going.

20 Supervision Consulting Services for Civil Works 5.4.3 Consultancy services for the supervision of civil works will be awarded and is valued at ZAR 28.16 million under one contract. The GOS has requested that the firm of consulting engineers that updated the feasibility study and carried out the detailed engineering studies/designs and prepared the tender documents be retained to supervise the civil works for the Mbabane Bypass. The retention of the firm will ensure that the designs and contract documents are interpreted properly during project implementation. Also, if any modifications in design are found necessary in the course of construction, these will be done at no additional cost and according to the original design principles. 5.4.4 The firm that carried out the feasibility studies/detailed engineering designs for the Mbabane Bypass road was acquired through a competitive short-list and in accordance with the procurement rules of the Bank and Central Tender Board of Swaziland. The output of the designs as well as the performance of the firm is satisfactory. The consultant is currently supervising the civil works on the on-going Two International Road Project and the performance of the firm is considered satisfactory. The consulting firm has experience in the fields of planning, design and supervision and has been advising GOS on the pre-contract services of the proposed project. Therefore, the retention of the design consultant is consistent with the desire to advance the implementation of the project and technical interpretation of the detailed designs, is in conformity with the Bank’s rules of procedure. The cost of the services will be based on current market rates in the supervision of road projects in Swaziland. The costs will be negotiated and subject to review by the Bank.

Audit Services

5.4.5 The selection of a consultant for auditing the project valued in total at approximately ZAR 0.60 million (UA 0.06 million) will be acquired through a short-list of qualified consultants in accordance with the Bank’s ‘Rules of Procedure for the Use of Consultants’. The selection procedure will be based on comparability of technical proposals and selection of the lowest financial offer. As the amount is less than UA 0.35 million, the Borrower will limit the publication of the announcement to national or regional newspapers. However, any eligible consultant, being regional or not, may express his/her desire to be short-listed. For continuity, the contract would be one year with the renewable option of retaining the same consultant. National Procedures, Regulations and Executing Agency 5.4.6 Swaziland national procurement laws and regulations have been reviewed and determined to be acceptable. The EA will be responsible for the procurement of goods, works and services. The EA has been executing similar projects financed by the Bank and other donors such as European Union (EU), Kuwait Fund (KF) and Arab Bank for Economic Development for Africa (BADEA), and is familiar with Bank procurement rules and procedures. The resources, capacity and expertise of the EA have been assessed and found adequate to carry out the procurement activities under this project.

General Procurement Notice and Review Procedures

5.4.7 The text of the General Procurement Notice (GPN) and the Specific Procurement Notice (SPN) have been agreed with MPWT and issued for publication in United Nations Development Business in October and November 2002, respectively. Tendering is on-going and expected to be completed by December 2003.

21 5.4.8 The following documents are subject to review and approval by the Bank before promulgation: (i) Tender Documents and Request for Proposals for project auditing services; (ii) Tender Evaluation Reports and Reports on Evaluation of Consultant for Audit Services proposals, including recommendations for Contract Award; and (iii) Draft contracts, if they have been amended from the drafts included in the tender invitation documents. 5.5 Disbursement Arrangements The loan will be disbursed against three categories of expenditure namely civil works, supervision consulting services and audit services using the direct payment method made against standard documentation as specified in the Bank’s ‘Disbursement Handbook’. 5.6 Monitoring and Evaluation 5.6.1 The monitoring of project implementation will be done through monthly progress reports and quarterly progress reports prepared by the consultant and GOS in the Bank's format. These reports will include progress achieved against agreed implementation and disbursement schedules, key performance indicators, work program and cost estimates for the next quarter. The reports will provide updated information on project implementation, highlighting key issues and problem areas, and recommending action plans for resolving identified bottlenecks. In addition, the project will be monitored through ADB field supervision missions (i.e., twice a year). 5.6.2 The officer in charge of environmental issues within MPWT and the supervision consultant will monitor the implementation of the environmental mitigating measures contained in the CMP. An officer from SEA will also provide assistance. SEA has already issued an environmental compliance certificate to MPWT on behalf of the proposed project. The comprehensive environmental guidelines prepared by SEA for infrastructure works in Swaziland shall be followed as guidance for monitoring these measures. 5.6.3 The supervising consultant is required to prepare and submit to the EA and the Bank a final report at the completion of the project. Pursuant to the general conditions of Bank loans, the Borrower will prepare a PCR within six months on completion of the project. The final report prepared by the consultant and the Borrower’s PCR will provide the background documents for the preparation of the Bank’s PCR in the established format. These reports will form the basis for post-evaluation of the project. 5.7 Financial Reporting and Auditing RD shall maintain separate accounts for the project in accordance with sound and acceptable accounting practices. This should allow identification of expenditures by component, category and source of finance. The project financial statements will be audited in accordance with international standards acceptable to the Bank and audited accounts with audit report of the project will be submitted to the Bank regularly on yearly basis. Some funds have been catered for in the cost estimate for audit of the project. The selected auditor shall also use to the Bank’s guidelines for auditing projects. 5.8 Aid Co-ordination In the transport sector, ADB, Japan International Co-operation Agency (JICA), EU, KF and BADEA have been financing technical studies as well as rehabilitation and development projects. The proposed project is being implemented as part of the NDS and also part of Bank’s support for the ESRA. Donor activities are co-ordinated by MOF and MEPD through donor

22 briefings and meetings. The MOF is responsible for co-ordinating project loan related activities and MEPD for vetting of projects. The EU and the United Nations Development Program (UNDP) have local offices and acts as a depositary for donor co-ordination while other donors monitor projects/programmes from Pretoria. The Bank continues to monitor the progress through official missions and routine reports submitted by other donors. The proposed project was discussed with representatives of EU and UNDP in Swaziland during the Bank’s preparation mission, and indications were that the Mbabane Bypass would ease transport bottlenecks in the MR3 corridor. 6. PROJECT SUSTAINABILITY AND RISKS 6.1 Recurrent Costs

Throughout the construction and guarantee period for the road, the construction firm will be responsible for road maintenance. One year after commissioning, the maintenance expenditure will be taken over by the RD and will be charged to the road maintenance budget. The maintenance activities comply with the current maintenance policy mostly comprising routine maintenance of the roadside, ancillary works including pothole patching. This is estimated at SZL 0.083 million per year for the project road. Also periodic maintenance, comprising of resealing of the surface after every six years of traffic use would be undertaken to refresh and prolong the life of the road. It is estimated that about SZL 3.08 million would be needed for periodic maintenance. The above maintenance expenditure would be met by the GOS through budget allocations to the RD. 6.2 Project Sustainability 6.2.1 The GOS, has over the years been, strictly adhering to providing to providing the financial requirements for road maintenance under the general budget in order to ensure sustainability. The GOS has committed itself to start a Road Fund and to raising the full budgetary allocations for routine and periodic maintenance of the national network. It also intends to toll this road so as to recover cost and provide for the maintenance through user charges mechanism. The availability of these funds have been committed by the Government through the allocation of sufficient revenue to the RD through the Government’s general budget and also providing additional allocation to the RD under the vote for recurrent activities. 6.2.2 The long-term sustainability of the road is going to be assured through the preservation of the investment by the implementation of the user pay principle of tolling. In January 2000, the Cabinet approved the tolling of the Ngwane-Mbabane-Manzini as a viable undertaking after a detailed study and consultation of stakeholders have been undertaken by the MPWT. It is envisaged that tolling will be done at the Ngwenya Border Post and at the Emvutjwini just after Malagwane Hill. This will generate sufficient revenue to ensure the proper maintenance of the entire road. The operation will be managed through a Comprehensive Toll Road Operation and Maintenance (CTROM) contract. The capital requirement of the toll road has been estimated at SZL 35 million and it is to be provided under a Government guaranteed loan. The road is expected to generate about SZL 34 million per year. Additionally, a weighbridge has been installed at Matsapha to check axle loading for overweight trucks in order to prevent premature failure of the pavement. 6.3 Critical Risks and Mitigating Measures 6.3.1 The project is expected to encounter some critical risks. Increase in project costs which are attributable to delays in procurement and project start-up activities and secondly project design

23 changes and scope of works. To a large extent this risk has been mitigated by the fact that the GOS has requested for Advance Procurement Action (APA) for which the Bank has approved. This will reduce the time lag for procurement and more importantly improve the chances of the construction of the Mbabane Bypass road being on time to join the other sections, which might have been completed already (i.e., Nkoyoyo to Ngwenya). RD through the utilization of TA provided by the Bank and the Japanese Government will effectively handle procurement activities for donor funded projects, especially on-going Bank financed projects, and the risk associated with this assumption would be minimized. 6.3.2 A potential risk to implementation of road works in the Kingdom is the acquisition of land required for the right of way of the project road. Based on experience from previous similar projects in the country, the timeliness in the acquisition of land in relation to the programme for construction is very critical. The experience from the on-going Two International Roads Project has been positive in this regard. In fact for the Mbabane-Bypass, about half of the land has been acquired and for the other half both the statutory and administrative arrangements are far advanced. However, in order to be prudent and also to minimise the occurrence of protracted land litigation during construction, it is recommended as a loan condition that actual acquisition of the land must be acquired by the GOS prior to commencement of the civil works. 6.3.3 The Mbabane Bypass road lies mainly in an urban setting. This means that services including electricity, telephone, lines and underground water pipes will have to be relocated in order to widen the road to dual carriageway standards. Any delay in the timely relocation of such services could result in delays in the construction work that can be translated to increase costs. During the re-appraisal mission in April 2003, the MPWT has already started the activity with the utility companies. However in order to minimise the possibility of such a risk, it is recommended that as a loan condition, the GOS be made, prior to the commencement of the civil works, arrange with the relevant statutory utility company for the expeditious relocation of such services. 7. PROJECT BENEFITS 7.1 Economic Analysis

Traffic 7.1.1 For the analysis, the Mbabane-Bypass was divided into two sections: Section A corresponds to Mbabane downtown (Mangwaneni) to SCOT Junction; and Section B which covers SCOT Junction to Nkoyoyo. The average daily traffic (ADT) flows for each section was obtained from previous studies and constituted the base year traffic. In 1998, ADT of about 7,284 was recorded for all sections of the Mbabane-Ngwenya road. Time series traffic counts data for the period 1990 to 2001 was obtained from RD. These data refer to two specific census stations: MR03/1 near Motshane representing the Section A and MR03/2 situated at Nkoyoyo representative of the Section B. The results indicate that the traffic fluctuate unevenly from year to year with an overall tendency to a traffic increase (i.e., an average traffic growth of 5.5% for Section A and 5.2% for section B) during the 10 year period. 7.1.2 Traffic prediction depends on a number of parameters and the interrelationship between them. Normally, traffic related time series data such as traffic counts, vehicle-km, fuel consumption, vehicle fleet, vehicle registration etc is analyzed in relation to macro-economic indicators (e.g., GDP, GDP/capita to determine the traffic forecast). In this particular case, the best correlation was obtained using vehicle registration and fuel consumption. Light vehicles, buses, and trucks (heavy goods vehicles) were analyzed separately. Although bus registration has

24 increased at very high rate over the period 1995-2000 (about 14%), it cannot be sustained in the long term. The elasticity adopted for buses was the average elasticity of light and heavy goods (trucks) vehicles. The adopted elasticity for projections are 1.65 for light vehicles; 1.60 for buses; and 1.55 for heavy goods vehicles. 7.1.3 The GDP is assumed to grow at 2.5%-3% in the short to medium term. This rate is assumed to occur up to and including the year 2010, after which a flat average annual value of 2.0% was assumed. From this, traffic growth rates for the 2002-2010 are assumed to be 5.1%, 5% and 4.8% for light, buses, and trucks, respectively. For the period 2011-2026, the rates for light vehicles, buses, and heavy goods are 4.1%, 4.0 and 3.9%, respectively. Based on these growth rates, it is estimated that in 2003 the total ADT for Section A will be12,187; 14,145 in 2006 when the road is opened to traffic; and 33,215 by the end of the useful life of the road (i.e., in 2026). Similarly, for Section B the 2003 ADT is 9,335; 10,833 in 2006; and 25,423 in 2026.

Economic Benefits and Costs 7.1.4 The project road will represent upgrading from a two-lane to a four-lane dual carriage-way for the SCOT Junction-Nkoyoyo; and four-lane new alignment for SCOT Junction to downtown. Two types of benefits are relevant to upgrading of the road compared to the current situation of continuation of basic maintenance. These benefits are savings in road user costs and maintenance costs. The road user cost savings consists of difference in vehicle operating costs (VOC) related to both distance and time between the improved and existing road options. With regard to the road maintenance savings, the upgraded road entails much lower maintenance costs compared to a deteriorated and/or lower grade road surface that calls for constant attention in terms of maintenance. With regard to the Mbabane Bypass road, reductions in accident as well as congestion aspects were included in the calculation of benefits. The impact of congestion on VOC and hence on the economic analysis results was directly modeled by the Highway Design and Management Model (HDM IV). Potential benefits from reduced accidents resulting from the upgrading of the existing road to dual carriageway were computed as exogenous variable. 7.1.5 A number of qualitative benefits will accrue to road users. The road users including the traveling public will benefit by reason of reduction in travel times which is normally associated with higher speeds as a result of upgrading of the road. The lower travel times will have the positive impact in reducing inventory levels of traders, suppliers as well as manufacturers found in along the corridor. Other benefits like increased comfort, reliability, frequency, accessibility of transport services would be gained by upgrading the road. Ultimately, these invariably create easy and comfortable access to places of work, markets, schools, health facilities and the economic and reliable transport service. 7.1.6 The methodology employed for the economic analysis was based on the comparison of 'with project' and 'without project ' scenarios over the 20 year economic life of the road. Upgrading of the existing road to dual carriageway standard represents the 'with project' case scenario while the existing road without improvement represents the 'without the project' case. The economic analysis was done using the HDM-IV model and the viability of the road was assessed using the criteria of Economic Internal Rate of Return (EIRR) and Net Present Value (NPV). The economic costs include construction costs, routine and periodic maintenance costs, construction supervision and audit services costs as well as physical contingency but less price escalation. A factor of 0.75 was employed to convert financial to economic costs. The salvage value of the road at the end of the 20-year life span was calculated on the basis of the estimated residual value of its construction components and estimated to be 36% of the initial construction costs.

25 7.1.7 Economic costs for the paved road maintenance operations used were as follows: SZL 8,214/km/year for routine maintenance; SZL 90/m2 for patching; SZL 6/m2 for resealing; and SZL 20/m2 for overlay. The maintenance policy for the ‘do nothing’ approach entails routine maintenance, patching of 100% of potholes and resealing every 6 years. The maintenance policy for the constructed road is based on engineering design reports taking into account an asphalt concrete pavement which includes routine maintenance, patching of 100% of potholes and 30-mm overlay every 10 years. 7.1.8 Comparison of the quantifiable project economic benefits and costs during the design life of 20 years yielded EIRR of 20.3% and NPV of SZL 229.0 million at 12% for the project road. As this EIRR is higher than the opportunity cost of capital (12%) for Swaziland; and the NPV is positive, the implementation of the road project is justified. The result is shown in Annex 7. The EIRR takes into account only the quantifiable benefits. If the qualitative benefits are assigned some monetary weights, it is clear that the project is more than justified from both economic and social viewpoints. 7.2 Sensitivity Analysis 7.2.1 Sensitivity analysis was carried out to gauge impact of the changes in the values of important variables like construction cost and traffic level (VOC savings) on the economic viability of the project. For this exercise, the economic analysis was undertaken under the following scenarios: 20% increase in construction cost, 20% decrease in construction costs, 20% increase in VOC savings, 20% decrease in VOC savings, and a combined 20% increase in construction and 20% decrease in VOC savings. 7.2.2 The results of the sensitivity analysis and the other economic criteria are shown in Table 7.1. The sensitivity analyses show that the EIRRs obtained are higher than the opportunity cost of capital for Swaziland. Therefore, the project can be considered as economically viable.

Table 7.1:Economic and Sensitivity Summary

Alternative/Index Sections A+B (11.0 km)

Construct. Cost (+20%) 17.7% Construct. Cost (-20%) 23.9% VOC savings (+20%) 23.2% VOC savings (- 20%) 17.0% CC (+20%) & VOC(-20%) 14.7%

7.3 Social Impact 7.3.1 The Matsapha-Manzini-Mbabane-Ngwenya corridor is the most highly developed corridor in the Kingdom of Swaziland in terms of population, industrial, manufacturing and concentration of social and community amenities and government services. At the last census, the population of the two regions (i.e., Hho-Hho and Manzini) where the project road is situated was 536,417 (i.e., more than 50% of the Swazi population) and growing at an annual rate of 3.2%. From a social viewpoint, upgrading of the project road will result in the reduction of vehicle operating cost, travel time and reduction in accidents. 7.3.2 The project road constitutes part of the backbone of Swaziland road network. The traffic pattern along the road is typical of a commuter route with peaking characteristics during the day (morning, mid-day, and evening). However, the existing geometrical characteristics of the road significantly reduce the overtaking opportunities along the road. The situation is aggravated during

26 the peak periods. With the provision of addition lanes there will be a significant reduction in queuing of vehicles and driver frustration as well as conserve energy consumption. 7.3.3 Women constitute about 51% of the population of Swaziland and have lower mortality than men. They are more educated than their male counterparts. Adult female illiteracy rate is about 21% and the comparable situation is about 70% in the rural areas. In Government employment, only about 11% are female and of these only 11% hold management position. The GOS established a Gender Unit at the Ministry of Home Affairs in 1996 to identify and address gender issues. The issues which have been identified include: the inherent biases in civil and customary law which presume women to be perpetual minors; strong influence of the traditional systems where women are under the male guardians for most of the decision making. These gender issues in most cases have complicated the poverty burden of women. The NGCO has progressed in the process of drafting a National Gender Policy as well as the necessary legal reforms to allow gender equity in national life. 7.3.4 It is estimated that of the population of the project area, about 53% are women. The improvement of the road will benefit women as workers employed especially in Mbabane, Matsapha, and Manzini. Large numbers of women are employed in Government offices in Mbabane; the hotel, tourist and hospitality industry in the Ezulwini Valley; as well as the commercial and industrial centers of Matsapha and Mbabane. The project road will increase the mobility of women in the conduct of these employment activities and thereby improve economic efficiency and accessibility to jobs leading to increase in incomes. 7.3.5 Along the project road, there are other commercial activities in the small scale farming of vegetables as well as the managing of small farms, operating stores and farms. The project road will help in the delivery of supplies and the inputs as well as accessibility to potential buyers. During the on-going Two International Roads Project, about 25% of the women are employed on construction work. It is expected that during implementation of the proposed project, about the same number of women will be employed. 7.3.6 Two major developments in the project, which will have both impact socially and improve the quality of life for women, are the Makholokholo Township Development (MTD) and the Ngwenya Industrial Estate Development. Out of the 60,000 people expected to be employed in these establishments, about 70% are envisaged to be women. There is no doubt that the proposed project will play a vital role in the movement of goods and peoples to their respective destinations. 7.3.7 Social problems associated with road works include prostitution and the inevitable transmission of diseases of which the most dangerous would be Sexually Transmitted Diseases (STD), in particular HIV/AIDS. Local communities would be educated on the risks of STD and means to reduce the risks. As part of the civil works contract and the environmental impact statements, the contractor will budget for public education. Also, there would be preventative health facilities in the construction camps as well as a budget in the civil works contract for information and education of STD, which would be managed by the Ministry of Health and NGOs working in HIV/AIDS campaigns to specifically target the camps along the road. Schools and institutions would be included in the campaigns.

27 8. CONCLUSION AND RECOMMENDATIONS 8.1 Conclusions 8.1.1 The GOS attaches a lot of importance to road infrastructure development especially the Two International Roads Project that connects the Kingdom to its neighbor of RSA and Mozambique. The project will support Government policy for restoring economic growth through improving road transport and developing the main road axis to the RSA, which is its major trading partner. 8.1.2 The objective of the project is consistent with the government’s national development strategy and the delivery of social services. The improvement of the road has international significance and it will improve cross-border international traffic. Domestically, the project will improve the transport service levels (i.e., easy access, road safety and reduction in VOC) as well as enhance the economic opportunities especially in the Mbabane-Ngwenya corridor. The proposed project is in conformity with the Bank Group’s country strategy as well as the transport sector policy. 8.1.3 The project is well conceived, technically feasible, economically viable, and environmentally sustainable. Using only the quantifiable road user benefits, the project road yields an EIRR of 20.3%, which is satisfactory for this type of investment. The construction of the road will give rise to other economic and social benefits, which will have significant impact on poverty reduction in the project area. 8.2 Recommendations 8.2.1 It is recommended that an ADB loan not exceeding ZAR 373.68 million (UA 37.19 million) should be extended to the Government of the Kingdom of Swaziland for financing the Mbabane Bypass. The loan shall be subject to the following specific and particular conditions: A) Conditions Precedent to Entry Into Force:

The entry into force of the Agreement shall be subject to the fulfillment by the Borrower of the conditions set forth in Section 5.01 of the General Conditions Applicable to Loans and Guarantee Agreements of the Bank.

B) Conditions Precedent to First Disbursement:

The obligations of the Bank to make the first disbursement of the loan shall be conditional upon entry into force of this Loan Agreement as provided in section 8.2.1 (A) above and the Borrower shall have to the satisfaction of the Bank:

i) Assigned from the Roads Department of MWPT, an engineer, whose qualifications

and experience are acceptable to the Bank, as the project coordinator for the duration of the implementation of the project (para. 5.2);

ii) Given an undertaking to implement the Environmental Comprehensive

Management Plan (CMP) and the Full Resettlement Plan (FRP) according to SEA regulations and which is acceptable to the Bank (para. 4.6.3);

iii) Submitted documentary evidence that the project affected people would be

compensated (para. 4.6.3); and

28

iv) Submitted to the Bank documentary evidence that it shall acquire all land and road reserves required for the project (para. 6.3.2 ).

(C) Other Conditions The Borrower shall:

(i) Implement the CMP and FRP for the road according to SEA regulations with reporting to the Bank through quarterly progress reports (para. 4.6.3 )

(ii) Prior to the commencement of the construction works, the Borrower should have

made adequate arrangements with the relevant statutory authorities for the expeditious re-location of any services such as power, water, sewerage and telephone lines (overhead and underground), easements, and wayleaves along the Mbabane Bypass road (para. 6.3.3).

Annex 1

Project Location Map

KINGDOM OF SWAZILAND MBABANE BYPASS (TWO INTERNATIONAL ROADS PROJECT PHASE 2)

Annex 2 Page 1 of 2

KINGDOM OF SWAZILAND MBABANE BYPASS (TWO INTERNATIONAL ROADS PROJECT PHASE 2)

Organogram of Ministry of Public Works and Transport

Source: Roads Dept, MPWT, July 2003

Honorable Minister

Parastatals

Principal Secretary

Planning Unit Chief ProfessionalOfficer

Under Secretary Technical

Under Secretary Administration

Civil Aviation

Roads Department

Central Transport Administration (CTA)

Buildings

Road Transportation Department

Meteorology

Housing Admin

Anti-Abuse

Personnel

Finance

Annex 2 Page 2 of 2

KINGDOM OF SWAZILAND MBABANE BYPASS (TWO INTERNATIONAL ROADS PROJECT PHASE 2)

Roads Department Current Organisational Structure

Source: Roads Dept, MPWT, July 2003

PRINCIPAL SECRETARY

CHIEF PROFESSIONAL OFFICER

CHIEF ROADS ENGINEER

TRAINING – Roads Engineer

PLANNING & DEVELOPMENT Principal Roads Engineer

PLANNING & DESIGN – Senior Roads Engineer

PLANNING Rds Engineers

DESIGN Roads Engineers

MATERIALS Rds. Engineers

Road Mgmt System

Mid Year Programmes

Traffic Counts

Surveyors Materials Laboratory

OPERATIONS DIVISION

MAINTENANCE CONSTRUCTION CONTRACTS

MAINTENANCE CONTRACTS

PLANT AND EQUIPMENT

OPERATOR INSTRUCTOR SECTION

MAINTENANCE DEPOTS - DISTRICT

MBABANE, SITEKI, LUBULI, NHLANGANO MAINTENANCE DEPOTS

SPECIAL UNITS

CONTACT CONSTRUCTION SUPERVISION

CONSTRUCTION UNITS

Annex 3 KINGDOM OF SWAZILAND

MBABANE BYPASS (TWO INTERNAIONAL ROADS PROJECT PHASE 2) BANK GROUP FINANCED OPERATIONS

1. Completed Projects for which PCR has been done

i) Power Transmission (ADB, UA 1.50 million) ii) Ngwavuma Irrigation Study (ADF, UA 0.32 million) iii) Manzini-Mahamba Road Study (ADB, UA 0.17 million) ii) Lupohlo-Ezulwini Hydro Power (ADB, UA 6.50 million)

iii) Lonhlupheko-Lomahasha (ADB, UA 5.30 million) iv) Telecommunications II (ADB, 0.70 million) v) Telecommunications III Project (ADB, UA 5.0 million) vi) Mafutseni-Mliba Road (ADB/ADF, UA 6.20 million)

vii) Telecommunications I (ADB, UA 1.50 million) iv) Telecommunications Supplementary (ADB, UA 7.82 million)

viii) Integrated Rural Development (ADB, UA 4.50 million) ix) Inst. Support to Agriculture Sector (TAF, UA 0.,68 million) x) Simunye Sugar Project (ADB, UA 5.0 million) xi) Health Services Development Project (ADB/NTF, UA 10.13 million) xii) Cotton Yarn Manufacturing (ADB, UA 5.0 million) xiii) Mkhondo River-Mahamba Road (ADF, 7.37 million)

xiv) Mkhondo River-Mahamba Road (Emergency Supplement) (ADF, UA 4.61 million) xv) Road Rehabilitation Studies (ADF, UA 0.54 million) xvi) Small holder Credit and Marketing Project (IFAD) xvii) Telcommunications Masterplan Study (ADF, UA 0.55 million) xviii) Main Roads Rehabilitation (ADB/ADF/TAF, UA 8.45 million) xix) Mbabanne-Mbalambanyasti Road (ADF, UA 4.79 million) xx) Health Sector Medium Term Strategy and Action Plan (TAF, UA 5.3 million) xxi) Education Study (ADF, UA 0.48 million)

2. Completed Projects for which PCR has not been done or has not been finalized i) Education I Project (ADF, UA 9.21 million)

ii) Transport Sector Project (ADB/ADF/TAF, UA 49.81 million) 3. Cancelled Projects (i) Line of credit to NIDCS (ADB, UA 5.0 million) (ii) Line of Credit to SDSB (ADB, UA 6.0 million) 4. On-going Projects

Project Title Date Approved Source and

Amount (UA million)

Amount Disbursed (million)

Education I Project 24/11/93 9.21 UA 7.10 Two International Roads Project (original)

18/11/94 ADB – 24.73 UA 20.45

Two International Roads project (Supplementary)

10/10/01 ADB – 11.47 (ZAR 113.6)

ZAR 99.52

Lower Usuthu Smallholder 15/12/01 ADB 28.73 Nil

Source: ADB Files, July 2003

Annex 4 Page 1 of 2

ENVIRONMENTAL AND SOCIAL MANAGEMENT PLAN SUMMARY

Project Title: SWZ Int'l Roads II Project Number: Country: Swaziland Department: ONIN Division: ONIN.3 Environmental Category I

a) Brief description of the project and key environmental and social components

The project is the second phase of the Two International Roads Project and involves upgrading 5-km of existing two-lane paved road and construction of 6-km road to 50-mm thick asphalt concrete dual carriageway (2x7.0-m lanes per direction) and 2.0-meter wide paved shoulder on each side of the Mbabane Bypass (total length 11 km).

b) Major environmental and social impacts

Positive Impacts: The overall improvement in road quality will lead to: • Improved transport of people and goods; • Enhancement of safety for vehicles and pedestrians; • Improved business opportunities; • Promote business and employment opportunities; • Increased convenience as new road furniture will be provided; • Induction of development of local communities in Motjane and Ngwenya; • Contribution to regional and national development; • Facilitated access to health, educational, services and market centers; and • The use of local labourers and supplies during construction, which will improve socio-economic conditions with a

wage related income coming to the region.

Potential Negative Issues: On the short to medium terms, the project could lead to: • Displacement of about 1350 people and land acquisition of 106 homesteads; • Some damaging of terrestrial and aquatic habitats; • Minimal soil erosion and siltation from run-off caused by erosion; • Noise, dust, and visual impairment; • Disruption of traffic; • Human and vehicular safety issues; • Some inconvenience during road operation due to noise from fast moving vehicles, risks to aquatic habitats caused

by run-off from exposed surfaces, and safety of animals, humans and vehicles due to increased traffic flow.

c) Enhancement and mitigation program

An Environmental Comprehensive Mitigation Plan (CMP) was developed for MPWT by a consulting firm following the policy of the Swaziland Environmental Authority. The following is a summary framework of the CMP: • The relocated people will be resettled in housed built together with other numerous structures such as schools,

services, etc. Two host areas were identified which are not more than one kilometre away from the current settlement. The resettlement process will cost about UA 2.5 million that was budgeted in the project cost and will be financed by the government.

• According to the Acquisition of Property Act no. 10 of 1961, and the Road and Outspans Act no. 40 of 1931, an appropriate compensation package will be agreed with the affected parties before commencement of construction.

• Pre-casting sites will be approved by SEA and local chiefs, sited away from surface water streams and wetlands; • All vehicle movement will be restricted to clearly demarcated construction corridor, access routs to borrow pits and

other existing tracks and roads; • All dumps and stockpiles will be arranged not to be exposed to the wind and water sprayed frequently; • Topsoil at stockpiling and other construction sites will be stripped and stored with as little compaction for

rehabilitation of disturbed lands; • Care will be taken to prevent spillage of noxious liquids and solvents with special care paid to hazardous materials; • Since the road mainly follows the existing alignment, vegetation clearance and grubbing will be kept to a minimum

and made after the rainy season with protected plants relocated; • Only two existing borrow pits will be used, and will be rehabilitated in harmony of the surroundings as soon as they

are no longer required; • Run-off entering and leaving the borrow pits and will be strictly controlled;

Annex 4 Page 2 of 2

• Traffic disruption and alternative routes will be scheduled and published to road users one week ahead; • Where feasible, the road will be water sprayed during construction to control dust. However, water abstraction for

construction activities will be done carefully to limit any potential negative impacts (in terms of quality and quantity);

• To prevent risks to local streams caused by run-off from exposed surfaces, road drainage system will be constructed with proper flow velocity maintained and kept free of refuse using curvatures and gradients. In addition, drainage structures will be regularly cleared of debris and silt as part of the maintenance operations;

• Measures of occupational health, including suitable sanitary facilities and STD's controls, will be maintained with proper training to the labor force;

• Contractor will inform local communities on job openings, give preference to locals when opportunities arise and provide training when necessary; and

• Traffic management measures will be adopted including urban/rural speed control, proper pedestrian and animal crossings, and ample signposts.

d) Monitoring program and complementary initiatives

• MPWT will provide regular compliance reports according to the CMP to SEA with copies to the Bank as follows: i. Two pre-construction mitigation compliance reports; one during and one after pre-construction. ii. One construction monitoring report every two months. iii. One annual monitoring report during operation.

• SEA, as part of their regular activities, will monitor the construction activities in order to ensure full compliance of the CMP, which is a legally binding document;

• The supervision missions of the Bank will validate and crosscheck whether the environmental management and monitoring have been carried out.

e) Institutional arrangements and capacity building requirements

The overall responsibility for implementation of the project EMP will rest with MPWT. An independent consultant was appointed to ensure the execution of the CMP, including the monitoring plan, during different phases of implementation. SEA also has reasonable capacity and does regular monitoring for CMP compliance.

f) Public consultations and disclosure requirements

Public consultation was done as part of the EIA and the FRP processes. Consulted stakeholders included, among others, local communities, business holders and town councils.

g) Estimated costs

The mitigation measures will be mainstreamed in the project design. However, the mitigation cost in the study is estimated at UA 10,000 and will be met by GOS. The consultant environmentalist will be part of the supervision consultant team.

h) Implementation schedule and reporting

Resettlement will be undertaken and completed before the start of the pre-construction activities. Environmental management and monitoring activities will be implemented (according to the CMP), following the same project schedule, as all activities will be mainstreamed in the project design. Achievements/problems will be reported in the project quarterly progress reports and should be timely addressed by the project management and the Bank.

Annex 5 KINGDOM OF SWAZILAND

MBABANE BYPASS (TWO INTERNATIONAL ROADS PROJECT PHASE 2) Detailed Cost Estimates (SZL)

Description of Work Items F.E L.C Total

1. General Provisions 49970130 16656710 66626840

2. Control of Works (testing, etc.) 1890000 630000 2520000

3. Earthworks (site clearance, cut, fill, retaining devices, overhaul, etc.) 91269982 16106468 107376450

4. Drainage (Drains, Culverts, etc) & Protection Works 21256044 5314011 26570055

5. Pavement (sub-base, base, surfacing, curbs, sidewalks, etc.) 31109329 5489882 36599211

6. Concrete Works (8 GSI, 10 footbridges, ret. walls, etc.) 32852619 8213155 41065774

7. Reinforced Earth (10 footbridges, etc) 36844544 9211136 46055680

8. Road Furniture (road signs & markings, lighting, 21 bus shelters, etc.) 23189902 4092336 27282238

9. Building Works 8036000 3444000 11480000

10. Dayworks (Labor, Equipment, Materials, etc.) 3411291 601993 4013284

Total for civil works 299829841 69759691 369589532

Supervision 21600000 2400000 24000000

Audit Services 600000 0 600000

Sub-total 322029841 72159691 394189532

Physical Contingencies 32202984 7215969 39418953

Price Escalation 199449295 103957718 29845013

GRAND TOTAL 373682120 89771378 463453498

Percentage 81 19 100 Source: Consultants Reports, Roads Department and ADB Re-Appraisal Mission, April 2003; and Updated June 2003.

Category of Expenditure for ADB and GOS Components (ZAR Million)

ADB GOS Total Component

FE LC Total FE LC Total FE LC Total Civil Works 299.83 - 299.83 - 69.76 69.76 299.83 69.76 369.59 Supervision 21.60 - 21.60 - 2.40 2.40 21.60 2.40 24.00 Audit 0.60 - 0.60 - - - 0.60 - 0.60 Contingencies 51.65 - 51.65 - 17.61 17.61 51.65 17.61 69.26 TOTAL 373.68 - 373.68 - 89.77 89.77 373.68 89.77 463.45

Source: Roads Department (MPWT) and ADB Re-Appraisal Mission, April 2003 and Updated June 2003.

Annex 6 KINGDOM OF SWAZILAND

MBABANE BYPASS (TWO INTERNATIONAL ROADS PROJECT PHASE 2)

Project implementation Schedule

2003 2004 2005 2006 ACTIVITY 2 4 6 8 1

012

2 4 6 8 10

12

2 4 6 8 10

12

2 4 6 8 10

12

I. Civil Works 1. Bidding/Contract Award 2. Mobilization 3. Works Execution 4. Maintenance Period

II. Supervision Consultant 1. Negotiation/Contract Award 2. Mobilization 3. Pre-contract Services 4. Works Supervision - Construction Period - Maintenance Period III. Audit Services 1. Short listing/Contract 2. Auditing Period

Source: Roads Department and ADB Re-Appraisal Mission, April 2003 and Updated June 2003..

Annex 7 Page 1 of 4

KINGDOM OF SWAZILAND MBABANE BYPASS ROAD PROJECT (TWO INTERNATIONAL ROADS PROJECT PHASE 2)

ECONOMIC EVALUATION 1. Traffic: Predicted AADT

Section A: Mbabane – SCOT Year Light Bus Heavy Total 2002 10444 441 712 11597 2003 10978 463 746 12187 2004 11540 486 782 12808 2005 12130 510 820 13460 2006 12750 535 859 14145 2007 13403 562 901 14865 2008 14088 589 944 15621 2009 14809 619 989 16417 2010 15566 649 1037 17252 2011 16208 675 1077 17961 2012 18877 702 1119 18698 2013 17573 730 1162 19465 2014 18298 760 1207 20265 2015 19053 790 1254 21097 2016 19839 822 1302 21963 2017 20657 855 1353 22864 2018 21509 889 1405 23803 2019 22396 924 1460 24780 2020 23320 961 1516 25798 2021 24282 1000 1575 26857 2022 25284 1040 1636 27959 2023 26327 1081 1699 29107 2024 27413 1124 1765 30303 2025 28509 1169 1836 31514 2026 29677 1216 1909 33215

Section B: Nkoyoyo – SCOT

Year Light Bus Heavy Total 2002 7973 169 741 8883 2003 8381 177 776 9335 2004 8810 186 814 9809 2005 9260 195 853 10308 2006 9734 205 894 10833 2007 10232 215 937 11384 2008 10755 226 982 11963 2009 11306 237 1029 12571 2010 1184 248 1078 13211 2011 12374 258 1120 13753 2012 12884 269 164 14317 2013 13416 280 1209 14904 2014 13969 291 1255 15515 2015 14546 302 1304 16152 2016 15146 314 1355 16815 2017 15770 327 1407 17504 2018 16421 340 1462 18223 2019 17098 354 1518 18970 2020 17804 368 1577 19748 2021 18538 383 1638 20559 2022 19303 398 1702 21402 2023 20099 414 1768 22280 2024 20928 430 1836 23194 2025 21765 447 1909 24121 2026 22940 471 2012 25423

Annex 7 Page 2 of 4

Roughness index (IRI) and VOC values

Annex 7 Page 3 of 4

Annex 7 Page 4 of 4

Annex 8 KINGDOM OF SWAZILAND

Mbabane Bypass (Two International Roads Project Phase 2) List of Annexes in Project Implementation Document (PID)

1. Mbabane Bypass Economic Evaluation - September 2002 2. Rehabilitation and Upgrading of the Mbabane-Ngwenya (MR3) Road Phse 2, Bill of Quantities,

Engineers Estimate – August 2002. 3. Transport Bulletin – Swaziland 2002 Edition. 4. National Development Strategy (NDS) – A25 years urs, or, 1997 5. National Development Strategy Vision 2002 – august 1999. 6. Updating of Economic Evaluation Mbabane-Ngwenya (MR3 Road) – August 2002. 7. Transport Sector Project (Swaziland) – quarterly Report. 8. Swaziland National Transport Policy. 9. Priority Road Investment Programme MPWT – October 1998. 10. Rehabilitation and Upgrading of the Mbabane-Ngwenya (MR3) Road – Engineering Design report –

August 2002. 11. Specialist Advisory Services for the Tolling of the Ngwenya-Mbabane-Manzini Road, MPWT – July

2001. 12. Swaziland Road Safety Report – 2001, MPWT. 13. Road Management System : Annual Maintenance and Rehabilitatin Report – October 2002, MPWT. 14. Central Bank of Swaziland, quarterly Review – March 2002. 15. Swaziland Railway 1999/2002 Annual Report. 16. Swaziland Human Development Report 2002, UNDP, October 2001. 17. Updating of Economic Calculations for Mbabane-Ngwenya Road MR3 and Luyengo-Sicunusa Road

MR4 – Final Report, African Swaziland (Pty) Ltd – 1998. 18. Mbabane Bypass Road – Economic Evaluation report – BCEOM in jv with OPP – March 2003. 19. Mbabane Bypass Road - Engineering Design Report. BCEOM in JV with OOP – March 2003. 20. Rehabilitation and Upgrading of the Mbabane-Ngwenya (MR3) Road – Scope of works – Summary.

BCEOM in JV with Otieno Odongo & Partners – December 2002. 21. Time Series Traffic Counts at Stations MR03/1 and MR03/2 (1990-2000). MOPWT-2001.