AFRICAN DEVELOPMENT BANK GROUP

PROJECT : FISH TOWN HARPER ROAD PROJECT

PHASE I : PAVING OF HARPER - KARLOKEN (50 KM)

COUNTRY : LIBERIA

PROJECT APPRAISAL REPORT

Task Team

Mr. A. OUMAROU, Director, OITC

Mr. F. PERRAULT, Regional Director, ORWB

Mrs. M. KILO, Resident Representative, LRFO

Mr. J-B. AGUMA, Team Leader

OITC DEPARTMENT

August 2013

Contents

1. STRATEGIC THRUST & RATIONALE .................................................................. 1

1.1. Project linkages with country strategy and objectives .................................................... 1

1.2. Rationale for Bank’s involvement…………………………………………………… 2

1.3. Donor Coordination……………………………………………………………………2

2. PROJECT DESCRIPTION ......................................................................................... 3

2.1. Development Objectives ................................................................................................. 3

2.2 Project components ......................................................................................................... 3

2.3 Technical solution retained and other alternatives explored ........................................... 4

2.4 Project type ..................................................................................................................... 4

2.5 Project cost and financing arrangements ........................................................................ 4

2.6 Project’s target area and population ................................................................................ 6

2.7 Participatory process for project identification, design and implementation ................. 6

2.8 Bank Group experience, lessons reflected in project design .......................................... 6

2.9 Key performance indicators ............................................................................................ 7

3. PROJECT FEASIBILITY ........................................................................................... 8

3.1. Economic performance ................................................................................................... 8

3.2. Environmental and Social impacts.................................................................................. 9

Climate Change ............................................................................................................... 9

Gender ........................................................................................................................... 10

Social ............................................................................................................................. 10

Inclusive Growth ........................................................................................................... 11

Involuntary resettlement ................................................................................................ 11

4. IMPLEMENTATION ................................................................................................ 11

4.1. Implementation arrangements ....................................................................................... 12

4.2. Monitoring .................................................................................................................... 14

4.3. Governance ................................................................................................................... 14

4.4 Sustainability, Institutional and Road Sector Reforms ………………………… … 15

4.5. Risk management .......................................................................................................... 15

4.6. Knowledge building ...................................................................................................... 17

5. LEGAL INSTRUMENTS AND AUTHORITY ....................................................... 17

5.1. Legal instrument ........................................................................................................... 17

5.2. Conditions associated with Bank’s intervention ........................................................... 17

5.3. Compliance with Bank Policies .................................................................................... 17

6. RECOMMENDATION .............................................................................................. 19

Appendix I Country’s comparative socio-economic indicators

Appendix II: Table of ADB’s portfolio in the countries

Appendix III: Key related projects financed by the Bank and other development partners in

the country

Appendix IV: Map of the Project Area

ANNEXES (Summarised Technical Annexes)

A. Country’s Development Agenda, Sector Brief and Donor’s Support

B1. Technical Annex: Detailed Project Costs

B2. Technical Annex: Procurement Arrangements

B3. Technical Annex: Economic Analysis

i

Currency Equivalents As of 31 July 2013

1 Unit of Account = 115.05 Liberian Dollars

1 Unit of Account = 1.50 United States Dollars

1 USD = 76.50 Liberian Dollars

Fiscal Year 01 July – 30 June

Weights and Measures 1metric tonne = 2204 pounds (lbs)

1 kilogramme (kg) = 2.200 lbs

1 metre (m) = 3.28 feet (ft)

1 millimetre (mm) = 0.03937 inch (“)

1 kilometre (km) = 0.62 mile

1 hectare (ha) = 2.471 acres

Acronyms and Abbreviations AADT

-Annual Average Daily Traffic

M&E Monitoring and Evaluation

MOF Ministry of Finance

ADF African Development Fund MPW Ministry of Public Works

AIDS Acquired Immune Deficiency Syndrome MRU

NGO

Mano River Union

Non-Governmental Organization

AfT ASRP

Agenda for Transformation Agriculture Sector Rehabilitation Project

NPA

NPV

Report-National Ports Authority

Net Present Value

CPIA

CPR

CSP

Country Political and Institutional Assessment

Country Performance Review Civil Society

Organization

Country Strategy Paper

NTF

OPRC

PAP

PAR

Nigeria Trust Funds

Output-based Road Maintenance Contract

People Affected People

Project Appraisal Report

ECO

WAS

Economic Community of West African States PBA

PCDP

Performance-based Allocation

Public Consultation and Disclosure Plan

EDF European Development Fund PD Project Details

EIRR Economic Internal Rate of Return PDO Project Development Objectives

FSF Fragile State Facility PCN Project Concept Note

ESIA Environmental and Social Impact Assessment PFMU Project Financial Management Unit

ESMP Environmental and Social Management Plan PPMS Project Performance Monitoring System

EU The Commission of European Union PRSP Poverty Reduction Strategic Paper

FS Feasibility Study QCBS Quality and Cost Based Selection

GAC General Audit Commission QPR Quarterly Progress Report

GDP Gross Domestic Product RAP Resettlement Action Plan

GIZ Gesellschaft für Internationale Zusammenarbeit RED Road Economic Decision Model

GoL Government of Liberia RISP Regional Integration Strategy Paper

HIV Human Immunodeficiency Virus ROW Right of Way

KfW Kreditanstalt Für Wiederaufbau SAPEC Smallholder Agriculture Productivity

Enhancement & Commercialization Project

ICB International Competitive Bidding STI Sexually Transmitted Infection

JAS Joint Assistance Strategy SIDA Swedish International Development

Agency

JICA Japan International Cooperation Agency TOR Terms of Reference

LBPW

P

Labour Based Public Works Project TA Technical Assistance

LCS Least Cost Selection method UA Unit of Account

LISGI

SS

Liberia Institute of Statistics and Geographical

Informati Systems

VOC Vehicle Operating Costs

LRTF Liberia Reconstruction Trust Fund WB World Bank

ii

Loan Information

Client’s information

BORROWER: GOVERNMENT OF LIBERIA

EXECUTING AGENCY: MINISTRY OF PUBLIC WORKS

Financing plan

Source Amount (UA) Instrument

AFRICAN DEVELOPMENT FUND 22.23 LOAN

FRAGILE STATES FACILITY 13.31 GRANT

LIBERIAN GOVERNMENT (GOL) 1.00 COUNTERPART FUND

NIGERIA TRUST FUND (NTF) 6.50 LOAN

TOTAL COST 43.04

ADB’s (ADF &NTF) key financing information

Loan currency Units of account

Interest type* Not Applicable

Interest rate spread* Not Applicable

Commitment fee* 0.5% per annum on the un-disbursed loan

balance

Service Charge 0.75% on the amount disbursed and outstanding

Other fees* Not Applicable

Tenor (ADF & NTF) 50 years (ADF), 27 years (NTF)

Grace period (ADF & NTF) 10 years (ADF), 7 years (NTF)

EIRR, NPV (base case) 17.6%, USD 25.28 million

*if applicable

Timeframe - Main Milestones (expected)

Concept Note approval

06 June, 2013

Project approval 04 September, 2013

Effectiveness March 2014

Last Disbursement December 2017

Completion March 2016

Last repayment March 2064

iii

Project Summary Project Overview The project will involve upgrading from gravel to bitumen standard Fish Town –Harper

Road: Phase 1: Harper – Karloken section (50km) at an estimated cost of UA43.04 million.

Project Funding is from Nigeria Trust Fund (NTF) Loan (UA6.5million), ADF12 Loan

(UA22.23 million), Fragile State Facility (FSF) Grant (UA13.31million) and Government of

Liberia (GoL) UA1.00 million (Compensation Costs for PAPs). The Project components

include: (i) Paving Harper City - Karloken Road (50km), ESMP and Supervision of Works;

(ii) Project Management (Implementation Support, Financial/Technical/Road Safety Audits,

Monitoring and Evaluation): and (iii) Complementary Components: Compensation of PAPs,

Capacity Building, and Awareness Campaigns - HIV/AIDS, Malaria, Gender Sensitization

and Road Safety Awareness Campaigns. The beneficiaries include the local communities

within the road catchment area, as the road is expected to provide access to socio-economic

centres (markets, schools, and health centres), which should in turn boost the local economy,

and contribute to poverty reduction. The road will also serve international traffic within

ECOWAS/Mano River Union Region (Cote d’Ivoire, Liberia, Guinea and Sierra Leone), and

will thus contribute to regional integration.

Needs Assessment The Project road is the only link that connects the south eastern part of Liberia with the rest

of the country. The road will open up the two counties of Mary Land and River Gee (with a

population of about 0.5 million people) which are currently cut off due to impassibility of the

road both in dry and rainy seasons. The project fits well with the GOL’s Agenda for

Transformation (AfT) with a strategy of connecting the counties capitals with an all-weather

road by 2020. In addition, the proposed road project is in alignment with the Bank’s Country

Strategy Paper (CSP, 2013-2017). Further, Liberia as a Fragile State is budget constrained; it

will thus require continued support from Development Partners such as the African

Development Bank, to support financing of critical Road Infrastructure in Liberia.

Bank’s Value Added The Bank has a wide experience in financing large scale road projects in Africa (including

the recently completed gravel rehabilitation of the project road in Liberia, which increased

Bank knowledge on Fragile States) and thus brings a wealth of experience necessary to guide

the Ministry of Public Works in Liberia to implement the project satisfactorily. The Project

Road is in line with the Bank’s Ten Year Strategy which has prioritized Infrastructure

development, with special focus on promoting inclusive growth. Second, the Bank’s vast

experience in project implementation in Africa will be applied. Third, participation of the

Bank in financing the project is already encouraging other Development partners to support

the financing of the entire 510 km of the Ganta-Harper Road Corridor. World Bank has

already committed about USD80million for upgrading part of the Corridor between Ganta

and Zwedru. The Bank’s intervention is therefore assisting the GoL to mobilize additional

resources for the road sector.

Knowledge Management

The Bank has accumulated knowledge of project implementation in Fragile States during the

recently concluded rehabilitation of the project road to gravel standards. Additional

knowledge is being accumulated during the design and implementation of the paving phases.

A capacity building component has been included in the project for knowledge sharing,

transfer and consolidation. The Monitoring and Evaluation component of the project will

facilitate monitoring and documentation of knowledge accumulation. All these strategies will

enable the Bank and GoL to improve the identification, design and implementation of road

sector improvement projects especially in fragile states and other countries on the continent.

iv

RESULTS BASED LOGIC FRAMEWORK

Country and project name: Paving Fish Town – Harper Road Project (Phase 1)

Purpose of the project: Provide efficient road transport access to South East Counties of Liberia and by extension to neighbouring ECOWAS / Mano River Union Member States

RESULTS CHAIN

PERFORMANCE INDICATORS

MEANS OF VERIFICATION RISKS/MITIGATION MEASURES Indicator

(including CSI)

Baseline

2012

Target

2016/2034

IMP

AC

T

Impact

Contribute to Improved economic

welfare in project area of influence.

Contribute to Increased agricultural

productivity in the project area of

influence.

Contribute to Increased Trade with

Cote d’Ivoire

Population below the

poverty line (%)

Yield /Ha

Trade Volume (USD)

58% in 2012

1.2 tons/ha in

2012

USD18.47million

45% in 2018

1.5 tons/ha in 2018

USD22.00 million

National Statistics from:

Ministry of Finance (MOF)

Liberia Institute of Statistics &

Geographical Information Systems

(LISGIS)

Ministry of Agriculture

Ministry of Commerce and Industry

Risk: Agenda for Transformation (AfT)

will not be implemented successfully.

Mitigation: GoL with support from

Development Partners is committed to

implementing AfT. Various concessions

signed in Mining, Forestry and Agriculture

will boost the project area economically.

OU

TC

OM

ES

Outcome 1

Reduced Vehicle Operating Costs

(VOCs)

VOCs (car)

(Cost/veh-km)

US$0.52/veh-km US$0.39/ veh-km (25%

reduction) Ministry of Public Works (MPW)

Monitoring & Evaluation Report

Risks: (i) Inadequate Axle Load

Management; (ii) Inadequate Road

Infrastructure Planning, Maintenance,

Management and Financing.

Mitigation Measures: (i) GOL is reforming

axle load control management and 1No.

Mobile Weighbridge will be procured

under this project; (ii) The GOL is

finalizing the road sector financing and

institutional arrangements reforms by

2015.

Outcome 2

Reduced average travel time between

Harper and Karloken.

Average Travel Time

(Hours)

1.0 hour 40 minutes (33 %

reduction

By inspection/ Driver Interviews

( MPW)

Outcome 3

Employment generated (during and

post construction).

No. people employed (%

female, % youth)

Nil 450 No. people employed

(at least 20% female, at

least 30% youth)

Contractors/Consultant’s Progress

Reports

OU

TP

UT

S

Road Works: 50km (Harper-Karloken) paved

Length (km)/Condition of

road paved (to design

specifications)

50km of gravel

road in fair

condition

50 km paved

By inspection/ Substantial completion of

works

Quarterly Progress Reports

Risks: (i) Non-payment of counterpart

funding (CF); (ii) Budget cost overrun;

(iii) Contractor fails to complete project.

Mitigation: (i) GoL committed to pay CF;

(ii) provide contingencies; (iii) contractor

procured through ICB prequalification

ESMP/RAP Implemented: (i) PAPs Compensated and resettled

(ii) Communities/Workers Sensitized

(i) Full execution of

ESMP and

PAPs (nos.) compensation

(ii) Awareness Campaigns

executed (Nos. Sensitised,

% female)

Nil

Nil

(i)ESMP implemented and

PAPs (1,172 )

compensated

(ii) (5,000 Nos.) sensitized

by themes (50% female)

-Project quarterly progress reports

-Annual ESMP Compliance Monitoring

Report

-Project Quarterly Progress Reports

Risks: (i) delay in payment of

compensation of PAPs.

Mitigation: (i) GoL has included some

funds in this year’s budget to pay PAPs.

100% financing of other Project costs by

the Bank could further mitigate against

this risk.

KE

Y A

CT

IVIT

IES

COMPONENTS INPUTS

Component 1: Paving Harper City - Karloken Road (50km.) ESMP and Supervision of Works

Component 2: Project Management (Project Coordination Support, Financial/Technical/Road Safety Audits,

Monitoring and Evaluation)

Component 3: Other Components: Compensation of PAPs, Capacity Building, and Awareness Campaigns -

HIV/AIDS , Malaria, Gender Sensitisation, Road Safety Awareness Campaigns )

Budget (UA Million)

Component 1 34.01

Component 2 0.66

Component 3 1.21

Contingencies 7.16

Total 43.04

Financing Plan (UA Million)

ADF FSF Grant 13.31 30.93

ADF PBA Loan 22.23 51.65

NTF 6.50 15.10

GoL (Compensation) 1.00 2.32

Total 43.04 100.0%

v

PROJECT TIME FRAME

1

REPORT AND RECOMMENDATION OF THE MANAGEMENT TO THE BOARDS OF

DIRECTORS ON A PROPOSED LOANS AND GRANT TO THE REPUBLIC OF IBERIA

Management submits the following Report and Recommendation on proposed loan of NTF UA

6.5 million, ADF loan of UA 22.23 million from PBA Allocation and FSF Grant of UA 13.31

million to the Republic of Liberia

1. STRATEGIC THRUST & RATIONALE

1.1. Project linkages with country strategy and objectives

Liberia’s Agenda for Transformation (AfT)

1.1.1 Having suffered from 14 years of civil unrest that ended around 2003, Liberia is

continuing its difficult path towards socio-economic recovery, an objective the AfDB has

committed to support as a main Development Partner for the Fragile States in Africa. As a fragile

state, the main development challenges facing Liberia include among others: (i) Limited physical

infrastructure, especially power and roads, and (ii) Weak human and institutional capacity. The

Government of Liberia (GoL) has prepared its Agenda for Transformation (AfT) (2012-2017).

AfT’s goal is alleviating extreme poverty and providing basic infrastructure that would, amongst

others, provide key connectivity between the country’s limited economic activities, and

accessibility to social services and assist the population in achieving better living standards.

Infrastructure development (energy and roads) is placed as the first pillar of AfT. AfT is the first

implementation phase of Libeira’s Vision 2030, with a target of turning Liberia into a middle

income country by 2030. The Project is contributing to Pillar 2 of the AfT that covers Economic

Transformation through Infrastructure development and institutional capacity development for

infrastructure delivery entities.

Strategic link between the project and Liberia’s development objective

1.1.2 The project road will contribute to reduction of a very high (93%) all-weather roads

infrastructure gap in Liberia. Out of an estimated 10,538 km of public roads, only 7% (734 km)

are paved. The Project Road is part of a key 510 km road corridor between Ganta and Harper

linking four (4) south-east counties with an estimated population of one (1) million (25% of

Liberia’s population). In addition to its national importance, the project road is part of the missing

regional link i.e. it is a spur link on the Trans West African Coastal Highway (Lagos- Dakar-

Nouakchott Corridor) and links Liberia with Cote d’Ivoire at Cavalla Customs. The project road

is also Liberia’s priority road under the upcoming Mano River Union (MRU) Initiative (being

spear-headed by the Bank) of Linking Harper City (Liberia) with San Pedro Port (Cote d’Ivoire),

and Liberia with all the other three MRU States that include Cote d’Ivoire, Guinea and Sierra

Leone. The Project is also in line with the Bank’s West African Regional Integration Strategy

Paper (RISP) 2011-2015, whose first pillar is investing in missing links on the Trans-African

Highway Corridors.

1.1.3 To maximise benefits, the entire corridor from Ganta to Harper (510km) needs upgrading.

Available financing under current ADF 12 is however only able to finance a section of the

corridor (about 50 km from Harper to Karloken) under Phase I. The remaining section from

Karloken to Fish Town (86km) has been included in Liberia’s CSP (2013-2017) which was

recently approved and will be undertaken under Phase II using ADF 13 resources. Subsequent

Phases from Fish Town to Zwedru (153 km) will be upgraded when the GoL acquires additional

resources expected when the Mano River Union initiative programme (still at its formative

stages) gets funding. To complete the corridor from Zwedru to Ganta (227km), the World Bank

has initially set aside about US$ 80million to finance the section. This Bank’s intervention will

also complement the World Banks’s and Liberia Reconstruction Trust Fund (LRTF) on other

2

sections of the entire 1000km Corridor (Monrovia-Ganta-Harper) highlighted in section 1.3.2 and

shown on the Map of the Project Road (Appendix IV).

1.1.4 The Project road is linked to Harper Sea Port (fourth most important Port in Liberia),

about 761 km from Monrovia located near the border with the Cote d’Ivoire. The Port handles

various commodities from the hinterland including timber and fish. Cargo handled from 2010 to

2011 has increased by at least 260% signifying strong growth potential. Further growth in the

cargo volumes is expected after paving the project road. Subsequent Bank support will explore its

strategic development as part of an integrated logistics solution.

1.2. Rationale for Bank’s involvement

The proposed project addresses development objectives in the Liberia’s Agenda for

Transformation (AfT) (2012-2017) and is prioritized in the Bank’s Liberia Country Strategy

Paper (CSP) 2013-2017. It is also in line with Pillar 1 of Infrastructure Development in the

Bank’s Ten Year Strategy (2013-2022) and also addresses key areas of special emphasis in the

Strategy that include: gender, agriculture, food security and fragility in the project area of

influence. The project will also contribute to inclusive growth by creating employment and

broadening opportunities for participation across gender, age and geography in the project area.

The Bank’s intervention also logically preserves the recent Bank investment made under the

Labour Based Public Works Project (LBPWP) of gravel improvement of the Fish Town – Harper

Road (130km).

1.3. Donor Coordination

1.3.1 Donor coordination in Liberia’s transport sector was established in the second quarter of

2012 and is coordinated by the Government of Liberia through the Ministry of Public Works.

Currently, the transport sector coordination meeting takes place monthly and is chaired by the

Deputy Minister for Technical Services. The Road Transport Sector in Liberia is supported by the

following Development Partners among others: World Bank, European Union, GIZ, USAID,

JICA, Kuwait Fund, SIDA and the African Development Bank. It is during these meetings that

GoL dialogues with donors on progress on roads rehabilitation and maintenance

programmes/projects, and ongoing studies. The Bank has been active in these meetings since mid

of 2012.

1.3.2 Principal donor financed road projects include: the current rehabilitation of Redlight –

Gbarnga (180.4km) financed from the Liberia Reconstruction Truth Fund (LRTF) administered

by the World Bank and the government of Liberia amounting to US$166 Million; Gbarnga to

Ganta (68.6 km) has funding committed as part of Liberia Road Asset Management Programme

(LIBRAMP) with additional financing from (LRTF and GoL); Ganta to Yekepa (70km) funding

is from Arcelor Mittal in the amount of US$40 million; EU has financed detailed design studies

and supervision for the rehabilitation of St. Paul River Bridge to Bo Waterside/Sierra Leone

border (126.6 km); EU is also funding feasibility study and detailed design for

upgrading/construction of the Greenville – Newton Junction (163.9 km) and African

Development Bank is funding the feasibility study from Harper to Zwedru and paving of Phase I

of Fish town Harper road.

3

Table 1.1

Donor Coordination

Players – Public Annual Expenditure (Average) 2011/2012*

Government Donors WORLD

BANK

EU

KfW

ADB

DFID

SIDA

GIZ

Others

53%

18%

8%

5%

4%

2%

1%

2%

UA18,75 million

20 %

UA 73.26 million

80%

Level of Donor Coordination

Existence of Thematic working Group YES

Existence of SWAPs or Integrated Sector approaches NO

ADB’s involvement in donor group YES Figures obtained from Aid Management Unit/ Ministry of Finance

2. PROJECT DESCRIPTION

2.1. Development Objectives

2.1.1 As defined in Liberia’s Agenda for Transformation (2012-2017), Government of Liberia

intends to link all County Capitals with an all-weather (paved) road by 2020. The sector goal of

the Project is thus to support Liberia’s economic growth through development of transport

infrastructure that contributes to its post-conflict Agenda (AfT).

2.1.2 The objective of the Project is to provide efficient road transport access to South East

Counties of Liberia and by extension to neighbouring ECOWAS / Mano River Union Member

States (Cote d’Ivoire, Guinea and Sierra Leone). The Project is expected to improve accessibility

of the communities in the project’s zone of influence to economic centres and social services. The

expected outcomes include: (a) reduced average travel time; (b) reduced vehicle operating costs;

and (c) employment generation during construction and post construction phases.

2.2. Project components

2.2.1 The Project Road is part of an economic and strategic road corridor of 510 km between

Ganta and Harper connecting four (4) south-east counties (See Map – Appendix IV). The road

not only constitutes part of an important primary network but is also a missing section on the

Trans-African Highway spur linking Liberia to Cote d’Ivoire at Cavalla Customs border. Inter

county transit on the corridor is characterised by poor road conditions often impassable during the

intense rainy season. During this period journey times could take even up to a week from

Monrovia to Harper. Consequently this has led to increased transport costs that have hampered

accessibility and development of counties in the region. The project is thus an effort to address

these challenges on the corridor. A description of components to be financed under Phase I is

provided in Table 2.1. Further details on the Project Components are in Annex B1.

4

Table 2.1

Project Components

No. Component Name

Estimated Base

Cost

(Million UA)

Component Description

1 Road Improvement Activities 34.01 1.1 50 km section of road between Harper - Karloken;

1.2 Design review, pre-contract services, and

supervision of works;

1.3 Environmental and Social Management Plan

(ESMP).

2 Project Management 0.62 1.1 Project coordination activities

1.2 Monitoring and evaluation;

1.3 Financial and Technical Audits.

3. Other Components 1.26 1.1 Compensation of Project Affected People;

1.2 Road sector capacity building activities;

1.3 HIV/AIDS/STI, Gender Sensitization and road

safety awareness campaigns

2.3. Technical solution retained and other alternatives explored

2.3.1 The project road follows an existing gravel road and did not require investigation of

alternative routes at feasibility level. A few geometric re-alignments necessitated by road safety

and environment considerations were however undertaken. The American Association of State

Highways and Transportation Officials (AASHTO) suite of standards were used for design of

principal road elements. In addition, the axle load design is adopted conforms to ECOWAS

standards.

2.3.2 Three (3) principal pavements deign alternatives were considered and subjected to

economic analysis to determine the most feasible. These included: (i) surface dressing with

cement stabilised base; (ii) Asphalt Concrete with crushed aggregate base; and (iii) Asphalt

Concrete with mechanically stabilized base. Asphalt concrete with crushed aggregate base was

found most technically and economically suitable requiring minimum maintenance and or life

cycle costs.

2.3.3 The project road will have a carriageway width of width of 7.3 m in addition to paved

shoulders each of 2.4 m. Urban sections will include paved walkways of at least 1.8m. Variable

design speeds of 100km/hour in rural unpopulated areas, 80 km/hour at approach to villages and

60 km/hour at heavily populated areas and or step/sharp grades have been adopted.

2.4. Project type

2.4.1 The project is designed as single investment operation to be financed through ADF grant

and loan facilities from the Banks’s country allocation, Fragile State Facility (FSF) and Nigeria

Trust Fund windows. The investments against which the funds are to be disbursed are well

defined and specific. As such, the project approach is the most appropriate arrangement for

Bank’s intervention in this operation.

2.5. Project cost and financing arrangement

2.5.1 The total project cost including compensation for Project Affected Persons is UA 43.04

million (US$ 64.55 million) of which the foreign exchange cost is UA 33.62 million (US$ 50.44

million) or 80% of the total, and the local cost is UA 9.42 million (US$ 14.11 million) or 20% of

the total cost. These cost estimates are based on detailed design studies of the project as well as

international norms and average unit prices for the works and services.

5

Table 2.2

Project cost estimates by component

No Components

UA (millions) %

FE Foreign

Exchange

Local

Currency Total

1 Road Works 27.20 6.81 34.01 80%

2 Project Management 0.52 0.14 0.66 80%

3 Complementary Components 0.30 0.91 1.21 80%

Total Base Cost 28.02 7.86 35.88

Physical Contingency 2.80 0.78 3.58

Price Contingency 2.80 0.78 3.58

Total Project Cost 33.62 9.42 43.04

2.5.2 As shown in table 2.3 total ADF contribution to the project would be UA 34.54 million in

form of UA 13.23 million (30.74%) FSF grant, UA 0.08 million (0.19%) FSF grant loan

cancellations and UA 22.23 million (51.65%) ADF 12 PBA loan. The remaining UA 6.5 million

(15.10%) will come as loan from the Nigerian Trust Fund (NTF). Total Bank contribution will

thus amount to UA 42.04 million. Contribution of the Country’s PBA has been confirmed by

government authorities.

Table 2.3

Sources of financing

Source ADF XII DSF Class US$ millions UA million %

Fragile State Facility Grant 19.85 13.23 30.74

Fragile State Facility (Cancellations) Grant 0.12 0.08 0.19

Nigerian Trust Fund Loan 9.75 6.50 15.10

ADF - XII PBA Loan 33.48 22.23 51.65

63.05 42.04

GoL Counterpart Funds 1.50 1.00 2.32

Total 64.55 43.04 100.00

2.5.3 In view of its constrained budget (as a fragile state), GoL requested the Bank to finance

total project costs with exception of compensation related costs. In line with the Policy on

Expenditure Eligible for Bank Group Financing and Liberia’s Country Financing Parameters,

ADF will finance components up to 97.68% of project cost while GoL will finance the

remaining 2.32% as compensation costs.

2.5.4 The project cost by category of expenditure and schedule by component are presented in

tables 2.4 and 2.5 respectively.

Table 2.4

Project cost by category of expenditure (UA millions)

No Category UA (millions)

Funding Source (UA millions)

PBA FSF NTF GoL

Foreign Local Total

1 Civil Works 25.83 6.46 32.29 15.84 11.03 5.42

2 Consultancy 1.81 0.47 2.28 2.21 0.07

3 Goods 0.10 0.03 0.13 0.13

4 Other Components 0.13 1.05 1.18 0.35 0.83

Total Base Cost 27.87 8.01 35.88 18.53 11.10 5.42 0.83

Physical Contingency 2.78 0.80 3.58 1.85 1.11 0.54 0.08

Price Contingency 2.78 0.80 3.58 1.85 1.10 0.54 0.09

Total 33.43 9.61 43.04 22.23 13.31 6.50 1.00

6

Table 2.5

Expenditure schedule by component

No Components UA millions

2013/14 2014/15 2015/16 2016/17 Total

1 Road Improvement Activities 6.80 11.90 11.90 3.41 34.01

2 Project Management 0.26 0.26 0.14 0.66

3 Other Components 0.84 0.18 0.19 1.21

Total Base Cost 7.64 12.34 12.35 3.55 35.88

Physical Contingency 0.76 1.23 1.23 0.35 3.58

Price Contingency 0.76 1.23 1.23 0.35 3.58

Total 9.16 14.80 14.81 4.25 43.04

2.6. Project’s target area and population

The project’s area of influence is the County of Maryland, located in the South Eastern

part of the country. The indirect beneficiaries include the inhabitants of Maryland County, which

according to the 2008 Census, represent 136,404 people (52.1% men and 47.9% women). The

project’s direct beneficiaries are the estimated 59,096 inhabitants living in the direct zone of

influence encompassing thirteen (13) communities along the road.1 Poverty levels are very high,

with 58% living on less than a dollar a day.2 More than 50% of households are engaged in small-

scale cash crop production (palm produce and rubber tapping) and subsistence farming (growing

rice, cassava, corn, sweet potatoes, plantain and vegetables). Current agricultural productivity is

low, due to primitive farming methods, lack of modern technology, inadequate tools and lack of

access to credit. Other important occupations include petty trading (17%), and formal

employment in local government institutions (14%).

2.7. Participatory process for project identification, design and implementation

A series of consultations were held with stakeholders in the towns and communities

affected by the project. Individuals, groups, organizations, and institutions interested in and

potentially affected by the project were also engaged in a stakeholders’ forum where issues

relating to the project impacts were discussed. Overall, communities members were supportive of

the construction of the road and believed that upgrading the road will help them join the country’s

mainstream socioeconomic development. However, they requested that people who will be

physically and economically affected by the project be compensated fairly and in a timely

manner. As part of RAP implementation a Grievance Redress Committee (GRC), which includes

representatives from affected persons, has been put in place to address any concerns related to

compensations. During preparations for awareness seminars, further consultations with

stakeholder involvement in project implementation will be considered by the Executing Agency.

2.8. Bank Group experience, lessons reflected in project design

2.8.1 Bank Activities: The Bank resumed investment operations in Liberia in 2003. A total of

twenty one (21) national operations and two (2) regional operations valued at about UA172

million have been committed. The Bank portfolio is made of thirteen operations valued at about

UA145 million in various sectors (details are in Appendix II). Two road sector projects have been

included in the Bank’s Country Strategy Paper (CSP, 2013-2017). These are: (i) Paving of Fish

Town-Harper Road (130km); and (ii) Upgrading sections of the Regional Trade Corridor (Trans-

African Highway in Liberia (Ganta-Harper). Current Bank commitment to the transport sector

1 Harper, Weah Village, Barriken, Old Lady Town, Gboloken, Sedeken, Pleebo City, Boniken, Tugbaken, Gbawaken, Manolu, Wutuken,

Karloken 2 Social Impact Assessment Survey results

7

comprises only one operation amounting to UA20.24 million. The Labour Based Public Works

Project (LBPWP) involves construction to gravel standard of the Fish Town- Harper Road

(130km) and construction of Social Infrastructure (10 No. schools, 10 No. clinics and 10 No.

boreholes). The rehabilitated gravel road has opened up the region previously inaccessible. The

Bank is also funding studies for upgrading Zwedru-Harper Road (237km) (which also covers the

Project Road: Fish Town- Harper). Under two Bank-funded operations approved in Agriculture

Sector and Rural Development (ASRP and Smallholder Agriculture Productivity Enhancement &

Commercialization Project (SAPEC), works are on-going on rehabilitation/construction of about

336 km of feeder roads. There are no Project Completion Reports (PCRs) delivered or due in the

last three years for projects implemented in Liberia. The last supervision of the project

implemented in road sector “Labor Based Public Works Project” took place in May 2013 and the

overall rating of the project performance is satisfactory: with a score of 2.47 (on a scale of 3).

2.8.2 Lessons learnt in Project Design from on-going / completed projects

Lessons Learnt: The major lessons learnt from implementation of Bank and other donor financed

projects considered in the project design include: (i) Liberia market for road construction is not

yet competitive as few companies are willing to work there; this Project shall use International

Competitive Bidding (ICB) to attract companies for both Civil Works and Consultancy services;

(ii) Unit price per km is relatively high compared to some of its neighbouring countries in the

Mano River Union Region; this Project shall use ICB to promote completion essential and with

potentail for lowering unit costs; (iii) The country faces inadequate institutional and skills in all

sectors (engineering and technical areas being the worst hit); capacity building for the Executing

Agency (MPW) is one of the proposed project sub-components; (iv) The social infrastructure

(clinics, school classrooms and boreholes) provided as one of the Components under the

completed Bank funded gravel rehabilitation of the project road is well appreciated by the

communities, and there is need for follow up by the GOL and communities to ensure that the

facilities provided are well maintained; (v) There is need to apply a “3Fragility Lens” for

operations in Liberia; (vi) Slow ratification of some loans by Parliament delays the effectiveness

of projects, the GoL has commenced sensitising its Legislature about the importance of the

Project, and will ensure that ratification is effected timely in order not to delay project

effectiveness; and (vii) Compensation of Project affected Persons (PAPs) has led to delayed

commencement of civil works of some projects and hence requires adequate planning and

implementation monitoring. The GOL has made a provision in its Budget to meet the

Compensation Costs for the PAPs.

2.9. Key performance indicators

The key performance indicators are shown in the results-based log-frame. For purposes of

measuring the outputs, outcomes and impact, the proposed indicators include: (i) population

below the poverty line, (ii) agricultural yields; (iii) Composite Vehicle Operating Costs; (iv)

Travel time; and (v) Employment generation during construction. Data on these indicators will be

collected under the framework of the Monitoring and Evaluation Component of the Project. The

component shall facilitate refining of baseline values, monitoring during implementation and at

the end of construction period. In addition, the performance monitoring and evaluation

mechanisms shall also cover monitoring the social, economic and environmental impact of the

road to the project area and on the neighbouring areas in Cote d’Ivoire.

3 Due to peculiar difficulties that include inadequate physical and institutional infrastructure, human capacity deficits, inadequate

financial resources, unemployment and vulnerability due to 14 years of civil unrest

8

3. PROJECT FEASIBILITY

3.1. Economic performance

3.1.1. The methodology for the economic analysis is based on cost benefit analysis which

compares the “with” and “without project” scenarios over a period of 20 years, using the Road

Economic Decision (RED) model. The economic costs consist of the capital investment and

routine and periodic maintenance costs. The road user benefits after the road is paved consist of

savings in vehicle operating costs, travel time for passengers and cargo, reduced accidents, road

maintenance costs, and exogenous benefits (employment during construction and increased

agricultural production). The exogenous benefits are based on the agricultural potential in the

project area currently not exploited due to poor accessibility. The major crops grown in the

Project area are Rice and Cassava. The road has an estimated annual average daily traffic

(AADT) of 311 vehicles per day plus 2,439 motor cycles per day. The existence of a high volume

of motor cycles indicates that there is suppressed demand for other vehicular traffic. This

suppressed demand will lead to increase in vehicular traffic after paving the road. Traffic

projection details are in Annex B3. The measures of project worth considered are the Economic

Internal Rate of Return (EIRR) and Net Present Value (NPV) at 12% discount rate, which is the

opportunity cost of capital in Liberia.

3.1.2. Assumptions taken and the Economic Analysis Results: The project construction is

assumed to commence in 2013/14. With a construction period of 24 months, the first year of

opening the road to traffic is assumed to be 2016. The economic costs used in the cost benefit

analysis are the Road Agency costs in the “with” and “without” project scenarios, which include

both the capital investment cost of upgrading to AC and DBST pavement options, maintenance

costs, construction supervision, and physical contingencies of paving a two-lane 50km road.

Compensation costs to be paid to people whose properties are affected are not included in the

economic analysis.

3.1.3. Residual values are assumed as 30% (the project road has three bridges and about 70

culverts) of the initial capital investment and credited to the project in the final evaluation year of

2036. The economic analysis also considered the induced agricultural production (exogenous

benefits) values estimated at USD2.87million annually commencing after the road is open for

traffic in 2016, and employment benefits during the two years construction period (2014-2015)

estimated at USD470,000 - 500,000 per year. The economic capital investment cost of the road is

USD 37.47 million (USD 0.749 million per km). Further to the benefits considered in the

analysis, the paved road is expected to contribute significantly to other socio-economic impacts

due to improved mobility. Other impacts which include: enhanced mining, tourism, regional

integration, lumbering and fishing have not been directly considered in the analysis due to

difficulty with quantification, but have informed the traffic growth rates projections. The

summary of the economic analysis result is presented in Table 3.1. The detailed economic

analysis results are presented in Annex B3.

Table 3.1

Summary of the Economic Analysis

Parameter Quantum FIRR, NPV (base case) (Not Applicable)

Economic Internal Rate of Return(EIRR) 17.6%

Net Present Value (NPV) in USD 25.28 million

Sensitivity of EIRR of concurrently 20% increase in cost and 20% decrease in traffic 13.1%

9

3.2. Environmental and Social impacts

Environmental

3.2.1. The project is classified as Category 1 according to the Bank’s Environmental and Social

Assessment Procedures (ESAP). The project road length is within the threshold for Category 1

projects and its implementation will result in involuntary displacement of 339 Households (or 1,172

persons). The ESIA, ESMP and RAP reports have been prepared. A summary of the ESIA and RAP

were prepared and approved, and posted on the Bank’s website on 26 July 2013.

3.2.2. The major direct adverse impact of the project before construction is permanent land take

for re-aligned sections and displacement of populations within the road Right of Way.

Approximately 81,754m2 of land will be taken by re-alignments. It is estimated that 339 Project

Affected Households (PAHs) or (1,172 persons) will be affected. During construction, negative

impacts of the project include; (i) vegetation clearance to achieve the required width of the

carriageway and to pave way for the re-alignments; (ii) impacts from establishment of

construction camps (iii) accidents with construction traffic or poorly maintained diversions (iv)

siltation of the water courses (v) noise, dust and vibrations during earthworks and quarry blasting.

During operations the adverse impacts include (i) increase in traffic accidents and (ii) increased

logging activities within the project catchment area.

3.2.3. An ESMP has been developed to provide mitigation and management measures for the

impacts. The mitigation measures include: (i) implementation of the Resettlement Action Plan

(RAP); (ii) re-planting at identified locations to compensate for trees lost; (iii) consultations with

county and local administration of the proper locations of construction camps (iv) Road Safety

Campaign during construction and operation and provision of safety signage (v) proper

management of spoil material and (vi) establishment of a checkpoint and weighbridge to monitor

transportation of logs and curb illegal logging. The Cost of ESMP implementation is estimated at

USD 1,339,000 (included in civil works).

3.2.4. Positive impacts include; (i) improved all-weather road infrastructure that will link the

south-eastern parts of Liberia to the Capital, Monrovia and to neighboring Ivory Coast,

promoting regional integration; (ii) improve accessibility to social services (schools, hospitals,

markets); (iii) increased agricultural production and reduced farm losses due to more efficient and

reliable transport infrastructure (iv) creation of employment opportunities to the local community

and (v) improved local socio-economy due to large number of construction workforce.

Climate Change

3.2.5. Historical climate data observed by Liberia’s National Adaptation programme of action

(NAPA) 2008 indicate that temperatures will continue to rise on an average of about 0.6 degrees

Celsius, 2.0 degrees Celsius and 3.9 degrees Celsius by the year 2020, 2050 and 2080

respectively. Rainfall is also predicted to decrease on average by 2.8 %, 10.9 % and 18.6 % by

2020, 2050 and 2080 respectively in all agro-ecological zones.

3.2.6. The volume of vehicular traffic is increasing in direct response to the increase in business

activities in Liberia. More vehicle kilometres (VKM) will be generated from the project area of

influence but transportation will be faster and more efficient. Currently, long hours are spent on

the poor road which implies more fuel consumption thus emission of more CO2 and loss of time

or productive human capital. The current state of road infrastructure leads to longer travel time

and thus increased wear and tear of vehicular parts, and also increased emissions, especially

greenhouse gases. The upgrading of the road will result in reduced travel time and reduced

emissions.

10

3.2.7. On promotion of Green Growth, the proposed project is part of a larger corridor

development initiative that will improve public transport, connectivity, facilitate social inclusion

and improve agricultural production and transport of agricultural produce in south eastern Liberia

and promote trade with Ivory Coast, thus improving livelihoods. The project also incorporates a

Public Road Safety Campaign component that will reduce the economic impacts of traffic

accidents by ensuring better infrastructure, public education, proper traffic and speed signage and

reduction of drunk driving.

Gender

3.2.8. It is estimated that the project will benefit around 70,000 women living in Maryland

County.4 The project will facilitate women’s access to healthcare facilities, including the County

hospital in Harper. This is particularly important for maternal care, as in the project area, only

21% of pregnant women deliver in health facilities and 30% of them are assisted by a skilled

practitioner (doctor, nurse, midwife of physician assistant).5 In addition to health benefits, the

project will facilitate women’s access to markets. With 90% of women in the project area

primarily engaged in subsistence farming and the informal sector, the paving of the road will be

an important factor encouraging women to sell their goods and produce to markets and towns.

Women will also benefit from the development of businesses attracted by the opening of the

region thanks to the all-weather road. Finally, experience from the Labor-Based Fish Town-

Harper Rehabilitation Project indicates that women are likely to represent an important share

(between 30 and 40%) of the unskilled and semi-skilled labor required for construction works.

The project will empower women through local NGO’s to increase access to new employment

opportunities, information and awareness creation so as to participate fully in the road activities.

Women will be empowered by ensuring that in some cases certain jobs are designated for them.

While the project will contribute to the well-being of women in the area, it also poses the risks of

affecting them negatively. Women are likely to be exposed to HIV/AIDS and sexually

transmitted diseases related to the inflow of construction workers. Moreover, the project will lead

to the physical and economical resettlement of around 560 women and girls, including 48 female-

headed households. The project design has integrated measures to mitigate these impacts as

described in the ESMP and the RAP.

Social

3.2.9. Development of economic growth: The project will contribute to economic growth in

the project area by improving all-weather market accessibility at affordable price and within

reasonable distances. Agriculture activity, which is the key economic activity in the project area,

is expected to become increasingly market-oriented, which will provide an incentive for

households to increase their production beyond subsistence levels. Farming productivity levels

should improve thanks to the inflow of tools and technology as the region opens up to trade.

Additionally, the project is expected to encourage the development of business opportunities,

from the increase in trade, road sellers and collective transport initiatives, to industries such as

palm oil and rubber processing facilities. Finally, it is expected that the project will create up to

450 short-term (at least 20% women) employment opportunities during construction.

3.2.10. Improved accessibility to social infrastructure (schools and health centers): The

project will improve access to existing social services as well as facilitate the development of

basic social infrastructure in the area. Currently, Maryland County is not connected to the

electricity grid nor does it have a potable water network.6 Most households use kerosene lamps

for lighting, wood for cooking and get their drinking water from creeks, rivers and open wells.

4 2008 Census: 65,679 in 2008 with an annual growth rate of 2.1% 5 LDHS 2008 6 Maryland County website: http://www.marylandcountyliberia.org/

11

The wealthiest households and some social services (health clinics, NGOs, administrative

services) use diesel generators to operate. The County has 17, mostly private, functional health

facilities and one hospital located in Harper, and very few health care staff (3 doctors and 122

nurse/physician assistants).7 As for the education sector, the County has 151 schools (118 public

and 33 private) with a student population of around 30,000 students.8 In the framework of the

Labor-Based Fish Town-Harper Road Rehabilitation Project, the AfDB financed the

rehabilitation and equipment of 5 schools and 2 health clinics in Maryland. An all-weather road

access will facilitate additional investments (e.g. electricity distribution, water and sanitation

network) that will improve their operational quality and efficiency.

Baseline data 3.2.11. Whereas ESIA provided little data on the demographics, social infrastructure and gender

for the project area, it is expected that basic socio-economic data will be collected at the

beginning of project implementation under the M&E sub-component. The Infrastructure

Implementation Unit (IIU) will maintain a Monitoring and Evaluation (M&E) Expert responsible

for the development of a baseline to measure Objectively Verifiable Indicators (OVI) and

monitor the project’s social and development impacts, such as: (i) People that can access all

season public transportation within 2 km of their homes; (ii) Yearly traffic accidents and

mortality along the transport project; and (iii) Monthly household expenditures devoted to

transport.

Inclusive Growth

3.2.12. The project will contribute to inclusive growth to the extent that it will open up a region

that had been isolated and difficult to access. It will facilitate the delivery of basic social services

and stimulate the development of business opportunities across gender, various age groups and

geographical divide.

Involuntary resettlement

3.2.13. Road rehabilitation and pavement typically affects land, houses, tree crops and other

public structures. In the framework of this project, the MPW has prepared a Resettlement Action

Plan (RAP) that identified 339 households (1,172 people) who will be affected by the project.

The RAP outlines the compensation measures for affected assets, institutional arrangements, and

timeline and grievance mechanisms. Its estimated budget is US$ 1,168,856. The Government will

however set aside a budget of US$ 1.5 million included in the project cost. The RAP summary

was published on the Bank’s website on 26 July, 2013 along with the ESIA and will be locally

disclosed in the administrative buildings of Maryland County as well as at the Environmental

Protection Agency (EPA) and MPW offices in Monrovia. The RAP implementation will be led

by the Infrastructure Implementation Unit (IIU) of the MPW with oversight of the Internal

Monitoring Committee (IMC), composed of representatives of several government ministries and

agencies (such as the Ministry of Finance and the EPA). Moreover, an NGO will be contracted to

conduct external monitoring and evaluation of the RAP implementation process.

3.2.14. For more information on Environmental and Social aspects, please refer to Detailed

Technical Annex B.5

7 Maryland County website: http://www.marylandcountyliberia.org/

8 Idem

12

4. IMPLEMENTATION

4.1. Implementation arrangements

4.1.1. The project components will be executed by the Ministry of Public Works through the

Infrastructure Implementation Unit (IIU), a dedicated Unit tasked to manage all donor financed

projects. A Project Coordinator (PC) appointed by PMW from within its organization will be the

key contact person responsible for coordinating and monitoring all project activities. In carrying

out project activities, the PC will rely on existing IIU management systems in areas such as

finance, procurement, monitoring and evaluation and environment. The project will provide

primary operational logistics support to the PC relating to transport, office equipment and

essential recurrent project costs. MPW has already submitted a CV of the Project Coordinator to

the Bank which has been found satisfactory.

4.1.2. IIU was created in 2009, assuming the role of its predecessor the Special Implementation

Unit (SIU) formed in 2006 and has been responsible for management of various donor financed

projects. Since its inception the unit was responsible for early post war reinstatement of basic

donor financed road infrastructure that included rehabilitation of Monrovia to international

airport, major city roads in Monrovia and the road corridor between Monrovia to Buchanan. Its

current portfolio stands at over US$200 million dollars of projects including a major long term

(10 years) World Bank financed Output Based contract pioneered on the Monrovia Guinea

Corridor. Government’s medium to long-term road reform agenda is to further strengthen the IIU

and transform it into a semi-autonomous road authority.

4.1.3. The current structure of IIU includes an establishment of 21 staff comprising at least 12

technical staff. The IIU’s organogram includes sections responsible for administration and

finance, engineering environmental and social safeguards and monitoring on which the project

will rely for its implementation. MPW is continuously strengthening IIU’s capacity. IIU is

currently in the process of filling senior managerial positions for Engineering, Administration,

Finance and Monitoring and Evaluation. As its responsibilities increase IIU will require a more

holistic human development strategy particularly with respect to filling new positions.

4.1.4. The project thus includes activities aimed at developing technical capacities of MPW.

These include support of an engineering mentorship scheme that will promote attachment of

MPW junior engineering staff to the project at various levels of contract implementation. The

staff will closely work with the supervision consultant who is expected to expose them to field

operations including works inspection, materials testing, quality control and works quantification.

The project will also support training of technical staff on short term professional courses and

limited long term academic training offered locally and or regionally. It is hoped that these

programmes will contribute to long-term viable efforts aimed at supplying much needed pool of

technical expertise to the sector.

Procurement

4.1.5. All procurement of goods and works and acquisition of consulting services financed by

the Bank under this project will be in accordance with the Bank's Rules and Procedures for

Procurement of Goods and Works or as appropriate, Rules and Procedures for the Use of

Consultants, using the relevant Bank Standard Bidding Documents. The Bank has approved

advance contracting to facilitate procurement Civil Works and Consultancy Services. Pre-

qualification of civil works contractor will be undertaken though International Competitive

Bidding (ICB).

13

4.1.6. The project is financed by the ADF, FSF and the NTF windows. The ADB acts on behalf

of the NTF and ADB rules of procurement are generally applicable to NTF loans. The application

of the different procurement rules to the various components of the project would add a level of

complexity to the procurement arrangements. An integrated approach to procurement is proposed

by making the ADF universal procurement rules applicable to procurement under the NTF loan

which would allow all procurement under the project to be undertaken using the same rules

4.1.7. The Ministry of Public Works (MPW) will be the executing agency for this Project.

Implementation will be mainstreamed within the IIU. The IIU is responsible for all donor

financed projects in the Ministry. The IIU will be responsible for the procurement activities under

the project. A qualified Procurement Officer will be assigned by the IIU as part of the Project

Management Team. In addition, to address the shortcoming of weak procurement expertise, the

Project will receive support from a Transport Engineer/Procurement who is being funded by the

Bank through the FSF Pillar III funding from August 2013 to July, 2014. Technical Annex B2

provides details on the procurement arrangements, the list of procurement items, procurement

rules and procedures relating to goods, works, consulting services, and training, as well as the

review procedures required by the Bank under this Project.

Financial Management, Disbursement Arrangements and Project Audit

4.1.8. Financial management: The existing Project Financial Management Unit (PFMU) of the

Ministry of Finance (MoF) will assume responsibility for the Project’s financial management.

The PFMU was created in 2006 as a centralized unit within the MoF to carry out the financial

management functions for most donor funded projects in the country. It is therefore familiar with

the financial management requirements of the Bank. The PFMU is manned by qualified and

experienced professionals, who are familiar with the Unit’s accounting software (Sun

Accounting), as well as experienced in producing financial reports in the form and content

expected by the Bank.

4.1.9. Disbursement: Direct Payments (DP) and Special Account (SA) methods will be used in

disbursing funds to the project. DP shall be used for payments of significant amounts under the

works, services and goods category of the project while the SA method will be used for recurrent

costs and small contracts. A designated US Dollar SA will be opened specifically for the project

at the Central Bank and managed by the PFMU, which is already managing the SA of some

ongoing Bank funded projects. All disbursements will follow the procedures outlined in the

Bank’s Disbursement Handbook.

4.1.10. External Audit Arrangements: The General Audit Commission (GAC) has primary

responsibility for the external audit operations of the Government of Liberia (GoL). However, the

GAC normally outsources the audit of donor financed projects to approved independent audit

firms in the country. Private auditors shall be invited to submit proposals for the audit of the

proposed project upon technical clearance of the terms of reference by the Bank. The PFMU is

quite familiar with external audit requirements of the Bank. Annual Audited financial statements

and associated management letter must be submitted to the Bank within six months of the end of

the financial year.

4.1.11. It is the overall conclusion that the PFMU, after addressing the issues in the FM action

plan (see details in Detailed Technical Annex B2) will have adequate capacity to manage the FM,

disbursement and audit arrangements of the proposed project. The residual risk is moderate.

14

4.2. Monitoring

4.2.1. The project will be monitored during implementation by the Works Supervision

Consultant and Monitoring and Evaluation (M&E) Consultant, Executing Agency [Project

Coordinator/MPW] and through the Bank Missions; and during the operations maintenance

phases (by the Executing Agency - MPW). Monitoring of Cross-cutting issues shall be carried

out by the MPW, Relevant Sector Ministries/Agencies (Ministry of Health, Ministry of Gender,

Liberia Institute of Statistics and Geographical Information Services, and Ministry of Finance),

Communities, NGOs and CSOs.

4.2.2. Monitoring is aimed at close oversight to ensure adherence to the set out delivery

timelines, quality and quantity standards, early detection of problems/challenges and provision of

timely remedial measures. The various targets specified in the Results based log-fame provide a

basis for monitoring at activity, output and outcome levels by relevant project stakeholders. The

Monitoring and Evaluation Consultant to be engaged by the Executing Agency will assist with

refining the framework for monitoring the project indicators. In addition to the day-today project

oversight by the Works Supervision Consultant, M&E Consultant and the Project Coordinator

assigned by MPW, the Bank’s monitoring strategy includes: semi-annual supervision missions,

review of quarterly project progress reports from MPW, mid-term review and preparation of the

project completion report (PCR) at about 85% completion of the project.

4.2.3. The Technical and Road Safety Audits before construction and at the end of construction

phase, and Financial Audits are some of the measures that will monitor adherence and

compliance to the agreed upon project standards/deliverables. Special attention will be made on

the monitoring of the implementation of the Environmental and Social Management Plan

activities to be executed by the Supervision Consultant, MPW, Ministry of Gender,

Environmental Protection Agency, Ministry of Health, NGOS and CSOs.

4.3. Governance

While Liberia still performs significantly below world and regional averages in many

areas of governance, most indicators reflect positive governance trends since President Johnson-

Sirleaf took office in 2006. The World Bank’s Worldwide Governance Indicators shows Liberia

scoring 39.8 on a 0 to 100 scale in 2011 in terms of control of corruption, compared to 14.1 in

2005. Both the Mo Ibrahim Index of African Governance and the ADB’s CPIA indicator has

shown marked progress. Liberia has improved from a rank of 47th in 2006 to 34th of 52 African

countries in 2012 in the former, and in the Governance rating of the CPIA from 2.1 in 2005 to 3.7

in 2012. Its ranking in the Transparency International Corruption Perception Index has improved

considerably, from 150th in 2007 to 75th of 186 countries in 2012, although significant

challenges remain. Weak institutions, low public sector salaries, lack of training and limited

capacity, as well as insufficient and cumbersome regulations have created both incentives and

opportunities for corruption across the public sector. The project has included in its design

governance risk mitigation measures such as (i) the appointment of external and independent

financial / technical audit firm to ensure that funds are used efficiently and for the intended

purposes; and (ii) Bank’s prior review and approval of all project procurement activities. The

Capacity Building Component for Ministry of Public Works will contribute to compliance to

expected governance standards. During the implementation phase of the proposed Project, as part

of monitoring the Government’s progress on implementation of the road sector reforms, further

assessments shall be made by the Bank on all road transport sector governance issues and those

identified will be brought to the attention of the GoL for addressing.

15

4.4 Sustainability, Institutional and Road Sector Reforms

4.4.1. Under sustainability, an assessment has been made on the institutional and financial

capacities to ensure that the paved road is maintained after construction. Currently the Ministry of

Public Works Infrastructure Implementation Unit (IIU) is responsible for all Donor Funded Road

Projects. The IIU is to be transformed into a Roads Authority by end of 2015. The Draft Bill is

under preparation and is expected to be reviewed by the Road Sector Reform Inter-Ministerial

Steering Committee before the end of the year 2013. Parliamentary Approval is expected in 2014

and establishment of the Roads Authority is expected to be completed by end of 2015 with the

recruitment of the Chief Executive and the Staff. The formation of the Roads Authority will move

side by side with the formation of the Road Fund, a body that will be dedicated to mobilise road

maintenance funding also by end of 2015.

4.4.2. The Annual maintenance needs for the national road network (Highways) based on an

estimated 2,300km maintained to good condition is USD15.00million (2012 Liberia National

Transport Master Plan). Despite limited resources, in the last 5 years (2007/08-2011/12) the GoL

allocated about USD18.95 million to highways maintenance, i.e. annual average allocation of

USD3.8 million. As part of the road sector reforms to increase maintenance funding, using a fuel

levy of USD0.1 per litre for an estimated 72 million litres per annum plus annual licence fees on

trucks would generate about USD8.9million annually for road maintenance. The estimate is,

based on a conservative fuel levy of USD 0.1per litre. If the fuel levy is adjusted upwards, the

GoL will be able to minimize the road maintenance funding gap when the Road Fund becomes

operational in 2016. In addition, as a maintenance strategy, the GoL gives priority to roads which

have been upgraded to bitumen standard. The on-going road sector reforms to create a Roads

Authority and Road Fund as well as priority allocation to recently upgraded roads will ensure that

maintenance of the project road on completion is guaranteed.

4.4.3. In the interim, the Project has included a Capacity Building Component covering

Improvement of the technical and civil engineering skills in the Ministry of Public Works through

attachment of graduate engineers to the Project, on-job training, and selected professional and

academic courses. The capacity building component will therefore contribute to the enhanced

capacity for road maintenance planning and management of the Ministry of Public Works, in

tandem with the completion of the road sector reforms. During the implementation phase, the

GoL shall explore opportunities for participation by the communities in the maintenance

activities of the upgraded road as a strategy for enhancing community ownership.

4.4.4. To strengthen the maintenance planning capacity, GIZ is currently supporting a Technical

Assistance that is piloting maintenance planning and implementation in selected Counties and is

expected to be replicated in all the counties in Liberia by the year 2016.

4.4.5. Following an Axle Load Management Study funded by the European Union, theGoL

through the Ministry of Transport plans is developing an Axle Load Control Management Policy

and Strategy that will include awareness raising, installation of Weigh bridges at major road

corridors initially with a plan to cover the primary road network in the next five years, and axle

load control enforcement. To preserve the project road against overloading the project has

included a mobile weigh bridge.

4.4.6. Under Loan conditions, to ensure that the GoL makes adequate arrangements for

maintenance of the project road on completion, the road sector reforms outlined above will be

closely monitored during project implementation phase.

16

4.5. Risk management

4.5.1. The potential risks at impact, outcomes and outputs levels have been identified and

mitigation measures have been highlighted.

Impact Risks

4.5.1.1 Implementation of Agenda for Transformation (AfT): The benefits to the entire

economy hinge on the successful implementation of AfT. The improved economic performance

that will include among others increased trade, agricultural production, mining, fishing and

tourism assumes that sufficient resources will be mobilized for implementation of the AfT. If the

AfT is not implemented as well the increased trade and regional integration the project benefits

may not be realised to the targeted levels. For the last five years however, the Government of

Liberia with support from various Development Partners has been committed to the

implementation of the post-war recovery and reconstruction programmes. In addition the various

concessions in Mining, Agriculture and Forestry in the Project area which have started well will

compensate for declines in other areas leading to realisation of the expected full benefits from the

upgraded road.

Outcome Risks

4.5.1.2 Sustainability: Inadequate Institutional and Financial Capacity to maintain the paved

road. In addition, lack of axle load management system may lead to pre-mature failure of the road

due to overloading. The road sector reforms are on-going and GOL is committed to establishing a

Roads Authority and Road Fund by 2015. GoL is putting in place measures for axle load

management by 2015. For the Project Road, a mobile weigh bridge will be procured under the

project for controlling overloading on the project road.

Output Risks

4.5.1.3 Price volatility of construction materials: The project location is remote and its

accessibility is challenging. As a result the cost of commodities are normally above market rates

and it is likely that bidding contractors will factor in adequate and or excessive risk to cover

likely sharp increase in cost of construction material mostly oil products and cement. Adequate

price contingencies have been included in the project’s detailed cost estimates. 4.5.1.4 Engineering Works Estimation: Considering that assessment of the road was

undertaken just before commencement of rain season, earth work quantities could be

considerably different after the rain season given unusually high rain intensity in the region. As

mitigation adequate physical contingencies have been included.

4.5.1.5 Contractor fails to complete the Project: The incompetence of the Contractor will lead

to delayed completion of the Project. The Contractor will be procured through the International

competitive bidding (ICB) to improve chances of getting a better qualified and experienced

Contractor. Similarly the selection of the Consultant will be carried out through a competitive

procurement process. The Project works will also be closely monitored to ensure adherence to

quality, cost and timelines by the Supervision Consultant, Ministry of Public Works, and the

Bank through the Field Office and Bi-annual Supervision Missions.

4.5.1.6 Resettlement Action Plan (RAP): Timely implementation of the RAP is key for smooth

project implementation. It is thus recommended that the IIU maintains the team responsible for

the elaboration of the RAP (environmental and social safeguard officers and assistants) to

supervise its implementation. In addition, it is expected that the resources included in GoL’s

Budget for meeting the RAP implementation will be released timely for Compensation of the

Project Affected Persons (PAPs). Furthermore, if the approval of 100% Project Funding by the

Bank is effected, then, GoL’s resources will only be used to finance the RAP expenses, which

minimises the GoL’s financial burden for Counterpart funding.

17

4.6. Knowledge building

The Bank has increased its knowledge on working in a Fragile State during the recently

concluded rehabilitation of the project road to gravel standards. Additional knowledge has been

accumulated during the design phase and will be consolidated during the implementation phase.

A capacity building component has also been included in the project for knowledge sharing,

transfer and consolidation. The Monitoring and Evaluation component of the project will

facilitate monitoring and documentation of knowledge accumulation. All these strategies will

enable the Bank and GoL to improve the identification, design and implementation of road sector

improvement projects especially in fragile states and other countries on the continent.

5. LEGAL INSTRUMENTS AND AUTHORITY

5.1. Legal instrument

5.1.1. The Bank instruments to finance this operation are an FSF Grant for an amount of UA

13.31 million; an ADF Loan of UA 22.23 million from ADF 12 PBA and NTF Loan of UA 6.5

million.

5.2. Conditions associated with Bank’s intervention

A. Entry into Force Conditions

i. Conditions Precedent to the Entry into Force of the FSF Protocol of Agreement: The

Grant Agreement shall enter into force upon signature by the Republic of Liberia and the

Fund.

ii. Conditions Precedent to Entry into Force of the ADF Loan Agreement: The entry into

force of the ADF Loan Agreement shall be subject to the fulfilment by the Republic of

Liberia of the provisions of Section 12.01 of the General Conditions.

iii. Conditions Precedent to Entry into Force of the NTF Loan Agreement: The entry into

force of the NTF Loan Agreement shall be subject to the fulfilment by the Republic of

Liberia of the provisions of Section 12.01 of the General Conditions.

B. Conditions Precedent to First Disbursement of the ADF Loan, NTF Loan and FSF Grant

The obligation of the Fund/Bank to make the first disbursement of the Grant/ Loan shall be

conditional upon the entry into force of the Grant /Loan Agreements, as specified above, and

submission by the Borrower/ Recipient, of evidence in a form and substance acceptable to the

Fund/Bank of fulfilment of the following:

i) Having opened one (1) foreign currency Special Account in a bank acceptable to the

Fund/Bank for the deposit of the proceeds of the Loan/Grant;

ii) Having developed and submitted to the Bank/ Fund the updated Resettlement Action Plan

(RAP) ;the Works Schedule and Compensation Payment Schedule detailing: (A) each

section of the road under the Project and; (B) the timeframe for compensation and

resettlement of all Project Affected Persons (PAPs) in respect of each section under the

Project;

iii) Having compensated and/or resettled all PAPs with respect to the civil works for the first

20 km of the Project in accordance with the Updated RAP and Compensation Payment

Schedule;

18

iv) Having submitted an Environmental Impact Assessment Licence or Certificate of

Approval from the authorised approval agency in Liberia

C. Other Conditions.

i) Prior to commencement of civil works for the remaining 30km of the road, the

Borrower/Recipient shall have submitted evidence, in form and substance satisfactory to

the Fund/Bank, of having compensated and/or resettled all PAPs, with respect to such

section of the road in accordance with the Updated RAP;

ii) Submit annual reports for the financial years 2013/2014 and 2014/2015, by September 2014

and September 2015 respectively demonstrating progress on implementation of the Road

Sector Reforms relating to the establishment of a Roads Authority, Road Fund, Axle Load

Management Framework, and Road Safety Council, acceptable to the Fund/Bank ; and

iii) Implement and report on the implementation of the Environment and Social Management

Plan, and the updated RAP on a quarterly basis, no later than 30 days at the end of each

quarter, in a form acceptable to the Fund/Bank;

iv) The submission from the Government of Liberia by 30 November 2013 of a report

acceptable to the Bank prior to commencement of works, that there are no complaints on the

Project from Project Affected Persons.

D. Undertakings

The Borrower/Recipient hereby undertakes:

i) Submit reports every six months on traffic counts undertaken during the road construction

and defects liability period;

ii) Submit reports on an annual basis to the Bank/ Fund, by the end of every September,

demonstrating the axle load control and Road Safety measures being enforced on the Liberia

road network; and

iii) Report on a quarterly basis, no later than 30 days, in a form acceptable to the Fund/Bank on

the measures adopted and progress on HIV/AIDS and STD prevention, Malaria control,

counselling and gender sensitization and awareness raising.

5.3. Compliance with Bank Policies

This project complies with all applicable Bank policies.

19

6. RECOMMENDATION

Management recommends that the Boards of Directors approve:

(i) NTF Loan of UA 6.5 million, ADF loan of UA 22.23 million from ADF 12 PBA

Allocation and the proposed grant of UA 13.31 million from FSF Pillar 1 resources

to the Republic of Liberia for the purposes and subject to the conditions stipulated in

this report; and

(ii) A waiver pursuant to Article 17 (1) (d) of the Agreement Establishing the Bank, taking

careful note of Article 4.3 of the Agreement Between the Federal Republic of Nigeria

and the African Development Bank for the Establishment of the Nigeria Trust Fund, to

permit procurement of goods, works and services, using the resources of the NTF, to

be open to countries that are not member countries of the Bank, provided however,

that other than as provided in this paragraph (ii), the Bank Group Rules and Procedures

for the Procurement of Goods and Works and the Rules of Procedures for the Use of

Consultants shall remain applicable.

I

Appendix I Country’s comparative socio-economic indicators

Year Liberia Africa

Develo-

ping

Countries

Develo-

ped

Countries

Basic Indicators

Area ( '000 Km²) 2011 111 30,323 98,458 35,811Total Population (millions) 2012 4.2 1,070.1 5,807.6 1,244.6Urban Population (% of Total) 2012 48.6 40.8 46.0 75.7Population Density (per Km²) 2012 37.1 34.5 70.0 23.4GNI per Capita (US $) 2011 240 1 609 3 304 38 657Labor Force Participation - Total (%) 2012 33.4 37.8 68.7 71.7Labor Force Participation - Female (%) 2012 47.6 42.5 39.1 43.9Gender -Related Dev elopment Index Value 2007-2011 0.430 0.502 0.694 0.911Human Dev elop. Index (Rank among 186 countries) 2012 174 ... ... ...Popul. Liv ing Below $ 1.25 a Day (% of Population)2007-2011 83.8 40.0 22.4 ...

Demographic Indicators

Population Grow th Rate - Total (%) 2012 2.8 2.3 1.3 0.3Population Grow th Rate - Urban (%) 2012 3.6 3.4 2.3 0.7Population < 15 y ears (%) 2012 43.5 40.0 28.5 16.6Population >= 65 y ears (%) 2012 2.8 3.6 6.0 16.5Dependency Ratio (%) 2012 86.0 77.3 52.5 49.3Sex Ratio (per 100 female) 2012 101.2 100.0 103.4 94.7Female Population 15-49 y ears (% of total population) 2012 23.4 49.8 53.2 45.5Life Ex pectancy at Birth - Total (y ears) 2012 57.3 58.1 67.3 77.9Life Ex pectancy at Birth - Female (y ears) 2012 58.4 59.1 69.2 81.2Crude Birth Rate (per 1,000) 2012 37.9 33.3 20.9 11.4Crude Death Rate (per 1,000) 2012 10.3 10.9 7.8 10.1Infant Mortality Rate (per 1,000) 2012 77.2 71.4 46.4 6.0Child Mortality Rate (per 1,000) 2012 108.0 111.3 66.7 7.8Total Fertility Rate (per w oman) 2012 5.1 4.2 2.6 1.7Maternal Mortality Rate (per 100,000) 2010 770.0 417.8 230.0 13.7Women Using Contraception (%) 2012 14.2 31.6 62.4 71.4

Health & Nutrition Indicators

Phy sicians (per 100,000 people) 2004-2010 1.4 49.2 112.2 276.2Nurses (per 100,000 people)* 2004-2009 27.4 134.7 187.6 730.7Births attended by Trained Health Personnel (%) 2007-2010 46.3 53.7 65.4 ...Access to Safe Water (% of Population) 2010 73.0 67.3 86.4 99.5Access to Health Serv ices (% of Population) 2000 39.0 65.2 80.0 100.0Access to Sanitation (% of Population) 2010 18.0 39.8 56.2 99.9Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2011 1.0 4.6 0.9 0.4Incidence of Tuberculosis (per 100,000) 2011 299.0 234.6 146.0 14.0Child Immunization Against Tuberculosis (%) 2011 73.0 81.6 83.9 95.4Child Immunization Against Measles (%) 2011 40.0 76.5 83.7 93.0Underw eight Children (% of children under 5 y ears) 2007-2011 20.4 19.8 17.4 1.7Daily Calorie Supply per Capita 2009 2 261 2 481 2 675 3 285Public Ex penditure on Health (as % of GDP) 2010 3.9 5.9 2.9 8.2

Education Indicators

Gross Enrolment Ratio (%)

Primary School - Total 2010-2012 103.0 101.9 103.1 106.6 Primary School - Female 2010-2012 98.2 98.4 105.1 102.8 Secondary School - Total 2010-2012 44.8 42.3 66.3 101.5 Secondary School - Female 2010-2012 40.2 38.5 65.0 101.4Primary School Female Teaching Staff (% of Total) 2011 13.9 43.2 58.6 80.0Adult literacy Rate - Total (%) 2010 60.8 67.0 80.8 98.3Adult literacy Rate - Male (%) 2010 64.8 75.8 86.4 98.7Adult literacy Rate - Female (%) 2010 56.8 58.4 75.5 97.9Percentage of GDP Spent on Education 2008 2.7 5.3 3.9 5.2

Environmental Indicators

Land Use (Arable Land as % of Total Land Area) 2011 4.7 7.6 10.7 10.8Annual Rate of Deforestation (%) 2000-2009 2.0 0.6 0.4 -0.2Forest (As % of Land Area) 2011 44.6 23.0 28.7 40.4Per Capita CO2 Emissions (metric tons) 2009 0.1 1.2 3.1 11.4

Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update :

UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports.

Note : n.a. : Not Applicable ; … : Data Not Available.

COMPARATIVE SOCIO-ECONOMIC INDICATORS

Liberia

May 2013

0

20

40

60

80

100

120

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

Infant Mortality Rate( Per 1000 )

Liberia Africa

0

200

400

600

800

1000

1200

1400

1600

1800

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

GNI Per Capita US $

Liberia Africa

0.0

1.0

2.0

3.0

4.0

5.0

6.0

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

Population Growth Rate (%)

Liberia Africa

1

11

21

31

41

51

61

71

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

Life Expectancy at Birth (years)

Liberia Africa

II

Appendix II: Table of ADB’s portfolio in the country as at May 2013

# Project Title

Sector and

share Approval

date

Effective

ness

Delay

Appro

val-

Effecti

ve

Closi

ng

Date

Appro

ved

Amou

nt

(Millio

n UA)

Disburse

ment

Ratio

Perform

ance

Rating*

1 Urban Water and Sanitation

Project

Water and Sanitation

(19%)

May-10 Jan-12 19.9 Jun-

15 26.09 5% Satisf.

2

Fostering Innovative Sanitation

and Hygiene in Monrovia (FISH)

Jan-13 Apr-12 3 Dec-

15 0.71 40% Not Yet

3 Rural Water Supply Sanitation

and Hygiene Program Study Oct-12 Jan-13 2.9

Feb-

14 0.58 0% Not Yet

4 Equity in Access Bank (and

supplementary Equity)

Finance and

Banking (4%)

Apr-08/

Dec-12 Oct-08 6.0 n/a 0.91 86% Satisf.

5

Payments System

Development Project (Liberia,

The Gambia, Guinea, S.Leone)

Nov-10 Feb-11 2.7 Jun-

14 5.00 9% Satisf.

6

Economic Governance and

Competitiveness Support

Program

Governance

(24%)

Jun-11 Dec-11 5.6 Jun-14

30.00 73% Satisf.

7

Integrated Public Financial

Management Reform Project Sep-12 Sep-12 0.3

Jun-

16 3.00 17% Not Yet

8

Fragile States Facility: LEITI,

Medicine School, PFM, Govern.Com, Public Works

Apr-09 effective 1.8 June-

14 1.01 15% Satisf.

9 Support to Liberia Institute for

Public Administration May-07

Nov.

2012 66**

Jun-

13 0.07 80% Not Yet

10

Agriculture Sector Rehabilitation Project

Agriculture and Rural

Development

(32%)

Apr-09 Mar-10 10.8 Jun-16

12.50 41% Satisf.

11

Smallholder Agriculture Productivity Enhancement and

Commercialization

May-12 not yet n/a Dec-

17 33.80 0% Not Yet

12

ECOWAS for Peace and development. Project (Guinée,

Guin. Bissau, Lib, SL)

Social

Infrastru-

cture

Sep-04 Nov-04 2.1 Jun-

13 10.00 84%

Pot.

Probl.

13 Labor-Based Public Works Project

Dec-07 Apr-09 15.2

Dec-15

15.24 88%

Satisf.

Suppl.Grant to Labor-Based

PWP

(21%) Jun-11 Jan-12 6.7

Dec-

15 5.00 23%

Total / Average 6.8 145 37%

*Performance rating after assessment from supervision activities: Not yet: Not yet rated; Satisf.: Satisfactory; Pot. Probl.: Potential Problematic Project; PP:

Problematic Project;

** Operation approved on a Trust Fund, not signed after 5 years and revived after opening of LRFO

III

Appendix III: Key related projects financed by the Bank and other

development partners in the country

Donors Currency Amount

ongoing

(millions*)

Amount

planned

(millions)

Exchanged rate

currency Eur

Ongoing

Eur

(millions)

Planned

Eur

(Millions)

WORLD

BANK

US$ 289.0 1.2544 231.0

AfDB US$ 23.0 57.0 1.2544 18.0 45.0

USAID US$ 2.5 20.0 1.2544 2.0 16.0

KUWAIT

FUND

US$ 1.5 1.2544 1.2

JICA US$ 20.0 1.2544 16.0

EU EUR 79.0 4.9 1 79.0 4.9

KfW EUR 34.0 1 34.0

DFID GBP 15.0 0.7911 19.0

IRISH AID EUR 2.0 1 2.0

GIZ EUR 6.1 1 6.1

SIDA (LRTF) US$ 11.5 7.0 1.2544 9.2 5.6

SIDA SEK 288.0 8.3478 35.0

NORWAY NOK 15.0 7.2775 2.0

Total 438.0 87.8.

US$ Equivalent 549.0

IV

Appendix IV: Map of the Project Area

Trans-African Highway

Missing Links

Word Bank Financed Section

Project Road Harper – Karloken (50km)

Harper

Zwedru Monrovia

Karloken

V

Technical Annex A: Liberia’s Development Agenda, Sector Brief and

Donors Support

A1: Economic Outlook

Liberia’s economy has experienced high growth since 2006 as post-war reconstruction has

continued, despite a decline from 2008 to 2010 largely due to the global financial crisis. Its

post-war economic growth was sustained in 2012, with estimated real GDP growth of 8.9%,

led by the first full year of post-conflict iron ore exports, buoyant construction, and strong

performance in services. The country has attracted over US$16 billion in foreign direct

investment (FDI) commitments since 2006, while it has also benefitted from some of the

highest ODA per capita in the world—some US$ 185 per capita in 2011, more than three

times the African average of US$ 49. Real GDP is projected to expand by 7.7% in 2013 and

5.4% in 2014, supported by further iron ore expansion and concession related foreign direct

investment (FDI). While poverty rate has decreased from 64% to 56% between 2007 and

2010, but some 78% of the population remains engaged in vulnerable employment, and

Liberia ranks close to the bottom of countries in the Human Development Index (HDI)

(174th out of 187). It is expected that implementation of its Agenda for Transformation

(2012-2017) will go a long way in addressing some of its major challenges; inadequate

infrastructure, weak institutional and human capacities and unemployment.

A2: Strategic Link between the Project, Country Strategy Paper and Agenda for

Transformation

A2.1: The Agenda for Transformation (AfT) (2012-17): The AfT is the current National

Development Plan and is the first step towards the long term national vision, Liberia Rising

2030, which aims to reach middle income status by 2030, while ensuring that the population

shares in inclusive economic growth and sustainable development. The AfT, launched in

December 2012, supports five pillars including 8 cross-cutting issues. The AfT focuses on

investment in infrastructure, particularly roads and energy, human development, and the

security sector. Paving of Fish Town – Harper Road Phase 1 is therefore strategically linked

with Liberia’s AfT.

A2.2 Country Strategy Paper (2013-2017): Fish Harper Road is a section on the 510km

Ganta-Harper Corridor. This is part of the main road corridor in Liberia that starts from

Monrovia to Ganta then to Harper covering a length of close to 1000km as shown on the

Map of the Project Area (Appendix IV). The Project Road is part of the Trans-West African

Highway Corridor (Lagos – Nouakchott) and links Liberia with Cote d’Ivoire. The Bank’s

Country Strategy Paper (CSP, 2013-2017) approved by the Board in July 2013 has two

pillars: (Pillar 1) Promoting inclusive economic growth through transformative

infrastructure investments. This pillar will invest in Liberia’s key constraints to growth,

focusing on energy and road infrastructure, to promote a competitive private sector,

increased agricultural production and market access, employment creation across age and

gender, and improved welfare and public service delivery. (Pillar 2) Enhancing governance

and the efficient management of resources. Given the on-going fragility of Liberia, this

pillar will promote sustainable economic governance. It will also improve the business

environment and decrease the barriers to regional and international trade. The Project Road

therefore in line with both pillars in that paving of the road will improve road infrastructure

in Liberia, currently whose proportion of paved roads is on 7% out of the total road network

in Liberia. The capacity building project component for the Ministry of Public Works

(Executing Agency for the Project) is in line with pillar two of enhancing governance for the

road sector.

VI

A3: Transport and Road Sector Brief

A3.1 The Transport Sector in Liberia: The Transport infrastructure in Liberia currently

consists of about 10, 600 km of roads, three mining-related railways totalling about 498 km,

four seaports, two international airports and numerous airfields. Roads are a dominant mode

of transport catering for over 90% of passenger and freight traffic. 14 years of civil war led

to destruction of a large part of the infrastructure. Whereas Government of Liberia jointly

with Development Partners is improving the transport sector, more investments are required

to revamp the infrastructure and transport services in Liberia. With support from GIZ the

National Transport Master Plan was finalised in 2012. The Master Plan aims at providing

access to all sections of the population and facilitating safe and comfortable transport for

economic recovery and poverty reduction. It outlines the investment and maintenance

requirements to rehabilitate and upgrade all transport modes in Liberia in the next 16 years.

A3.2 Road Sector: Arising out of its dominance, the road transport sector has attracted

funding from the GoL and Development Partners for the last ten years. Focus has been on

the restoration of the major roads linking the capital city of Monrovia with the Neighbouring

Countries in the Mano River Union (Cote d’Ivoire, Guinea and Sierra Leone). Other road

rehabilitation programmes have concentrated on road leading to economic zones such as

those with minerals, forests and agriculture. For example, through the Liberia

Reconstruction Trust Fund (LRTF) contributed by various Donors and managed by the

World Bank, rehabilitation works are on-going on Monrovia –Ganta-Guinea Boarder

(300km). With EU funding periodic maintenance was carried out on Monrovia – Mano

River (Sierra Leone Boarder) (126km). The road however needs reconstruction.

The Ministry of Public Works is responsible for road development and maintenance of roads

in Liberia. In order to separate the policy and implementation roles arrangements are under

to form a Roads Authority by 2015 which will be responsible for implementing road sector

programmes and projects while the Ministry will concentrate on policy formulation,

strategic planning, setting standards and oversight and other road sector regulatory

functions. The Roads Authority will be supported by a Road Fund (under formation) which

will be responsible for mobilising and managing the road maintenance funding. Delivering

The Ministry of Public works currently faces inadequate capacity constraints to deliver on

its mandates. As an Interim measure with support from the World Bank an Infrastructure

Implementation Unit was established in 2009 and is responsible for implementing the Donor

funded road sector improvement projects. It is anticipated that the IIU will be transformed

into the Roads Authority by 2015. The project has included a capacity building component

to address the capacity constraints in the Ministry of Public Works.

A4: Donors Support and Bank’s activities in the Transport Sector in Liberia and its

Strategic intervention

A4.1 Donor activities in Liberia

This section highlights on-going road transport sector funded by the Development Partners

in Liberia. The current rehabilitation of Redlight – Gbarnga has funding from the Liberia

Reconstruction Truth Fund (LRTF) administered by the World Bank and the government of

Liberia in the amount of $166 Million. The contract was signed in 2012 and commenced on

3 portions of the road link, in total 30km. Gbarnga to Ganta has funding committed as part

of LIBRAMP with additional financing from (LRTF and GoL). The Ganta to Yekepa

funding is from Arcelor Mittal in the amount of $40 million. EU has financed a consultant

firm to provide bid documents of the procurement of consultants for the detailed design,

procurement services and optional supervision for the rehabilitation of St. Paul River Bridge

VII

to Bo Waterside/Sierra Leone border (126.6 km). EU is also funding feasibility study and

detailed design for upgrading/construction of the Greenville – Newton Junction

(approximately 163.9 km). African Development is funding the feasibility study from

Harper to Zwedru and the paving of 130km of asphalt concrete.

A4.2 Bank’s activities in the transport Sector in Liberia and its strategy

Since December 2007, the Bank has approved and implemented three operations that

include road components. The first project is the Labor Based Public Works Project

approved in December 2007 that has been implemented during the period 2008 to 2013. The

main output of that project is a 130 Km road connecting Harper to Fish Town rehabilitated

as gravel road. The other two projects having activities related to road sectors are in the

Agriculture and Rural Development sector and they plan to rehabilitate or construct nearly

340 km of feeder roads especially in the southeast region. The projects are the Agriculture

Sector Rehabilitation Project (ASRP) approved in April 2009 and currently under

implementation, and the Smallholder Agriculture Productivity Enhancement and

Commercialization (SAPEC) approved in May 2012 and that will start activities from

August 2013. The Bank is part of the Road Sector Working Group headed by the Ministry

of Public Works.

VIII

Technical Annex B - Backup of the Key Arguments of the Report

Annex B1: Detailed Cost

Table B1.1: Source of financing by components

No Components

US$ (millions) UA (millions) Funding Source %

FE Currency

PBA FSF NTF GoL Foreign Local Total Foreign Local Total

1.00

Road Improvement

Activities

Road Civil Works + ESMP 38.75 9.69 48.44 25.83 6.46 32.29 15.84 11.03 5.42 80

Supervision 2.06 0.52 2.58 1.37 0.35 1.72 1.72 80

Sub-Total 40.81 10.21 51.02 27.20 6.81 34.01 17.56 11.03 5.42

2.00 Project Management

Project Coordination Support 0.24 0.06 0.30 0.16 0.04 0.20 0.20 80

Monitoring and Evaluation 0.24 0.06 0.30 0.16 0.04 0.20 0.20 80

Financial and Technical Audit 0.31 0.08 0.39 0.20 0.06 0.26 0.26 80

Sub-Total 0.79 0.20 0.99 0.52 0.14 0.66 0.66

3.00 Other Components

Road Sector Capacity

Building 0.33 0.09 0.42 0.22 0.06 0.28 0.28 80

HIV / AIDS Sensitization 0.12 0.03 0.15 0.08 0.02 0.10 0.03 0.07 80

Compensation of PAPs - 1.25 1.25 0.83 0.83 0.83

Sub-Total 0.45 1.37 1.82 0.30 0.91 1.21 0.31 0.07 0.83

Base Cost 42.05 11.78 53.83 28.02 7.86 35.88 18.53 11.10 5.42 0.83

Physical Contingency 4.20 1.17 5.37 2.80 0.78 3.58 1.85 1.11 0.54 0.08 80

Price Contingency 4.19 1.16 5.35 2.80 0.78 3.58 1.85 1.10 0.54 0.09 80

Project Cost 50.44 14.11 64.55 33.62 9.42 43.04 22.23 13.31 6.50 1.00

IX

Table B1.2: Source of financing by category of expenditure

Components

US$ (millions) UA (millions) Funding Source (UA millions)

% FE Foreign

Exchange

Local

Currency Total

Foreign

Exchange

Local

Currency Total PBA FSF NTF GoL

1 Road Improvement Activities

Road Civil Works + ESMP 38.75 9.69 48.44 25.83 6.46 32.29 15.84 11.03 5.42 80

Sub-Total 38.75 9.69 48.44 25.83 6.46 32.29 15.84 11.03 5.42

2 Consultancy

Supervision 2.06 0.52 2.58 1.37 0.35 1.72 1.72 80

Monitoring and Evaluation 0.24 0.06 0.30 0.16 0.04 0.20 0.20 80

Financial and Technical Audit 0.31 0.08 0.39 0.20 0.06 0.26 0.26 80

HIV / AIDS Sensitization 0.12 0.03 0.15 0.08 0.02 0.10 0.03 0.07 80

Sub-Total 2.73 0.69 3.42 1.81 0.47 2.28 2.21 0.07

3 Goods

Support to the Project Coordinator

Computer Equipment & Accessories 0.02 0.01 0.03 0.02 0.00 0.02 0.02 80

Cross Country Vehicles 0.10 0.02 0.12 0.06 0.02 0.08 0.08 80

Axle load Weigh pads 0.04 0.01 0.05 0.02 0.01 0.03 0.03 80

Sub-Total 0.16 0.04 0.20 0.10 0.03 0.13 0.13

4 Other Components

Road Sector Capacity Building 0.33 0.09 0.42 0.07 0.21 0.28 0.28 80

Project Coordination Support 0.08 0.02 0.10 0.06 0.01 0.07 0.07 80

Compensation of PAP 1.25 1.25 0.83 0.83 0.83 80

Sub-Total 0.41 1.36 1.77 0.13 1.05 1.18 0.35 0.83

Base Cost 42.05 11.78 53.83 27.87 8.01 35.88 18.53 11.10 5.42 0.83

Physical Contingency 4.20 1.17 5.37 2.78 0.80 3.58 1.85 1.11 0.54 0.08

Price Contingency 4.19 1.16 5.35 2.78 0.80 3.58 1.85 1.10 0.54 0.09

Project Cost 50.44 14.11 64.55 33.43 9.61 43.04 22.23 13.31 6.50 1.00

X

B2: Technical Annex: Procurement Of Goods, Works And Consultancy Services

B.2.1 National Procedures and Regulations - Use of Country Procurement System

The Republic of Liberia’s national procurement law and regulations are governed by the

Amendment and Restatement of Public Procurement and Concessions Act (PPCCA) 2005,

which was approved September, 2010. The Act applies to procurement of goods, works and

services, financed in whole or part from public funds. A Public Expenditure Management and

Financial Accountability Review (PEMFAR) 2009, prepared by World Bank confirmed that the

Act complies with the international best standards. It however, states that due to lack of

capacity, application of the Act and procedures is not consistent with good practice and poses

high risk on the public finance system. The PEMFAR has recommendations for areas for

improvement for sound procurement system. (i) Eligibility of Parastatal organizations and state

enterprise; (ii) advance contracting and retroactive financing and (iii) margin of domestic

preference. This was confirmed by an NCB Assessment which was carried out by the Bank in

2011. The PEFA assessment carried out in September 2012 indicates that the PFM reform

strategy sees capacity building as the main challenge in the procurement area. Capacity

building is essential if the procurement reforms introduced over the last few years are to have

their full impact on performance over the medium term. The focus should be on strengthening

the oversight role of PPCC and general capacity building initiatives for procurement personnel

within ministries and agencies.

An assessment carried out by the Bank in 2011 concluded that the legal framework for NCB in

Liberia is globally consistent with the Bank’s Rules and Procedures. The assessment revealed

that overall, due to lack of capacity, the application of the Act and procedures is not consistent

with good practice and poses high risk on the public finance system. The NCB assessment

revealed the following major discrepancies exist between the PPCA and the Bank Procurement

Rules & Procedures (i) eligibility of Parastatal organizations and State enterprises; (ii) advance

contracting and retroactive financing; and (iii) margin of domestic preference.

B.2.2 Procurement Arrangements

All procurement of goods, works and acquisition of consulting services financed by the Bank

will be in accordance with the Bank’s Rules and Procedures: “Rules and Procedures for

Procurement of Goods and Works”, dated May 2008, revised July 2012; and “Rules and

Procedures for the Use of Consultants”, dated May 2008, revised July 2012, using the relevant

Bank Standard Bidding Documents, and the provisions stipulated in the Financing Agreement.

The various items under different expenditure categories and related procurement arrangements

are summarized in Table B2.2 below. Each contract to be financed under the Project, the

different procurement methods or consultant selection methods, the need for prequalification,

estimated costs, prior-review requirements, and time frame are agreed between the Borrower

and the Bank project team and are provided in the Procurement Plan (see section B.5.3.4). In

light of the fact that the financing for the Project is coming from both the ADF window , the

FSF and the NTF window (NTF loan), with respect to which the ADB acts on behalf of the

NTF and ADB rules of procurement are generally applicable, and the application of the

different procurement rules to the various components of the Project would add a level of

complexity to the procurement arrangements, Management proposes an integrated approach to

procurement by making the ADF universal procurement rules applicable to procurement under

the NTF loan which would allow all procurement under the Project to be undertaken using the

same rules. Accordingly a waiver is being requested from from the Board of Directors, which

waiver will apply to all procurement under the NTF loan and permit procurement in non-

member countries.

XI

Table B2.2: Summary of Procurement Arrangements

Use of Bank’s procedures

(UA million)

Non- Bank-

Funded Total

(UA million)

1. Civil Works 1.1 Civil Works for Road construction

2. Goods 2.1 IT Equipment

2.2 Pick Up Vehicles

2.3 Axle Load Weigh pads

3. Consulting Services 3.1 Construction Supervision

3.2 M&E Services

3.3 HIV/AIDs Sensitization

3.4 Financial

3.5Technical/Safety Audit

4. Operating Expenses

TOTAL

[32.29]

[ 0.02]

[ 0.08]

[ 0.03]

[ 1.72]

[ 0.20]

[ 0.10 ]

[ 0.10 ]

[ 0.16 ]

[ 0.07 ]

[34.77]

[32.29 ]

[ 0.02]

[ 0.08 ]

[ 0.03]

[ 1.72 ]

[ 0.20]

[ 0.10]

[ 0.10]

[ 0.16]

[ 0.07 ]

[34.77]

+Figures in brackets are amounts financed by the Bank/Fund/NTF as the case may be.

B.2.2.1 Civil Works

Procurement of civil works above UA 1.5 million per contract will be carried out under

International Competitive Bidding (ICB) procedures, with prequalification, using the

Bank’s Standard Bidding Documents (SBDs). Works procured under this method, would

include: civil works related to road construction for UA32.29 million.

B.2.2.2 Goods

Procurement of goods, such as IT equipment estimated to cost UA0.02 million, vehicles

estimated to cost UA 0.08 million and axle weigh pads to cost UA 0.03 million will be

procured using shopping. These goods are readily available in Liberia.

Operating expenses, such as vehicle fuel, maintenance and insurance shall be procured

using GoL Procedures, acceptable to the Bank.

B.2.2.3 Consulting Services

Consultancy services related to construction supervision, monitoring and evaluation services,

financial and technical audit and HIV/AIDs sensitization shall be procurement under the

Project.

Construction supervision services, monitoring and evaluation services and

HIV/Sensitization, Malaria, Gender Sensitization and Road Safety Awareness Campaign

Services shall be procured through a shortlist using Quality Cost Based Selection (QCBS).

Financial Audit services shall be procured using a shortlist through Least Cost Selection

(LCS). A shortlist of consultants may be composed entirely of national consultants in

accordance with the provisions of paragraph 2.7 of the Rules and Procedures for the Use of

Consultants”, dated May 2008 Edition, Revised July 2012.

XII

Technical and Safety Audit services shall be procured using a shortlist through Least Cost

Selection (LCS).

When the amount of the contract is less than UA 200,000, the Borrower may limit the

publication of a Specific Procurement Notice (SPN) requesting for expressions of interest to

national or regional newspapers. However, any eligible consultant, being regional or not, may

express their desire to be short-listed.

B.2.3 General Procurement Notice

The text of a General Procurement Notice (GPN) has been agreed with Ministry of Public

Works and it will be issued for publication9 in UNDB online and in the Bank’s Internet

Website, upon approval by the Board of Directors of the Financing Proposal.

B.2.4 Procurement Plan

The Borrower, at appraisal, developed a Procurement Plan for project implementation which

provides the basis for the procurement methods. This plan has been agreed between the

Borrower and the Project Team on July 20, 2013 and is available at the IIU, Ministry of Public

Works (Monrovia, Liberia). It will also be available in the Project’s database and in the Bank’s

external website. This Procurement Plan will be updated by the Borrower’s Project Team

annually or as required to reflect the actual project implementation needs and improvements in

institutional capacity. Any revisions proposed to the Procurement Plan shall be submitted to the

Bank prior no objection. The Borrower shall implement the Procurement Plan in the manner in

which it has been agreed with the Bank.

B.2.4.1 Goods and Works

Prior Review Threshold: Procurement Decisions for all goods and works shall be subject to

Prior Review by the Bank.

Any Other Special Selection Arrangements: Prior review shall be required for packages to

be procurement using advance selection procedures which have been approved for the

following package:

DESCRIPTION PROCUREMENT METHOD

i Civil Works (Road Construction) International Competitive Bidding,

with prequalification

B.2.4.2 Selection of Consultants

Prior Review Threshold: Prior review shall be required for all selection decisions related to

consulting firms and for individual consultants.

Any Other Special Selection Arrangements: Prior review shall be required for packages to

be procurement using advance selection procedures which have been approved for the

following package:

DESCRIPTION PROCUREMENT METHOD

ii Civil Works Supervision Consultancy

Services

Quality and Cost Based Selection

(QCBS)

9 The General Procurement Notice is prepared by the Borrower and submitted to the Bank, which will

arrange for its publication in the United Nations Development Business (UNDB online) and in Bank’s

Internet Website.

XIII

B3: Technical Annex: Economic Analysis

Traffic Analysis for Harper-Karloken Road

The manual classified annual average traffic counts results carried out in May 2013 by the

Feasibility Study Consultant for the project road were used as base year traffic for the

economic evaluation. The vehicular traffic composition for Harper -Karloken section is 9.9%

for passenger cars and light goods vehicles, 1% for freight vehicles, 0.4% for buses and 88.7%

for motor cycles, as indicated in the traffic counts results summarized in Table B4.1 below.

The economic evaluation is based on medium traffic growth assumption for normal traffic used

traffic growth scenarios of 12% for the period 2014- 2023 and 8% for the period 2024-2036

based on the current trends in Liberia.

Table B4.1: 2013 Traffic Counts Results – Harper-Karloken Road

Section/

Composition

Km

Car,

Taxis

Pick

up

4WD

Light

Truck

Medium

Truck

Heavy

Truck

Mini

Bus

Bus

Total

Motorised

(excluding

M.cycles)

Motor

Cycle

Total

Motorized

Traffic

(MT)

Non

Motorized

Traffic

(NMT)

Harper-

Karloken

50

13

31

209

20

6

21

10

1

311

2,439

2,750

13

% of

Vehicle

Composition

0.5

1.1

7.6

0.7

0.2

0.8

0.4

0

88.7

100

Source: MPW/Consultant- May 2013 Traffic Counts & ADF Appraisal Mission July 2013

Generated traffic for all other types of motorized traffic has been assumed at 35% of the base

year traffic, while 15% has been assumed for motor cycles, at the opening of the project road.

The generated traffic estimation is also based on the suppressed traffic on the road shown by

relatively high volume of motor cycles. Generated traffic on the project road is expected from

increase in trips due to reduction in transport costs and induced economic activities in the

project area of influence. The main economic activities in the project area of influence include:

agriculture mainly rice and cassava, mining, lumbering, fishing and tourism along Harper

beaches. The project road being a spur to Trans West African Highway (Abuja- Dakar-

Nouakchott) Corridor that links Cote D’Ivoire, Liberia, Guinea and Sierra Leone (Mano River

Union states) will also contribute to generated traffic. Diverted traffic has not been considered

in economic evaluation, due to absence of an alternative route to the Project road.

Economic Analysis

Methodology and Assumptions for Economic Analysis: The methodology for economic

analysis for the Project is based on cost benefit analysis by comparing the “with” and “without

“ project scenarios over a period of 20 years, using the Road Economic Decision (RED) model.

A discount rate of 12% (which is the opportunity cost for capital in Liberia) and a construction

period of 2 years starting in 2014 are adopted. The base year (May 2013) estimated annual

average daily traffic (AADT) for Harper - Karloken section are 311 vehicles per day plus 2,439

motor cycles per day (MT=2,750 and NMT=13) vehicles per day respectively as detailed in

Table B4.1 above. A relatively high number of motor cycles on the project road indicates that

there is suppressed vehicular demand which will lead to vehicular traffic replacing motor

cycles after the road is paved.

Project Costs: The economic costs used in the cost benefit analysis are the Road Agency costs

in the “with” and “without” project scenarios, which include both the capital investment cost of

upgrading to AC and DBST pavement options, maintenance costs, construction supervision,

XIV

and physical contingencies. Compensation costs to be paid to people whose properties are

affected are not included.

The financial costs have been converted to economic costs to remove any distortions from

subsidies/taxes using a standard conversion factor for Liberia of 0.83. The economic

construction unit cost (for AC and DBST) per km from the project’s engineering designs of

June 2013 and recent tenders on similar works has been used, and are summarized in Table

B4.2 below.

Residual values are assumed as 30 % of the initial capital investment and credited to the project

in the final evaluation year of 2036. The estimation of the residual has considered existence of

three bridges and about 70 culverts on the project road whose structural integrity is expected to

be good by the end of the analysis period

All costs have been expressed in United Stated (US) Dollars at an exchange rate of US$1=

Liberia Dollars 76.50 (July 2013).

Table B4.2: Improvement Options for Harper-Karloken Road (50km)

Option Financial

Unit Cost per km

(US $)

Economic

Unit Cost per

km

(US $)

Standard

Conversion

Factor

Option 1: Upgrade the Gravel Road to Double

Bituminous Surface Treatment (DBST)

870,323 722,368 0.83

Option 2: Upgrade the Gravel Road to Asphalt

Concrete (AC) Surfacing with crushed stone

base.

902,895 749,403 0.83

Option 3: Upgrade the Gravel Road to Asphalt

Concrete (AC) Surfacing with stabilised base

(Mechanical).

890,283 738,935 0.83

Source: MPW/Consultant/ADF Appraisal Mission July 2013

Project Benefits: The economic benefits considered for the evaluation are: (i) Savings in VOC

for normal and generated traffic; (ii) Savings in maintenance costs; (iii) Passenger time savings,

(iv) Residual value, (v) Employment during construction, and (vi) increased agricultural

production. Reduction in traffic accidents were not considered among the benefits due to

unavailability of historical data on accidents on the project road. The annual average VOC per

vehicle km for the car is estimated at USD0.52 per veh-km on the existing road (2013) and is

expected to reduce by 25% to USD0.39 per veh-km when the project road is completed and

open to traffic in 2016. Average travel time from Harper to Karloken currently 1 hour on the

existing road is expected reduce by 33% to 40 minutes when the road is open to traffic in 2016.

Exogenous Benefits due to Employment Generation during Project Implementation: Out of an

estimated number of 450 people to be employed during construction phase, a conservative

figure of about 284 (177 skilled and 117 un-skilled) workers has been used for the estimation of

employment benefits considered in economic analysis. The annual employment benefits are

estimated to be US$ 470,000 – 500,000/year during the two (2) years, (2014-2015)

construction period.

Exogenous Benefits (Increased Agricultural Production): Accordingly to the data from the

Liberia Institute of Statisitcs and Geo- Information services (LISGIS), agriculture is one of the

major economic activities in the project area. Rice and Cassava are among the major crops

grown in the project area (Maryland and River Gee Counties). Production of the two crops is

expected to increase when the road is paved due to improved accessibility. Trend analysis on

XV

the production of the two crops has revealed that when the road is paved and open to traffic in

2016, it will lead to a two per cent annual increase in rice production which translates into

USD0.38 million per annum, and a three per cent increase for cassava which translated into

USD2.49 per annum. Hence, a total of USD2.87million per annum is the total estimated value

for agricultural production surplus due to paving the project road from 2016.

Economic Evaluation Results

The base case economic evaluation results are based on measures of economic viability i.e.

Economic Internal Rate of Return (EIRR) and Net Present Value for the various options at 12%

discount rate. Based on the costs and benefits related to the project, the evaluation of the

investment with AC (crush stone base) option, at 2013 prices, resulted in a 17.6 % economic

internal rate of return (which is above the opportunity cost for capital at 12% for Liberia) and

an NPV of US$25.28 million. The AC option when compared with the DBST option yielded

better economic benefits based. The life cycle maintenance costs for the DBST option being

higher than those of the AC option, since resurfacing for DBST is expected to be carried out

after 3 years as compared to AC overlay which is expected to be carried out after 7 years of

project paving, hence AC option offers higher maintenance cost savings. For the case of the

two AC Options 2 and 3, whereas Option 3 – AC (mechanically stabilised base) yielded a

slightly higher ERR of 17.8%, it does not offer a more technically resilient pavement solution

and hence Option 2- AC (crush stone base) with the EIRR of 17.6% is the recommended option

for the Project road. The Economic Evaluation Results for all the three pavement options

considered are summarized in Table B7.3 below.

Table B7.3: Economic Evaluation Results – Base Case for Harper-Karloken Road (50km)

Option EIRR (%) Net Present Value

(Million US$)

Option 1: Upgrade the Gravel Road to

Double Bituminous Surface Treatment

(DBST)

15.7 16.51

Option 2: Upgrade the Gravel Road to

Asphalt Concrete (AC) Surfacing with

crushed stone base.

17.6 25.28

Option 3: Upgrade the Gravel Road to

Asphalt Concrete (AC) Surfacing with

stabilised base (Mechanical).

17.8 25.72

Source: MPW/Consultant/ADF Appraisal Mission July 2013

Sensitivity Analysis

Sensitivity analysis was carried out by varying the project costs and benefits for ascertaining

the robustness of the evaluation results for the AC (crushed stone base) option. A sensitivity

analysis on a simultaneous increase in investment costs by 20% and a 20% decrease in the

benefits (worst case scenario) for the AC option gives a 13.1% internal rate of return and an

NPV of US$5.12 million.

Based on the above economic evaluation results, Option 2 –AC (crushed stone base) with a

financial construction unit cost per km of US$0.90 million is the most economically viable

option among the three construction alternatives with a base case EIRR of 17.6% and NPV of

US $25.28 million. According to the economic analysis, the project is viable with AC (crushed

stone base) construction option.