Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 31006

IMPLEMENTATION COMPLETION REPORT(COFN-03460 TF-27975 IDA-24660 IDA-24661)

ON A

CREDIT

IN THE AMOUNT OF SDR 12.9 MILLION

TO THE

REPUBLIC OF CAPE VERDE

FOR A

TRANSPORT AND INFRASTRUCTURE PROJECT

DECEMBER 23, 2004

Transport Sector Africa Region

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

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CURRENCY EQUIVALENTS

(Exchange Rate Effective )

Currency Unit = Cape Verde Escudo (CVE) CVE 64.89 (appraisal)CVE 85.11 (Nov. 2004)

= US$ 1

US$ 1.404 (appraisal)US$ 1.511 (Nov. 2004)

= SDR 1

FISCAL YEARJanuary 1 December 31

ABBREVIATIONS AND ACRONYMS

ARE Economic Regulatory AdministrationBADEA Arab Bank for Economic Development in AfricaCAS Country Assistance StrategyCFD Caisse Francaise de Developpement CPU Coordination Project UnitDCA Development Credit AgreementDGI Directorate General of InfrastructureDGMP Directorate General of Shipping and PortsDGTR Directorate General of Road TransportEIB European Investment BankENAPOR National Port AuthorityGoCV Government of Cape VerdeIDA International Development AssociationIMP Institute of Maritime and PortsIRR Internal Rate of ReturnISPS International Ship and Port Facility Security CodeKFW Kreditanstalt fur WiederaufbauMIT Ministry of Infrastructure and TransportOPEC Organization of Petroleum Exporting CountriesPIT Infrastructure and Transport Project PPF Project Preparation FacilityRF Road FundRI Road InstituteSAR Staff Appraisal ReportSDR Special Drawing RightsSLA Subsidiary Loan AgreementSTCW 98 Standards of Training, Certification and Watchkeeping for SeafarersUCP Project Coordination Unit

Vice President: Gobind T. NankaniCountry Director Madani M. TallSector Manager Sanjivi Rajasingham

Task Team Leader/Task Manager: Gylfi Palsson

CAPE VERDETransport and Infrastructure Project

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 24. Achievement of Objective and Outputs 55. Major Factors Affecting Implementation and Outcome 106. Sustainability 117. Bank and Borrower Performance 128. Lessons Learned 149. Partner Comments 1410. Additional Information 15Annex 1. Key Performance Indicators/Log Frame Matrix 16Annex 2. Project Costs and Financing 18Annex 3. Economic Costs and Benefits 20Annex 4. Bank Inputs 24Annex 5. Ratings for Achievement of Objectives/Outputs of Components 26Annex 6. Ratings of Bank and Borrower Performance 27Annex 7. List of Supporting Documents 28

Project ID: P000435 Project Name: Transport and Infrastructure ProjectTeam Leader: Gylfi Palsson TL Unit: AFTTRICR Type: Core ICR Report Date: December 23, 2004

1. Project DataName: Transport and Infrastructure Project L/C/TF Number: COFN-03460; TF-27975;

IDA-24660; IDA-24661Country/Department: CAPE VERDE Region: Africa Regional Office

Sector/subsector: Ports, waterways and shipping (53%); Roads and highways (44%); Central government administration (3%)

Theme: Export development and competitiveness (P); Other financial and private sector development (P); Other trade and integration (P); Public expenditure, financial management and procurement (S)

KEY DATES Original Revised/ActualPCD: 11/15/1991 Effective: 06/17/1993 07/22/1993

Appraisal: 06/25/1992 MTR: 11/15/1995 06/26/1996Approval: 03/04/1993 Closing: 06/30/1998 06/30/2004

Borrower/Implementing Agency: GOV'T, ENAPOR,/MIT/PIT; ENAPOROther Partners: OPEC, BADEA, AfDB, FCC, SDC, EDF, EU, FAD, KFW, Portugal, Netherlands

STAFF Current At AppraisalVice President: Gobind T. Nankani Edward V. K. JaycoxCountry Director: Madani Tall Katheleen MarshallSector Manager: Sanjivi Rajasingham Peter WatsonTeam Leader at ICR: Gylfi Palsson Michel LoirICR Primary Author: James Wright; Gylfi Palsson

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

Sustainability: L

Institutional Development Impact: SU

Bank Performance: S

Borrower Performance: S

QAG (if available) ICRQuality at Entry: S

Project at Risk at Any Time:

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:The project objectives, as listed in the Staff Appraisal Report of February 1993 and the Development Credit Agreement of March 2003, were:

(i) To promote international competitiveness through port modernization, reorganization of the shipping industry and development of offshore information industries. (ii) To foster national economic integration by streamlining transport sector investment planning and achieving a more balanced and cost effective allocation of resources. (iii) To prevent further erosion of the capital stock in the road network by setting up a road maintenance organization. (iv) To support the promotion of the local contracting industry through the execution of a four year road maintenance program.(v) To promote economic growth and alleviate poverty in Fogo Island through rehabilitation of its only port.(vi) A longer-term objective was to build capacity in the Ministry of Transport and Communications.

The objectives were important for Cape Verde’s development. The 1980s had seen a deceleration of economic growth, but by the end of the decade the country was beginning to reform its economy to attract foreign capital, develop the private sector and adopt a more outward-looking development strategy. However, the country lacked adequate port and road infrastructure, and direct government management of ports, roads and shipping constrained economic growth. In particular, roads and ports were poorly maintained. Bureaucratic management and inefficient labor policies hampered port and shipping services. Inter-island shipping involved sixteen vessels, many very old, and thirteen companies, many of which were barely solvent. Maintenance of the roads was directly by force account, which was inefficient and unable to keep up with the need. Funding for road maintenance was inadequate.

This project followed the Infrastructure Rehabilitation and Technical Assistance Project (Credit 1954-CV) which had supported the adoption of new legislation liberalizing the transport sector. The Government’s strategy was developed in discussions with the Bank and other donors. A donors’ round-table meeting was held in 1991 where donors made commitments to finance different components. The strategy was to support the structural change of the economy to be more outward looking by streamlining transport policies and modernizing transport infrastructure. The strategy supported: (i) creation of new port facilities at Porto Grande (Mindelo) which was to be the center for international and inter-island transshipment; (ii) reorganization of shipping to restore profitability, improve service and create opportunities for joint ventures as feeders of transshipped cargo; and (iii) development of private sector led information processing activities. The strategy also aimed at reducing development imbalances among the nine inhabited islands.

The World Bank served as the catalyst to mobilize other donors to fund a transport sector program with the intention of financing components that other donors would not. The project objectives as well as the text of the SAR and Schedule 2 of the DCA detail a transport sector

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program, identified in the SAR as costing US$ 78.4 million, while the IDA credit was for a project of SDR 8.9 million. By this, success of the program became integral to the success of the IDA funded project and required the Bank to be an active partner in all sector discussions.

A Project Preparation Facility (PPF) and a Japanese grant financed project preparation. Other donors financed most port components. The Bank financed mostly roads and capacity building, but also cofinanced some activities with other donors.

The Bank’s Country Strategy at the time called for, inter alia, the elimination of infrastructure bottlenecks and improving public administration. The project objectives were consistent with the country’s economic needs and the Bank’s country strategy.

3.2 Revised Objective:Concerning objective (i), a study concluded that offshore information industries would not have the foreseen outcome due to technology changes in the world. At the mid-term review this part of the objective was dropped, but the DCA was not amended accordingly.

IDA and other donors had committed to financing various sections of the Santiago island ring road and it was expected that Government would secure assistance in financing the Sao Domingos-Vila da Assomada section. However, during the course of project implementation, unforeseen climatic conditions necessitating emergency rehabilitation, execution difficulties in road construction in Fogo and port rehabilitation in Mindelo among other occurances, required that Government redirect resources. This situation, combined with limited resources of the country and competing priorities, made it impossible for Cape Verde to secure the necessary resources prior to project completion. Therefore, and consistent with objectives (ii) and (iii), a Supplemental Credit Agreement for US$5 million was approved on January 3, 2001 to finance the rehabilitation of the Sao Domingos-Vila da Assomada section of the Santiago Island ring road.

3.3 Original Components:Port Investments. (Program: US$30.0 million). GoCV wanted to improve port infrastructure and management, in part to enable transshipment activity in Cape Verde. Components included:

Porto Grande modernization (Mindelo)lVale de Cavaleiros port rehabilitation (Fogo)lA 35 ton mobile crane in Porto Grandel

Reorganization of Shipping. (Program: US$0.7 million). A framework for private sector led modernization of shipping services:

Technical assistance for an Action Plan to Reorganize Shipping. (There was a concern that a lfull market approach to shipping may not be in the best interest of a country of nine islands.)Promotion of capacity for a consortium of private ship owners in charge of international linter-island services.

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Highway Sector Improvements. (Program: US$ 33.3 million). A program for roads and highways was prepared under the Infrastructure Rehabilitation and Technical Assistance Project, which established a road inventory and a work program for each island. The new project aimed to rely on the private sector for works execution and supervision.

During project preparation further road studies were carried out, and a master plan for the road network was set out with economic priorities for a four year maintenance program. It included:

Spot improvements of 247 km of roads.lImprovements in road safety.lPeriodic and routine maintenance of the whole road network.lRoad Construction: only small road sections were contemplated. Pilot schemes were to be lcarried out to assess best ways to introduce private contracting.

Teleport Development. (Program: US$0.4 million)

Draft legislation for private operations.lTechnical assistance to Government for pre-investment studies.lDevelop an “Opportunity Profile” for potential overseas investors.l

Total base costs of the original program, which included US$ 1.2 million for the PPF, were estimated at US$65.6 million. Including physical contingencies of US$5.9 million and price contingencies of US$ 7.0 million, the program cost was US$78.4 million. The portion of the credit related to ports was to be on- lent by the Government to ENAPOR, which would bear the foreign exchange risk. The IDA credit amount was equivalent to US$12.5 million (16%) and the Government’s contribution was US$15.6 million (20%). Co-financing was to be provided by, the Netherlands (US$3.3 million - 4%), Germany/KFW (US$7.0 million – 9%) the Africa Development Fund (US$3.9 million – 5%). A funding gap of US$36.1 million (46%) remained at appraisal which was closed by additional donors over the next several years. Funds from the Netherlands and the OPEC Fund were administered by IDA.

3.4 Revised Components:Several activities were added to the overall program in the first years of implementation. The airport in Sao Vicente (S. Pedro airport) was added to the program in 1994, to be financed by CFD. Ports in Boa Vista and Maio were added to the program, to be financed by a Portuguese commercial bank. Port works were added at Porto de Furna (Brava) to be financed by KFW. Rehabilitation works for Porto Novo (St. Antao) were added, to be financed by IDA. Teleport development was dropped when it was determined not to be feasible.

Under a supplemental credit of US$5.0 million and for a total cost of US$6.4 million including Government counterpart funding, the rehabilitation of the Sao Domingos -Vila da Assomada road was added to the program in January 2001 and the closing date was extended to December 31 2003 and later to June 30, 2004.

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3.5 Quality at Entry:The thrust of the program and the project was to introduce market forces into a transport system that was constrained by direct public sector involvement. Publicly owned companies were bankrupt and a private sector orientation was necessary. The project involved large civil works components focused mainly on ports and roads, including private supervision consultants and contractors for some road maintenance, institution building at ENAPOR and improvement of the shipping industry.

The objectives and components were stated similarly. This made it difficult to assess progress and enabled each task manager to redefine the objectives somewhat based on his/her own perception and professional background.

Conditions of effectiveness included inter alia a Maritime Action Plan (regulatory frameworks and maritime legislation) and a Contract-Plan for ENAPOR (targets for port management, review of the tariff system, stevedores’ conditions, productivity indicators). There was a subsidiary loan agreement between the Government and ENAPOR.

Quality at entry is rated satisfactory, but marginally so.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:The development objectives of the project have been largely achieved and in some cases surpassed:

(i) International competitiveness has improved. Five ports have been modernized for international shipping as well as for inter-island transport, including major port renovations in Porto Grande (Mindelo) and Vale de Cavaleiros (Fogo). The overseas and inter-island shipping agency was analyzed and new regulations and maritime legislation were enacted to liberalize overseas shipping. The government ceased direct involvement in international shipping in 1996, and private operators have developed for long distance shipping. Port management improvements were sought initially through a contract-plan between ENAPOR and Government that was not successful. By the end of the project, private participation in port operations had been accepted in principal. The details of this are still being considered; private concessions for port management are the most likely outcome (see section 4.5). When this is accomplished, the original objective for port management will have been exceeded. The options for development of an offshore information industry were assessed near the beginning of the project period. The planned teleport development was dropped at the mid-term review (see section 4.2).

(ii) National integration has been strengthened, especially with the improvement of ports and inter-island shipping. Inter-island shipping, which had been inefficient and costly to government, was mainly under private sector management at the end of the project. The government corporation, Arca Verde, which had been crowding out private operations, was in the months following the closing of the project liquidated and its remaining four boats are being sold and chartered. (iii) The objective of preventing the erosion of the capital stock of the road network by improving the institutional framework has been largely achieved. Road rehabilitation and maintenance has

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been carried out throughout the country. A new Road Institute has been established to manage the road network. A Road Fund was established during the project period. Although it does not yet have the financial resources to maintain the entire road network, an agreement has been reached to convert it into a second-generation road fund under a follow-on project, which will improve its effectiveness.

(iv) The objective of creating a local contracting industry and local supervision consulting capacity has been achieved. Private contractors and independent length men now carry out most road construction, rehabilitation and maintenance. At the beginning of the project there was only one Cape Verdian contractor with significant capacity. Three more large contractors have developed with experience and heavy equipment, and about twelve more small and medium contractors are involved in road rehabilitation and maintenance. There are also a number of engineering consultants now who work in association with foreign firms. The work of private contractors will be further expanded when the Road Institute and the improved Road Fund are fully operational with more assured sources of financing for road maintenance.

(v) The port of Vale de Cavalerios has been rehabilitated and now contributes to economic growth and poverty alleviation in Fogo Island. Cargo handling at Vale de Cavaleiros has increased by 50% since the beginning of the project.

(vi) Improvements in the system for transport planning did not occur as intended. The intention was to create planning capacity within MIT, but a separate planning and project management unit was established (UCP) staffed by non-civil servants with higher salaries, which has been involved in planning. However, transport planning capacity has been created within ENAPOR and in the Road Institute where it will be more directly useful for infrastructure programming and maintenance (see Section 4.5).

4.2 Outputs by components:Port Investments. (Program US$42.8 million, whereof IDA US$1.8 million)

Porto Grande modernization (Mindelo). This was financed by the Netherlands, the OPEC Fund, EIB and IDA. The contract was not signed until early 1995. Due to problems in the design of earth fill works, extra work was necessary to avoid erosion of dredged sand placed in the earth fill. By early 1997 there was a 44% cost overrun on contract value. The crane was not bought due to a lack of funds. The IDA credit financed 80 % of the construction cost of a passenger terminal building in Porto Grande, finished in 2001. Porto Grande is used for transshipment to the other islands. Porto Grande also has the potential to be a transshipment port for West Africa that ENAPOR is discussing with potential partners.

Vale de Cavaleiros port rehabilitation (Fogo): Difficult technical issues involving reconstruction of the breakwater required extensive study, which led to delays. Construction began at the end of 1996 and was finished in June 1999. The wharf is only 75 meters long, which limits the size of ships that can be served by the port. The work was financed by KFW and involved cost overruns that were financed by a supplemental contribution by KFW.

Porto de Furna (Brava): These works were financed by KFW under the same contract as Vale de Cavaleiros. It has a 30-meter wharf. These works also involved cost overruns.

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Porto Novo (Sto. Antao): These works entailed repair of pavement, walls and fenders and were financed by IDA.

Port works in Maio and Boa Vista: These works, financed by a Portuguese commercial bank, were added to the project during implementation and were completed in 1997.

Reorganization of Shipping. (US$1.1 million, whereof IDA US$1.1 million).

Technical Assistance to Reorganize Shipping. The Directorate General of Shipping and Ports (DGMP) received equipment, and with IDA support it analyzed maritime legislation which was revised in three phases over a four year period (see Section 4.5).

Capacity building for Maritime Transport. Originally this component was intended to support the creation of an association of private maritime operators with technical assistance and eventually to facilitate the acquisition of a ship to transport bananas. This did not happen. Instead, an Inter-island Transport Study, financed by the Netherlands, began in March 1994. It provided statistical data on the movement of goods and people and provided information about what was being transported and by what routes. The main result was a move to liquidate the government inter-island operator, Arca Verde, and to initiate private service. Implementation was delayed due to concern about how unprofitable routes would be served, and an IDA-assisted Privatization Project became involved. The first bidding for private sector involvement in 2000/2001 was annulled because the winner was not considered financially viable. Arca Verde continued to operate which crowded out private operators. In 2003, under the Privatization Project, Government decided to sell or lease the remaining four Arca Verde ships (now being executed). Inter-island service is now in private hands. Government will decide whether subsidies are necessary and an auction will determine the amount. Roll on – Roll Off (RoRo) facilities are being provided in inter-island ports to facilitate freight handling, and RoRo ships are being purchased from abroad by private operators. Port management. IDA financed the improvement of ENAPOR management information systems, a study on improving the competitiveness of Cape Verde ports, a study of transshipment potential in Porto Grande and a Master Plan for Porto Grande.

Highway Sector Improvements. (Program US$38.4 million, whereof IDA US$13.9 million including Supplement Credit)

Cape Verde has a reasonably extensive main road network, but roads are difficult to build because of the mountainous terrain and hard to maintain because of rare, but heavy rains. The network was in poor condition because of a lack of maintenance. The project supported the General Directorate of Infrastructure (DGI), which is responsible for heavy road works, and the General Directorate of Road Transport (DGTR). From 1994 some road maintenance (routine and periodic) was undertaken by contract on the larger islands, such as the Santiago Ring Road. In the smaller islands such as Fogo routine maintenance was undertaken using linemen for 7 to 8 km lengths of road. Routine maintenance was financed through protocols signed by government and municipalities whereby municipalities would maintain the road networks.

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Road spot improvements were financed by IDA and the government, as counterpart funds, under the project. Road maintenance is still a problem, but it is expected to improve when the new Road Institute and reformed Road Fund become fully operational (see Section 4.5). The project was extended with supplemental financing to support the rehabilitation of the S. Domingos-Assomada Road. There was a delay due to the rebidding of the supervision contract which required a further one-year extension.

The DGTR was restructured during the project period and it received assistance to improve road safety (see Section 4.5). Teleport Development. (US$0.2 million. whereof IDA US$0.2 million)

This initiative was managed by the Ministry of Tourism, Industry and Commerce. The result of a study undertaken was that Cape Verde did not have a competitive advantage in this field. At the mid-term review it was agreed that this component was not feasible. Recently a type of teleport development has been initiated by private entrepreneurs to service needs in Portugal.

Figures in this section do no include PPF costs of US$0.4 million or the US$5.6 million cost of S. Pedro Airport in S. Vicente, for an actual program cost of US$88.5 million.

4.3 Net Present Value/Economic rate of return:For civil works in the road sector, the internal rate of return for 7 road segments was estimated at the beginning of the project and ex-post evaluation undertaken at the end of the project. In 5 of these, reevaluated IRR exceeded original estimates. The reevaluated IRR for the 7 roads ranged from 15.8% to 65.8%. This compares to IRR estimates in the SAR which ranged from 16% to 35%.

The premises for the original estimates for civil works in the port sector were difficult to decipher and therefore it was deemed infeasible to do ex-post economic evaluation on same basis. Other ways of fairly linking investment made to consequent port activity (as opposed to organic growth independent of investment) were explored, but a reasonable approach was not found.

4.4 Financial rate of return:Financial rates of return are not relevant in this type of non-revenue generating project.

4.5 Institutional development impact:Project Management: A Project Coordination Unit (UCP) was developed under the project with responsibility for the program at large and donor dialogue. UCP initially had a National Coordinator and four international technical assistants. The international technical consultants were phased out during the project, and UCP by the end of the project had three professionals at different levels and also managed a World Bank-assisted HIV-AIDS project. Its personnel were paid at levels above government civil servants and commensurate with private sector. These arrangements were necessary for a project involving policy change and requiring a high level of engineering expertise that was not available in government. While its existence reduced the incentive of MIT to develop its own planning capacity, the UCP, with largely intact capacity, has now been absorbed and integrated into the MIT in anticipation of a follow-on project.

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Ministry of Infrastructure and Transport (MIT): The MIT was responsible for project implementation through the UCP. It has a General Directorate of Infrastructure (DGI) and a General Directorate of Road Transport (DGTR). During the project and after a change in cabinet structure, the responsibility for transport and transport infrastructure management were moved from MIT to a newly created Ministry of Tourism, Transport and Sea. After general elections in 2001, the responsibility for transport and transport infrastructure management was moved back to MIT. MIT and MTTS received technical assistance on project management, management information systems and procurement, and received vehicles and computer equipment. During the early 1990s MIT did not outsource supervision services for its project. It was legally empowered to collect funds from contractors to pay for supervision by its own employees. The funds were also used to provide extra remuneration of professionals involved in managing studies, tender evaluation and supervision under the project. When supervision started to be outsourced, this separate budget no longer was available, and without these incentives and with increasing employment competition from the private sector, it was difficult for the ministry to retain staff.

Directorate General of Road Transportation (DGTR): Development of this agency was quite successful. The Road Code was revised. Technical assistance involved computerizing services and creating a database for vehicles, titles, drivers’ licenses, vehicles and rental vehicles. Municipal authorities were helped to assume the licensing of taxis and rental vehicles. Road safety campaigns were initiated. The first was IDA financed. Subsequent campaigns were financed by stakeholders benefiting from improved safety, such as insurance companies and driving schools. Legislation was passed on alcohol use and safety belts. Technical assistance was provided to revise road legislation. A vehicle inspection law was introduced, and a fully equipped inspection center was financed. It is being used for trucks and busses but is not yet used for private vehicles.

ENAPOR: ENAPOR was to be the implementing agency for port investments under the project in accordance with a Subsidiary Loan Agreement (SLA). However, the SLA was not signed or used. Funds for ENAPOR were passed directly from Government. Consultants designed financial management systems and assessed the potential for transshipment through Cape Verde. Strengthening of ENAPOR was originally to be sought through a Contract-Plan. Early missions helped draft an improved contract-plan, but compliance was disappointing. Costs were rising too fast and IDA proposed new labor policies. There was a need to change the payment of port workers from an hourly to a tonnage basis. There has been some retrenchment but there are still too many port workers and administrative staff. In 1995 IDA suggested restructuring tariff structures, but this was not done. A new contract-plan with improved performance indicators was drafted, but beginning in 1997, under the IDA-supported Privatization Project, a new strategy of port concessioning has been pursued. The solution now being considered would have ENAPOR acting as port administrator, with an Institute of Maritime and Ports (IMP) for technical evaluations (instead of DGMP) and the Economic Regulatory Administration (ARE) regulating concession terms.

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Directorate General of Maritime and Ports (DGMP). Assistance to DGMP included a reorganization, computers and equipment. An international lawyer reviewed maritime legislation with three Cape Verdian lawyers to bring it up to date with international conventions. The legal framework for maritime law was thoroughly modernized. This has enabled Cape Verde to adopt the most important maritime conventions, including STWC – 98 (governing crew qualifications), and to implement the International Ship and Port Facility Security Code (ISPS).

Road Maintenance Financing: In 1997 AfDB recommended the creation of a Road Fund (RF) that was made an effectiveness condition for an ADB credit agreement. The RF was created in the same year. The Decree provided that up to 50% of the proceeds from an existing fuel tax collected by MOF (not a separate user fee) would be used for RF road maintenance activity. In one year only 7% of the RF’s budget was allocated for maintenance, most of which was used for administration. This is now being changed. In preparation for a proposed follow-on project, a more robust “second generation” road fund is being established to collect fees from users and finance road maintenance on a commercial basis.

Road Institute: During the project the MIT set up a task force to propose organizational changes for road management. A Road Institute has now been established. It is responsible for establishing a road database and management and maintenance of road assets using funds from the Road Fund. Institutional development impact is substantial.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:A sole and exorbitantly high cost bid came for consultant supervision of the S. Domingos - Assomada road section during the initial tender. Government had no choice but to rebid. Time lost because of this and subsequent complaint by bidder contributed largely to the need for the fourth extension.

5.2 Factors generally subject to government control:There was a suspension by BADEA of its lending under the program because of arrears by Government on other loans by BADEA.

5.3 Factors generally subject to implementing agency control:There were cost overruns on contract value in the construction of port infrastructure, especially in Porto Grande, although only marginally so compared to appraisal estimate of cost. This was due to insufficient soil investigation prior to the construction of the quay, and incidentally the cost overrun resulted from a contractor's claim as he had to stop the works for about six months until the soil investigation was completed. Some road designs were also not costed accurately.

The original closing date of the project was June 30, 1998. There were delays, especially on port studies and the implementation of port works and some road rehabilitation activities. The project was extended twice to December 31, 2000 so that these activities could be completed. However, at that time four IDA financed activities were still ongoing and only completed in 2001: the passenger terminal in Porto Grande, port rehabilitation in Porto Novo, rehabilitation of the Chao Bom-Ribeira da Prata Road and the road safety campaigns.

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5.4 Costs and financing:Of the program appraisal estimate of US$ 84.8 million (amended for the Supplement Credit), which included funding from IDA, from co-financiers and counterpart funding, US$ 88.5 million (104.3% of the estimate) were spent under the program (see Annex 2). The largest amounts were for port rehabilitation and road works: US$ 81.2 million, US$ 15.7 by IDA, US$ 9.8 million by the Government and US$ 55.7 million by co-financiers, representing about 91.7% of the funds spent under the program.

6. Sustainability

6.1 Rationale for sustainability rating:Capacity building within the MIT was not as effective as originally intended, in part because the project was implemented by a separate entity. However, the project has developed capacity within several semi-independent entities that are now capable of maintaining the new assets and carrying out future development initiatives.

Operation and maintenance of ports will be financed by ENAPOR from their own revenues (user fees). The planned concessioning of port operations should make expertise available for this purpose. Likewise, a Civil Aviation Authority has been created which is mobilizing expertise from abroad. Inter-island maritime transport is being provided by private operators as the government withdraws from this activity. Long distance shipping has been privatized.

Road construction, rehabilitation and maintenance will be entrusted to private contractors. A number of local contractors, some in partnership with international contractors, developed capacity in Cape Verde during the project. This should contribute to the country’s ability to maintain the road network. The Road Institute is responsible for road planning, management and contracting of road works. It has specialized expertise and will receive funds for maintenance from the RF, and from government and donors for construction and rehabilitation.

Sustainability is rated likely.

6.2 Transition arrangement to regular operations:Road maintenance will be managed by the Road Institute and financed by a second-generation road fund. Technical support and capacity building for these will be provided under a follow-on project.

ENAPOR will be the port administrator responsible for the ports. Port operation will be concessioned to the private sector through public bidding (see section 4.5).

International shipping is provided by the private sector and private operators are now providing inter-island shipping.

Economic regulation (setting of tariffs for private entities operating under public concession contracts) will be managed by the independent Multi-Sector Regulatory Agency (ARE), which has been created and developed under the IDA-assisted Privatization Project.

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7. Bank and Borrower Performance

Bank7.1 Lending:Preparation began under a previous Bank-assisted infrastructure project that was followed by a Transport Sector Review. The Bank took advantage of changes in government economic policy that were opening the country to market solutions. The Bank suggested a sector program. It then helped government to hold a round table meeting to mobilize bilateral funding and support for studies of ports, maritime transport, road rehabilitation and maintenance, road safety, airport, and teleport development. Most international partners preferred to finance specific physical components, mainly ports and roads. The Bank therefore agreed to finance most capacity building and technical assistance. Although airports were not included in the program (the Sao Vicente airport was later reintroduced) and the teleport component was dropped, the preparation of the other components provided a good basis for the program and the project. Bank lending instruments of the time did not have the same flexibility that is now available, but integration of IDA credit and project objectives to a sector program was proxy programmatic approach.

Although the objectives and components were rightly selected, there are factors of project design that should have received more attention, such as the funding gap, the number of donors which led to divergence of views and the program complexity which strained the Government and its capacity, and sub-obtimal implementationn arrangement which led to creation of a PCU.

On balance, Bank performance during lending is rated satisfactory, but marginally so.

7.2 Supervision:There were 25 supervision missions from April 1993 to February 2004. Most of the missions were staffed by a transport economist and a transport engineer or specialist. Many included port specialists and highway engineers. The missions worked closely with Government to overcome problems. They focused on policy issues, especially port management, inter-island shipping and road rehabilitation and maintenance. In the end more was achieved in these areas than originally intended, particularly institutional development, infrastructure management and inter-island shipping. Bank missions took advantage of changing government policy, which enabled profound changes in the transport sector and more broadly in the country’ economic policy (see Section 7.5).

Two extensions were granted on the original credit. At the end of the second extension, a Supplement Credit was given, including a concomitant extension. A fourth and final extension was given due to delays because of need for rebidding (see Sections 4.2 and 5.1). Had the project had been closed at that point, implementation period would have been 8 years instead of the 5 years originally planned or the 12 years actually realized. Byproduct of the long implementation period was that it allowed for an intense Government and Bank sector policy dialogue that is resulting in comprehensive Government owned institutional reforms.

The impact of supervision by the Bank was constrained at times by six changes in task team leaders. Bank supervision is rated satisfactory.

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7.3 Overall Bank performance:The Bank played a key role in initiating policy dialogue and in organizing the project and mobilizing support from other donors. This dialogue was particularly important in developing private sector participation in road maintenance and rehabilitation, improvements in road management and maintenance financing and a maritime strategy. Overall Bank performance is rated satisfactory.

Borrower7.4 Preparation:The Government worked with the Bank and other donors to undertake the studies that formed the basis for the project. It organized a donors’ meeting and began to identify a transport sector program. Government performance during preparation is rated satisfactory.

7.5 Government implementation performance:Government supported the creation of a strong project implementation agency, the UCP, initially under the Ministry of Infrastructure and Transport, which became autonomous after 1996. It authorized a performance based incentive system to be able to retain qualified staff to manage the project. During long implementation period, the Government significantly improved its infrastructure capital stock and dramatically restructured the institutional structure of the transport sector. Additionally, a significant shift took place from public provision of transport service to private provision.

Project implementation took much longer than it should have, although it is recognized that the originally forseen implementation period may have been optimistic given the size of the program vis a vis the size of the economy and Government capacity. Implementation period was especially long due to slippage in the design and implementation of some port works and slow implementation of some road works, especially the Chao Bom-Ribeira da Prata Road where a contractor went bankrupt. During the implementation of the supplemental credit, problems with the contract of the supervision consultant also led to delays. However, these delays came at a time when Government receptivity to outward looking, market-oriented development strategies was growing. Though not originally intended, the lengthened implementation period provided an opportunity for the Government to continue policy development. The privatization of inter-island shipping was brought about during the extended project period as was the creation of the Road Institute and a second generation Road Fund.

Balancing the long implementation period with Government largely achieving the program and project objectives and the considerable effort in institutional development and restructuring of the sector (which may not have been possible within a shorter time frame), Government performance is on balance rated satisfactory.

7.6 Implementing Agency:The UCP was directed by a National Coordinator and four technical assistants. This unit worked efficiently during the entire project. It skillfully acted as an intermediary between the Bank and other donors and government agencies. The UCP was a good technical performer during implementation and facilitated policy dialogue. Its capacity at the end of the project has largely been absorbed into the MIT. Performance by the implementing agency is rated satisfactory.

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7.7 Overall Borrower performance:The borrower supported a strong implementation unit that implemented a wide-ranging investment program in ports and roads. It made difficult choices to privatize international and inter-island shipping. Further policy choices made more recently to concession port services, to implement a second generation road fund and to create a Road Institute to manage the road system on a commercial basis demonstrate the government’s intention to continue with an important policy agenda. Overall borrower performance is rated satisfactory.

8. Lessons Learned

Continuity in dialogue. When a Government is receptive to in depth discussion on ldevelopment and sector policies, a long implementation period of a project may promote continuity and trust in Borrower and Bank relationship and prevent disruption in dialogue. While an APL was not available as a lending instrument at the time of the preparation of this project, its design had many of the characteristics of an APL and would in later times likely have been design as one. A careful program approach preparation (APL) can capture the continuity benefits long implementation periods offer.

Transition in team leadership. Changes in Bank team leadership during project implementation lrequire careful management of transition to ensure evolution rather than shift in dialogue. While not more pronounced in this project than in many others, change in team leadership inevitably causes some temporary disruption during transitions.

Public sector crowding out. The full impact of subsidized government agencies crowding out lthe private sector development is difficult to appreciate at the beginning of a privatization program. Inter-island maritime transport turned out to be more feasible than expected originally as the government subsidized company began to withdraw from the market. Fears that the private sector would not provide inter-island transport to the least developed islands such as Brava and Maio were exaggerated. Several private operators began to provide service to all the islands as Arca Verde reduced service.

9. Partner Comments

(a) Borrower/implementing agency:The Borrower has completed its own full ICR, which is on file. The Borroer asked that the following text be part of the Bank's ICR:

Overall, the development objectives of the project were largely achieved and in some cases surpassed, regardless the natural and expected difficulties encountered along the way. An overall assessment of the objectives set in the Credit Agreement reveals the following:

Cape Verde’s competitiveness has improved in effect through the modernization of ports. lDuring the life of the PIT, five ports were constructed in the islands of S. Vicente, Boavista, Maio, Fogo and Brava, thus achieving the long-time objective of having one port in every island. The Porto Grande, in the island of São Vicente, now has the minimum infrastructures to launch transhipment activities of goods, thus strengthening the possibility of the flow of

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local products at lower transportation costs. The existence of one port in every island has improved the regularity of inter-island connections and has provided for better planning of activities in the national shipping sector, with positive results in the management dynamics of national operators while also generating greater competitiveness.

National economic integration has definitively been strengthened and fostered with the lprovision of docking infrastructures in all islands, creating investment potentials in different sectors, with the possibility of improving resource allocation and reducing poverty and, thus, strengthening the settlement of local populations.

Increased competitiveness among local ship-owners, providing for the State’s withdrawal lfrom the maritime transportation sector, brought new organization to national shipping with advantages for users of the maritime and port sector.

PIT contributed largely to «foster intra-island economic integration» through the lrehabilitation of important road stretches, particularly those exposed to greater traffic pressure. This intervention was also important for the efforts to unlock isolated areas and, consequently, in alleviating poverty.

With the execution of an important road maintenance program, PIT has valued the capital lstock that the road network represents. Likewise, important steps were taken to implement a current road network maintenance system as a way of preventing the future erosion of the capital stock through the recent establishment of a Road Institute and a Road Fund.

The objective of creating local contracting capacity was achieved. In fact, the road lrehabilitation and maintenance program is also at the basis of the increase in the number of local contractors from 8 in 1991 to 73 in 2004.

Although it was not originally foreseen, the Modernization of the São Pedro Airport, in the lisland of São Vicente, was accepted by IDA as it was in line with the sector strategy. With financing from the CFD and ASA, the works were concluded in October 2000 and consisted in the construction of a new 1500 meter runway with 30 meters in width, parking, a control tower, localizer and lighting of runways and obstacles.

(b) Cofinanciers:African Development Bank:I found the report well written, providing a lot of information on the Cape Verde transport and road sector. However, I have a few comments concerning page 9:

Road maintenance financing: Whilst awaiting the creation of a second generation Roads lFund, the Government should ensure maintenance of constructed and rehabilitated roads.

I believe that the report should recommend to Government that it takes the necessary steps to lreplenish the existing fund with 50% of the fuel levy as it had been planned.

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5.1 Factors outside the control of Government or implementing agency : The refusal of the lADB to finance certain roads (in particular the Praia - Trinidade Road) is not due to insufficient resources but rather due to the non compliance to Bank procedures. (ICR has been amended accordingly.)

OPEC Fund for International Development:We have reviewed the excellent Completion Report and have no objection to it.

(c) Other partners (NGOs/private sector):Not applicable in this project.

10. Additional Information

N/A

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Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators:

Indicator/Matrix

Projected in last PSR1

Actual/Latest Estimate

Port Rehabilitation and Rationalization of Shipping Industry

Porto Grande rehabilitation completed in 1997 and other ports in 2001.

Porto Grande rehabilitated by 1997; others by 2001International shipping under provate managementMost inter-island shipping will soon be fully under private mgnt.

Economic Integration Notable improvement of road network and multimodal systems

Roads, ports and inter-island shipping improved

Prevent erosion of road network Rehabilitation of 368 km 247 km. rehabilitatedDevelop local contracting industry Increase capacity and recruitment of local

companies in the road sector3 large contractors and 12 small and medium have developed

Rehabilitate Fogo Island Port Renovation by 2001 Vale de Cavaleiros Port has developed; freight increased by 50%

Output Indicators:

Indicator/Matrix

Projected in last PSR1

Actual/Latest Estimate

Porto Grande: Lengthening of central pier Completed in 1997 Finished in 1997

Porto Grande: Strengthening of seward berth Completed in 1997 Finished in 1997

Porto Grande: Construction of RoRop ramp Completed in 1997 Finished in 1997

Porto Grande:Reclaimation of 20,000 m2 for cargo storage

Completed in 1997 Finished in 1997

Porto Grande: Construction of passenger terminal bldg.

Completed in 2001 Finished in 2001

Porto Grande: Provision of 35 ton crane Dropped due to resource shortage Dropped in 1996 due to resource shortage

Vale de Cavaleiros: Reconst. of 270 m. breakwater

Completed in 2000 Finished in 2000

Valle de Cavaleiros: Reconstruction of 120 m. breakwater

Completed in 2000 Finished in 2000

Vale de Cavaleiros: Const. of 2 secondary breakwaters

Completed in 2000 Finished in 2000

Vale de Cavleiros: Provision of 15 ton crane Dropped due to lack of funds Dropped due to lack of funds

Highways: Const of 2 road links in Fogo and Praia

Completed by 2001 Finished in 2001 and 1995

Highways: Rehab. of 247 km; upgrading of 64 km.

Completed in 2000 Finished in 2000

Highways: Road safety improvements on 234 km.

Completed in 2000 Finished in 1999/2000

Highways: Periodic and routine maintenance of whole network

On-going Currently maintenance done through protocols with municipalitiesNational Road Institute (RI) is soon to be operational to manage road network

Reconst, rehab, widening of 21 km. Sao Domingos - Vila da Assomada Rd.

To be completed by 06/15/04 Finished in 06/30/04

Shipping: action to reorganize shipping services

Identify an efficient operational mechanism Institute for Maritime and Ports being created for this purpose

Development of offshore informantion agencies

Dropped Dropped in 1996

Capacity Building: development of transport planning unit in MIT

Achieved in 1997 General Directorate of Planning in MIT received equipment; some capacity developed

Development of central and local road Achieved in 1997 Central capacity developed. Capacity will be

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management capacity

Establishment of Road Mgnt. Unit for assistance to TPU

Road Safety Program

Strengthening of ENAPOR operations, human resource mgnt, financial mgnt.

Training of MIT personnel and private and municipal personnel

Implemented

Achieved in 1999

Achieved in 2000

developed in RI.

Capacity building in 1995/96; will be integrated into RI

Carried out in 1999/2000

Done in 1999

Training in road management provided in 2000

1 End of project

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Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)AppraisalEstimate

Actual/Latest Estimate

Percentage of Appraisal

Component US$ million US$ millionA. Ports- modernization of Porto Grande 11.60 13.54 117- rehabilitation of Furna 8.60 14.65 170Other Ports 9.80 14.58 149B. Shipping 0.70 1.10 157C. Highway- original program 33.30 32.13 96- supplement 6.27 6.27 100D. Teleport 0.40 0.20 50E. Airport S. Pedro 0.00 5.61PPF 1.20 0.37 31

Total Baseline Cost 71.87 88.45 Physical Contingencies 5.90 Price Contingencies 7.00

Total Project Costs 84.77 88.45Total Financing Required 84.77 88.45

Appraisal amount amended for Supplement Credit

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 22.30 43.70 0.00 0.00 66.00(6.10) (0.00) (0.00) (0.00) (6.10)

2. Goods 1.25 1.00 0.10 0.00 2.35(0.55) (0.00) (0.10) (0.00) (0.65)

3. Services 0.00 3.60 3.95 0.00 7.55(0.00) (0.00) (3.95) (0.00) (3.95)

4. Operating Expenditures 0.00 0.00 1.30 0.00 1.30(0.00) (0.00) (0.60) (0.00) (0.60)

5. PPF 0.00(0.00)

0.00(0.00)

1.20(1.20)

0.00(0.00)

1.20(1.20)

6. Miscellaneous 0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

Total 23.55 48.30 6.55 0.00 78.40(6.65) (0.00) (5.85) (0.00) (12.50)

Without Supplement Credit

Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)

Procurement Method

1

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Expenditure Category ICB NCB Other2 N.B.F. Total Cost

1. Works 16.14 0.35 0.00 59.41 75.90(7.70) (0.29) (0.00) (0.00) (7.99)

2. Goods 0.92 0.01 0.18 0.00 1.11(0.92) (0.01) (0.18) (0.00) (1.11)

3. Services 6.36 0.06 1.27 2.57 10.26(6.36) (0.06) (1.27) (0.00) (7.69)

4. Operating Expenditures 0.00 0.00 0.81 0.00 0.81(0.00) (0.00) (0.20) (0.00) (0.20)

5. PPF 0.00(0.00)

0.00(0.00)

0.37(0.37)

0.00(0.00)

0.37(0.37)

6. Miscellaneous 0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

Total 23.42 0.42 2.63 61.98 88.45(14.98) (0.36) (2.02) (0.00) (17.36)

Including Supplement Credit1/ Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff

of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units.

Project Financing by Component (in US$ million equivalent)

Component Appraisal Estimate Actual/Latest EstimatePercentage of Appraisal

Bank Govt. CoF. Bank Govt. CoF. Bank Govt. CoF.Ports - Port Grande Modernization

2.50 2.39 8.51 1.52 0.24 11.78 60.8 10.0 138.4

- Furna Rehabilitation 2.90 1.74 6.11 0.00 1.31 13.34 0.0 75.3 218.3- Other ports 0.00 1.96 10.08 0.26 0.00 14.32 0.0 0.0 142.1Shipping 0.50 0.20 0.00 1.10 0.00 0.00 220.0 0.0 0.0Highway 8.90 10.48 26.80 13.92 8.21 16.27 156.4 78.3 60.7- Original Program 3.90 9.21 0.00 0.0 0.0 0.0- Supplement 5.00 1.27 0.00 0.0 0.0 0.0Teleport 0.40 0.00 0.00 0.20 0.00 0.00 50.0 0.0 0.0PPF 1.20 0.10 0.00 0.37 0.00 0.00 30.8 0.0 0.0Airport S. Pedro 0.00 0.00 0.00 0.00 0.00 5.61 0.0 0.0 0.0Not Allocated 1.10 0.00 -1.10 0.0 0.0 0.0Total 17.50 16.87 50.39 17.37 9.76 61.32 99.3 57.9 121.7

Including Supplement Credit. As figures presented in main text are shown with one decimal point, slight difference may be found with the tables above.

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Annex 3. Economic Costs and Benefits

Ports.The premises for the original estimates for civil works in the port sector were difficult to decipher and therefore it was deemed infeasible to do ex-post economic evaluation on same basis. Other ways of fairly linking investment made to consequent port activity (as opposed to organic growth independent of investment) were explored, but a reasonable approach was not found. However, for information purposes traffic growth for two of the ports benefiting from investments are presented here below.

Porto Vale dos CavaleirosYear 1997 1998 1999 2000 2001 2002 2003

Loaded, T 1,364 2,396 2,405 2,707 2,442 2,297 2,450Unloaded, T 25,093 26,204 28,226 25,217 27,953 34,529 35,042

Total Cargo, T 28,454 30,598 32,630 29,924 32,396 38,828 39,495Pax in 3,379 5,143 6,811 9,621 9,259 10,163 9,413

Pax out 4,115 6,220 7,362 9,561 9,386 9,835 10,174Total Pax 7,494 11,363 14,173 19,182 18,645 19,998 19,587

Porto GrandeYear 1995 1996 1997 1998 1999 2000 2001 2002 2003

Loaded, T 3,373 4,891 4,662 5,050 6,191 8,724 8,913 11,325 12,728Unloaded, T 354,036 346,170 358,026 349,972 346,850 355,508 361,739 459,525 450,834

Total Cargo, T 357,409 351,061 362,688 355,022 353,041 364,232 370,652 470,850 463,562Pax in 54,455 45,635 50,125 61,647 78,826 61,108 93,666 87,574 96,850

Pax out 56,033 48,474 48,177 57,118 69,014 85,934 84,399 77,387 86,540Total Pax 110,488 94,109 98,302 118,765 147,840 147,042 178,065 164,961 183,390

TEU's loaded 1,609 1,842 1,971 2,270 2,732 3,540 3,436 5,659 6,152TEU's unloaded. 1,978 1,835 2,166 2,334 2,890 3,349 3,716 6,266 6,092

Total TEU's 3,587 3,677 4,137 4,604 5,622 6,889 7,152 11,925 12,244

Roads.The economic analysis for selected roads shown here rely on consultant report the borrower commissioned. Following extract from that report (full report in file) compares the initial evaluation with the ex-post findings (for clarification purposes, the language of the exerpt has been amended and condensed):

Comparison of the initial evaluation In the case of the rehabilitation, return on invetsment is favorable, except for road no3 between Nazare and Praia Baixo, where the increase in the traffic was only 5% per annum since 1993 (alternatively, it is possible that the traffic count of 1993 was over-estimated).

Traffic comparison For the needs for the initial evaluation of 1993, traffic volumes on the project roads were estimated in dialogue with the persons in charge for public works at the local level.The comparison between its estimates and the count results of September 2004 presented in the following table.

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Table A: Traffic comparison

ROADS Traffic estimated in

Traffic medium

Growth 1993 - 2004 Start-up SU

N Heading 1993 2004 Growth promoter

Average annual increase

Year of SU Medium trafic SU

1 Praia-Trinidade 207 1 797 8,7 21,7% 1 998 553

2 Campanas-Atalaya 65 107 1,7 4,7% 2 003 102

3 Nazare-Praia Baixo 149 249 1,7 4,8% 1 994 156

4 Mindelo - Sao Pedro 269 2 096 7,8 20,5% 2 002 1 443

5 Ribeira G - PontaSol 162 552 3,4 11,8% 1 997 253

Ribeira G - Oporto Novo 149 317 2,1 7,1% 1 997 196

6 Praia - Cidade Velha 465 3 992 8,6 21,6% 1 998 1 236

During the period 1993-2004, the traffic multiplied by 8 on roads N 1, 4 and 6 of Santiago and Sao Vicente, giving an average increase of more than 20% per annum This accelerated increase, corresponds certainly to the growth usually observed at the first years following installation.

In the case of the road no 2 of Fogo, the noted increase is just average 5% per annum. It would correspond rather to the growth of the situation without project, since this new road is of recent start-up (April 2003). It is thus awaited a stronger growth during the next years with the appearance of the induced traffic.

The roads no 5 of Santa Antao were rehabilitated and brought into service in 1997, the increase noted in 1993 to 2004 reached 7% per annum for the road Ribeira Grande - Porto Novo and 12% per annum for the road connecting Ribira Grande to bridged ground where the local traffic share significant, is characterized by frequent rotations of the freight vehicles of passengers.

The increase in the traffic on the road no. 3 Nazare Praia Baixo did not exceed 5% per annum since its rehabilitation in 1994.

Costs comparison The real construction costs evolved much compared to the envisaged costs in the initial evaluation.The comparison is presented in the following table:

Table B: Costs comparison

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ROADS Length km

Estimated Cost million USD

Real cost million USD Variation

N Heading Total / km Total / km

1 Praia-Trinidade 8,0 3,400 0,43 2,35 0,29 -31%

2 Campanas-Atalaya 3,5 1,600 0,46 2,85 0,81 78%

3 Nazare-Praia Baixo 7,0 0,500 0,07 0,59 0,08 18%

4 Mindelo - Sao Pedro 11,0 0,200 0,02 0,69 0,06 245%

5 Ribeira G - PontaSol 3,6 0,200 0,06 0,35 0,01 -30%

Ribeira G - Porto Novo 31,6 0,300 0,01

6 Praia - Cidade Velha 10,8 0,40 0,04 1,20 0,11 200%

The comparison emphasizes on the one hand, the reality costs lower by 30% at the planned costs for the construction of the road no.1 Praia Trinidade and the rehabilitation of the roads no. 5 of Santo Antao. In addition, a consequent increase in the costs reality for construction and the rehabilitation of the other roads. This increase, about 18 and 78 % for roads no. 3 and 2 and more than 200 % for roads no. 4 and 6, due primarily to additional work not envisaged in the initial study.

Re-estimation of economic return The ex-port return on investment indicators were thus calculated starting from the effective construction costs and the advantages produced for the measured traffics.

Table C: Return on Investment

Year of

Initial evaluation Post-project 1993 evaluation 2004

1 Praia-Trinidade 1998 18% 22,3% 2 Campanas-Atalaya 2003 31% 27,8% 3 Nazare-Praia Baixo 1994 27% 15,8% 4 Mindelo - Sao Pedro 2002 35% 65,8%

Ribeira G - PontaSol 1997 16% 17,0% Ribeira G - Oporto 1997 33% 40,6%

6 Praia - Cidade Velha 1998 27% 48,3%

ROADS R.R.I

5

Start-upHeading N

Compared to the ex ante return on investment determined, the IRR obtained by the ex post project evaluation are higher, except for the roads no. 2 and 3 where the costs increased and the traffics increased during the 10 years of exploitation by only 5% per annum. It is probable that

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the forecasts of growth retained by the initial study were more optimistic, so that rentability reaches stronger rates. Conversely, the strong rate of rentability recorded by the road no. 4 is explained by the increase noted in traffic since 1993 with on average 20% per annum.

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Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle Performance Rating No. of Persons and Specialty

(e.g. 2 Economists, 1 FMS, etc.)Month/Year Count Specialty

ImplementationProgress

DevelopmentObjective

Identification/PreparationOctober 1991 1 Transport EconomistDecember 1991 1 Transport EconomistFebruary 1992 1 Transport EconomistJune 1992 3 Transport Economist, Port

Engineer, Hihgway Engineer

Appraisal/NegotiationJuly 1992 5 Transport Economists (2),

Highway Engineers (2), Port Engineer

November 1992 Country Delegation and Bank Team

SupervisionNovember 1993 2 Transport Economist, Port

EngineerJune 1994 2 Transport Economist, Highway

EngineerS HS

February 1995 4 Transport Economist, Highway Engineer, Economist, Port Engineer

S HS

June 1995 4 Transport Economist, Highway Engineer, Economist, Port Engineer

S HS

October 1995 3 Transport Economist, Economist, Port Engineer

S HS

March 1996 2 Economist, Port Engineer S HSSeptember 1996 - MTR

3 Road Engineer, Economist, Port Engineer

S HS

March 1997 2 Road Engineer, Port Engineer S SJune 1997 2 Road Engineer, Port Engineer S SNovember 1997 1 Transport Engineer S SOctober 1998 4 Operations Officer, Maritime

Officer, Projects Officer, Economist

S S

May 1999 3 Maritime Transport Specialist, Financial Analyst, Transport Economist

S S

October 1999 2 Transport Specialist, Economist S SMay 2000 2 Transport Specialist, Transport

EconomistS S

July 2000 5 Financial Analyst, Transport Specialist, Operations Analyst, Program Assistant, Transport Economist

S S

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May 2001 3 Financial Analyst, Transport Specialist, Transport Economist

S S

July 2001 2 Transport Specialist, Transport Economist

S S

October 2001 2 Transport Specialist, Transport Economist

S S

Mission 2001 2 Transport Specialist, Transport Economist

S S

June 2002 5 Transport Specialist, Transport Economist, Procurement Specialist, Financial Specialist, Highway Engineer

S S

November 2002 3 Transport Specialist, Social Scientist, Transport Economist

S S

April 2003 4 Transport Specialist, Social Scientist, Transport Economist, Road Engineer

S S

September 2003 2 Transport Specialist, Transport Economist

S S

November 2003 1 Highway Engineer S S

ICRApril 2004 3 Transport Specialist,

Transport Economist, Highway Engineer

S S

PSR/591 does not indicate any rating for the November 1993 supervision mission. Also, following establishment of the positions of Procurement Specialist and later Financial Management Specialist in the Dakar Country Office, these relevant fiduciary aspects of the project were often supervised by them in between regular project supervision missions.

(b) Staff:

Stage of Project Cycle Actual/Latest EstimateNo. Staff weeks US$ ('000)

Identification/Preparation 39.5 108.6Appraisal/Negotiation 38.3 119.7Supervision 216.1 943.9ICRTotal 293.9 1,172.2

Supervision includes ICR

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingMacro policies H SU M N NASector Policies H SU M N NAPhysical H SU M N NAFinancial H SU M N NAInstitutional Development H SU M N NAEnvironmental H SU M N NA

SocialPoverty Reduction H SU M N NAGender H SU M N NAOther (Please specify) H SU M N NA

Private sector development H SU M N NAPublic sector management H SU M N NAOther (Please specify) H SU M N NA

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

Lending HS S U HUSupervision HS S U HUOverall HS S U HU

6.2 Borrower performance Rating

Preparation HS S U HUGovernment implementation performance HS S U HUImplementation agency performance HS S U HUOverall HS S U HU

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Annex 7. List of Supporting Documents

For the preparation of this ICR, appraisal and other preparatory aide memoire were studied as well as relevant legal documents, including minutes of negotiations. The SAR for the project was reviewed and all supervision reports as well as PSR/590s. Prior to a Supplement Credit Agreement being introduced, the borrower drafted a technical ICR and this documented was drawn on.

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