AFRICAN DEVELOPMENT FUND

PROJECT COMPLETION REPORT

ROAD MAINTENANCE AND REHABILITATION PROJECT

ETHIOPIA

TRANSPORT DIVISION
INFRASTRUCTURE DEPARTMENT - NORTH, SOUTH & EAST

AUGUST, 2005
 EQUIVALENTS AND ABBREVIATIONS
Currency Equivalents

PCR Appraisal

1 UA = Birr 11.0544 2.7856

WEIGHTS AND MEASURES

1 tonne (t) = 2,205 lbs

1 kilogramme (kg) = 2.205 lbs
1 metre (m) = 3.281 ft
1 foot (ft) = 0.305 m
1 kilometre (km) = 0.621 mile
1 square kilometre (km2) = 0.386 square mile
1 hectare (ha) = 0.01 km2 = 2.471 acres

FISCAL YEAR

July 1 - June 30

ABBREVIATIONS

AADT = Average Annual Daily Traffic

ADB = African Development Bank
ADF = African Development Fund
BIRR = Ethiopian Currency
EU = European Union
ERA = Ethiopian Roads Authority
EIRR = Economic Internal Rate of Return
ETCA = Ethiopian Transport Construction Authority
FE = Foreign Exchange
FUA = Fund Unit of Account
GOE = Government of Ethiopia
ICB = International Competitive Bidding
JICA = Japan International Cooperation Agency
MOC = Ministry of Construction
MOFED = Ministry of Finance and Economic Development
MOUDC = Ministry of Urban Development and Construction (?)
TA = Technical Assistance
TCDE = Transport Construction Design Enterprise
UA = Bank Unit of Account
VOC = Vehicle Operating Costs
 TABLE OF CONTENTS

Page

Project Log-Frame
Basic Project Data i-iii
Executive Summary iv-vi

1. INTRODUCTION 1

2. PROJECT OBJECTIVE AND FORMULATION 1

2.1 Project Objective 1

2.2 Description 2
2.3 Formulation, Evaluation and Approval 2

3. PROJECT EXECUTION 2

3.1 Effectiveness and Start-up 2

3.2 Modifications 3
3.3 Implementation Schedule 3
3.4 Reporting 4
3.5 Procurement 4
3.6 Financing Sources and Disbursement 5

4. PROJECT PERFORMANCE AND RESULTS 6

4.1 Overall Assessment 6

4.2 Operating Results 7
4.3 Institutional Performance 7
4.4 Management and Organisational Effectiveness 8
4.5 Staff Recruitment, Training and Development 8
4.6 Performance of Consultants, Contractors and Borrowers 9
4.7 Conditions/Covenants 10
4.8 Economic Performance 10

5. SOCIAL AND ENVIRONMENTAL SUSTAINABILITY 11

5.1 Social Impact 11

5.2 Environmental Impact 11

6. PROJECT SUSTAINABILITY 11

7. PERFORMANCE OF THE BANK 12

 (con't)

8. OVERALL PERFORMANCE AND RATING 12

9. CONCLUSIONS, LESSONS AND RECOMMENDATIONS 12

9.1 Conclusions 12
9.2 Lessons learned 13
9.3 Recommendations 13

________________________________________________________________________

This Report was prepared by Messrs M.O. Ajijo, Principal Transport Economist,
D. R. Rao, Transport Engineer (Consultant) and A. Ambo Transport Economist
(Consultant) following their mission to Ethiopia in September 2002. The document was
revised in August 2005. Any inquiries relating to this report may be referred to either the
authors or to Mr. J. RWAMABUGA, Manager, ONIN.3, Ext. 2181 or Mr A. R.
RAKOTOBE, Director, ONIN, Ext 2040.
 LIST OF ANNEXES

Annex No. of
No. Titles Pages

1. Project Location Map 1

2. Implementation Schedule 1
3. Project Costs, Categories of Expenditure,
ADF Disbursements and Yearly Disbursement
by Source of Funding 4
4. Calculation of Economic Internal Rate of Return 3
5. Performance Evaluation and Rating 4
6. Recommendations and Follow-up Actions 1
7. Sources of Information 1
8 Borrower's PCR 1
9 Executing Agency's Comments on the Bank's PCR 1
 ETHIOPIA
ROAD MAINTENANCE AND REHABILITATION PROJECT

PROJECT MATRIX

REVISION DATE: 13th October, 2002

DESIGN TEAM: M.O.Ajijo/D.R..Rao/A.Ambo

Narrative Summary (NS) Verifiable Indicators (VI) Means of Verification Assumptions

Goal: Appraisal (1989) PCR (2002) (Goal to super goal)

1.1. The overall objective of the 1.1 Rise the level of road 1.1 Roughness reduced and 1.1 Annual road
project is to expand the essential density by the year 2000. riding surface improved. traffic survey
infrastructure with a view to support the 1.2 Volume of goods and 1.2 AADT increased by 90% of ERA
economic and social development. passengers by road at 2002. 1.2 Road
network increased by 60% Traffic data of
by the year 2004. Central Statistical
Authority

Project Objective: 1.1 Roughness less than 3.5 1.1 Roughness of paved road Project objective to
IRI throughout the life of surface observed at 3.0 Goal
1.1 The objective of the project is to the project. 1.2 Vehicle operating costs 1.1 Calculate VOC
improve the capability of ERA in 1.2 Reduced vehicle operating reduced by 40% in Aug. 2001. using HDM 1.1 Adequate
maintenance activities and to improve cost by 35% when the model. Government
road surface conditions to reduce VOCs project road is opened to 1.3 Mtce cost reduced by about 1.2 Measure commitment for the
and road maintenance costs and to traffic. 50% in Sept. 2002. roughness. successful
facilitate movement of import/export 1.3 Maintenance cost are 1.3 Traffic counts. implementation of the
traffic through Assab port by improving reduced at least by 50% 1.4 Annual budget of Road Sector
the Semera-Elidar road section. over the life of the project. 1.4 AADT increased to 1300 in ERA. Development Program
2002.. (RSDP).
1.4 AADT estimated at 1200.
Outputs (Outputs to
Project Objective)
1.1 New equipment for 1.1 More than 19 types of 1.1. 19 types (307 equipment) 1.1 QuarterlyProgress
maintenance procured. 2438 km of road equipment to be purchased purchased and fully utilised with Reports (QPRs) 1.1 ERA will maintain
maintained. and fully utilised for maintenance of 2438 km of 1.2 Supervision the road after its
1.2 Semera-Elidar section (134 km) of maintenance activities. By roads.. Reports(SRs) completion and
the Mille-Assab road corridor May 1993. 2438 km of road 1.2 Only 94 km of road section 1.3 Project implemented the
strengtherned/rehabilitated. maintained. between Semera to Dobi junction Completion maintenance
1.2 134 km of bitumen road completed. Reports (PCR) action plan.
between Semera and Elidar
completed. 1.4 Audit Reports.

Activities Input/Resources (Activity to Output)

Input Million UA Input Million UA

1.1(a) Approval of bidding document
for procurement of 1.1 Road Mtce 1.1 Road Mtce 1.1 Appraisal 1.1 All procurement
equipment/machinery for maintenance Equipment 16.19 Equipment 18.33 estimates actions are on schedule.
and construction works. (b) approval of 1.2 Road reh/ 1.5 Road reh/ 1.2 QPRs 1.2 Payments for
RFP for supervision consultancy Construction 22.14 Construction 25.50 1.3 SRs invoices are not
services. 1.3 Consultancy 1.2 Consultancy 1.4 PCRs delayed.
Supervision 0.96 Supervision 1.62 1.5 Audited accounts. 1.3 GOE’s timely
1.2 Issue and receipt of tenders for 1.4 Contingencies Total 45.45 1.6 Disbursement payment of
procurement of equipment and - Physical 3.93 records. counterpart local
construction machinery and RFP for - Price 6.14 funds.
supervision services. Total 50.16 1.4 Effective supervision
1.3 Evaluation, negotiations and by the Bank and ERA..
award of contracts for procurement and Resources Resources
supervision services.
1.4 Commencement of procurement ADF 43.75 ADF 38.61
of equipment/machinery and GOE 6.41 GOE 6.84
commencement of consultancy services Total 50.16 Total 45.45
for supervision of Semera-Elidar
section.
EIRR : Mtce 0%-229% EIRR : Mtce 28.6%-406.6%
Reh. 23.15% Reh. 20.3%
 (i)

BASIC PROJECT DATA

1. Country : Ethiopia
2. Project : Road Maintenance and Rehabilitation Project
3. Loan Number : F/ETH/ROD/89/28
2. Borrower : Government of Ethiopia
3. Beneficiary : Government of Ethiopia
5. Executing Agency : Ethiopian Roads Authority(ERA)

A. Loan Details Appraisal. Actual

1. Amount (in UA million) : 43.75 38.61

2. Commitment Charge : 0.75% 0.75%
3. Repayment Period : 40 Years 40 Years
4. Grace Period : 10Years 10 Years
th
5. Loan Negotiation Date : 16 August, 1989
6. Loan Approval Date : 22nd November, 1989
7. Loan signature Date : 1st December, 1989
8. Date of Entry into Force : 2nd December, 1990

B. Project Data

1. Project Cost

In UA million
Item of Cost As per Appraisal Actual
Estimate
Foreign Exchange Component 43.75 38.61
Local Cost Component 6.41 6.84
Total Cost 50.16 45.45

2. Source of Finance

In UA million
Source of As per Appraisal Estimate Actual
Finance F.E. L.C. Total % F.E. L.C. Total %
ADF 43.75 - 43.75 87.2 38.61 - 38.61 85
GOT - 6.41 6.41 12.8 - 6.84 6.84 15
Total 43.75 6.41 50.16 100 38.61 6.84 45.45 100

Appraisal Actual

3. Effective Date of First Disbursement: - Jan 1991

4. Effective Date of Last Disbursement: Jun . 1994 Dec 2001
5. Commencement of Project : April 1990 Nov 1991
6. Completion of Project : May 1993 Aug 2001
 (ii)
C. Performance Indicators

1. Cost Overrun/Underrrun : *
2. Time Overrun : 99 months
* Slippage on Effectiveness (%) : 50%
* Slippage on Completion Date (%) : 267%
* Slippage on Last Disbursement (%) : 650%
* Number of Extensions of Loan Validity Period : 7
3. Project Implementation Status : Completed
4. List of Verifiable Indicators and Levels of Achievement :

Score
Evaluation Criterion Maximum Actual
1. Time Overruns 4 1
2. Cost Underruns 4 2
3. Adherence to Contractual Conditions 4 3
4. Adequacy of Supervision and Reports 4 3
5. Operational Performance 4 1
Total Score 20 10

5. Implementation Performance

* Institutional Performance : Satisfactory

* Supplier’s Performance : Satisfactory
* Consultant’s Performance : Satisfactory
* Contractor’s Performance : Satisfactory

6. Economic Internal Rate of Return (EIRR):

Appraisal PCR
Maintenance: 0% - 229% 28.6% – 406.6%
Rehabilitation 23.15% 21.6%
D. Missions

Numbers of
Project Cycle M/Y Persons Composition Man Days
1. Identification 10/86 2 TE, TEn 14
2. Preparation 10/88 3 TE, TEn, LO 63
3. Appraisal 03/89 2 TE, TEn, 42
4. Supervision 11/89 2 TE, TEn 14
06/93 2 TE, TEn 22
05/94 2 TE, TEn 20
07/97 1 TEn. 14
09/99 2 FA, TEn 30
06/00 2 DM, TE 42
07/01 2 TE, TEn 42
11/01 1 TE 15
5.PCR 09/02 2 TE, TEn 28
TE: Transport Economist, TEn: Transport Engineer, LO: Loan Officer, DM: Division Manager,
F.A:. Financial Analyst.
* The percentage figure for cost overrun/underrun, cannot be indicated since the comparison was made between the
“original cost” and the revised cost based on the reduced scope of works on the basis of “cost per km” length of the
constructed road.
 (iii)

E. ADF Loan – Bank Disbursements (UA million)

As at Appraisal Actual
Year
Amount Cum (%) Amount Cum (%)
1990 5.61 12.8 - -
1991 17.67 53.2 3.04 7.8
1992 12.90 82.7 11.35 37.3
1993 5.06 94.3 4.33 48.5
1994 2.51 100.0 4.08 56.4
1995 - 7.09 77.4
1996 - 2.45 83.8
1997 - 2.24 89.6
1998 - 1.03 92.2
1999 - 0.71 94.0
2000 - 0.64 95.7
2001 - 1.60 99.8
2002 - 0.04 100.0
Total 43.75 100.0 38.61 100.0
Un disbursed balance 5.144
Loan Balance 5.144

F. SUPPLIERS
Equipment & Spare Parts
Name Suppliers from Various Member Countries
Responsibility Road Maintenance Activities for Alemgena, Jimma & Nkempte
Districts and Semera-Dobi Junction Road Construction
Date Contract Signed 1 November, 1991
Date Contract Terminated 31 December, 1996
Contract Duration 61 months
Amount UA 18.32 million (Birr 66.76 million)

G. CONTRACTOR
Civil Works
Name Ethiopian Roads Authority (Force Account Unit)
Responsibility Semera – Dobi Junction Road (94 km)
Date Contract Signed July 1993
Date Contract Terminated 31 August, 2001
Contract Duration 98 months
Amount UA 25.47 million (Birr 227.80 million)

H. CONSULTANT

Supervision
Name Sir William Halcrow and Partners (UK) in Association unit
TCDE of Ethiopia
Contract Description Supervision of Semera-Dobi Junction Road Works
Date Contract Signed 21/01/93
Date Contract Terminated 31/08/2001
Contract Duration 98 months
Amount UA 1.66 million (Birr 14.88 million)
 (iv)
EXECUTIVE SUMMARY
1. INTRODUCTION

1.1 In 1988, the GOE as a part of its transport policy, embarked on restoration of road network
through rehabilitation and maintenance activities. Given the country is landlocked, in order to
facilitate transportation of goods to the nearest ports of neighbouring countries that handle more
than 85% of foreign exchange trade, the GOE accorded priority for maintenance and rehabilitation
of deteriorated road sections. Two such vital components, namely, road maintenance works on 17
road sections of Alemgena and Jimma districts and rehabilitation of Semera-Elidar section of Mille-
Assab corridor were identified by the GOE that approached the Bank Group accordingly for
financing.

1.2 The project was appraised in March 1989. The ADF Board approved the Loan in November
1989 and was signed in December 1989 for an amount of FUA 47.50 million (UA 43.75 million).

1.3 This PCR is based on the appraisal report, project files in the Bank, Borrower’s quarterly
progress and annual audit reports and PCR, interviews and site inspection conducted during an ADF
mission to Ethiopia in September 2002. The Borrower's PCR is on the file with ONIN.3.

Project Objective and Description

1.4 The objectives of the project were (i) to improve the capability of ERA’s maintenance
activities in two Districts through the procurement of road maintenance equipment, and (ii) to improve
the road surface conditions to reduce vehicle operating costs and to facilitate movement of import/
export traffic through Assab port corridor by improving Semera – Elidar section. The project as
originally conceived consists of (a) procurement of new equipment and spares for road maintenance
activities in Alemgena and Jimma districts, (b) pavement strengthening and reconstruction including
shoulders and drainage on 134 km Semera- Elidar road to two lane bitumen surface, and (c)
consultancy services for supervision of construction works.

Project Execution

1.5 The conditions precedent to first disbursement of the loan agreement, were fulfilled by the
GOE on 26th October 1990, which was about 12 months after the Loan signature. In addition, there
were some delays in the start up of the project mainly in the procurement of equipment/machinery and
the recruitment of supervision consultant. In the course of the project implementation, modifications
were made to the original scope of works with reduction in the length of the project road from 129 km
to 94 km and improvements to the pavement design of the project road.

Implementation Schedule

1.6 The project was scheduled for completion as per appraisal in June, 1993 (from April 1990
to May 1993 (37 months), but was actually implemented between November 1991 and August 2001
(117 months) with a slippage of 99 months and about 124 months after appraisal. In respect of
maintenance component of the project, the procurement process of equipment commenced towards
mid 1990 and delivery completed in 1996. Similarly, for consultancy services of supervision works,
consultant should have commenced services by March 1990 while actually the Contract was awarded
in January 1993. The execution of the rehabilitation works on Semera-Elidar section, which should
have been completed by May 1993 as per appraisal, was continued up to August 2001. The reasons for
various delays have been dealt with in the Report.
 (v)
Project Costs

1.7 In 1989 at appraisal, the project cost was estimated at UA 50.16 million of which, UA 6.41
million was local cost. The actual cost of the equipment procured for maintenance was less than the cost
estimated at appraisal. This coupled with the reduction in the scope of work on Semera-Elidar section, the
actual project total cost has been reduced to UA 45.45 million: UA 38.61 million in foreign currency and
UA 6.84 million in local currency.

Financial Resources

1.8 The project was jointly financed by ADF and GOE. The estimated and actual
expenditures by source of finance using historical exchange rates in the computation of local costs.
With reduced scope of works, it can be noted that the counterpart fund local currency in real terms of
UA, has slightly increased (7%) from UA 6.41 million at appraisal to UA 6.84 million at PCR. The
ADF actual expenditure amounted to UA 38.61 million compared to appraisal estimate of UA 43.75
million. The ADF share of project costs was 85% at PCR while GOE share was 15%, as against 87.2%
and 12.8% respectively at appraisal.

Overall Assessment

1.9 The different types of equipment procured for maintenance activities have been
found to be in good condition even after a period of 5 years and are being fully utilized by the district
maintenance units. Very few breakdowns were reported and the availability of the equipment was
estimated to be about 75%. The objective of restoring the 17 deteriorated road sections have been
achieved.

1.10 The initial objective of the rehabilitation component of the project road was to rehabilitate the
section between Semera and Elidar consisting of 129 km on contract basis. The procurement mode was
later changed to Force Account. However, due to seismic areas along the existing alignment beyond
Dichoto junction coupled with border conflicts towards Elidar end, only 94 km could be successfully
completed, which accounts for 73% of the objective. As a result of the above, the GOE's strategy of
movement import/export traffic through Assab has been diverted to the port of Djibouti and the Bank
has agreed to this proposal.

1.11 In consideration of performance rating based on start up, implementation time, adherence to
the implementation schedule and adequacy of supervision, the overall project execution can be rated
just satisfactory.

Economic Performance

1.12 Based on recent ERA traffic Survey data, the appraisal traffic forecast have been observed to
grow at the rate of more than 4% per annum during the project life. The actual maintenance/construction
and supervision costs as well as the benefits emanating from the revised traffic forecasts formed the basis
for re-evaluation of EIRR. The benefits included savings in VOC and maintenance costs. The recalculated
EIRR for the links for maintenance was between 28.6% and 406.6% (Annex 4) for the maintenance
projects and 22.7% for the rehabilitation project. This compared with the range of 0% and 229% for
maintenance at appraisal indicated that the intervention has been very viable. In the case of rehabilitation,
the EIRR of 22.7% compared to 23.15% at appraisal is almost the same.

Conclusions

1.1.3 The overall objectives of the project has been substantially achieved. The restoration of
road sections to good condition in three districts through maintenance activities has resulted in
increased traffic, reduction in VOCs and maintenance costs. The rehabilitated project road of Semera-
 (vi)

Dobi Junction has improved transport services from the capital city to the two main ports on the East
viz. Djibouti and Assab (now in Eritrea).

1.14 The performance of the Contractor, Consultant and Borrower were satisfactory. As a result,
the overall implementation of the project was found to be satisfactory with a rating of 2.2 out of 4
(maximum).

1.15 Adequate funds have been allocated for the maintenance works of the project components out
of the Road Fund budget and institutional arrangement for the maintenance, the ERA District
maintenance organisations have been further strengthened. As such the project is sustainable.

1.16 In terms of financial performance, it was noted that the ADF had a loan balance of UA 5.144
million and the Bank with the consent of the GOE cancelled the loan balance.

Lessons Learned

The lessons learned from the project are given hereunder:

• An important lesson learnt out of this project is the execution of works of this magnitude
through Force Account. The Force Account mode of execution is time consuming, and at
times it may not be cost effective, this is evident from the implementation of this project.

• The Bank should be cautious during appraisals in considering the execution of works through
Force Account. Even though, execution of works through “Force Account” is one of the
Procurement mode in the Bank’s “Rules of Procedure, for Procurement of Goods and
Works”, its applicability should to be restricted only to small works and for maintenance
activities.

• For projects of large magnitude, the Bank to undertake a mid-term review to assess the
progress on the spot, in order to consider restructuring of the project, if necessary.

Recommendations

We recommend as follows:

• For future projects of large magnitude, the Bank should ensure that construction works are
executed on contract basis.

• The Borrower should rectify the defects observed during the field inspection of the completed
project.
1. INTRODUCTION

1.1 Ethiopia, situated in the North-Eastern corner of Africa, has a land area of 1.14 million
km2, with a rugged topography of altitude ranging from 100 meters below sea level to 4,620 meters
above sea level The estimated population of Ethiopia, as per 1999/2000 census was 65.3 million.
The maintenance component of the project is located in Oromia and Southern Nations and
Nationalities Regions and the rehabilitation project road is located in the Afar region.

1.2 In 1988, the GOE as a part of its policy, embarked on restoration of road network through
rehabilitation and maintenance activities. Given the country is landlocked, in order to facilitate
transportation of goods to the nearest ports of neighbouring countries that handle more than 85% of
foreign exchange trade, the GOE accorded priority for maintenance and rehabilitation of
deteriorated road sections. Two such vital components, namely, road maintenance works on 17 road
sections of Alemgena and Jimma districts and rehabilitation of Semera-Elidar section of Mille-
Assab corridor were identified by the GOE that approached the Bank Group accordingly for
financing.

1.3 The Bank Group’s intervention in the transport sector in Ethiopia dates back to December
1979. The Bank has to date, approved a total of ten loans in the transport sector, viz. eight projects
in road sub-sector and two in the airport sub-sector, apart from two studies (one in Road and the
other in air transport). Seven out of the eight projects (six in the road sector and one in air sub-
sector) have been successfully completed and three projects (2 road projects and one airport project)
are under implementation. Currently, the Bank Group is participating, with other donors, in the
implementation of the multi-faceted ten-year (1997- 2007) Road Sector Development Programme
(RSDP).

1.4 The transport system consists mainly three modes of which roads play a dominant role. The
three modes are: (i) a road network of about 16176 km federal and 14164 km regional, a railway
system totalling about 781 km of tracks, and (iii) two international airports and over 20 smaller
airfields.

1.5 At the time of the project appraisal, Ethiopia had about 18,053 km of classified roads, of
which 4,072 km (23%) paved, 8,715 km (48%) gravel and 5,266 km (29%) low standard rural access
roads. Most of them had deteriorated due to lack of maintenance.

1.6 The economic feasibility study and detailed engineering design on Semera- Elidar road
section and road condition surveys on Alemgena and Jimma districts were carried out by the ERA. The
Bank reviewed and found the reports acceptable. A Bank mission visited Ethiopia in March 1989 to
appraise the project. The loan was approved by the Board in November 1989 and was signed in
December 1989 for an amount of FUA 47.50 million (UA 43.75 million).

1.7 This PCR is based on the appraisal report, project files in the Bank, Borrower’s quarterly
progress and annual audit reports and PCR, interviews and site inspection conducted during an ADF
mission to Ethiopia in September 2002.

2. PROJECT OBJECTIVE AND FORMULATION

2.1 Project Objectives

2.1.1 The objectives of the project were: i) to improve the capability of ERA's (former ETCA)
Road maintenance activities in two districts of Alemgena and Jimma through the procurement of road
maintenance equipment and spare parts; ii) to improve road surface conditions so as to reduce vehicle
operating costs and increase transport service levels and road safety; and iii) complement the ongoing
 2

development of Assab Port financed by the ADF through facilitating the movement of import/export
traffic along the Addis Ababa-Assab port corridor by improving the conditions of the Semera to
Elidar road section.

2.2 Description

The project consists of the following components:

i) Procurement of new equipment for road maintenance including spare parts;

ii) Procurement of spare parts for the rehabilitation of existing equipment;
iii) Pavement strengthening and reconstruction, and widening and reconstruction of
shoulders and improvement of drainage structures of the 134 km Semera (km 571) to
Elidar (km 705) road to 2 lanes bituminous surfaced road 7.0m wide with 1.5m wide
gravel shoulders; and
iv) Consultancy services for design review, pre-construction contract and supervision
of civil works

2.3 Formulation, Evaluation and Approval

2.3.1 The project was formulated considering both rehabilitation and maintenance of deteriorated
road sections before appraisal. A survey of road conditions in Alemgena and Jimma districts was
carried out by ERA former ETCA) to determine the level of deterioration on each section. As a result
of this, 17 road sections were identified for restoration through repairs under maintenance activities by
procuring new equipment and spare parts.

2.3.2 In order to facilitate transportation of goods to the nearest port, the road conditions of the
Mille-Assab corridor (355 km) required improvements through rehabilitation. The economic feasibility
and engineering studies for the corridor were carried out by the Ethiopian Roads Authority (ERA) in
collaboration with the Transport Construction Design Enterprise (TCDE). The project was well
prepared and was supported by ADF. In the year 1988, GOE approached the Bank for financing a
section (Semera-Elidar) of the Mille-Assab corridor along with other donor(s). The Bank reviewed the
design and found it technically feasible and economically viable. An appraisal mission was fielded to
Ethiopia in March 1989 to appraise the Road Maintenance and Rehabilitation Projects. All loan
conditions were negotiated and there were no issues of disagreement. The Board approved the loan in
November 1989 as conceived at appraisal and was signed in December 1989 for an amount of FUA
47.50 million ( UA 43.75 million).

3. PROJECT EXECUTION

3.1 Effectiveness and Start-up

3.1.1 The loan was approved on 22 November 1989, signed on 1 December 1989 and
declared effective on 2 December 1990. In accordance with Clauses 9.01 and 15.01 of the General
Conditions Applicable to Loan Agreement and Guarantee Agreement of the ADF, there was no
slippage on the loan signature. There was however some slippage with respect to the loan
effectiveness, as the loan was declared effective after the nominal period of 180 days from the date
of loan signature.

3.1.2 The reasons for the delay in declaring the loan effective were due to frequent institutional
changes within the Executing Agency and coordinating agencies. The delay in the loan
effectiveness, did not however, had any effect on the implementation.
 3

3.2 Modifications

3.2.1 In the course of the project implementation, modifications were effected as under:

(i) Technical (Design)

The appointed consulting firm who reviewed the initial design of the TCDE, made some
improvements to the pavement structure on the Semera-Elidar section. The new pavement
structure is replaced with asphalt concrete surfacing instead of double surface bitumen,
with increase in thickness of base and sub-base courses, in order to be compatible to the
adjacent pavement sections funded by the other donor, viz World Bank.

(ii) Scope of Project Works

The appraised length of the project road (Semera-Elidar) was 134 km, which was later
corrected after detail survey to 129 km. During the course of implementation, in the year
1992, an earth quake was recorded and some of the existing structures were collapsed. As
a result of this, GOE condoned an area of 10 km in diameter beyond Dichoto Junction (km
648) due to force majeur and declared as non-active zone with no construction activities.
A re-alignment to the original route was the only alternative route to connect the
destination. Among various alternatives explored, a detour at Dichoto junction up to Dobi
depression junction (towards Djibouti), was found to be technically and economically the
feasible alternative and GOE decided accordingly to proceed with design and construction
along the chosen alignment. However, implementation of the project road beyond Dobi
depression junction could not be continued due to border conflicts in the area, and the
project was therefore terminated at Dobi junction with completion of 94 km instead of 129
km.

3.3 Implementation Schedule

3.3.1 The implementation of the project components were delayed due to several factors. The
Semera-Elidar project road that was scheduled for completion as per appraisal in May 1993, could
not be completed until August 2001. This gave a slippage of 99 months. Annex 2 shows the
implementation schedule at Appraisal Vs Actual. Various factors that affected the implementation
are stated hereunder:

Equipment for Maintenance Activities

3.3.2 Procurement processing delays coupled with supply delivery, affected the timely
maintenance activities in the districts. The procurement process that should have been completed by
September 1990, continued up to December 1993 causing a delay of nearly 3 years. Similarly, the
equipment deliveries have continued up to nearly 5 years. The main reasons for such delays could
be attributed to (i) long delays in the evaluation of bids by the Executing Agency and its submission
to ADF for approval (ii) non-conformity of some bids to the Bank’s procedural requirements, and
(iii) additional time taken due to re-tendering of some major items of the equipment.

Construction Works

3.3.3 The project was implemented through the Force Account Unit of ERA. Many problems
and difficulties were encountered during implementation that accounted for a large part of the
slippage in the overall completion. The project, which should have been completed in three years
 4
continued up to eight years for final completion. Some of the major factors that contributed to this
long slippage are given hereunder:

• Frequent suspension of construction works due to conflicts in the project area;

• Non-deployment of adequate construction equipment/machinery on site;
• Delay in procurement of construction machinery and consequent delay in its supply
coupled with non-availability of spare parts on time during frequent breakdowns;
• Non-availability of construction materials and water in the vicinity (it involved long
hauling distances);
• Extreme bad weather conditions with day temperatures ranging from 45 to 50 degrees
centigrade during most part of the year, which restricted the working hours of the
personnel that virtually retarded the progress and efficiency of the Force Account Unit
personnel;
• Frequent changes in the deployment of the Project Manager and other personnel
coupled with improper coordination;
• Huge earth works including rock blasting involved along the foot hill of Dobi
depression realignment section, which took almost three years to complete the small
stretch;
• Existence of flood prone area on the re-alignment section at Dobi depression;
• Delay in initial review of the design and its effect on the commencement;
• Non-deployment of an additional Force Account Unit brigade unit by the Executing
Agency (ERA) in the initial stages for its timely completion, even though it was agreed
before commencement of works. This accounted for a large slippage in the
implementation.

Consultancy Services for Supervision of Construction Works

3.3.4 Due to unawareness of Bank’s procurement procedures by the Executing Agency, the
recruitment process and award of contract was delayed almost by three years. During the execution
of the project, the supervision services of the main consultant (M/s Willam Halcrow & Partners of
UK) was extended once up to June 1999 through an addendum. There after, their associated
consultants (TCDE) continued the supervision of works until its completion in August 2001.

3.4 Reporting

Pursuant to the provisions of the General Conditions of the Loan Agreement, the GOE
submitted quarterly progress reports, annual audit reports, the final Consultant's construction
report and the Borrower's PCR. The contents of the progress reports in terms of keeping the Bank
continually informed of the project status, was satisfactory. The final audit report has been
submitted by the Government.

3.5 Procurement

Maintenance Equipment

3.5.1 Procurement of all new equipment, including spares for maintenance activities was
undertaken through ICB procedures following Bank's guidelines. Suppliers from seven different
member countries supplied the equipment with warranties where necessary for the maintenance
activities.

Supervision Consultancy Services

3.5.2 The supervision consulting firm for the construction works, M/s Sir William Halcrow &
 5

partners of UK in association with TCDE, was chosen on the basis of shortlist of six consultants in
line with Bank's procurement guidelines for consultants.

Civil Construction Works (Semera - Elidar Section)

3.5.3 The construction works were executed by the Force Account Unit of ERA. Due to
shortage of construction machinery, and to strengthen the existing fleet of the brigade for speedy
execution of the project, additional construction/machinery was procured to meet the deficiency.
ICB procedures in accordance with Bank's guidelines were followed in the procurement process.
Items like tyres, spares, lubricants etc. were procured following domestic and international
shopping procedures as applicable, and cement was procured through various state enterprises.

3.5.4 The schedule in terms of implementation of procurement activities (Appraisal Vs Actual)

under the project are indicated below:

Procurement Actions Performance

Procurement Activities Road Maintenance Road Rehabilitation

Consultancy Construction Works

Appraisal Actual Appraisal Actual Appraisal Actual

Comp.

Bidding Process Oct. 89 –Jan. 90 May 90 - - - -

ADF approval Jan 90 – April 90 Oct. 91 - - - -
Contract Award April 90-Sept 90 Dec. 93 - - - -
Eqpt/Spare Parts Deliiver Sept 90-Jun 91 Dec. 96 - - - -
Appointment of Consultant - - Sept 89-Mar Jan 93
ADF Approval - - 90 - Aprl 90-Sept 90 April 93
Bidding process/contract award - - - - Sept 90-Mar 91 Jul 93
Commencement - - - - Maar 91-May 91 Jul 93
Construction completion - - - - May 91- May 93 Aug. 01
-

3.6 Financial Sources and Disbursements

Project Costs

3.6.1 In 1989 at appraisal, the project cost was estimated at UA 50.16 million of which, the
foreign exchange component was UA 43.75 million and the balance of UA 6.41 million was the
local cost. During the execution of the project, some modifications took place as indicated in
Section 3.2 above. The completed portion of the road was 94 km instead of 129 km, thereby the
scope of works was reduced by about 27% at completion. Keeping this in view, the actual project
cost at completion is UA 45.45 million: UA 38.61 million in foreign currency and UA 6.84 in local
currency in 2002. The component-wise costs at appraisal vs actual are given in Annex 3.

Financial Resources

3.6.2 The project was jointly financed by ADF and GOE. The estimated and
actual expenditures by source of finance using historical exchange rates in the computation of local
costs is presented in Table 1. With reduced scope of works, it can be noted that the counterpart fund
local currency in real terms of UA, has slightly increased (7%) from UA 6.41 million at appraisal to
UA 6.84 million. The actual expenditure schedule over the implementation period and the
disbursement profile by categories of expenditure and by sources of financing are given in Annex 3.
 6
3.6.3 As can be seen from the table, there is a change in the overall financing plan with ADF’s
contribution reduced from 87.2% to 85%, but GOE’s contribution has increased from 12.8% to
15%. The final completion cost indicated a cost under run of UA 5.144 million relative to the
appraisal estimate.
Table 1

In UA million
Source of As per Appraisal Estimate Actual
Finance F.E. L.C. Total % F.E. L.C. Total %
ADF 43.75 - 43.75 87. 38.61 - 38.61 85
2
GOE - 6.41 6.41 12. - 6.84 6.84 15
8
Total 43.75 6.41 50.16 100 38.61 6.84 45.45 100

Disbursements

3.6.4 The loan funds were disbursed by direct method to the contractor (in this case Ethiopian
Roads Authority, ERA) and the consultant. However, the large slippage in the implementation
schedule has significantly affected the disbursement schedules. The disbursements were planned to
commence in 1990 at appraisal but did not actually start until 1991 because of delay in loan
effectiveness. It can be noted that the first disbursement was effected in 1991 and the last disbursement
took place in April, 2002. Annex 3 presents the disbursement profile at appraisal Vs actual. From the
Bank’s records, it was noted that most disbursements were effected on time, except that few were
delayed due to incorrect submissions by the Borrower.

4.0 PROJECT PERFORMANCE AND RESULTS

4.1 Overall Assessment

Maintenance Equipment

4.1.1 The different types of equipment procured for maintenance activities have been found to be in
good condition even after a period of 5 years and are being fully utilized by the district maintenance
units. Very few breakdowns were reported and the availability of the equipment was estimated to be
about 75%. The objective of restoring the 17 deteriorated road sections have been achieved.

Construction works (Semera-Dobi Junction ) 94 km

4.1.2 The initial objective of the project was to rehabilitate the section between Semera and Elidar
consisting of 129 km. However, as described in Section 3.2 above, only 94 km has been successfully
completed, which accounts for 73% of the objective.

4.1.3 The non-adherence of the Government’s initial commitment to deploy two Force Account
construction units to commence the works from both ends, had affected the completion of this
component. In spite of implementation lags, the works were executed as per specification and the
quality of workmanship was found to be satisfactory. In consideration of performance rating based on
start up, implementation time, adherence to the implementation schedule and adequacy of supervision,
the overall project execution can be rated just satisfactory.
 7
4.2 Operating Results

Maintenance Equipment for Alemgena, Jimma and Nkempte Districts

4.2.1 In spite of initial delays in the procurement process, the equipment for district maintenance
activities was delivered in accordance with the requirements and specifications. All procured
equipment deployed on different sections of road network has been reported to be in good working
condition. The objective of restoring 17 sections of the deteriorated roads network (2438 km) to good
condition has been achieved.

Construction of Civil works (Semera- Dobi Junction)

4.2.2 The completed project road of 94 km ( Semera- Dobi junction) was fully opened to traffic
in September 2001. In spite of several difficulties experienced by the contractor (Force Account
Unit), the workmanship and overall quality of work executed by the Unit was satisfactory and the
rehabilitated road was generally in good condition. The constructed road followed the standard
geometrics and specifications and was able to meet the requirements of providing a safe, faster and
smooth riding surface with an all weather bitumen road between Mille and Dobi junction. A field
inspection of the completed road concluded no visible major surface distress and the side drains
along the route were found to be free from clogging

4.2.3 Some defects that were noted during field inspection of the completed road include: (i)
failure of the pavement surface at some places forming undulations along the route length; (ii)
depressions and variation in levels of pavement at some places caused due to shearing of sub-
base/base courses; (iii) differences in the levels of the road formation and the shoulder; (iv) high
elevation of culvert slab than the road formation level at four locations, (iv) low parapet walls at
some culvert locations with no hand rails; (v) non-provision of guide stones at embankments, and
(vi) non-installation of signposts at strategic points. These were brought to the authority of GOE for
immediate remedial actions in order to protect the investment. The construction equipment procured
under this component is now being used effectively for maintenance activities.

Traffic

4.2.4 There has been significant increase in traffic in all 17 road sections of maintenance districts,
as well as on the Semera-Dobi junction project road. In this regard, AADT on the 17 sections of
maintenance roads increased from 3721 in 1989 to 7357 in 2002. Similarly, AADT on Semera-Dobi
Junction road increased from 444 in 1991 to 803 in 2002. The traffic growth rates at PCR were
observed to be higher than at appraisal on maintenance roads as shown in Annex 4. However, in the
case of Semera-Dobi junction project road, the growth rate of 4.5% was observed at PCR, which is
marginally lower than the appraisal growth rate of 5%. This lower growth rate is attributed to the
competition of the railway line that runs between Addis Ababa and Djibouti..

4.3 Institutional Performance

4.3.1 At appraisal, the Executing Agency was the Ethiopian Transport Construction Authority
(ETCA) which was later changed through a proclamation to Ethiopian Roads Authority (ERA). Within
ETCA, the Force Account works were under the responsibility of the Chief Engineer through the
department of Heavy Construction. Furthermore, ETCA had the responsibility of construction and
maintenance of air, seaport, urban and railway works. Under ERA, the Force Account works were
managed directly by the Operations Department headed by a Deputy General Manager. In addition,
ERA has a very efficient Cost Accounting Branch where the Force Account expenditures were
maintained with proper accuracy. By this transformation, the efficiency of ERA has significantly
 8
improved, which enabled the authority to concentrate only on road infrastructure. However, this
organisational changes has not affected the implementation of the project.

4.3.2 The Force Account Unit has personnel with high skills and long experience in the
construction activities of bitumen and gravel roads and bridge works. During the implementation,
proper, regular, and realistic work programs were prepared to meet the targeted outputs. Though the
calibre is high, the Unit was unable to achieve its goal in particular the time schedule for its
completion. Irrespective of several constraints, the quality and workmanship of the works executed by
the Unit on this project were of high standard.

4.4 Management and Organisational Effectiveness

4.4.1 The new structure of ERA headed by a General Manager has three departments each headed
a Deputy General Manger as follows: (i) Regulatory & Engineering services who controls the
Planning, Contracts Administration and Design & Research (ii) Operations Department which has
responsibility for Force Account construction and maintenance, and (iii) Human resources and
Financial Management department in charge of staffing and financial matters. The Force Account
construction and maintenance of road network was under the responsibility of Operations
Departmental. The Force Account Division headed by a Manger has specialized branches, with a
branch head responsible for activities under his jurisdictions and is assisted by qualified and
experienced professionals in relevant fields. Each engineer is assigned with projects and is in charge
for overall supervision and day-to-day monitoring of projects. For the rehabilitation project, a qualified
and experienced engineer, approved by the Bank, as Project Coordinator was assigned for the overall
supervision and monitoring of the day-to–day activities of the project.

4.4.2 There are ten maintenance districts under ERA located in various parts of the country, each
headed by a District Manager who is responsible for the maintenance operations of the federal trunk
road network and major link road in the respective districts. In view of effective set up, the
maintenance aspect of the project roads can be effectively and efficiently managed by the qualified
and experienced personnel.

4.5 Staff Recruitment, Training and Development

4.5.1 All technical units of the ERA are staffed by qualified Ethiopians including 10% of women.
The current staffing of ERA is about 15,000 of which about 10% are professionals. However, there
still exists shortage in technical and managerial positions in some areas of operations.

4.5.2 ERA has its own in-house and on the job training programmes at all levels of its
Personnel. Recruitment of professionals is carried out on regular basis based on the work programme
and are given on the job training in its institutes. ERA has capacity to train personnel engaged in
construction and maintenance of all trunk and major link roads. In addition, training facilities exist in
labour based techniques, equipment operation, engineering and financial management etc. ERA
through these training centres arranges advanced training courses in foreign institutions with the
assistance from World Bank, JICA, and EU.

4.5.3 In order to strengthen the institutional capacity of ERA, training of more personnel in
highway design and engineering, transport planning, contract administration and equipment
management is underway. More than 80 professionals have been trained so far in different disciplines

4.5.4 with financial assistance received from EU and GTZ. Currently, in order to meet the
objectives of RSDP technical assistance in different fields are provided in order to compliment the in-
house activities of ERA. A total of seven Technical Advisors financed by EU and World Bank, are
assisting ERA in planning, contract administration, supervision and monitoring of works.
 9

4.6 Performance of Consultants, Suppliers, Contractors and Borrowers

Consultant

4.6.1 The overall performance of the consultant, M/s Willam Halcrow & Partners of UK in
association with TCDE was found to be satisfactory. The Consultant as a part of his services had
reviewed and suggested improvements to the initial design carried out by TCDE. The Resident
Engineer conducted regular field pavement tests to conform to the specified requirements before
incorporation in the works. Constant supervision of project works was undertaken at every stage to
maintain quality of pavement works. Adding to this, the Consultant was regular in submitting progress
reports to the EA for review and onward transmission to the Bank. Good coordination existed between
the Consultant and the field personnel during execution.

Suppliers

4.6.2 The performance of the suppliers on the equipment was satisfactory. Good quality
equipment/machinery was supplied with no problems and were in accordance with the provisions of
the stipulated requirements of the contract agreement(s). It was observed that all suppliers have
maintained good relationship with EA.

Contractor ( Force Account Unit of ERA)

4.6.3 The technical performance of the contractor in the execution of works on the quality and
workmanship was found to be satisfactory. The contractor ( Force Account Unit) had considerable
difficulty in managing the project road works during the first two years that resulted in a very slow
progress. This was largely due to slow pace of mobilization of plant and equipment due to non-
availability and change of key personnel. In general, the works executed by the Force Account Unit
were in accordance with the standard engineering practices and methods. However, the contractor's
performance on site management is barely satisfactory in terms of output and delivery schedule.
The reasons can be attributed to the poor management and non-deployment of the second Force
Account Unit as originally agreed. The ERA being the contractor, could have estimated their
available resources in respect of equipment/machinery for execution of the works of this magnitude
and acted accordingly. Lack of proper and timely availability of the equipment/machinery, coupled
with the non-deployment of additional Unit, had made the project's completion to suffer
implementation lags. Had there been effective planning of the equipment/machinery required before
the commencement of the works, several obstacles faced by the Force Account Unit during
execution, could have been avoided.

4.6.4 The Executing Agency, ERA, has maintained a close working relationship with the
supervising consultant during the course of the project implementation.

The Borrower

The Loan Agreement was signed by the Borrower within ten days of the approval. There were
however some delays in fulfilment of all conditions precedent to the first disbursement that affected the
loan effectiveness. The Borrower had submitted the quarterly progress reports regularly to the Bank. In
conclusion, the performance of the Borrower is judged as satisfactory.
 10
4.7 Conditions/Covenants

4.7.1 In accordance with Loan Agreement, there were eleven conditions precedent to first
disbursement and two other conditions. Three conditions out of eleven were fulfilled within one month

after the loan signature while the remaining eight conditions were met between seven to eleven
months. The Loan was declared effective twelve months after the signature.

4.7.2 The Borrower fulfilled the two "other conditions" 'after the supervision consultant submitted
the revised Bill of Quantities based on the review design.

4.8 Economic Performance

4.8.1 The maintenance of the roads under Alemgena and Jimma districts and the rehabilitation
of Semera-Elidar road were evaluated at appraisal on net incremental benefit by comparing “with”
and “without” project scenarios. In accordance to budget expenditure and project implementation,
the period between 1991 and 2000 was considered for analysis in the case of maintenance
components and between 1996 and 2005 in the case rehabilitation project. This was because, the
maintenance activity was delayed and the last disbursement was effected in 1996. Similarly,
sections of the Semera-Elidar road project was delayed until 2002 and about 80 km of the project
was open to traffic in 1996. The analysis was conducted using the 1990 prices in the case of
maintenance roads and 1995 in the case of rehabilitation road.

4.8.2 Historical and actual traffic was provided by ERA. The 1989 AADT was used as base
traffic at appraisal while the actual traffic was used at PCR with projection to 2005 in the case
Semera-Elidar road. The 1989 average AADT on 17 maintenance roads was 219 while the actual
AADT in 2002 was 408. The 1989 AADT on Semera-Elidar road was 544 and the actual in 2002
was 803.

4.8.3 The project benefits were estimated based on vehicle operating cost (VOC) and
maintenance cost savings. At appraisal, future traffic was forecasted using annual traffic growth
rates between 2% and 3.0% in the case of maintenance activities, and between 3% and 5% in the
case of Semera-Elidar road. The actual traffic growth rates on the maintenance roads were
calculated between 4.3% and 8.6% and at 4.5% on Semera-Elidar road.

4.8.4 VOCs were used as provided by ERA based on international roughness index (IRI).
Specific VOCs for each road sections were estimated based on IRI ‘before’ and ‘after’
maintenance/rehabilitation activities. These figures were adjusted for each year between 1991 and
2005 using GDP deflators at constant factor cost.

4.8.5 Project costs used at PCR were based on actual expenditure as provided by ERA and
ADB. The base costs amounted to Birr 78.98 on maintenance and Birr 230.62 million on
rehabilitation activities. GDP deflators at constant factor cost were used to minimize inter-temporal
cost differences. Accordingly, corresponding costs at 1990 prices were estimated at Birr 71.11 and
Birr 170.57 million on maintenance activities and rehabilitation projects respectively. Similarly,
financial maintenance cost savings were provided by ERA at Birr 3,000/km for paved roads, Birr
1,880/km for gravel roads and Birr 10,000/km for project roads. Both VOCs and maintenance cost
savings were shadow-priced using an adjustment factor of 0.78 as also provided by ERA. A salvage
value of 30% has been accounted in the case of Semera-Elidar project.
 11
4.8.6 The maintenance cash flows were discounted at 1990 prices and the rehabilitation at 1995
price using 12% as opportunity cost of capital. Based on the results of the analyses, both EIRRs
and NPVs at PCR exceeded the appraisal figures in Alemgena and Jimma districts as shown in

Annex 4. The highest EIRR at PCR was calculated at 406.6%, which was 229.0 at appraisal.
Similarly, the lowest EIRR at PCR was calculated at 28.6% that was none at appraisal. The EIRR
for all maintenance projects was calculated at 139.7%. In the case of Semera-Dobi junction road,
EIRR was calculated at 21.6%, which was marginally lower than the 23.2% at appraisal.

4.8.7 The implementation of both maintenance and rehabilitation projects were found to be
economically feasible. In this regard, the overall EIRR was calculated at 73.6% and NPV at Birr
1,015 million.

5.0 SOCIAL AND ENVIRONMENTAL SUSTAINABILITY

5.1 Social Impact

5.1.1 Most of the interventions in Alemgena and Jimma districts are existing roads.
Communities along the roads are settled and their daily activities are consistent and stable. The
maintenance of the roads would improve the livelihood of the people in facilitating access to
markets, schools, hospitals and social amenities and enhancing poverty alleviation. However, no
major road rehabilitation activities were carried out to result in any significant social impact

5.1.2 Similarly, no major social impact was observed within the area of influence of the Semera-
Dobi junction road. The rehabilitation of the road has benefited women in respect of income
generation through selling charcoal and firewood along the route. In addition, the project road has
provided a significant number of employment opportunities to the people within the area of the
influence.

5.2 Environmental Impacts

5.2.1 Alemgena and Jimma districts are familiar with the implementation of environmental
mitigative measures such as erosion protection and maintenance of drainage structures. In this
regard, no negative impact was observed within the area of influence of the maintenance roads.

5.2.2 In respect of rehabilitation works, the Semera-Elidar road was designed on existing
alignment and no environmental impact assessment was carried out at appraisal. At PCR however,
the first 77 km was on the existing alignment while the remaining 17 km between Dichoto and Dobi
junction was a new alignment. Along the new alignment, there are neither nature reserves nor
identified archaeological or palaeological sites within the road reserve. The new alignment did not
displace any human settlements and uncontrolled settlements are not expected due to general land
use within the road corridor. The borrow pits and quarry sites have been properly restored. No
visible negative impacts were observed along the project road since its completion. Mitigative
measures for drainage and protection for possible landslides were however taken by provision of
retaining walls.

6. PROJECT SUSTAINABILITY

6.1 The maintenance activities of both trunk and rural roads were the responsibility of ERA
through its Operations Department. The maintenance activities are carried out through ten districts
spread over the country. The responsibility for maintenance of regional/rural roads has been
delegated to the Regional Government’s Rural Roads Organization under the respective regions.
Each maintenance district is headed by a District Manger who is responsible for planning,
 12
6.2 budgeting and monitoring of maintenance activities under his District and reports directly
to the Deputy General Manager of the Operations Department of ERA.

6.3 ERA’s policy of commercialisation of the Force Account Unit and contracting out
increasingly to match pace of development of domestic constructing capacity in line with the
Maintenance Action Plan will ensure project sustainability. In addition, the establishment of the
Road Fund will enhance the road maintenance capacity of the subject roads through financial
availability. The Road Fund has surplus revenue to finance road maintenance requirements. In this
regard, RF had excess money of Birr 203.2 million in 1999/00 that was carried over to 2000/01.

7.0 PERFORMANCE OF THE BANK

7.1 The project was fully in line with the Borrower’s priorities. The Bank’s timely intervention,
facilitated the GOE to improve the transport services in the maintenance Districts and along the
Semera-Elidar corridor. The Bank’s performance at appraisal was satisfactory.

7.2 The Bank carried out regular desk monitoring and field supervision during implementation.
The project was supervised with eight field and follow up missions during the implementation period
including participation of experts from other departments. However, the Bank could not undertake
mid-term review even though this was one of the loan conditions due to staff constraints.

7.3 The Bank adhered to the agreed procurement schedule at appraisal. However, the slippages
during implementation were caused mainly due to other factors stated in the earlier sections.

7.4 The processing of loan documents and disbursement applications were handled within the
guidelines of the Disbursement manual; however at times payment of some applications were delayed,
due to incorrect submissions by the Borrower. From the perspective of the Borrower, it appears that
long delays occurred in the release of certain payments. However, on verification from the
disbursement section, it was found that such cases were the minimum. Timely advice was given by the
Bank to the Borrower to solve the problems that arose out of the disbursements.

7.5 Overall, the performance of the Bank is judged satisfactory.

8.0 OVERALL PERFORMANCE AND RATING

8.1 In accordance with the implementation performance indicators (Annex 5), the overall
assessment of implementation performance is satisfactory with an overall rating of 2.2 out of 4
maximum. The rating for the Bank's performance is 3.0 out of 4 maximum indicating highly
satisfactory while the rating for the project outcome is just satisfactory with a rating of 2.71 out of 4
maximum. In general, the overall performance of the project is satisfactory except delay in the
implementation due to unforeseen circumstances.

9.0 CONCLUSIONS, LESSONS LEARNED AND RECOMMENDATIONS

9.1 Conclusions

9.1.1 The overall objectives of the project has been substantially achieved. The restoration of
road sections to good condition in three districts through maintenance activities has resulted in
increased traffic, reduction in VOCs and maintenance costs. The rehabilitated project of Semera- Dobi
Junction has improved transport services from the capital city to the two main ports on the East viz.
Djibouti and Assab (now in Eritrea).
 13

9.1.2 The performance on the road maintenance undertaken in the three districts was satisfactory.
The equipment procured is being fully utilized for maintenance activities with 75% availability. The
performance on the construction works of Semera-Dobi Junction was affected due to delays.

9.1.3 The performance of the Contractor, Consultant and Borrower were satisfactory. As a result
the overall implementation of the project was found to be satisfactory with a rating of 2.2 out of 4
(maximum).

9.1.4 Adequate funds have been allocated for the maintenance works of the project components out
of the Road Fund budget. The periodic and routine maintenance schedules prepared for the district road
network and for the completed road section of Semera-Dobi Junction were reviewed and found
adequate to sustain the desired high level of maintenance necessary to protect the investment.

9.1.5 The recalculated EIRR at PCR in the case of maintenance component is between 28.6% and
406.6% as against the EIRR of 0% and 229% at appraisal. The corresponding EIRRs in respect of
Semera-Dobi Junction were 22.7% and 23.2% respectively. A review of the physical performance
confirmed that after usage of the procured equipment over a period of 5 years for the maintenance
works it was noted that these are still in good working condition. Similarly, the constructed project
road between Semera and Dobi junction is in good condition with a smooth riding surface.

9.1.6 In terms of financial performance , it was noted that the ADF had a loan savings of UA 5.144
million, while the GOE incurred a small cost overrun in terms of UA amounting to UA 0.43 million.
This local cost overrun was mainly due to the frequent devaluation of local currency during the period
of implementation.

9.1.7Bank has informed the GOE over the cancellation of the balance amount of UA 5.144 million
available under the ADF loan.

9.2 Lessons Learned

9.2.1 The lessons learned from the project are given hereunder:

• An important lesson learnt out of this project is the execution of works of this magnitude
through Force Account. The Force Account mode of execution will be time consuming, and
at times it may not be cost effective, this is evident from the implementation of this project.

• The Bank should be cautious during appraisals in considering the execution of works through
Force Account. Even though, execution of works through “Force Account” is one of the
Procurement mode in the Bank’s “Rules of Procedure for Procurement of Goods and
Works”, its adoption is to be restricted only to small works and maintenance activities.

• For projects of large magnitude, the Bank to undertake a mid-term review to assess the
progress on the spot, in order to consider restructuring of the project, if necessary.

9.3 Recommendations

9.3.1 Our recommendations are as follows:

• For future projects of large magnitude, the Borrower should ensure that construction works
are executed on contract basis;
 14

• The Borrower should rectify the defects observed during the field inspection of the completed
project.

• For future Bank’s participation in projects of large magnitude (where appreciable slippages
are possible), a mid-term review is preferably undertaken

A matrix of recommendations is presented in Annex 6.

 ANNEX 1

ETHIOPIA
ROAD MAINTENANCE AND REHABILITATION PROJECT
MAP OF THE PROJECT AREA
 ANNE
X 2
ETHIOPIA
ROAD MAINTENANCE AND REHABILITATION PROJECT
IMPLEMENTATION SCHEDULE (APPRAISAL Vs ACTUAL)

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
COMPONENT

PROCURMENT OF MAINTENANCE
EQUIPMENT AND SPARE PARTS

BIDDING PROCESS

BID REPORT/ADF APPROVAL

NEGOTIATIONS / CONTRACT AWARD

EQUIPMENT / SPARE PARTS DELIVERY

ROAD REHABILITATION

SELECTION OF CONSULTANT/APPOINTMENT

PREQUALIFICATION OF CONTRACTORS

DESIGN REVIEW/PREPARATION OF BIDDING

DOCUMENTS

BIDDING/CONTRACT AWARD

MOBILIZATION/COMMENCEMENT

EXECUTION OF THE WORKS

MAINTENANCE PERIOD

CONSULTANCY SERVICE

SOURCE: ERA and ADB MISSION, SEPTEMBER 02 LEGEND: APPRAISAL

ACTUAL
 Annex 3
Page 1 of 4

Ethiopia

Road Maintenance and Rehabilitation Project

Project Completion Report (PCR)
Actual Project Costs (Component and Sourcewise)
(UA million)

ADF GOE Total

Foreign Local Foreign Local Foreign Local
Exchange Cost Total % Exchange Cost Total % Exchange Cost Total %
Road Maintenance
(Equipment and Spares) 16.98 - 16.98 44% - 1.35 1.35 19.7 16.98 1.35 18.33 40.3
Road Rehabilitation
(Semera – Elidar 4.94
20.56 - 20.56 53% - 4.94 4.94 72.2 20.56 25.50 56.1
Const)
Consultancy
(Supervision of Construction) 0.55
1.07 - 1.07 3% - 0.55 0.55 8.1 1.07 1.62 3.6
Total 38.61 - 38.61 100% - 6.84 6.84 100 38.61 6.84 45.45 100
(85%) (15%)
Source: ERA and ADB Mission, September 2002.
 Annex 3
Page 2 of 4
ETHIOPIA

Road Maintenance and Rehabilitation Project

Project Completion Report (PCR)

Categories of Expenditure
(UA million)

As per Appraisal Actual

Foreign Local Foreign Local %
Exchange Cost Total % Exchange Cost Total
A. Road aintenance
New Equipment &
Spares for 18.40 1.29 19.69 39.26 16.98 1.35 18.33 40.3
rehabilitation
Sub Total (A) 1.35
18.40 1.29 19.69 39.26 16.98 18.33 40.3
B.Road Rehabilitation
Construction Works 4.94
24.28 4.92 29.21 58.23 20.56 0.55 25.5 56.1
Consultancy Services
1.07 0.19 1.26 2.51 1.07 1.62 3.6
Sub-Total (B) 25.35 5.12 30.47 21.63 5.49 27.12 59.7
Grand Total 43.75 6.41 50.16 100.0 38.61 6.84 45.45 100.0
Source: ERA and ADB mission, September 2002
 ANNEX 3
Page 3 of 4

ETHIOPIA

ROAD MAINTENANCE AND REHABILITATION PROJECT

PROJECT COMPLETION REPORT

YEARLY DISBURSEMENT BY SOURCE OF FUNDS
(In UA MILLION)

ADF GOE TOTAL

Year As at Appraisal Actual As at Appraisal Actual As at Appraisal Actual
Amount Cum.(%) Amount Cum.(%) Amount Cum.(%) Amount Com.(%) Amount Cum.(%) Amount Cum.(%)
1990 5.61 12.8% - - 0.40 2.6% 6.01 11.9% -
1991 17.67 53.2% 3.04 7.8% 2.24 41.1% 0.14 2.04% 19.91 51.7% 3.18 7.0%
1992 12.90 82.7% 11.35 37.3% 2.24 76.1% 0.83 14.18% 15.14 81.6% 12.18 33.8%
1993 5.06 94.3% 4.33 48.5% 1.02 92.1% 0.08 15.35% 6.08 93.9% 4.41 43.5%
1994 2.51 100.0% 4.08 56.4% 0.51 100.0% 1.39 35.67% 3.02 100.0% 5.47 55.5%
1995 7.09 77.4% 0.82 47.66% 7.91 72.9%
1996 2.45 83.8% 0.89 60.67% 3.34 80.3%
1997 2.24 89.6% 0.85 73.09% 3.09 87.0%
1998 1.03 92.2% 0.42 79.23% 1.45 90.3%
1999 0.72 94.0% 0.38 84.79% 1.10 92.7%
2000 0.64 95.7% 0.36 90.00% 1.00 94.9%
2001 1.60 99.8% 0.66 99.70% 2.26 99.9%
2002 0.04 100.0% 0.02 100.00% 0.06 100.0%
Total 43.75 100% 38.61 100.0% 6.41 100% 6.84 100,0% 50.16 100% 45.45 100.0%

Sources: FFCO & ERA

 Annex 3
Page 4 of 4
Ethiopia
Road Maintenance and Rehabilitation Project
Project Completion Report (PCR)
ADF Disbursement Schedule (Appraisal Vs Actual)

As at Appraisal Actual
Year Amount Cum Amount Cum
(%) (%)
1991 17.67 53.2 3.04 7.8
1990 12.8 - -
1992 12.90 82.7 11.35 37.3
1993 5.06 94.3 48.5
1994 2.51 100.0 4.08 56.4
1995 - 7.09 77.4
1996 - 2.45 83.8
1997 - 2.24 89.6
1998 - 1.03 92.2
1999 - 0.71 94.0
2000 - 0.64 95.7
2001 - 1.60 99.8
2002 - 0.04 100.0
Total 43.75 100.0 38.61 100.0
Un disbursed balance 5.144
Loan 5.144
Savings
 Annex 4
Page 1 of 2
Ethiopia
Road Maintenance and Rehabilitation Project
Project Completion Report (PCR)

Summary of Economic Internal Rate of Returns and Net Present Values

AADT AADT Growth Rates (%) EIRR (%) NPV at 12%(Birr in million)

Length Appraisa PCR Appraisal PCR Appraisal PCR Appraisal PCR (2002)
No. Road Section (km) l (1989) (2002) (1989) (2002) (1989) (2002) (1989)
1 Alemgena District (Paved)
Addis-Ghion-Gibe River 175 431 1137 2.3 4.4 148.5 406.6 24.5 67.9
Addis-Fitche-Dejen 220 342 387 2.3 5.0 81.8 116.4 10.6 15.5
Addis-Ambo 118 541 929 2.3 5.8 68.8 127.4 7.0 18.1
Addis-Borkena River 304 280 726 2.3 6.5 61.3 127.5 8.4 24.4
Nazareth-Melkesa-Asela 96 513 1450 2.3 11.6 229.0 360.3 14.9 66.1
All Paved Roads-Alemgena 2.3 6.7 216.1 143.2
2 Alemgena District (Unpaved) 40.4
Aemgena-Butajira-Sodo 313 154 202 3.3 3.9 69.1 136.3 20.4 1.4
Hossana-Welkite 125 107 324 3.3 4.7 2.8 29.1 - 4.1
Nekempte-Ghimbi 112 158 239 3.3 3.1 30.6 59.6 2.0 2.4
Holeta-Muger 55 239 304 3.3 6.7 38.7 77.9 2.2 1.4
Zeway-Butajira 48 160 200 3.3 2.8 12.0 28.6 - 28.4
All Gravel Roads-Alemgena 3.3 4.3 93.3 71.5
Total Alemgena District 164.2 846.4
3 Jimma District (Paved)
Gibe River-Agaro-Dedessa River 151 240 547 2.3 8.5 135.0 270.8 10.8 14.3
Bedelle-Metu 116 118 207 2.3 9.4 12.8 36.1 0.1 2.2
All Paved Roads-Jimma 2.3 9.0 170.9
4 Jimma District (Unpaved) 2.3 9.0
Agaro-Chira 48 111 126 3.3 7.1 4.7 29.5 - 0.4
Jimma-Mizan-Tepi 226 83 171 3.3 6.1 16.1 52.0 0.5 5.6
Metu-Gori-Gambella 164 81 94 3.3 4.7 62.0 66.3 5.2 6.8
Metu-Alge 51 40 82 3.3 13.3 - 45.4 - 1.3
Arjo-Bedelle-Dedessa River 116 123 232 3.3 12.0 64.9 89.0 5.6 10.2
All Gravel Roads-Jimma 3.3 8.6 60.7 30.6
Total Jimma District 96.1 278.8
Alemgena and Jimma Districts 139.7
Semera-Elidar Rehabilitation Project 5.0 4.5 23.1 21.6 39.1 56.1
Overall Project 135.6 834.61
 Annex 4
Page 2 of 2
Overall Cash Flows and Economic Parameters (Birr in million)

Alemgena
Year Alemgena Jimma and Jimma Semera-Elidar Total
1990 -45.60 -25.50 -71.10 0.00 -71.10
1991 65.94 19.41 85.35 0.00 85.35
1992 76.81 21.83 98.64 0.00 98.64
1993 95.66 32.25 127.91 0.00 127.91
1994 134.95 34.81 169.76 0.00 169.76
1995 122.17 38.49 160.65 -215.46 -54.81
1996 141.27 45.96 187.22 45.82 233.04
1997 159.93 54.02 213.94 38.64 252.58
1998 190.15 71.08 261.23 42.65 303.88
1999 213.09 78.36 291.45 59.25 350.69
2000 224.09 71.90 295.99 53.00 348.99
2001 234.42 85.96 320.38 59.79 59.79
2002 257.26 95.99 353.25 62.41 62.41
2003 65.19 65.19
2004 71.12 71.12
2005 145.70 145.70
EIRR 164.2% 96.1% 139.7% 21.6% 135.6%
NPV (Birr in
million) 715.01 226.19 1125.23 56.61 834.61
 ANNEX 5
Page 1 of 4

ETHIOPIA
ROAD MAINTENANCE AND REHABILITATION PROJECT
PROJECT COMPLETION REPORT

Performance Rating Scale and Evaluation Criteria

1. Rating Scale
X>3 Highly satisfactory
2<X<3 Satisfactory
1<X<2 Unsatisfactory
X<1 Highly unsatisfactory
Where X is the value assigned to a performance variable.

Classification: Implementation performance is considered satisfactory if the average value of X > 2.

2. Evaluation Results

Component Indicators Score Remarks

(1-4)
1. Adherence to time schedule 1 Delay 99 months
2. Adherence to cost schedule 2 Under run cost since project scope
reduced
3. Compliance with covenants 2 50% delay in loan effectiveness
4. Adequacy of monitoring & evaluation and 3 Adequate monitoring but delays in
reporting evaluations
5. Satisfactory Operations (if applicable) 3 VOC decreased, traffic flow closer
to projection.
TOTAL 11

Overall Assessment of Implementation Performance 2.2 Satisfactory

 ANNEX 5
Page 2 of 4

ETHIOPIA
ROAD MAINTENANCE AND REHABILITATION PROJECT
PROJECT COMPLETION REPORT

FORM BP 1

BANK PERFORMANCE

Component Indicators Score Remarks

(1 to 4)
1. At Identification 3 The project was a component of the Road Sector
Development Programme ( RSDP).
-
2. At preparation of project

3. At appraisal 4 The project was of high priority by the GOE.

4. At supervision 3 Most of the problems were resolved in time and

adequate measures taken.
Overall assessment of Bank 3.33
Performance
 ANNEX 5
Page 3 of 4

ETHIOPIA
ROAD MAINTENANCE AND REHABILITATION PROJECT
PROJECT COMPLETION REPORT

FORM PO 1

PROJECT OUTCOME
Score
No. Component Indicators (1 to 4) Remarks
1 Relevance and Achievement of
Objectives*
i) Macro-economic policy 2
ii) Sector Policy 3
iii) Physical (incl. Production) 2
iv) Financial
v) Poverty alleviation & social & gender 3
vi) Environment 3
vii) Private sector development 3
viii) Other (Specify)
2 Institutional Development (ID)
i) Institutional framework incl.
Restructuring 2
ii) Financial and Management Information
Systems including Audit Systems
iii) Transfer of Technology 2
iv) Staffing by qualified persons (incl.
Turnover), training & counter-part staff 3
 Annex 5
.Page 4 of 4

Contd.

3 Sustainability

i) Continued Borrower Commitment 3

ii) Environmental Policy 3

iii) Institutional Framework 3

iv) Technical Viability and Staffing 3

v) Financial viability including cost recovery -

systems

vi) Economic Viability 4

vii) Environmental Viability 3

viii) O&M facilitation (availability of recurrent

funding, foreign exchange, spare parts,
workshop facilities etc.) -

4 Economic Internal Rate of Return 4

TOTAL 46

Overall Assessment of Outcome 2.71

 ANNEX 6

ETHIOPIA
ROAD MAINTENANCE AND REHABILITATION PROJECT
PROJECT COMPLETION REPORT
RECOMMENDATIONS AND FOLLOW-UP MATRIX
Main Findings & Conclusions Lessons Learned Recommendations Follow-up Actions Responsibility
Formulation & Project Rational:

The project was a component of a Road The outcome of the project shows there Donor-co-ordination should be ADF/ GOE
Sector Development(RSDP) programme was an effective donor-co-ordination. encouraged in the transport section.
funded by various donors.
Project Implementation:
1. Execution of Works through Force Bank should not encourage execution of The Bank should be cautious during ADF
Account. works of large magnitude through Force appraisals in considering the Force
Account mode. Bank can consider this Account Mode for the execution of
mode, if the works are small in nature works.
and the Borrower has capacity and
capability to execute them

Cost under run has been realised in the Minimise start-up delays in project ADF/ GOE
2. Cost-under run due to delay in the project, mainly due to reduction in the implementation.
implementation. scope of construction works. Had the
appraised project scope executed,
probably the overall cost would have
exceeded the approved estimated cost
Compliance with Loan Conditions &
Covenants:

1. No final Audit Report The Borrower should always comply The GOE was requested to submit. GOE
with the Loan Agreement
Performance Evaluation & Project The delay in completion was mainly due The appraisal missions to assess the
Outcome: to institutional weakness, inadequate situation in the field during appraisal and ADF/GOE
monitoring & supervision and the field decision taken on the mode of execution
The overall project performance rating conditions. To avoid this, Bank to of works.
was satisfactory. The initial objective consider execution of through contract
was however not fully achieved. basis.
 ANNEX 7
ETHIOPIA
ROAD MAINTENANCE AND REHABILITATION PROJECT
PROJECT COMPLETION REPORT

SOURCES OF INFORMATION

1. An Economic Evaluation of A Road Maintenance Project in Alemgena and Jimma Districts, Main Report, Vol. 1,
Addis Ababa, Ethiopia, March 1989.

2. An Economic Re-Evaluation for the Upgrading of the Mille-Assab Highway, Ethiopian Transport Construction
Authority, January 1989.

3. Annual Report 1996/97 (Ethiopian Fiscal Year 1989), National Bank of Ethiopia, Addis Ababa, Ethiopia,
February 1999.

4. Ethiopia: Focussing Public Expenditures on Poverty Reduction, Vol. 1: Main Report, World Bank Country Office
in Ethiopia, December 2001.

5. Ethiopia: Focussing Public Expenditures on Poverty Reduction, Vol. 2: Appendixes and Statistical Tables, World
Bank Country Office in Ethiopia, December 2001.

6. Monitoring Report of the Third Year 2000/2001, Draft, European Commission, Ethiopian Roads Authority,
December 2001,

7. Quarterly Bulletin, National Bank of Ethiopia, Fiscal Year Series, Second Quarter 2001/2002,Vol. 17, No. 2,
Addis Ababa, Ethiopia.

8. Borrower’s Project Completion Report for the Road Maintenance and Rehabilitation Project, Ethiopian Roads
Authority, Addis Ababa, Ethiopia, August 2002.

9. Semera-Elidar Asphalt Rehabilitation Project, Final Report, Transport Construction Design Enterprise, Addis
Ababa, Ethiopia, October 2001.

9 Appraisal Report on Road Maintenance and Rehabilitation Project, ADF March 1989.

10 Project Files.
 ANNEX 8

ETHIOPIA
ROAD MAINTENANCE AND REHABILITATION PROJECT

BORROWER’S PCR

The Borrower’s PCR is on the project file with ONIN

 ANNEX 9

ETHIOPIA
ROAD MAINTENANCE AND REHABILITATION PROJECT

EXECUTING AGENCY’S COMMENTS ON THE BANK’S PCR

The comments were taken into account and are in the project file with ONIN