Document of
The World Bank
Report No. 13579-HR
STAFF APPRAISAL REPORT
CROATIA
HIGHWAY SECTOR PROJECT
MARCH 15, 1995
Energy, Environment, Transport & Telecommunication DivisionCentral Europe Department
Europe and Central Asia Region
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CURRENCY EQUIVALENT
Unit of currency: Croatian dinar (HrD) up to May 1994,thereafter Kuna (HRK)
US$ 1.00 = 0.87 HRK (equivalent) January 19933.53 HRK (equivalent) July 19936.60 HRK (equivalent) January 19946.07 HRK June 19945.83 HRK July 19945.74 HRK September 1994
ABBREVIATIONS AND ACRONYMS
dwt - Dead-weight TonsEIB - European Investment BankEBRD - European Bank for Reconstruction and DevelopmentERR - Economic Rate of ReturnGDP - Gross Domestic ProductGOC - Government of CroatiaGOR - Government Office for Restructuring and Economics of
State-Owned EnterprisesHC - Croatian Roads AuthorityHDM III - Highway Design Model, Third VersionHRR - Highway Rehabilitation and ResurfacingHZ - Croatian RailwaysICB - International Competitive BiddingLCB - Local Competitive BiddingMM - Man-MonthMMATC - Ministry of Maritime Affairs, Transport and
CommunicationsMOF - Ministry of Financepkm - Passenger-kilometersPMS - Pavement Management SystemProgram - The 1995-97 Road Expenditure and Financing ProgramSOE - Statement of Expendituretkm - Ton-kilometersTYH - Trans-Yugoslav HighwayUNPA - United Nations Protected Areavpd - Vehicles Per Day
FISCAL YEAR
January 1 to December 31
REPUBLIC OF CROATIA
HIGHWAY SECTOR PROJECT
Table of Contents
Chapter Page No.
LOAN AND PROJECTSU MARY ............................ (i) - (iii)
I. THE TRANSPORT SECTORA. Background ................................... 1B. Transport System andDemand ....................... 1C. Croatian Railways ........ ...................... 5D. Organization, Investments and Transport Policy ............. 6E. Previous Bank Projects ............................ 7
II. THE HIGHWAY SECTORA. Road Network ............................... .9B . T raffic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10C. Road TransportIndustry ........................... 10D. Highway Administration ........................... 12E. Planning and Engineering .......................... 12F. Financing and Expenditures ......................... 13G . Construction .................................. 14H . M aintenance .................................. 151. Human Resources ............................... 16J. Traffic Safety ............ ...................... 17
Ill. THE PROJECTA. Project Objectives ............................... 18B. Project Description .............................. 18C . Project Cost .................................. 23D. Project Financing Plan ............................ 23E. Status of Project Preparation ........................ 25F. Implementation and Monitoring ....................... 25G . Procurement .................................. 25H . Disbursements ................................. 291. Accounting and Auditing ........................... 30J. Environmental Considerations ........................ 30
IV. ECONOMIC EVALUATIONA . G eneral . . . ... . .. . . .. . . . . .. . .. . . . . .. . . . . .. . .. 31B. New Construction ............................... 31C. Rehabilitation and Pavement Strengthening ................ 32D. Conclusion and Risks ............................. 32
V. AGREEMENTS REACHED AND RECOMMENDATIONS ....... 33
ANNEXES
1.1 Previous Projects in the Transport Sector . . . . . . . . . . . . . . . . . . . . 352.1 M otor Vehicles by Type .............................. 382.2 Highway Design Standards ............................. 393.1 Road Expenditure Program ............................. 403.2 Guidelines for the Level of Economic Analysis Needed
for Different RoadW orks ............................. 433.3 Pavement Management System .......................... 443.4 Tentative List of Highway Maintenance Equipment . . . . . . . . . . . . . . 513.5 Draft Terms of Reference for Rijeka Port Study . . . . . . . . . . . . . . . 523.6 Draft Terms of Reference for Consultant Assistance for HZ . . . . . . . . 643.7 Technical Assistance for a Road Safety Study . . . . . . . . . . . . . . . . . 693.8 Project Components and Estimated Cost . . . . . . . . . . . . . . . . . . . . . 743.9 Summary of HC's 1995 Highway Rehabilitation and
Resurfacing Program ................................ 753.10 Monitoring Indicators for Project Activities . . . . . . . . . . . . . . . . . . . 763.11 Implementation Plan ................................ 773.12 Disbursement Forecast ............................... 88
CHART Organization of Croatian Roads Authority
MAP IBRD 26152
This report was prepared on the basis of an appraisal mission to Croatia in June 1994. The missioncomprised Messrs. Enn Vasur (Task Manager, Transport Economist, EC2ET), William Hayden(Financial Analyst, EC2ET), Enrique Pinilla (Engineer, LA21E), Kanthan Shankar(Environmentalist, EMTEN), Chris Robson (Road Safety Expert, Consultant). The Peer Reviewersare Messrs. Jacques Yenny (Transport Economist, ECIN), and Jeremy Lane (Highway Engineer,ECIN). The Division Chief is Mr. Hans J. Apitz (EC2ET) and the Department Director Mr.Kemal Dervis (EC2DR).
CROATIA
HIGHWAY SECTOR PROJECT
Loan and Project Summary
Borrower: Republic of Croatia
Beneficiary: Ministry of Maritime Affairs, Transport and Communications, andCroatian Roads Authority (HC)
Amount: US$80 Million equivalent
Terms: 17 years maturity including a grace period of 4 years at the Bank'sstandard variable interest rate
Project Objectives: The main objective of the project is to support and speed up themodernization and transformation of the transport sector with specialemphasis on the main road network and Croatian Road Authority (HC).In particular the project would: (a) assist GOC in its investmentprogram for the roads sector with the objective of reducing thedeterioration of the network and completing the construction of a fewwell justified sections; (b) support the development of modemmanagement tools in HC; (c) improve the road safety situation; (d)decrease road vehicle emissions; (e) maintain the present level of roaduser charges; (f) support the restructuring of Croatian Railways (HZ)leading to reduced budget transfers; and (g) contribute to theelaboration of a master plan and associated investment plan for the portof Rijeka.
Description: (a) Policy and Institutions
The Government and HC will adopt policies and implement measuresto:
(i) maintain the road vehicle fuel tax on at least its present level inreal terms;
(ii) reduce the Governments's budgetary support to HZ;(iii) design and implement a road traffic safety program;(iv) reduce lead content in vehicle emissions and ensure wide
availability of unleaded fuel at a price equal to or less than thatof leaded gasoline; and
(v) continue the separation of civil works contractors from HC and
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pursue further implementation of the Pavement ManagementSystem (PMS).
(b) Investments
(i) a three-year time slice (1995-97) of HC's road expenditureprogram directed at repairing war damage, reducing thedeterioration of the network and making investments to completeprojects that accommodate changes in transport demand;
(ii) technical assistance and studies for:
* HZ restructuring* traffic safety* implementation of PMS* Rijeka port master plan
(iii) training for HC technical personnel in modernizing roadmaintenance techniques, including pavement and bridgemanagement systems.
Benefits: The project will: (i) reduce vehicle operating costs; (ii) reduce futurecostly reconstruction by increasing road maintenance; (iii) reduce roadaccidents and vehicle emissions; (iv) reduce Government subsidies toHZ; and (v) contribute to HZ restructuring and development of Rijekaport.
Risks: The main project risks are that hostilities would resume, or that theGOC would not have sufficient counterpart funds or recurrent budgetsto implement the project. Although serious tensions still exist inCroatia and in the region, however, the situation is believed to besufficiently stable to begin an assistance program, with good chances ofsuccess. The project has been limited to territories which are under theGovernment's control, and even if hostilities should resume, it isdoubtful they would extend so far as to prevent project implementation.In addition, the sector investment loan format, including annual reviewsof the Program, and the experience of the borrower, provide theflexibility to adjust the size, location and composition of the Programaccording to changing economic and political circumstances. Projectrisks are considered to be acceptable given the exceptional conditions inCroatia.
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Estimated Costs and Financing Plan'(US$ Million)
Estimated Cost Local Foreign Total
HC Highway Program 308.95 221.47 530.42
Technical Assistance and studies 0.29 1.20 1.49for HZ, Rijeka Port and Safety
Price Contingencies 20.87 15.03 35.90
Total Cost 330.11 237.70 567.81
Financing Plan
Government of Croatia 330.11 98.50 428.61
IBRD Emergency Loan - 11.70 11.70
IBRD Proposed Loan 80.00 80.00
EBRD - 47.50 47.50
330.11 237.70 567.81
Estimated Disbursements:
IBRD FY 1996 1997 1998 199 2M0 2001
Annual (US$ Million) 14.4 22.4 19.2 16.0 6.4 1.6
Cumulative (US$ Million) 14.4 36.8 56.0 72.0 78 .4 80.0
Economic Rate of Return: Because of the high proportion of rehabilitation works a weightedaverage ERR of about 40% is expected.
Staff Appraisal Report: Report No. 13579 HR
Map No. IBRD 26152
1/ Including contingencies
I. THE TRANSPORT SECTOR
A. Background
1.1 After the war in late 1991, Croatia emerged with about one-third of its pre-warterritory outside its control, including about 25% of its agricultural land. These areas havebeen designated as United Nations Protected Areas (UNPAs) since January, 1992. Over thelast two years, after the war had ceased in Croatia, limited hostilities continued to take placefrom time to time around these areas. However, the cease-fire of March 1994, reinforced bythe withdrawal of personnel and weapons, appears to be holding well. An agreement wasalso reached (March 1994) between the republics of Croatia and Bosnia-Herzegovina on afederation within Bosnia-Herzegovina as well as a preliminary agreement on a confederalarrangement between the two republics. The Government has persevered in its efforts ateconomic reintegration within Croatia, and, with the assistance of international negotiators,has succeeded in signing the second in a series of agreements to that end in December, 1994.
1.2 The war in Croatia severely disrupted the economy and cost thousands of lives, withmany more missing and wounded. Physical infrastructure and buildings sufferedconsiderable damage, estimated by the Government at about US$ 20 billion. For example,virtually every major bridge along the Sava river was destroyed; houses, churches, schoolsand hospitals were particularly hard hit; and looting and theft of machinery and equipment,and the placing of land mines on agricultural land increased the level of destruction anddisruption. The war caused the displacement of some 350,000 people from within Croatia,while more than 360,000 Bosnian refugees settled in Croatia. Although many families havenow returned to their homes, the remaining displaced persons and refugees continue toconstitute a heavy financial burden for the Government.
1.3 Prior to the war, Croatia was, after Slovenia, the second richest republic of formerYugoslavia with a per capita income of about US$3,350 equivalent. It enjoys a goodgeographical location -- close to Italy and Hungary, a considerable potential for tourismalong the Adriatic coast, and a well-educated workforce. Croatia has a well-developed, openeconomy, with manufacturing (electrical machinery, textiles, foodstuffs and chemicals)accounting for about 30% of GDP, services for about 60%, and the total of imports andexports for about 50% of GDP. The disruption of inter-republic trade resulting from thebreak-up of former Yugoslavia, and the war impact on production and tourism activitiesbrought about a 25% drop in output, with per capita income falling to about US$2,500. Themost affected sectors were those which suffered either from the disruption of trade withformer Yugoslavia (e.g., shipbuilding, metalwork, and chemicals) or from the war-relateddestruction and traffic disruption (tourism, construction, transportation). The decline inproduction was accompanied by a significant reduction in the level of employment, by about25% over the whole period, and by the near-doubling of the unemployment rate, from about9% at end-1990 to about 18% in early 1994. In addition, Croatia suffered from the loss ofall foreign exchange reserves that were kept by the National Bank of Yugoslavia, and is not
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expected to have ready access to foreign financing due to the outstanding dispute on theallocation of part of former Yugoslavia's foreign debt.
1.4 In addition to the problems related to the war and the break-up of the formerYugoslavia, Croatia also had to tackle simultaneously the problems of a transition economy.Poorly run enterprises, which were formerly socially owned, accounted for the bulk ofindustrial and agricultural output. Losses of the enterprise sector were some 7-8% of GDPin 1993. Pressures on fiscal accounts, as well as the financing by the banking system of thelosses of the more inefficient public and formerly socially-owned enterprises, fuelled inflationwhich reached an annual rate of over 1400% in 1993. Croatia has been addressing thesechallenges courageously, in two distinct phases. During most of 1992 and 1993, itendeavored to maintain its external competitiveness while trying to avoid falling intohyperinflation. Building on initial success, the authorities launched a comprehensivestabilization package in early October 1993 that has delivered impressive results so far.After an initial surge due to the devaluation of the currency, inflation was curbed in onemonth, and has remained slightly negative between November 1993 and June 1994 (minus4% in cumulative) The negative real effects of the stabilization have been quite limited sofar: a moderate decline of industrial production in January-February 1994 was offset byincreases in April-May and GDP is projected to grown by 2-3% in 1994, after threeconsecutive years of decline. The Croatian authorities are aware that, in spite of these earlysuccesses, sustaining stabilization and resuming growth will now require more aggressivemeasures in support of the systemic transformation of the economy, i.e., enterprise and bankreform.
1.5 The Republic of Croatia became a member of the International Monetary Fund inJanuary and the World Bank in February 1993. It became a member of the European Bankfor Reconstruction and Development (EBRD) in April, 1993. The Bank approved anEmergency Reconstruction Project as its first operation in June 1994. The proposed projectprovides an important input into the Government's reconstruction program, by assisting inhigh priority reconstruction activities and institutional reforms in the transport sector whichare needed to restore the basic conditions for renewed economic growth. A loan in supportof the Government's enterprise and banking reform efforts is under preparation.
B. Transport System and Demand
1.6 Transport System: Croatia normally provides an important transport link betweenWestern and Southeastern Europe and on to the Middle East, but this has been disrupted bythe war. Croatia has three main transport corridors (see Map, IBRD No. 26152). The mainnorthwest-southeast corridor runs through the Sava river valley and is served by the Trans-Yugoslav Highway (TYH) and the main trunk railway, both of which are currently blockedsince sections lie within areas not accessible to the Government. A second corridor, also
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served by main roads and the railway, links the main port of Rijeka and the Dalmatian Coastwith Zagreb and Hungary. This corridor has taken on increased importance due to theblockage of parallel routes through Bosnia and the reorientation of central European traffic tothe West. The third corridor serves the 1,700 km Adriatic coast which is the center oftourism.
1.7 The Croatian transport system, including what is now situated in the UNPAscomprises: (a) a 27,000 km road network and around 700,000 domestic road vehicles(discussed in Chapter II); (b) a 2,664 km railway network (described below); (c) the mainsea port of Rijeka, four secondary ports on the Adriatic, and numerous river ports on the 918km of the Sava and Drava rivers which are navigable; (d) ocean-going vessels totaling 5.9million dead-weight tons (dwt); (e) river boats, barges and tankers with a capacity of 90,000dwt; and (f) seven international airports and an international airline.
1.8 Traffic: Croatia was more transport-intensive than Western Europe prior toindependence, although less so than other socialist countries in the region. Croatia generatedabout 0.6 ton-kilometers (tkm) of freight transport per US$ of GDP in 1989, compared with0.3 in France, 0.4 in West Germany, 0.5 in the Netherlands, 1.7 in Hungary and 2.1 inPoland, at about the same time. Croatia, like other former socialist countries in the region,is expected to become less transport intensive in the future, and to move an increasingproportion of goods by road. This is because: (a) the manufactured goods and servicesectors, for which the speed and reliability offered by trucking is important, is likely togrow; (b) competition from a deregulated trucking industry will increase; and (c) economicactivity will increasingly decentralize, which requires the door-to-door service which canmore easily be provided by road transport.
1.9 Recent traffic developments are as follows:
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Table 1.1 Goods and Passenger Transportation, 1960-1993
1960 1970 1980 1990 1991 1992 1993
Freight
Road.' (tons, thousands) 3,549 12,991 22,398 15,144 9,058 7,247 6,118(tkm, millions) 329 1,367 2,630 3,060 1,837 1,545 1,345
Rail (tons, thousands) 32,765 38,300 43,181 35,796 21,479 9,585 12,002(tkm, millions) 4,404 5,676 7,561 6,535 3,617 1,770 1,664
River (tons, thousands) 447 2,449 5,748 2,680 2,620 501 280(tkm, millions) 247 803 827 470 396 52 19
Total (tons, thousands) 36,761 53,740 71,057 53,620 33,157 17,333 18,400(tkm, millions) 4,980 7,846 11,018 10,065 5,850 3,367 3,028
Passengers
Road(1) (passengers, 000) 29,006 160,115 146,957 97,140 80,177 79,268(pkm, millions) 779 7,077 7,151 6,297 5,276 4,761
Rail (passengers, 000) 62,613 44,596 40,248 21,790 17,878 19,888(pkm, millions) 2,965 3,619 3,429 1,503 981 1,033
Total (passengers, 000) 91,619 204,711 187,205 118,930 98,055 99,156(pkm, millions) 3,744 10,696 10,580 5,963 4,712 4,449
Public Transport Enterprises only
Source: Statistical Surveys of Croatia, various years.
1.10 Freight traffic (measured in ton-kilometers, tkm) grew 3.6% p.a. from 1960 to 1980,and then declined slightly between 1980 and 1990 as Croatia began to restructure itseconomy. Passenger traffic (measured in passenger-kilometers, pkm) grew by 5.4% p.a.from 1960 to 1980, and then remained constant between 1980 and 1990. The rail share offreight traffic, not including own-account or private road transport which are significant,declined from 89% to 65%, and passenger traffic from 79% to 32%, between 1960 and
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1990. Traffic fell sharply and transport patterns were reoriented as a result of the war,which began in mid-1991. Road traffic has fallen about 40% and rail traffic by more than70% from their pre-war levels in 1990. The main northwest-southeast corridor, served bythe TYH and main trunk line railway, are presently blocked. East-west transit traffic hasincreased, and concentrated on the Zagreb-Rijeka road and rail line due to the destruction ofbridges and subsequent closure of parallel routes through Bosnia and Herzegovina and theUNPAs. Many ports have been damaged and traffic has decreased by about 75 %. Airtraffic was disrupted by the closure of airports and the withdrawal of Yugoslav Airlines.
C. Croatian Railways
1.11 Croatian Railways (HZ), as an entity in its present form, was founded when Croatiabecame independent in 1991. The 2,664 km railway network includes 248 km which aredouble track, and 910 km which are electrified, including 784 km connected to the25kV/50 hz system and 126 km to the 3kV/DC system. The major part of the network andstations are connected to a signalling system which functions well. At present 40% of thesystem is operating normally, a further 25% is damaged but in operation and the remaining35% is in areas not currently accessible by the Government. The traction system includes315 diesel and 147 electric locomotives (56% are 20 years old or less), and 35 electric and79 diesel multiple units. Rolling stock includes 13,418 wagons (74% are 25 years old orless) and 824 passenger cars (72% are 25 years old or less). As a result of war damage andlack of spare parts only 60% of traction equipment and 30% of wagons are presentlyavailable for operations.
1.12 Railway traffic is not likely to recover to pre-war levels, even if all lines arereopened, due to the restructuring of the economy, the permanent diversion of some transittraffic, and the probable decrease of mining and heavy industry activity. The Governmentbudget supported HZ with $130 million in operating subsidies and capital grants in 1993.Even with this support, HZ incurred a net decapitalization of about $15 million. Projectedoperating subsidies and capital grants for 1994 of US$154 million amount to 1.6% ofCroatia's GDP, a level of support which does not appear sustainable. HZ needs to beradically downsized and restructured to reduce its losses and enable it to survive in a marketeconomy without major Government support.
1.13 Following participation in the Railway Roundtable sponsored by the Bank in 1991,the GOC and HZ have become increasingly cognizant of the likely size of future deficits.The Ministry of Maritime Affairs, Transport and Communications (MMATC) and HZ havetaken some steps to address the railways' financial problems, including reducing railway staffby 7,000 (25% of its staff), and reorganized its maintenance and manufacturing units intoseparate enterprises. In 1993, the Government Office for Restructuring and Economics ofState-Owned Enterprises (GOR) was assigned responsibility for restructuring HZ in additionto 9 other major state enterprises. In November 1993, GOR issued its report on HZ,proposing that a restructuring should be undertaken in three phases:
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Phase I Preparation of new legal framework.
Phase II Increase in equity, privatization of subsidiaries, reduction inworkforce and reconstruction of war damaged infrastructure.
Phase III Transformation of HZ into a joint stock company eventuallyprivatized with infrastructure remaining under state ownership.
The first phase was implemented in July 1994 with the enactment of the law on CroatiaRailways. Phase II is scheduled to commence in 1994 and take 10 years, with phase IIIcommencing in the year 2000. No details are presently available on Phases II and III. Asan interim measure to reduce the current level of subsidies for HZ, the Bank has obtainedagreement with the Government during negotiations regarding the maximum level ofgovernment subsidies to HZ (para. 3.9).
D. Organization, Investments and Transport Policy
1.14 Organization The Yugoslav economy, including the transport sector, was organizedas a self-management system until shortly before Croatia's independence. Under this system,economic decision-making was achieved through a consensus of managers, workers, and thesocial-political community, primarily through intra- and inter-firm agreements on long-rangecooperation (self-management agreements). These agreements were enforced through acomplex system of laws and social checks and balances. This resulted in a "soft budgetconstraint", where firms did not have sufficient incentive to reduce costs, and did not investefficiently.
1.15 Croatia has made good progress on enterprise restructuring. Clear state ownershiphas been established for most enterprises, workers' councils have been eliminated, and a welldesigned privatization program has begun. However, implementation has been slowedbecause the GOC has to do too much simultaneously, i.e. address territorial issues, care forrefugees, take on tasks previously done by the former Yugoslavia, and implement marketreforms. The GOC initiated a comprehensive privatization and restructuring program withthe 1991 Act on Transformation of Social Enterprises. This Act provides for the eventualprivatization of social enterprises, including giving 30% of their value to certain categories ofcitizens, although it did not cover all economic activities (e.g. the important banking sector).The project includes actions to reduce the GOC's financial support for the railways, and astudy to support their restructuring. (para. 1.13).
1.16 Investments Prior to independence, most transport investments were made by thesocial sector. Their level varied considerably because of the need to complete the basictransport network in the 1960s and 1970s, ex-Yugoslavia's relatively easy access to credit inthe 1970s and early 1980s, an economic slowdown in the late 1980s, and the disruptionscaused by the war since 1990. At present, the situation is being consolidated and a medium
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term investment planning framework is emerging. This process is rather advanced in theroads subsector; the Croatian Roads Authority (HC) has a three year investment plan(para 3.4) which the present project supports. For the railways the situation is much lessclear because of the overall unclear and unsettled financial situation (para 1.11-13). For theaviation and ports subsectors, the attention up till now has been on repairing the most urgentwar damages. For the major port, Rijeka, the project includes a component aimed atproposing an administrative/managerial structure and developing a master plan for itsdevelopment (para. 3.10(a)).
1.17 War Damage: It is difficult to estimate the extent of war damage in the transportsector because most damage is in inaccessible areas. The 1995-97 road expenditure programallocates about US$30 million for direct war damage repair and replacement. In addition, animportant part of the pavement resurfacing and rehabilitation component, which is the biggestone in the program, is attributable to the destruction caused by the war. HZ has alreadymade temporary repairs to the railway, and estimates that it will need to spend an additionalUS$32 million to repair damage in accessible territories. MMATC estimates it needs tospend US$20-30 million to replace the most urgently needed air traffic control equipment; itis proposed that this be financed by the EBRD. The Bank has lent US$128 million for anEmergency Reconstruction Project, including US$12 million for roads and US$10 million forrailways.
1.18 Sector Strategy: Taking financial constraints and the need for institutional reformsinto account, the GOC and Bank have discussed the following strategy for the transportsector during the next several years: (a) repair damaged transport infrastructure over a periodof about five years, including repairing the most important tourist airports; (b) defer mostpurchases of railway rolling stock, or vehicles for road transport enterprises owned by GOC,until traffic levels recover; (c) reduce the road maintenance backlog; (d) be highly selectivewith other road investments due to the recent decline in traffic and fiscal constraints; (e)reduce the railway subsidy and restructure HZ to reduce its losses and increase itscommercial orientation; and (f) privatize truck operators and separate road maintenancecontractors from HC. MMATC and Ministry of Finance (MOF) have agreed in principalwith these recommendations. In addition, for the ports, primarily Rijeka, there is a strongawareness that installations have to be made more efficient and that an overall developmentconcept has to be formulated.
E. Previous Bank Projects
1.19 Although the Bank's dialogue with Croatia started in early 1992, it did notimmediately translate into lending operations. Initially, our restraint was due to thecontinuing limited hostilities within Croatia; the Bank continued to be cautious during 1993and early 1994 because of the situation in the neighboring Republic of Bosnia andHerzegovina. The major breakthroughs of March 1994 allowed the Bank to adopt a moreactive cooperation stance. On June 22, 1994, the Board approved the first loan to the
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Republic of Croatia (Emergency Reconstruction Loan, 3760-HR). In addition to theEmergency Reconstruction Project, the Bank has made 12 loans for transport to the formerYugoslavia totalling US$711.5 million equivalent (Annex 1) which contained componentsbenefiting Croatia. These included eight loans to the highway subsector, three loans for therailway subsector, and one loan for an pipeline project.
1.20 The main emphasis in highway lending to Yugoslavia was on improvements to keylinks in the primary road network. The First and Second (Highway) Projects which financedthe completion of the coastal section of the Adriatic Highway; and improvement of roadsconnecting the Zagreb-Belgrade highway with the Adriatic highway, were completed withinthe original cost estimates and agreed time schedules. The Completion Report for the NinthHighway Project indicated that it substantially achieved its objectives. The CompletionReport for the Eleventh Highway Project pointed out that it suffered delays inimplementation because of shortages of local funds due to a severe recession. The First andSecond Highway Sector Projects were based on a comprehensive sector lending approach,including a deeper involvement in the important area of road maintenance. They proceededsatisfactorily in Croatia. The former Yugoslavia and the Bank also prepared the ThirdHighway Sector Project, including US$75.0 million for Croatia, which included follow-upinitiatives on road maintenance, financing and investment planning. This project was lapsedprior to effectiveness following the breakup of the former Yugoslavia.
1.21 The Project Performance Audit Report for the Fourth Railway Project (Loan 1026-YU) noted that the project was successfully completed, albeit with some delays and local costoverruns, that it was economically justified, and that it succeeded in making operationalimprovements. This project, and its successors, also succeeded in introducing cost-benefitanalysis as the basis for investment selection. The railway projects were only partlysuccessful in improving railway financial performance because of an underlying differenceof view between the Government of the former Yugoslavia and the Bank about the functionof the railways (the Government of former Yugoslavia viewed the railways as servingimportant non-commercial functions which required continued subsidization). The Bank alsoprepared the Seventh Railway Project, including US$32.5 million for Croatia, which includedfurther initiatives in the areas of finance, coordination of investments, and thecomputerization of rail operations. This project was also lapsed prior to effectiveness due tothe breakup of Yugoslavia. Project Completion Reports are under preparation for the Firstand Second Highway Sector Projects as well as for the Sixth Railway Project.
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H. THE HIGHWAY SECTOR
A. Road Network
2.1. The Croatian public road network comprises about 26,732 km which areadministratively classified as main, regional or local roads (Table 2.1). Of these, 21,541 kmare paved and 5,191 km are gravel surfaced. The density of the road network is about 48km per 100 square kilometers, compared to an average of about 77 km per 100 squarekilometers in Western Europe. Presently, about 5,600 km of roads are not underGovernment control or accessible. Paved road standards vary from high quality four-lanetoll facilities with grade separated interchanges to narrow country lanes. All classified roadsare administered by HC.
Table 2.1 The Road Network (km) in 19931
Road Category Paved Gravel Earth Total2
1. MAIN ROADS
Motorways 342 - - 342
Highways 4,327 76 - 4,403
Sub-total 4,669 76 - 4,745 (3,493)
2. REGIONAL ROADS 6,767 815 - 7,582 (5,127)
3. LOCAL ROADS 10,105 4,300 - 14,405 (12,512)
TOTAL 21,541 5,191 - 26,732 (21,132)
2.2. The main road network carries around 75% of road traffic. The GOC desires torehabilitate and upgrade these roads to a level consistent with the network of countries in theEuropean Community. While the GOC would like to improve a number of roads, it giveshigh priority to the Zagreb-Karlovac-Rijeka highway which is a part of the Trans-EuropeanHighway network.
1/ Excludes urban and some 21,000 km of unclassified roads.
2/ Amounts within brackets indicate road lengths under Government control.
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B. Traffic
2.3. The road vehicle fleet grew at a rapid 10.1% p.a. from 1972 to 1980, and a modest2.6% p.a. during the 1980s, to 896,800 vehicles in 1990 (Annex 2. 1). The passenger carfleet totaled 795,400 units in 1990, or 182 passengers cars per 1,000 persons which is ahigher motorization rate than most Eastern European countries, but lower than WesternEurope. The number of passenger cars has thereafter fallen by close to 20%. The averagetraffic levels on main roads were about 4,500 vehicles per day (vpd) in 1990, but fell toabout 3000 vpd in 1993, ranging from 1,800 vpd to 15,800 vpd. HC estimates that therewere about 4,000 km of roads with traffic levels exceeding 3,000 vpd, and that the averagetraffic level on regional roads was about 1,600 vpd, ranging from about 500 vpd to over7,000 vpd. Road traffic has fallen overall by around 30% since the beginning of the war inmid-1991 but with some roads, e.g. Zagreb-Rijeka showing substantial increases, and trafficpatterns are re-oriented (para. 1. 10). Traffic has considerably decreased on the AdriaticHighway, especially on its section leading from Zadar to Sibenik, owing to the warcircumstances, while the traffic on the roads running toward Bosnia and Herzegovina relatesonly to humanitarian aid activities. The roads running through the UNPAs are still closed totraffic. Traffic is expected to eventually recover to pre-war levels, but only over a period ofseveral years in parallel with the expected economic recovery.
2.4. HC carries out regular detailed origin-destination traffic surveys on main roads, andmonitors traffic volumes on main and regional roads at 238 locations with automatic andmanual traffic counts. These provide detailed information on annual and hourly fluctuationsin traffic volumes. In normal years, there is a significant seasonal traffic variation due totourism, with traffic flows on roads along the Adriatic Coast increasing from 4,000 vpd inthe winter to 12,000 vpd during the summer.
C. Road Transport Industry
2.5. There were three types of trucking in the former Yugoslavia, which partly remain inCroatia: social sector enterprises, own-account trucking (mostly social sector), and privatesector operators. Public social sector firms specialized in long distance and internationaltraffic, competing with the railways. Own-account and private operators until recentlyspecialized in local transport. Trucking is increasingly the major freight transport mode,with the private sector showing strong growth.
2.6. The road freight industry was heavily regulated until about 1989, through variouslaws which limited the participation of the private sector (e.g. barriers to entry, prohibitionsagainst international transport, more favorable tax rates and customs duties for social sectorfirms). These formal regulations were reinforced by various Government agencies andassociations and informal arrangements which served to divide the market, and by accountingand managerial practices which permitted social sector firms to operate inefficiently and
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sustain losses over the long term. However, the regulations were unevenly enforced, whichcoupled with a relatively dynamic private sector, resulted in the private sector increasing itsshare of the market (measured in tkm) from 13% in 1970 to 28% in 1988. The regulatoryframework also resulted in the inefficient growth of own account fleets, which accounted for21% of the market at that time. Vehicle utilization was also inefficient, e.g., trucks wereestimated to average only 50,000 km in 1990:
Table 2.2: Efficiency Indicators for the Trucking Industry in 1990
Average Truck Average Length Vehicle-Kilometers Vehicles
Capacity of Haul p.a. (000) in Use
(tons) (km) (%)
Social Sector
Commercial 14 160 48 62Own Account 6 32 29 46
Private Sector
Commercial 8 29 49 70Own Account 4 8 11 n.a.
Source: Yearbook of CroatiaTransport and Communications Bulletin
2.7. The bus industry was organized in a similar way as trucking, and heavily regulatedprior to independence. Intercity buses carried 31.7 billion pkm in 1987 (about three times asmuch as railways) with an average length of haul of 31 km (i.e., mostly suburban) at an 83%load factor which is high. In 1990, 5,836 buses were registered, of which 2,477 participatedin public transportation. Private buses are now estimated to account for 10% of the fleet.
2.8. Internal trucking is now essentially deregulated, with vehicles only required to havean annual technical inspection. International trucks and buses are subject to a system ofbilateral and multilateral permits which have been partially liberalized in recent years.Croatia prohibits trucks or buses older than ten years to participate in international transport.Intercity bus transport has been partly deregulated since independence, while urban busservices remain regulated by the respective municipalities. Maximum intercity bus tariffs areset by MMATC, which also limits the number of buses working in some intercity corridors.
2.9. The main difficulties facing the road transport industry are: (a) implementing theprivatization program (para. 1.10); and (b) operators' lack of familiarity with operating ascommercial enterprises. Only one company (Casina-Trans, 2,000 employees) has been
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privatized to date. Privatization is difficult because the GOC valued vehicles and other assetsat their replacement cost less depreciation, whereas their earning potential is much less atpresent due to the decline in traffic. The question of road transport privatization will beaddressed through the Bank's work in support of enterprise reform and privatization.
D. Highway Administration
2. 10. HC was established in 1991 as the successor of the Self Managing Community ofInterest for Roads. It is in charge of planning, constructing and maintaining all publicinterurban roads in Croatia. Since July 1, 1994 most of HC financing resources come fromthe Government's centralized budget. HC is governed by a managing board of ninemembers, of which six are appointed by the Government and three are selected by HC. HCis headed by a manager and his deputies, all appointed by the Government. TheMaintenance Department is the largest of the three departments in which HC is organized.The Department is responsible for road maintenance with the actual work carried out by 17district offices covering the entire road network. The other two departments deal withplanning and engineering, and administrative functions. The organization of HC is shown inChart 1.
2.11. The previous road organization carried out not only road maintenance but also roadconstruction, employing about 5,050 workers. HC is in the process of separating roadconstruction activities by establishing Government-owned construction companies with theobjective of eventually privatizing them. So far, four construction companies have beenestablished and the remaining one is expected to be established in the near future. As aresult, HC's manpower and equipment have been reduced. Presently, HC employs about3,750 persons, of which some 3,250 are in the Maintenance Department. HC's headquartersin Zagreb is staffed with about 500 persons, mainly engineers and technicians and has amanagement role focusing on policy, budget and technical issues. Furthermore, HC isimplementing its budget as much as possible through contracting; all new construction worksare contracted as well as most of the highway resurfacing and rehabilitation, and about 30%of the routine maintenance activities.
E. Planning and Engineering
2.12. HC is responsible for planning and programming of the road network. Theinstitutional framework and procedures are generally adequate for formulating rational andefficient road development plans. HC currently prepares annual and multi-annual roadexpenditure programs for submission to MMATC and MOF. Feasibility, environmental anddetailed studies for road works are commissioned from local highway institutes andconsulting firms. Most of these organizations are connected to the major universities. Thequality of these studies has improved over the years, most recently with the preparation of
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new feasibility study guidelines in connection with the lapsed Third Highway Sector Project.Environmental studies and engineering design standards (Annex 2.2) generally followEuropean norms, and are adequate. GOC intends to harmonize its vehicle standards with theEuropean Union, and to adopt an 11.5 ton axle load limit. Work on drafting the necessaryregulations as well as defining the administrative and technical implications is underway inMMATC.
2.13. Further improvement in the utilization of HC's planning tools in its decision makingprocess is needed, particularly given the emphasis on highway rehabilitation, resurfacing andmaintenance and current budgetary constraints. To improve cost effective maintenanceplanning, HC requires a "systems" approach by means of which reliable data are collectedperiodically and evaluations are performed using a decision-making scheme that, among otherfactors, considers road performance, user costs and budget constraints. HC would beassisted under the project to improve the utilization of the Pavement Management System(PMS), as discussed below (Para 2.22).
F. Financing and Expenditures
2.14. HC has derived its revenues primarily from a sales tax on road fuel, as well as othertaxes and charges on road users. In 1992, HC revenues came from the fuel tax, vehicleregistration fees, tolls, foreign vehicle taxes and other sources. Most of these revenues wereearmarked for HC, but Parliament set the level of the fuel tax and other road taxes at thesame time it approved the annual road expenditure program. De facto, this was equivalent toan annual budgeting process. On July 1, 1994, the earmarking of the fuel tax for HC wasabolished and substituted by direct budget allocations.
2.15. Vehicle fuel price levels and structures are:
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Table 2.3: Structure of the Retail Price of Fuel, June 1993(US$ Equivalent Per Liter)
MB98 D-2Gasoline % Diesel %
Tax Fuel Tax
Refinery Price including 0.35 0.28(including sales costs)Road User Tax 0.13 0.13Other Taxes 0.25 0.18Total Taxes 0.38 0.31RETAIL PRICE 0.73 52 0.59 51
The amount of fuel tax collected from road users is about two times higher than what isrequired for a reasonable road expenditure program and can thus be considered to cover theeconomic cost of road use. Agreement has been reached that Government will maintain atleast this level in real terms (para. 5. 1(b)).
2.16. The present level of road expenditure is acceptable given the severe budgetaryconstraints which the GOC now faces (paras. 1.2, 1.4). The 1995-97 Road ExpenditureProgram (para. 3.4-9) that the project supports, foresees average annual expenditures ofabout $200 million with a strong increase foreseen for maintenance related items. Given thepossibility of economic developments, which might influence the Program, its size andcomposition will be adjusted annually, in consultation with the Bank, to adopt to changingcircumstances, as discussed below.
G. Construction
2.17. Building and construction are an important industry in Croatia. In 1992, the industryemployed 76,200 persons distributed in about 1970 companies. Recently, the number ofnewly established small private businesses has increased significantly due to the privatizationprocess. The output capacity of the industry is estimated at about US$3,000 million peryear, of which some 10% is taken by the highway sector. However, the industry is onlyworking at about 60% of its installed capacity because of the serious economic and financialburdens resulting from the war and the transforming of the economy.
2.18. Road construction, reconstruction and improvement is normally executed by means ofunit-price contracts. In the past, under contracts financed by the Bank under internationalcompetitive bidding (ICB), no foreign contractors have been successful in presenting the
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lowest responsive bid except in one case. This is due to the very competitive prices of thelocal contractors. With the emphasis on rehabilitation and strengthening programs, and withthe intention of encouraging the smaller local contractors, local competitive bidding (LCB)was introduced as an acceptable procurement procedure under the Second Highway SectorProject, and will be continued under the proposed project. The quality of the constructionwork, though generally good, could certainly be improved through more demandingconstruction supervision and the use of more advanced equipment in some enterprises whichare presently equipped with worn-out mechanical plants.
H. Maintenance
2.19. HC's technical road maintenance' capability is considerable but the physical conditionof the road system is deteriorating and the backlog of highway rehabilitation and resurfacing(HRR) is increasing, because of the lack of adequate funding, and more recently thesignificant destruction and damage caused by the war. To improve planning of HRR androutine maintenance, HC is stepping up the implementation of its Pavement ManagementSystem (PMS). The proposed project, by supporting the 1995-97 Road Expenditure Program(para. 3.4-9) and further developing and implementing the PMS (para. 2.22), would supportthe Government effort of preserving the condition of the road system.
2.20. The condition of the road network and therefore the maintenance and rehabilitationrequirements can at present only be roughly estimated. In order to get an overview of thesituation and as part of the development of the PMS, HC conducted, in the spring of 1994, avisual road condition survey on the major and regional roads. Local roads were notsurveyed but their condition is probably no better than that of regional roads. According tothe survey, 27% of the network is in poor condition, about 39% in fair condition, and 34%in good condition. This distribution does not however take into account the importance ofthe roads as measured by traffic density. Doing so would probably improve the estimate ofthe road network condition.
2.21. Under some assumptions it can be estimated that about 2,600 km requirerehabilitation works and that some 3,000 km are affected by the accumulated backlog ofdeferred resurfacing. It is thus likely that the maintenance problem is a serious one. If theorders of magnitude indicated above prove to be correct, the maintenance problem will notbe resolved with the proposed project. There is even the possibility that the condition of thenetwork will continue to deteriorate. To remedy the situation will thus require sustainedefforts over a longer time than what one Bank project covers. However, to get a reliable
,1/ The term maintenance includes regular routine, periodic and winter maintenance,including pavement strengthening, and rehabilitation.
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assessment of the situation and an efficient planning tool, it is of central importance that thedevelopment of the PMS be accorded high priority.
2.22. To improve efficiency of HRR and routine maintenance operations and preparation ofthe budget, HC has agreed that cost-effective maintenance planning requires a PMS approachby means of which reliable data are collected periodically and evaluations are performedusing a decision-making scheme that, among other factors considers road performance, usercost and budget constraints. In this respect a series of actions is needed to continue thedevelopment and implementation of PMS in Croatia (Annex 3.3). During negotiations HCconfirmed that PMS would be fully operational by 1997 and that starting 1998 the budget forHRR and routine maintenance would be prepared and monitored through the systematic useof PMS (para. 5.1(m)).
2.23. The Government has taken several initiatives in recent years to improve maintenance.HC is being reorganized, and only routine road maintenance operations will be carried out byforce account. HC also commissioned a pilot maintenance study which was completed by theConstruction Institute in 1989. The Study had two main findings: (a) the current method ofrating pavement condition was inconsistent and technically inadequate for use in a PMS; and(b) the road rehabilitation backlog was substantial and growing. Using HDM III, the studydemonstrated the advantages of using economic analysis to plan periodic maintenance andrehabilitation, and concluded that such works typically yield economic rates of return (ERRs)in excess of 50%. Based on these findings, HC decided to proceed with the full-scaleimplementation of a PMS in Croatia. Technical assistance would be provided under theproject to assist HC with its reorganization, including separating civil works contractors, andin further implementing the PMS. HC agreed at negotiations to carry out an action plancovering the reorganization and improvement of its maintenance operations, including theseparation of civil works contractors (para. 5.1(c)).
I. Human Resources
2.24. The education, capability and experience of HC staff is high, although motivationappears to have declined due to low salary levels resulting from inflation. HC staff is highlyqualified and experienced, with technical diplomas required for road foremen and engineeringdegrees for higher level staff. At the regional and local level, training sessions take place onthe organization and techniques of road maintenance. The primary training needs, whichwould be assisted under the project, are those relating to adopting computer-based systems,modem management practices, and the latest highway maintenance techniques.
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J. Traffic Safety
2.25. Road traffic accidents have become a serious problem in recent years. In 1991, therewere 14,471 accidents, injuring 19,791 persons and causing 1,020 deaths. The number offatalities is three to six times higher than in Western European countries:
Table 2.4: Traffic Accidents and Fatalities in 1991
Number of Vehicles Number of Fatalities Number of FatalitiesState per 1,000 persons per 100,000 persons per 100,000 vehicles
Croatia 182 27.1 127.6
Austria 439 20.7 47.0
Italy 453 12.9 28.5
Germany 506 13.4 26.5
Great Britain 422 9.2 21.7
2.26. The government views the high accident rate with deep concern, and has taken stepsto reduce the number of accidents. These include road improvements, as well as signallingand marking, construction of bypasses around towns and villages, more rigorous vehicleinspection, stricter enforcement of traffic laws, improving driver education, and publicawareness campaigns. Croatian traffic safety laws are in line with international standards.Presently, traffic safety is under the responsibility of four Ministries (MMATC, InternalAffairs, Education and Health) and the Croatia Committee for Traffic Safety. The GOCrecognizes that more needs to be done to reduce the accident rate.
2.27. There is a large number of administrative entities involved in road safety in Croatiatoday and a significant amount of road safety work is already being undertaken. A NationalRoad Safety Council exists and it has elaborated a road safety plan. This is a reasonableplan which provides a sound basis for improvement of the traffic safety situation. There are,however, elements in the plan which need further review and/or elaboration and the projecttherefore includes technical assistance for such a review (Annex 3.7). During negotiationsagreements were reached that the proposed traffic safety review be carried out and thatconsultations with the Bank be held before December 31, 1995 about the implementation ofthe study recommendations (para. 5.1(d)).
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M. THE PROJECT
A. Project Objectives
3.1. The main objective of the project is to support and speed up the modernization andtransformation of the transport sector with special emphasis on the main road network andHC. In particular the project would: (a) assist GOC in its investment program for the roadssector with the objective of addressing the road maintenance situation and completing theconstruction of a few well justified sections; (b) support the development of modemmanagement tools in HC; (c) improve the road safety situation; (d) decrease road vehicleemissions; (e) maintain or increase the present level of road user charges; (f) support therestructuring of HZ leading to reduced budget transfers; and (g) contribute to the elaborationof a master plan and associated investment plan for the port of Rijeka. To achieve theseobjectives, GOC and HC will develop and implement policies covering:
(i) maintenance of fuel taxes and charges at least at their present levels inreal terms (para. 2.15);
(ii) reduction of Government's budgetary support to HZ (para.1.11-13 and3.9);
(iii) design and implementation of a road traffic safety program (para.2.27);
(iv) reduction of lead content in vehicle emissions and availability ofunleaded fuel (para. 3.32); and
(v) HC action plan, including continued separation of civil workscontractors and further implementation of the PMS (paras. 2.22, 2.23).
B. Project Description
3.2. The project components are summarized below and described in more detail in thefollowing paragraphs.
(i) a three-year time slice (1995-97) of Croatia's HC road expenditureprogram directed at repairing war damage, increasing HRR and routinemaintenance and completing projects that accommodate changes intransport demand;
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(ii) a total of 110 mm of TA and studies distributed as follows:
* HZ restructuring study, 30 mm* traffic safety, 20 mm* implementation of PMS, 30 mm* port study, 30 mm
(iii) training for HC technical personnel in modernizing road maintenancetechniques, including pavement and bridge management systems.
The Road Expenditure Program
3.3. The aggregate three-year (1995-1997) Road Expenditure Program of Croatia (theProgram) is estimated to cost $566 million including contingencies and administration butexcluding the debt service. Including the debt service, the total figure amounts to US$638million. The Program is summarized in Table 3. 1 below, with the details shown in Annex3. 1. The Program, as well as necessary budgetary resources for its execution, were agreedon during negotiations (para. 5.1(h)).
Table 3.1 HC ROAD EXPENDITURE PROGRAM
CURRENT US$ MILLION
KM 1995 1996 1997 95-97 %
"A* TRUNK HIGHWAYS 28 56.2 64.1 25.6 145.9 23
"B" OTHER PRIMARY AND REGIONAL ROADS 17 1.6 1.5 2.5 5.6 1
"C" BETTERMENT AND BLACK SPOTS 146 9.8 8.5 22.7 41.0 6
"D" STRENGTHENING, RESURFACING ANDREHABILITATION (HRR) 2,387 48.8 53.5 70.4 172.7 27
"E ROUTINE MAINTENANCE 26,928 37.9 39.1 43.6 120.6 19
F" OTHERS 23.9 11.1 10.9 45.9 7
G" ADMINISTRATION 5.9 5.2 6.6 17.7 3
"H DEBT SERVICE 25.1 24.5 22.1 71.7 11
"1" REPAIR OF WAR DAMAGES 4.1 0.5 11.9 16.5 3
TOTAL EXPENDITURES 213.3 208.0 216.3 637.6 100
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3.4. The 1995-97 Program has been drawn up in consultation with the Bank, and is areasonable basis for the project. It represents a sizeable increase in HC's budget, being onaverage about 40% higher per year for the 1995-97 period than for the 1991-94 period. Thebalance of the program and its structure are reasonable and prudent as shown in thedistribution given below. The program indicates a substantial shift toward HRR and highwaymaintenance as ongoing commitments for new construction will be completed. Maintenanceexpenditures will increase by close to 90% per year for the program period as compared tothe previous four years.
Distribution of the 1995-97 Road Expenditure Program
US$ Mill. %
Capacity Investment 151.5 24Safety Related Works 41.0 6Maintenance and War Repairs 309.8 49Equipment, Services, Administration 63.6 10Debt Service 71.7 11
637.6 100
3.5. Provided economic viability is confirmed, the Bank could support any construction,betterment or HRR component included in the Program. HC has tentatively identified thecomponents for Bank and other foreign financing, as shown in Annex 3.1. Components andlevels of expenditure for 1996 and 1997 are tentative at this stage. The program will bereviewed annually with the Bank. This provides the flexibility to adjust: (a) the volume ofexpenditures annually according to economic circumstances; and (b) the composition of theProgram if priorities change, e.g. if the issue of occupied territories is resolved. Duringnegotiations, the GOC provided assurances that not later than October 15 of each year, itwould furnish to the Bank a report on the progress achieved in carrying out the RoadExpenditure and Financing Program and proposed revisions to the Program for the periodthrough 1997; afford the Bank a reasonable opportunity to comment on the proposal; andthereafter introduce any revisions so that the Program is satisfactory to the Bank (para.5.1(f)). Also, during negotiations, the GOC agreed: (a) to carry out feasibility studies ofroadwork investments proposed to be included in the Road Expenditure Program inaccordance with methods of economic analysis satisfactory to the Bank (Annex 3.2); and (b)to undertake road expenditures greater than $5.0 million during 1995-97 only if theirestimated economic rate of return (ERR) is greater than 12% (para. 5.1(g)).
3.6. The Program includes $152 million, about 24% of the Program, for the capacityinvestments category. Practically all of this is allocated to complete projects which havebeen delayed due to the lack of funds. This category decreases rapidly with less than 20%
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left for 1997. There are four items in this category. The first item is the completion ofconstruction of trunk roads including about US$71.6 million for the Ostravica-Delnice sectionof the Zagreb-Rijeka road, where traffic has concentrated due to the closure of other roadsthrough Bosnia and Herzegovina and the territories. It is now the only road available fromthe capital Zagreb to the port of Rijeka, and with one alternative over part of its length, theonly road between the main part of Croatia and Dalmatia. Two other major ongoing projectsare the Split by-pass and the Solin-Klis road, with an estimated total completion cost of aboutUS$40 million. The other items consist of the completion of ongoing minor projects, therepair of war damages and a betterment and black-spot program. This is a modestinvestment program given the changes in transport demand which need to be accommodated,but is appropriate under the severe budgetary constraints which Croatia now faces. It isenvisaged that the proposed Bank loan would help finance the highway equipment (forsignalling, tunnel ventilation and other miscellaneous equipment) for the three mentionedmajor ongoing projects as well as a contract to construct one km of highway and thepavement of the 9 km of the Solin-Klis road. Also, it is envisaged that EBRD wouldpartially finance the completion of works of the Ostrovica-Delnice road as well as thebetterment program.
3.7. The maintenance and war repair category accounts for 49% of the Program orUS$310 million. The routine maintenance allocation is adequate. HRR accounts for animportant share of this category, US$173 million or about 55%. However, the HRRallocation is insufficient to remove the backlog of maintenance in the short run. If thepreliminary estimates referred to (paras. 2.20-21) are correct, the backlog of deferredmaintenance might be around $270 million, requiring about $55 million a year over a five-year period to be eliminated. As the foreseen maintenance expenditures roughly correspondto the estimated requirements, there would not be sufficient funds to reduce the backlog andhence a higher HC budget might be warranted. However, taking into account: (a) theuncertainty of present estimates of maintenance needs and backlog; and (b) the verysubstantial increase in HC's budget, particularly for maintenance, that the Program providesfor, the planned maintenance expenditures are considered reasonable. The Loan wouldfinance a portion of the HRR program. The project also supports the completion ofimplementation of the PMS which would be operational by 1997 and should provide the basisfor making better HRR and maintenance decisions. It is envisaged that starting 1998 theannual HRR and maintenance program will be prepared on the basis of a PavementManagement System, supported under the project. In the meantime, the selection ofindividual road sections to be included under the program would be made using a simplesystem based on reported road conditions and traffic as well as local cost and remedialmeasures obtained from engineering experience (Annex 3.3). During negotiations the GOCconfirmed that the above maintenance and HRR program will be carried out and that HC willmake PMS operational by 1997 and that the 1998 budget for HRR and maintenance will beprepared and monitored through the systematic use of PMS (para. 5.1(m)).
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3.8. HC administrative costs including salaries of headquarters personnel, consultants fortechnical services and purchasing of highway maintenance equipment and parts are about10% of the program. The 10% share of these items in the program is considered a normaland adequate level of expenditures. These costs include expenditures of about US$6 millionfor equipment, technical assistance and training required for the installation of the PMSsupported by the project (Annex 3.3). They also include about US$20.7 million foracquisition of highway maintenance equipment of which some US$11.7 million equivalent isprovided under the Emergency Reconstruction Project (Report No P6360-HR) and a portionof the remaining US$9 million would be financed by the proposed Loan. Annex 3.4 presentsa tentative list of equipment to be financed under the proposed project.
Croatian Railways
3.9. As described in Chapter 1 (paras. 1.11-13), the financial situation of HZ isunsustainable. Therefore, during negotiations the Bank reached agreement with Governmentabout the maximum level of subsidies to HZ not to surpass:
a) 1995 - US$105.0 million plus debt serviceb) 1996 - US$ 90.0 million plus debt servicec) 1997 - US$ 75.0 million plus debt service
As the Government is meeting the debt service on HZ loans, any additional borrowing byHZ will, for the purposes of this agreement, be counted as part of Government subsidy. Inaddition, HZ will be required to maintain the level of payables, in real terms, including debtsto the social welfare fund and suppliers, at not greater than the level of June 30, 1994(para. 5.1(a)). Based on projected debt service levels the annual cost to Government forsupport to HZ would be as follows:
a) 1995 - US$150.0 millionb) 1996 - US$120.0 millionc) 1997 - US$ 90.0 million
To achieve these targets while ensuring that HZ will have sufficient cash flow to meetoperating needs will require a major effort on the part of the Government and HZ. TheGovernment will have to authorize reduction in current service levels in line with the reduceddemand, increase tariffs etc., and HZ will have to improve efficiency. To assist indeveloping an appropriate short-term strategy for the purpose, the Bank proposes to providefinancing under the proposed loan for technical assistance as outlined in the draft terms ofreference in Annex 3.6.
Studies for the Rijeka Port and Road Safety
3. 10. The project also provides for two additional studies:
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(a) The Rijeka Port Study would draw up a master plan and associated investmentplan and would propose an administrative/managerial structure for the portincluding its relationships to the national and local governments as well as tothe private sector. The study would be based on the work already carried outby French consultants. The Terms of Reference, a draft of which is includedin Annex 3.5, were agreed upon before negotiations. The cost of this study isestimated at about US$600,000.
(b) Road Safety. Although the Croatian services related to road safety arerelatively well organized there are some elements of the system, notimmediately obvious, which are restricting the effectiveness of the currentarrangements. To identify those elements and outline potential remedialmeasures a review of an existing road safety plan (para. 2.27) LocalCompetitive Bidding would be carried out under the project. This, pluspossible follow-up TA, would have an estimated cost of about US$400,000.Draft Terms of Reference are in Annex 3.7.
C. Project Cost
3.11. The total project cost is estimated at about US$568 million equivalent with a foreignexchange component of US$238 million, based on 1994 prices and including physical andprice contingencies (Annex 3.8). Identifiable taxes and duties are about US$85 million andthe total project cost, net of taxes, is US$483 million equivalent. The cost estimates for thecivil works under the Road Expenditure Program are based upon reported local costs andengineering experience, and are similar to those obtained in recent contracts. The costs ofequipment and technical assistance are estimated on the basis of recent experience.
D. Project Financing Plan
3.12. The Borrower will be the Republic of Croatia. The proposed loan of $80 millionequivalent would finance 34% of the foreign exchange cost or about 14% of the total cost ofthe project. Another 8% of project cost, or about US$47.5 million equivalent, is expected tobe financed by the European Bank for Reconstruction and Development (EBRD). Theremaining US$441 million equivalent would be financed by the Government. This wouldnecessitate HC budgets of about US$190 million p.a. excluding the debt service.
3.13. In accordance with the above, the Project cost and financing plan is as follows:
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Table 3.2: Cost Estimates and Financing Plan'(US$ Million)
Estimated Cost Local Foreign Total
HC Highway Program 308.95 221.47 530.42
Technical Assistance and studies 0.29 1.20 1.49for HZ, Rijeka Port and RoadSafety
Price Contingencies 20.87 15.03 35.90
Total Cost 330.11 237.70 567.81
Financing Plan
Government of Croatia 330.11 98.50 428.61
IBRD Emergency Loan - 11.70 11.70
IBRD Proposed Loan - 80.00 80.00
EBRD - 47.50 47.50
Total Financing 330.11 237.70 567.81
Retroactive Financing: A maximum amount of US$8.0 million (10% of the loan amount)would be eligible for retroactive financing of expenditures incurred after December 31, 1994.The reasons for including retroactive financing in the project are: (a) the project covers threeconstruction seasons, the first being 1995 and unless procurement is undertaken early 1995,thus could delay the start-up of the project; and (b) the project is cofinanced by EBRD andan important consideration has been to keep the implementation schedules of both IBRD andEBRD more or less parallel, since both institutions are financing different parts of theOstravica-Delnice road.
1/ Including contingencies
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E. Status of Project Preparation
3.14. All necessary studies for construction of the Ostravica-Delnice section of theKarlovac-Rijeka highway, for the Split by-pass, and for the Solin-Klis road are completed.Feasibility studies for the betterment of 235 km and pavement strengthening of about 1,000km are done based on HDM III. However, given the fact that Croatian conditions are notalways suitable for HDM III, a simpler model for analysis of HRR is proposed in Annex 3.3while Annex 3.9 shows the grouping of HRR works for 1995. Supervision of constructionwould be carried out by HC professional engineers assisted by consultants as needed.HC has completed detailed engineering and draft bidding documents for items related to thetrunk highways included in the 1995 Program.
F. Implementation and Monitoring
3.15. Specific sub-projects will be prepared on a continuous basis in time for inclusion inthe annual programs. Preliminary updated investment and financing plans would be madeavailable to the Bank, so that the Program for the following year can be firmed up by theend of October of each year during project implementation. During negotiations, assuranceswere obtained that prior to bidding the Borrower will submit and agree with the Bank on thefollowing year's program and adhere to the criteria of project selection (paras. 3.6 and5.1(f)).
3.16. HC will be responsible for execution and management of the project, except for thetechnical assistance to the railways, for road safety as well as the port study which would bethe responsibility of MMATC. The Implementation Schedule for project activities is shownin Annex 3. 11. The project is expected to start in the first quarter of 1995 and to becompleted by June 2000. The Implementation Schedule would be updated during the annualreview. HC will be responsible for monitoring and reporting on project implementation.Monitoring indicators for project activities are given in Annex 3. 10. The abovearrangements were agreed during negotiations (para. 5.1(j)).
G. Project Procurement Arrangements
3.17. Procurement of goods and works will be carried out in accordance with the Bank'sProcurement Guidelines. To the extent practicable, items to be procured under the projectwill be grouped into major packages to encourage competitive bidding, permit bulkprocurement, and to ensure standardization. Under the project, the proposed methods ofprocurement would include International Competitive Bidding (ICB); Limited InternationalBidding (LIB); Local Competitive Bidding (LCB); and Direct Contracting (DC). Theproposed procurement arrangements are summarized in Table 3.3.
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3.18. International Competitive Bidding (ICB). Procurement packages for civil worksexceeding the equivalent of US$2 million per contract would be procured through ICB exceptif a bidding group contains a road section, the cost of which is estimated to exceed US$1million, in which case that group would be bid under ICB procedures, even if the estimatedcost of the group is less than US$2 million. It is estimated that the equivalent of at leastUS$10.3 million for at least 2 ICB packages would finance civil works.' All ICB packagesfor civil works will be prequalified. Procurement packages for goods and materialsexceeding the equivalent of US$300,000 per package, US$24.99 million for 8 packages,would also be procured through ICB. In the case of procurement of goods through ICB,eligible domestic firms would be provided a preference margin equal to 15% or theprevailing duty, whichever is lower, in accordance with the Bank's Procurement Guidelines.
3.19. Limited International Bidding (LIB). Equipment for bridge maintenance, trafficcounting, weighing scales and road monitoring as well as the services for monitoringpavement behavior, which are of very specialized nature and are supplied by a limitednumber of suppliers, will be procured following LIB procedures in accordance with theBank's Guidelines. It is estimated that the above mentioned equipment and services will beprocured in approximately 5 LIB packages at an aggregate cost of about US$2.0 million.
3.20. Local Competitive Bidding (LCB). Civil works for HRR are dispersed, are of smallvalue (the equivalent of less that US$2 million per contract), and in which foreign biddersare unlikely to be interested because of their limited sizes and often remote locations andbecause of the existence in Croatia of competitive and strong civil works contractors, wouldbe procured through Local Competitive Bidding (LCB) procedures. It is expected that theloan proceeds would be used to finance about 30 LCB contracts, ranging from US$ 1 millionto US$ 2 million at a total estimated cost of US$67 million equivalent. To facilitate contractadministration, the Bank would only finance civil works contracts with a cost greater thanUS$1.0 million.
3.21. Direct Contracting. Spare parts for existing research equipment which the Bankagrees can be procured only from the original suppliers would be procured through directcontracting at an estimated cost of US$35,000.
3.22. Procurement Review and Use of Standard Bidding Documents. The Bank wouldconduct a prior review of procurement documentation, including prequalification ofcontractors, for all ICB packages in accordance with paras. 2 and 4 of Appendix 1 of theBank's Guidelines. Prior approval will also be sought for the use of the LIB procurementmethod. The Bank would also conduct prior review of bid documents for all LCB contracts.The use of Bank's Bidding Documents for Goods and Civil Works (ICB) is mandatory, and it
1/ As annual programs are defined, part of the LCB contracts will be changed into ICB ifthey contain road sections valued to more than US$1 million.
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is recommended for Civil Works (LCB) to facilitate preparation and review. Thesedocuments were made available to the Borrower during negotiations. The project includestechnical assistance and training at an estimated total cost of US$3.20 equivalent. Theselection and employment of consultants would be done in accordance with the Bank'sGuidelines for the Use of Consultants, dated August 1981. All documents related toprocurement of consulting services would be subject to prior review and approval by theBank. A public procurement law in Croatia is under preparation. Therefore, a CountryProcurement Assessment would be scheduled only after the law has become operational andits implementation is well underway. However, preparation of a Country ProcurementStrategy is planned for the current fiscal year. Meanwhile, for the procurement to befinanced with its own resources, the Borrower will follow procedures consistent with theBank's Guidelines. The Project Implementation Plan includes the schedule of majorprocurement steps (Annex 3. 11).
3.23. Implementation arrangements. HC will be responsible for procurement under theproject. It has acquired substantial experience in procurement of works, goods and servicesthrough previous experience with Bank projects in former Yugoslavia. It is familiar withICB, LIB, LCB and Direct Contracting.
3.24. Procurement information provided to the Bank would include: (a) prompt reportingof contract award information; and (b) comprehensive explanation of revised cost estimatesfor individual contracts and the total project, revised timing of procurement actions, andcompliance with aggregate limits on specified methods of procurement. During negotiations,agreement was reached with the Government on all procurement arrangements(para. 5.1 (k)).
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Table 3.3: Summary of Proposed Procurement Arrangements(US$ million equivalent)
Project Element ICB LCB' Other NBF Total
1. Works
-Paving of Solin-Klis Highway 7.60 --- - --- 7.60(4.56) --- -- --- (4.56)
-Highway Resurfacing and 9.60 67.05 --- 96.05 172.70Rehabilitation (5.76) (40.23) -- --- (45.99)
-Other highway works --- --- --- 302.50 302.50
2. Goods
-Electrical and Telephone 1 07 --- --- --- 1.07Equipment (0.86) (0.86)
-Traffic equipment 4.67 --- --- --- 4.67(3.74) (3.74)
-Tunnel Equipment 9.95 --- --- --- 9.95(7 95) (7.95)
-Highway Lighting 3.72 --- --- -- 3.72(2.98) (2.98)
-Highway Maintenance 8.80 --- 0.20" 11.70 20.70Equipment (7.04) (0.16) (7.20)
-Traffic counters, weighing 3.03 --- 1. 3 7 "- 4.40scales, road monitoring, and (2.42) --- (1.10) (3.52)computers
3. Services
-Technical assistance and --- --- 3.20' --- 3.20training (3.20) (3.20)
-Projects, studies, and --- --- --- 19.60 19.60miscellaneous
-Highway Administration --- --- --- 17.70 17.70
Total 48.44 67.05 4.77 447.55 567.81(35.31) (40.23) (4.46) (80.00)
Note Figures in parentheses are the respective amounts financed by the Bank Loan Detail does not always add to totalsdue to rounding.
N.B.F.: Not Bank financedLimited International Bidding (LIB).Includes LIB for about US$1.33 million and Direct Contracting for about US$35,000.Includes US$400,000 for contracting specialized service for road monitoring through LIB.
41 As annual programs are defined, part of the LCB contracts will be changed into ICB if they contain roadsections valued at more than US$1 million.
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H. Disbursements
3.25. The proposed Bank loan would be disbursed against the project components asfollows:
(a) Civil Works: 60 % of expenditures for new construction, road betterment andpavement strengthening;
(b) Goods: 100% of foreign expenditures; 100% of local expenditures (ex-factorycost) and 60% of expenditures for other items procured locally; and
(c) Training and Technical Assistance: 100% of expenditure excluding taxes.
3.26. Disbursements would be made against Statements of Expenditure (SOE) for eligibleexpenditures under civil works and equipment supply contracts valued at $1.5 million and$300,000 equivalent or less respectively. Supporting documentation would be retained by theborrower and made available for the required audit as well as for Bank supervision missions.The annual audits of project accounts would include a separate opinion on the disbursementsmade under the SOE procedure. All other disbursements would be made against fulldocumentation submitted to the Bank.
3.27. To facilitate disbursements, the Bank's share of the project would be financed througha Special Account (revolving fund) which would be opened by the Borrower in a bankacceptable to the Bank. The authorized allocation for the Special Account would be $5.0million, equivalent to about four months of the Bank's share of estimated projectexpenditures during the four-and-one-half year disbursement period for the project. Fundsfor goods would be withdrawn by the Borrower from the Special Account after approval ofthe ICB or international shopping procedures and related contract awards by the Bank.Replenishment for technical assistance and for consultants services would be made on thebasis of appropriate documentation. Replenishment of the Special Account would followBank procedures. The Special Account would be audited annually by independent auditorsacceptable to the Bank. The audit report would be submitted to the Bank for review andapproval within six months of the end of each fiscal year.
3.28. The disbursement forecast, based on the Project Implementation Schedule, is given inAnnex 3.12. Croatia being a new IBRD member country, there are no disbursement profilesavailable. Croatia was a republic of the former Yugoslavia and therefore, the disbursementforecast is based on the disbursement profile for transportation projects in the formerYugoslavia. The project is expected to be presented to the Bank's Board of Directors in thefirst quarter of 1995, and to be completed by June 2000, and to be fully disbursed sixmonths later or by December 2000.
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I. Accounting and Auditing
3.29. HC maintains a satisfactory accrual accounting system. The annual accounts,including the SOEs as well as the special account would be audited each year by auditor(s)acceptable to the Bank. The accounts and the auditor's report thereon would be received inthe Bank within six months of the end of the fiscal year. The arrangements for accountingand auditing were agreed at negotiations (para. 5.1(j)).
J. Environmental Considerations
3.30. Croatia introduced Environmental Assessment requirements for Highways and HighSpeed Roads in 1984 and this formed the basis for granting of location and building permitsin the Highway Sector. More recently, Croatia has passed laws requiring detailed environ-mental impact assessments for any new highway constructions. The assessment must address:(i) land acquisition and resettlement issues (ii) protection of air, land and water resources,historical and cultural monuments (iii) mitigation of noise pollution (iv) management anddisposal of construction waste.
3.31. The new construction components, i.e. the Ostravica-Delnice section, the Solin-Klisroad and the Split Bypass involve major new highway construction. They have thereforebeen categorized as "A" projects warranting full environmental impact assessments. Majorenvironmental issues anticipated in these locations include water pollution due to carriagewayrunoff, land acquisition and resettlement, protection of historical monuments and noise pol-lution due to proximity to urban areas. Environmental Impact Assessments have been pre-pared by HC for these components. They have been reviewed by the Bank and found to besatisfactory in the analysis of the environmental issues and in the recommended measures tomitigate the impact. The recommendations have been taken into account in the design andconstruction of these works. Summaries of the Environmental Impact Studies have beendistributed to the Board.
3.32. In regards to air pollution due to traffic, Croatia is in the process of preparing legisla-tion on regulating air pollution, specially targeting traffic pollution. The legislation is expect-ed to be passed during 1994. The state owned oil company (INA) is committed in bringingdown lead and sulfur contents its gasoline. INA expects lead levels in gasoline to be reducedto 0.15% by weight within the next two years. All new stations commissioned sell unleadedgasoline and leaded gasoline will be phased out. However, the extent of Governmentcommitment to fulfill the above mentioned objectives needs clarification. Nevertheless, theGovernment has taken steps in reducing the use of leaded gasoline by taxing leaded gasolinemore than unleaded. During negotiations, the GOC agreed to cause: (a) the lead contents tobe reduced to at least 0.4% by weight by not later than June 30, 1996; and (b) unleadedgasoline to continue to be widely available at a price equal to or less than leaded gasoline(para. 5.1 (1)). The transport of hazardous waste is strictly controlled by government law,which is in compliance with the European Agreement on Transport of Hazardous Waste(1982).
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IV. ECONOMIC EVALUATION
A. General
4.1. The transport sector has an important contribution to make to Croatia's economicrecovery, including improving road maintenance, repairing war damage and accommodatingchanges in transport demand associated with the war, the reorientation of trade and therestructuring of the economy, and reducing the severe financial losses of the railway. Asdescribed in Chapter III, the HC 1995-97 expenditure program is a reasonable basis formeeting the above objectives given the present financial circumstances. The program givesincreasing emphasis to routine and periodic maintenance and to the reduction of accidentblack spots. It is very modest with respect to new construction, basically only completingprojects which have been under construction for a long time and which should be opened totraffic as soon as possible. It is reasonable to assume that the implementation of themeasures foreseen in the HC expenditure program are necessary, but not sufficient conditionsfor economic growth to take place. This makes it difficult to quantify the full benefits of theproject. Project benefits were quantified on the basis of road user cost savings only, whichprobably understate the contribution of the project to the economic recovery.
B. New Construction
4.2. Of the four main items under this heading, the project will finance three items asdescribed below. The fourth item consists of minor ongoing projects, the repair of wardamages and a betterment and black spot program. The three project financed items accountfor 75% of total investments for new construction and are evaluated below. For theremaining expenditures included in the program the project includes provisions to: (a) carryout feasibility studies of road work investments proposed to be included in the RoadExpenditure Program in accordance with methods of economic analysis satisfactory to theBank; and (b) to undertake road expenditures greater than $5.0 million during 1995-97 onlyif their estimated economic rate of return (ERR) is greater than 12% (para. 5.1(g)).
4.3. Ostravica-Delnice: Traffic grew by almost 7% p.a. between 1983 and 1990. Thewar led to a significant decrease in 1991 but traffic grew very rapidly thereafter; the 1990 to1993 growth rate was practically the same as for the preceding years. For the future, anincrease of 4% p.a. has been assumed. The ERR has been estimated, using conventionalroad user cost methods approved by the Bank, at 19% on a sunk cost basis. About 50% ofthe investments have already been done. Construction started in 1990 and has been delayedbecause of the war and the ensuing difficult financial situation.
4.4. Solin-Klis and Split By-pass: Both of these components represent basic elements ofthe development strategy for the Split urban region. These projects have a backgroundsimilar to Ostravica-Delnice with respect to long construction times and delays. On a sunkcost basis, their ERR's are 20% and 25% respectively.
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C. Rehabilitation and Pavement Strengthening
4.5. The ERR for betterment works costing more than $3 million equivalent, andrepresentative pavement strengthening works, were estimated using HDM III. The "without"case assumes that only routine maintenance will be performed as in the past, and the modelestimates that the international roughness index (IRI) will deteriorate to 11.0 m/km in abouteight years, following which drivers would be forced to accept very high vehicle operatingcosts or the road would have to be reconstructed at high cost. The "with" case assumes theimproved road would be resealed after five years and rehabilitated again when the IRI haddeteriorated to 7.0 m/km. HC and the Croatian Road Institute evaluated ten road sections,considering ten different betterment strategies. Of these, 68 km are proposed forrehabilitation, with the estimated ERRs ranging from 34% to 136%. HC similarly evaluated1000 km of primary roads for pavement strengthening, with the ERRs estimated to rangebetween 39% and 77%. These roads are considered to be representative of their respectiveexpenditure categories under the Program.
D. Conclusion and Risks
4.6. The weighted average ERR, based on the above estimates, for items which coveralmost 90% of the Program, is estimated to be above 40%. This very high ERR reflects thetypical high returns of betterment and strengthening of existing roads and the high share ofthese categories in the Program, about 60%.
4.7. The main project risks are that hostilities would resume, or that the GOC would nothave sufficient counterpart funds or recurrent budget to implement the project. It has to berecognized that serious tensions still exist within Croatia and in the region, which could leadto situations that would derail our assistance. However, several reasons lead us to believethat Croatia's situation is now stable enough to begin an assistance program, with goodchances of success. First, the Croatian authorities have shown prudence with respect to boththe difficult territorial situation within Croatia and the threatening proximity of outbreaks ofhostilities in Bosnia and Herzegovina; and second, departure from this prudent stance wouldhave a high cost for the Government in terms of suspension of assistance and jeopardizingthe initial successes towards stabilization and recovery. The project has been limited toterritories which are under GOC's control, and even if hostilities should resume, it isdoubtful they would extend so far as to prevent project implementation. In addition, thesector investment loan format, including annual reviews of the Program, and the experienceof the borrower, provide the flexibility to adjust the size, location and composition of theProgram according to changing economic circumstances. Project risks are considered to beacceptable given the exceptional conditions in Croatia.
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V. AGREEMENTS REACHED AND RECOMMENDATIONS
5.1 During negotiations, agreements were reached regarding:
(a) maximum level of government subsidies to HZ (para. 3.9);
(b) road vehicle fuel tax to be maintained at least at its present level in real terms(para. 2.15);
(c) HC will carry out action plans covering the reorganization and improvement ofits maintenance operations, including the separation of civil works contractors(para. 2.23);
(d) the carrying out of the proposed traffic safety study and that consultations withthe Bank be held before December 31, 1995 about the implementation of thestudy recommendations (para. 2.27);
(e) the project objectives (para. 3.1) and the project description (para. 3.2);
(f) arrangements for annual reviews of the 1995-97 Road Expenditure Program(paras. 3.5 and 3.15);
(g) carrying out of feasibility studies of roadwork investments proposed to beincluded in the Road Expenditure Program in accordance with methods ofeconomic analysis satisfactory to the Bank (Annex 3.2) and to undertake roadworks greater than $5.0 million only if they have an ERR greater than 12%(para. 3.5);
(h) the 1995-97 Road Expenditure Program and provisions of budgetary resourcesto meet its requirements, in a timely manner (para 3.3);
(i) all terms of reference (para. 3.9-10);
(j) the implementation schedule (para 3.16), monitoring, auditing, and reportingarrangements (paras. 3.16, 3.29);
(k) the procurement arrangements (paras. 3.17-24);
(1) (i) the lead contents to be reduced to 0.4% by weight by June 30, 1996; and(ii) unleaded gasoline to be widely available at a price equal to or less thanfor leaded gasoline (para. 3.32);
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(m) HC confirmation that PMS would be fully operational by 1997 and thatstarting 1998 the budget for HRR and routine maintenance would be preparedand monitored through the systematic use of PMS (paras. 2.22 and 3.7);
5.2 Based upon the above assurances and agreement, the project is suitable for aBank loan of US$80 million equivalent to the Republic of Croatia for a 17 year term,including a 4 year grace period.
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Annex 1.1Page 1 of 3
STAFF APPRAISAL REPORT
CROATIA
HIGHWAY SECTOR PROJECT
Previous Projects in the Transport Sector
Previous Projects
1. The Bank has lent US$711.5 million to ex-Yugoslavia for projects whichbenefited Croatia in the transport sector, including US$389.5 million for eight road projects,US$273 million for three railway projects, and US$49 million for an oil pipeline project.
Highway Projects
2. The First Highway Project (Loan 344-YU), US$35 million) in 1963 financedthe completion of the coastal section of the Adriatic Highway (422 km) and parts of theBelgrade-Nis road (174 km). The Second Highway Project (Loan 485-YU, US$10 million),financed in 1967, was for the improvement of 367 km of roads connecting the Zagreb-Belgrade highway via Sarajevo and Tuzla with the Adriatic highway. Both projects werecompleted within the original cost estimates and agreed time schedules. The Third HighwayProject (Loan 608-YU, US$30 million), financed in 1969, comprised about 120 km of roadsin Croatia, Macedonia and Slovenia, and was completed in August 1974 with a 20-monthdelay, primarily due to delays in completing an access road. This project had an 8% costoverrun because of inflation and foreign exchange adjustments. The Ninth project comprisedconstruction of four highly congested sections of TYH in Slovenia, Croatia and Serbia,totalling about 86 km, and the procurement of equipment for maintenance and for monitoringloadings of vehicles using the primary highway network, including TYH. All road worksand the delivery of highway maintenance equipment and weighing scales were completed in1982.
3. The loan for the Eleventh Highway project (Loan 1819-YU, US$125 million)was made in 1980. It comprised the construction of six sections of the TYH totalling about164 kn, and the procurement of highway maintenance and road monitoring equipment,technical assistance, a highway safety program and the preparation of a Toll Study.Although execution was delayed by up to two years because of the shortage of local funds,most construction items were completed by the revised loan closing date of June 30, 1985.The Tenth and Eleventh Highway Projects were both implemented during a period ofeconomic difficulty and budgetary reductions. Because of the severe shortage of local funds,
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Annex 1.1Page 2 of 3
both the Tenth and Eleventh Highway Projects were included under the Bank's SpecialAction Program in 1983. The investment plans were revised, and the projects were thenimplemented as planned, albeit with a two year delay. Re-estimated economic returns forboth projects were satisfactory. Several institutional improvements were incorporated in theproject including the creation of FARP, the carrying out of a road user charges study, andtraining.
4. The First Highway Sector Project (Loan 2715-YU, US$121.5 million) wasmade in 1986. The project financed a time slice of the road investment/maintenanceprogram of four Republics of ex-Yugoslavia with the emphasis on removal of bottlenecks,rehabilitation, and completion of the basic network. The project emphasized investmentplanning, a systematic approach to road maintenance operations, sound financial planningunder conditions of budgetary constraint, and strengthening of the new coordinating body forroads (FARP). Project preparation was delayed due to slowness in reaching agreement onthe Republics to be included in the project and the composition of investment plans, anddelays in adjusting road user charges. Project signature was delayed about six months due toGovernment delays in providing bank guarantees to the borrowers. Following substantialincreases in road user charges in 1986, the project was signed, and became effective in July1987. The project was completed satisfactorily.
5. The Second Highway Sector Project (Loan 2878-YU, US$68 million) wasmade in 1988. The project financed a time slice of the investment/maintenance programmeof three Republics/Provinces not covered under the First Highway Sector Project. Theproject emphasized investment planning, a systematic approach to road maintenanceoperations, sound financial planning under conditions of budgetary constraint, andstrengthening the role of FARP. The project included a road maintenance management studyfor Croatia, which was completed with delays, and served as a basis for improving thepavement management system.
Railways
6. The Sen Railway Loan (Loan 395-YU, US$70 million) was made in 1964to help finance the modernization of 1,509 km of main lines traversing Yugoslavia from theAustrian and Italian borders to the Greek border. It included electrification, signalling,telecommunications, and the improvement of six key marshalling yards. This project raninto major difficulties because after the 1965 political and economic reforms, the railwaysinternal funds fell substantially below expectations, and also because of deficiencies in projectplanning and preparation which resulted in an underestimate of quantities and of time neededfor completion of such an extensive project. With hindsight, this was too ambitious a projectin relation to the railways' resources. The Bank loan was fully disbursed in 1972. Theproject was refinanced from the fourth railway loan and was completed in 1981 at a total costof about US$410 million, over twice the original cost estimate.
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Annex 1.1Page 3 of 3
7. Because of problems on the second project, the Bank, in agreement with theYugoslav authorities, undertook a comprehensive study of the railways with the assistance ofconsultants. This prepared the ground for the Forh Railway Project (Loan 1026-YU,US$93 million), agreed in 1974, under which the Bank's loan was allocated to thecompletion of the 1964 Modernization Program and to "Related Investments" needed tomaximize its benefits, all to be completed by the end of 1976. However, in contrast withearlier projects which consisted only of investments to which the Bank loan had beenallocated, the fourth project was defined as the totality of the railways' investments in 1974-76, whose cost was estimated at US$1,138 million. The Bank loan thus amounted to about12% of the cost of the project. Agreement was reached on measures to help overcome therailways' financial problems, principally through tariff increases. An important feature ofthe project was the preparation of comprehensive Action Plans which, given Yugoslavia'sdecentralized system, were designed to contribute to a common understanding of objectivesand responsibility by all concerned. Only about two-thirds of project investments wereexecuted under the project; however, they were reasonably balanced to maximize systemeffects, and the remainder were included in the 1976-80 Investment Plan. Execution ofBank-financed "Related Investments" was substantially better (about three quarters). Exceptfor the section from Skopje to Gevgelia on the greek border, the electrification of the mainline traversing Yugoslavia was completed under the 1964 Modernization Program. Workswere completed satisfactorily and the loan was closed in 1981.
8. The Sih Railway Project (Loan 2336-YU, US$110 million) was made in1983. The project consisted of a four year time slice (1983-86) of four RTOs investmentplans, including the overhaul of 545 km of track, signalling and telecommunications on about320 km of line, electrification of the Bosanski-Novi Knin line, spare parts for locomotives,and technical assistance and training. Project effectiveness was delayed by one year due todelays in increasing tariffs, but the project then proceed on schedule and within the costestimate. The RTOs have complied with the tariff covenant; however, compensationpayments initially declined, but then increased due to the effect of high inflation. US$3.7million in project funds were cancelled due to exchange rate fluctuations. The project wascompleted in 1988.
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Annex 2.1
CROATIAHIGHWAY SECTOR PROJECT
Motor Vehicles by Type (1972 - 92)(thousands)
1972 23.6 256.5 3.6 28.4 8.1 320.2
1973 21.2 286.6 3.7 28.9 8.7 349.2
1974 20.5 324.0 4.0 30.0 10.7 389.2
1975 21.4 368.8 4.1 30.5 7.7 432.5
1976 18.7 405.5 4.3 32.8 8.2 469.4
1977 39.9 463.6 4.7 33.0 5.5 546.7
1978 38.9 521.7 5.0 36.8 8.8 611.2
1979 28.7 549.3 4.7 36.0 20.2 638.8
1980 33.6 584.2 5.2 44.9 7.7 675.6
1981 34.7 633.8 5.6 44.6 8.6 727.3
1982 34.9 679.2 5.9 47.9 9.5 777.4
1983 26.3 652.7 5.8 37.0 8.3 730.1
1984 27.3 679.3 5.9 39.0 8.7 760.2
1985 21.0 652.7 5.8 38.4 8.6 726.5
1986 21.0 693.2 6.0 40.8 9.2 7.2
1987 21.2 716.3 6.1 41.3 9.1 794.0
1988 20.7 756.1 6.2 42.2 9.2 834.4
1989 19.9 796.1 6.1 42.9 9.1 874.1
1990 17.5 795.4 5.8 41.4 8.5 868.6
1991- 13.1 735.7 4.9 34.4 6.8 794.9
1992- 9.6 669.8 4.1 31.3 6.8 721.6
1993' 7.4 646.2 3.9 35.3 6.9 69.4
Without UNPA zones
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Anne 3.1Page 2 of 3
lEghway Sector ProjectExpenditure Program 1995-1997
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k.., wm. 51 1 6.7 1 by ýý,tyt. iv. 19 7.?Ncný! -- 2.2 i 45 i Z2 1.1 i 1.1
R~ ca - SomaýGC 10.5 i 5.4 by ;n~ m. i ge. i 7-2 1 3.2 l- Z2 1.1
M-2, sctý - Lu~ IL4 3.5 by Irwitat. V 1995. J- L- I- -- i 7-2 1.4 i 0.7 0.73m122d1 - Ja~ac 14.0 2.8 by h-M i' ges, 1.4 1.4 2.8 1.4 1,4
~ d Vodka 1.3-ý-.4 1.4 i 1.71 4.1 1.1 2- 0 i,i
Md Z&Osutn 1.4 l 1.4 3.2 2. el 6-1 3.1 3.. iCOPI 373 4.91 by kný;tat. f: E 95.* 9i i . ! 3.0 1 9 1.0 i 0.9fakk - Kraljcnelcat lä aff by in.tat. i v. I5.1 0. er 061 0.3 1 0.3
M-?ii. PåM - Gadwa 19.0 3.5 by inýitat. 111.199L i 0.5 1.0 i 7 o 1.5 0.8 i 0.7
pazin - Podbemm to os try i~ttal. 111.1996. i ä.: 2
4&2. 96~ - 0.101410c1n4 2,8 i 2.1 by in-,itat i 11.1997. 2.0 0,1 : 7-0 1.0 1>0OGNI måýý4 Nasice zo i 2.0 by ~a 19.1997.: oi
- - L-L-J-J.-.- -1.0 3.5
V~ ;n - 64MIOýcc 4.0 0.5 i by inýitat 11.1997 i 0.5 0,0 i 0-0 0.0 i
M-S. Zvta ~ 4 - JUnd 11.01 &6 by ir~ I v11.1995.1 l 3.6 i 1.(1 4.8 i - 2.34 8F 0*2 2.0 -3 cc] I - T-
M-IVI LX2a Rösa i i
w?rL C~ - 0. SlatruY &1 &7 by irwitat i V10.1991. 3.6 i 1,91 0.0 i 0.0 0.0
M-29. Rozwac - pashd matt .199t. 2.1 1,2 0.0
Muka - Pag by in'ÅlaL'j Vill
by irmut. i 11.1997. J T-7.37 4.3
ETCIM Pro- Å=W t993. Esti 1995.P L A N i 99C. Totel COMPONEXT4 : FOREIGN LC)ANS5 E C r 1 0 km lYmposed and mate and iggs.
11 SC30 ment bid date befori 1994. - i ZIT. L~ Fortig 1995,1 M97 JE3RIi z- -4 5 e 7 11 12 13 14 15
0/ PÅVEMIE4T STAENGT)ýENING
Mötorolkyll 1.31 3.4 4.01 15.71 6.3 i 9.4 i
4 16.7 ;.5 ýi ^0-0- 1_ 35.7749.7 i 3,7 13.3 12.81 13.5 i 20.0 i 1 46.31 18.5 i Z7.8 i
i 71 #.a 8.6 17.8 34.5 2V, 9atidgota i 0.7 $.o! 5.0 i 5.6 6.0 16.8 8.6i too
rOTAL 0 -387.2 0.0 l 21.1 49.0: 48.8 i 53.5 70.4 i 0.0 172- 7 69. 1 Ja3.6 0.5 19.2 22.0 fROt.MINE MAINrENANCE
7-14 23.6 U. 1 28.2 30.4
21.5 7.9 9. .9.7 11.3SOwfied 3.4 1.2 1.21 1.2 1.9
26,925,2
14.7 1 2.0 i - 1 5.0
2.0: 2.0 0,4 20 z4Aý !JTM!ctx consul.
........... 0.4
PIGICCUL JWýd IXdi.% 2, 0 3.7 50 5.0 5.0 %so 150 i
- 42 -
Annex 3.1Page 3 of 3
CROATIA
Highway Sector ProjectExpenditure Program 1995-1997
JEarra. 1 Actj 1. I.i P 1. A t ^oes. Tos. COMPONENT POE1GN F .0~ANss t C T ION kr t. Prpo. d mall and 199s. I m
US3 r~ Wd dat* b~*ara 199M. 1 995. 199. 199r. an.O 1M9r. .9. ?ac.ig 95s 7. lnn
8 a L 4 s 1 a 10 11 12 13 4 15 is t 17 a
a AMuinISTATION - TOTAL. 20.7 es. s.; s.8 &2 I 4.6 7.7 17.71
wr os5 SEaiVICINc
•. .4.2 .1 25.0 2 .10 .
LI . 1.01 sl_. -o. f 0.0.a 1 l ..5 6.5
2. I. .. .. ._ .4. v a .7 4 .1 i 1.2 9.0 = 1 .__ a
L s w 0an IL c.a1 1.41 Z.1 2.. - 4.7 4.7laso m M.o ..01 _ .
L. iso . gu.sas3.8l saL 1 1 1 1 .o o.o ~j4 1... (i YU.i _-1s _._. .
s. sso u.__ts5.. s 3.8! 14.1 1.
to. Isa .ar..o.0 1 031 1 0.0. .lWT. 9c Dn~ m*00y0 snt~ IIU2 .1 i. ;0 1 2. 1.Il 1. .1 I i. .
Maofl Z~_VJ.981 I__ W)2_I____ IM sfiL .1 1.1 o 1 1.112982
o.0
1..r. OI... Oraw. ( -- 305n.0 J a fintrn'ai.| 13.cs.sa l.O 2.1 2.9 . . .
U.ae. 'Co.no . ... k Pae (m -- ) saa.o 1 1.8 i ny invazj. v.1es.! 0.4 0 .? 0 .7 . . .
M-3, Mag.nidO Zd j[n4 27U.o 14.21 p rutin 1 Iso.oUs 0.2 1.0o 0. 0.5 11.9 12.± 4.7 8.2J 1
-43
CROATIAHIGHWAY SECTOR PROJECT
Guidelines for the Level of Economic AnalysisNeeded for Different Road Works
I. Major New Construction (Level 1)
For such work full-fledged feasibility studies must be carried out in accordancewith the Guidelines (revised) for road investment projects. While no specific lower estimatedvalue can be given for this type of work, we envisage that such studies should apply to allroadworks above $5.0 million equivalent and bridgeworks above $1.5 million equivalent.
II. Rebabilitation and Betterment Works (Level 2)
For such road projects with a total cost of between $1.0 million and US$5million equivalent detailed feasibility studies are not required. However, adequateinformation and analysis should be carried out to indicate the economic viability of theproposed work. These should include traffic projections, benefit calculations (both vehicleoperating cost savings and travel time savings), economic cost of the proposed project anddiscounted streams of cost and benefits giving the expected internal rate of return.
III. Minor Work (Level 3)
For minor works with a total cost of less than $1.0 million equivalent, theeconomic assessment of the project should be confined only to the relationship betweentraffic volume and the rate of return expected at that volume. Such relationships can beestablished from the results of existing feasibility studies carried out for road projects withdifferent types of terrain and hence unit costs.
-44 -
Annex 3.3Page 1 of 7
CROATIAHIGHWAY SECTOR PROJECT
PAVEMENT MANAGEMENT SYSTEM
1. The purpose of this Annex is to assess the status of PMS development in H.C. and torecommend further actions for its full implementation by 1997.
2. Although H.C. started to implement its PMS in 1987, full implementation stillrequires the Government confirming the adoption of the PMS as a highway management tooland committing to a timetable for a) completing the road data base system, b) purchasing thecomputer hardware, c) providing and installing decision making models and d) assigning andtraining a team to operate PMS.
3. To assess the status of HC's PMS, this annex will review first its scope anddevelopment of its components and explain the reasons for its slow implementation. Then itwill present an action plan, including a timetable, to make PMS operational. Finally, it willpropose a methodology to be used until PMS is operational.
SCOPE AND DEVELOPMENT
4. PMS is a process to coordinate and control a series of activities with the objective ofoptimising resources for highway maintenance and rehabilitation (including reinforcement)particularly of pavements, and to generate the corresponding budgets and work programs.
5. The Croatian PMS essentially seeks to encompass the following aspects, which are indifferent stages of development and implementation:
(a) A unified address system, identifying and denoting classified roads, sectionsand intersections in the road network to detect road data unambiguously. Thisidentification system was completed in 1992. It is being complemented with aGeographical Information System (GIS).
(b) A road data base with objective, reliable and timely information on thestructural and functional condition of pavements, traffic volumes, maintenanceand highway rehabilitation costs, and user cost.' As a first step of the roaddata base development a data dictionary was completed by end of 1991. Thedictionary provides terminology standards and procedures and methods for datacollection. In addition to the dictionary, the data base system would cover thecollection and entering into the system of data related to: Pavement Surface
1.While this annex covers the data for a PMS, "Hrvatske Ceste" has been developing anIntegrated Information and communication System (ISAR) since 1990, which includes andIntegrated Management and Technological Information System (IMTIS) and a BusinessInformation System (BIS). These systems cover not only information for the PMS but forother aspects of Hrvatske Ceste responsibilities such as administrative matters, road safety,bridges, etc. Nevertheless, 'Hrvatske Ceste" is giving priority to the subset of data files,aiolications software and documentation aoolvinL to PMS.
-45-
Annex 3.3Page 2 of 7
Condition, Pavement Unevenness (Roughness), Pavement Strength, Traffic,and Unit Cost on vehicle operating cost and civil works involved. Collectionof the above data has been slow because of the lack of adequate equipment
(c) A computer system that continuously updates and monitors the database. Thesystem is in the early stage of development due to inadequate computerhardware.
(d) Computation models for network and project analysis that can manipulate dataon pavement conditions, the cost of vehicle operation and various strategies formaintenance and rehabilitation, to formulate annual and multiannual pavementmaintenance and rehabilitation programs. On the basis of a small pilot studydone in 1989, it was decided to try the HDMII and EBM models, developedby the World Bank, as computation models. The HDM, however has somelimitations and needs to be adapted to local conditions, particularly to existingclimatic conditions (freezing and thawing) that influence pavementdeterioration. Ongoing research includes the local calibration of HDM andconnecting the HDM and EBM systems to the database system.
(e) Institutional and technical aspects, including the assignment and training ofstaff to operate PMS. The functions of PMS staff include the coordination ofthe various units participating in the PMS, such as consultants, monitoringservices contractors, engineering institutes, and universities to carry outspecific tasks including possible multiannual contracts to monitor pavementsurface condition, roughness, and deflexion through the use of multifunctionalvehicles. Also, they would include the preparation and implementation of stafftraining programs.
6. Implementation of several of the above aspects have been hampered by the war.
Acquisition of the necessary computer hardware and software, and of the communication and
measuring equipment required were delayed. In addition, parts of the network areinaccessible and traffic on the entire network has significantly reduced, making datacollection difficult and sometimes unreliable.
ACTION PLAN
7. A PMS should be considered implemented only when the recommendations of thesoftware are routinely used in selecting pavements to repair, allocating funds amongcompeting pavement requirements, determining overall network needs, and justifying fundingneeds to governing authorities and the public. In this respect, a series of actions are neededto continue the development and implementation of PMS in Croatia and to ensure its
systematic operation. First, H.C. should prepare a policy statement confirming the adoption
of the PMS, as well as its objectives and organization. The statement should be well
published and distributed among H.C. staff and other interested groups. Second, H.C.
should carry out the action plan that it has prepared for strengthening the further
development and implementation of its PMS. The action plan envisages that HC's PMS will
be fully operational by 1997 and that starting 1998 the budget for highway rehabilitation,resurfacing and maintenance will be prepared and monitored through the systematic use of
PMS. Table 1 presents the timetable for the action plan indicating the main actions and their
timing, and tables 2 and 3 detail the equipment, services, and technical assistance needed."n .- jr--*. -
-46-
Annex 3.3Page 3 of 7
PROVISIONAL METHODOLOGY
8. Considering the present conditions in Croatia (para. 6) and that PMS will only beoperational by 1997, the Bank's appraisal mission proposed that HDMIII voc in conjunctionwith pavement deterioration, based on Croatian engineering experience, be used forpavement analysis until PMS is fully operational. Table 4 presents a matrix with provisionalstandards for pavement rehabilitation, resurfacing and maintenance that would be used for theselections of Mrvatske Ceste's 1995-97 Highway Rehabilitation and Resurfacing Program.
-47T'
Annex 3.3- Page 4 of 7
Table 1 PMS IMPLEMENTATION SCHEDULE
Implementadon Schedule 1987 18 199 1990 1991 1992 1993 1994 1995 1996 1997 1993
A. PMS
1. PMS development study - Pilotstudy '(Phase I)
2. PMS development study (Phase II) I
2.1 Data dictionary
2.2 Data base applicationSW
2.3 HDM II and EBMAnalysis
3. Establishment of computerized
3.1 Address system
3.2 Road inventory(geometrical elements,road structures, roadequipment)
S3.3 Pavement data
3.4 Traffic and trafficaccident data
3.5 Vehicle operation costsand road maintenanceunit costs
4. Computerized decision - makint models (selection and
5. Purchasing of equipment
6. Road condition monitoring
7. System in operations*
B. BM
1. Development project
2. Establishment of data base (inventory, construct,
3. Unit costs
4. Computerized decision - makingmodels
5. Monitoring of bridge condition
6. System in operation
-48 -
Annex 3.3Page 5 of 7
Table 2 TENTATIVE LIST OF EQUIPMENT FOR PMS
Seq. No. Description Quantity Unit Price Estimated Date of Year estimate costCosts biding (in thousand dollars)
I Equipmes foc traffic counting andvehicle loading measuring
1.1 Equipment for traffle measuring 758,000
1.1.1 Automatic counter 30 15,000 450.000 '96
1.1.2 Dais processing equipment 10 8.000 80,000 '96
1.2 Vehicle loading measuring
1.2.1 Dynamic weighing machine 4 15,000 60,000 '95 & '96
1.2.2 Static weighing machine 42 4,000 168,000 '95
2. Special equipment for monitoring 615,000road conditions
2.1 Equipment for data storage.analysis and connecting with 1 120.000 120.000 '96information system
2.2 Traction device for measuring ofgriping, including vehicle SKID- 1 180,000 180,000 '95TESTER
2.3 Traction device fbr measuring ofdynamic loading, including vehicle 1 180,000 180,000 '97DYNATEST
2.4 Prolensetr 1 100,000 100,000 '97
2.5 Modular assembly for existing 1 20,000 20,000 '95device BUMP-ITEORATOR
2.6 Modular assembly for existing 1 15,000 15,000 '95device LACROIX
3. Computer technology 3,027
3.1 Software
3.1.1 Operating system software (UNIX, 110,000 '9DOS, communication software)
3.1.2 Database and programming tools 330.000 95
3.1.3 Application software 400,000 '95 & '96
3.1.4 01S. CAD Software 350,000 '96
3.2 Hardware .537,200 '95 & '96
3.3 Communication equipment 300,000 '95-97
TOTAL F,400,200 2003 2017 380
- 49 -
Annex 3.3Page 6 of 7
Table 3 SERVICE CONTRACTS AND CONSULTANCIES
Input Estimated Service Estimated year costsDESCRIPTION (man months costs (000 period (in thousand dollars)
or service unit) USS)
A: SERVICE CONTRACTS
I Measuring of fUnctional featurzs ofpavement condition by multifanctional 7,000 km/year 400 '95 - '98device ______-
B: CONSULTATIONS
1 Routine road maintenance management 3 60 '96 - 98
2 Pavement management, planning,programming, (PMS) based on HDM 15 300 '95 -*97
3 Execution of road maintenance activities2 40 '95 -'96
4 Bridge management system 10 200
TOTAL B 30 600
C: TRAINING
Training costs (seminars, studies, visits,seminars, workshops etc. 600 '95 - '98 g
Total A - C 1,600 400 400 400 400
- 50 -
Annex 3.3Page 7 of 7
Table 4: Highway Rehabilitation, Resurfacing and MaintenanceProvisional Standards for Flexible Pavement Rehabilitation,
Resurfacing and Maintenanceand Estimated ERR
Remedial Actions
Road Condition Good Condidon Fair Condition Poor Condition
IRI <3 3-5 S-7
HC Category 0 1&2 3-5
Clan I Class H_
Strategy Routine Maintenance Repair and Rehabilitation ReconstructionPeriodic
Traffic Maintenance
Under 1000vpd 1 (2)? 2(7) 5 (21) 8(70)ERR >100 25 17
1000 - 3000 vpd 1(2) 3(24) 6(35) 9(110)ERR 80 35 15-20
3000 - 7000 vpd 1(2) 4(30) 7(45) 10(125)ERR 80 50 35
7000 - 12000 vpd 1(3) 4(35) 7(70) 11(150)ERR 80 50 55-dS
Over 12000 vpd 1(3) 4(40) 7(90) 12 (200)ERR 80 so 15-30
1 Continue regime of normal routine 7 Repair surface and base; patch2 Patch and repair surface 8 Reconstruct or repair and patch3 Patch and repair surface; surface treatment 9 Reconstruct or repair, surface treatment4 Patch and repair surface; surface treatment 10 Reconstruct or repair; thin overlay
or thin overlay 11 Reconstruct or repair plus overlay5 Repair surface and base; patch 12 Rebuild road6 Repair surface and base; surface treatment
Maintenance Strategies(for the network In sound condition)
* Annual routine maintenance, including winter mstatenance and normal amounts ofpatching at about US$2000/km
* Surface treatment at about seven year intervals to Improve skidding resistance andwaterproof the pavement at about USS240001km
* Provision of regulating layer plus a 4 cm. asphaltic overlay, with normal minor pavementrepairs at about USS70000/km. Frequency depends on pavement design and trafic buton average about every 14 years.
- 51 -
Annex 3.4
CROATIAHIGHWAY SECTOR PROJECT
Tentative List of Highway Maintenance Equipment
DESCRIPTION Quantity Unit Price Estimated Cost ProposedUSS bid date
Conducting systen of tunnel Ucka" 1,000.000 3/95
Universal vehicle with attachment and tools for road maintenance 7 120,000 840,000 6/95
Backhoe loader 3 70,000 210,000 6/95
Grader 2 140,000 280,000 6/95
Vibratory rollers 10 20,000 200,000 6195
Rotary salt spraying machine 8 35,000 280,000 6/95
Equipment for bridges maintenance 190,000 6/95
TOTAL 1995 3,000,000
Universal vehicle with attachment and tools for road maintenance 9 120,000 1,080,000 3/96
Tractor with attachment 4 50,000 200,000 3/96
Grader 3 140,000 420,000 3/96
Backhoe loader 9 70,000 630,000 S/96
Vibratory rollers 9 20,000 180,000 3/96
Rotary salt spraying machine 9 35,000 315,000 3/96
Equipment for bridges maintenance 180,000 3/96
TOTAL 1996 3,005,000
Universal vehicle with attachment and tools for road anintenace 5 120,000 600,000 5/97
Tractor with attachment 7 50,000 350,000 5/97
Grader 2 140,000 280,000 5/97
Backhoe loader 2 70,000 140,000 5/97
Trucks (winter service) 4 80,000 320,000 5/97
Layer finisher 3 120,000 360,000 5/97
Rotary salt spraying machine 12 35,000 420,000 5/97
Vibratory rollers 4 20,000 80,000 5/97
Roadwork vehicle (2t) 15 30,000 450,000 5/97
TOTAL 1997 3,000,000
TOTAL 1995-1997 9,005,000
- 52 -
ANNEX 3.5Page 1 of 12
CROATIA
RIJEKA PORT STUDY
Draft Terms of Reference
I. BACKGROUND
1. The Croatian ports have been subjected to fundamental changes in the conditionswhich affect their operations. The independence of Croatia, the war in former Yugoslavia,the ensuing political and economic changes have contributed to dramatically reduced trafficvolumes and changes in hinterlands. Also, the questions of ownership, relations between thestate and the port administrations, privatization, financial performance, etc. have to beredefined, taking into account the changes that have already occurred, as well as the newdirections for economic and political developments.
2. Rijeka is by far the most important of the Croatian ports, accounting for about twothirds of total port activity. Although traffic has dropped by about 70% from the late 80's, itis a port of great importance, not only to Croatia, but also potentially to neighboringcountries.
3. A preliminary study of the situation of the Croatian ports (Les ports croates, Apis &Sofremer, Paris, January, 1994) has been carried out.
II. OBJECTIVES OF THE STUDY
4. The purpose of the present study is to recommend actions for and by the port of.Rijeka so that it would make an optimal contribution to the development of the Croatianeconomy. The overall policy foresees the ports being transformed into so-called landlordports, with as much scope as possible for private participation in the investments andoperations of the ports. Within this framework the study would investigate and propose thefollowing:
(a) based on internationally observed trends and development with regard toshipping, trade facilitation, port equipment and operations, as well as likelydevelopment scenarios for Croatian trade, a perspective of what functions andcapacities the port of Rijeka will have to provide for 2000, 2005 and 2010;
(b) a report on current and prospective land tenure situation in the port and maritimeindustries areas based on site visits and interviews with authorities and enterprises
AN53 -
Page 2 of 12
managing of the maritime sector; such report shall also include recommendationsregarding optimization of land use and management policies;
(c) a report on present, proposed and recommended laws, together with theconsultants' proposals for changes in the legal structure;
(d) recommendations for a suitable institutional framework and appropriate policiesregarding the port sector, based on a review of the strengths and weaknesses ofthe current situation, as well as a study of different alternatives taking intoaccount measures under preparation or recently implemented;
(e) based on an analysis of the efficiency of port operations, as well as anidentification of constraints and bottlenecks affecting the smooth flow of goodsand documentation through the port system, recommendations for operationalimprovements that could be introduced with no or minor alterations to existingfacilities and equipment;
(f) suggestions for adapting the organizational structure and management systemsbased on a critical review of the suitability of the existing organizational elementsfor achieving efficient administration and operation of the port;
(g) an overview of the present financial situation, as well as financial forecasts undervarious assumptions;
(h) master plan for the broad long-term development of the port based on foreseenfuture traffic, an assessment of the capacity and service provided by existingfacilities, as well as likely competing ports' volumes and capacities. The masterplan shall include inter Uia: (i) recommendations on the uses and regulation ofland and water areas within the port; (ii) access and circulation plans formaritime, road and rail traffic; (ii) outline of the principal port installationsproposed; and (iv) recommendations to reduce the negative impact of port relatedactivities on the environment;
() feasibility studies for recommended investment program for rehabilitation anddevelopment, including preliminary engineering, environmental assessments, costestimates, economic analyses and financial plan; the program shall rate thealternatives for development, indicate the implementation time schedule andspecify the professional services needed to expedite the next steps required toimplement the programs; and
(j) a detailed phased program of actions to achieve the recommended changes andimprovements, including recommendations on training and other technicalassistance.
-54-
ANNEX3.5Page 3 of 12
m. SCOPE OF CONSULTING SERVICES
5. The Consultants shall perform all engineering work, the collection and analysis ofoperational, economic and financial data and other work herein described, as required toattain the objectives set forth in Section II above. The Consultants shall conduct thesestudies in consultation with the Ministry of Maritime Affairs, Transport and Communications(MMATC), the port, as well as other agencies involved.
6. The services shall be carried out in four phases, as follows:
PhasI shall comprise the reviews, studies, analyses and forecasts necessary toprovide a perspective of the future role and functions of the port of Rijeka withpreliminary recommendations for Government policies and actions, especially thoserelated to the legal and administrative context. It shall be completed within twomonths and followed by the organization of a study tour for a group of Croatiandecision-makers in the port sector and relevant Government agencies to WesternEurope to review relevant experience of port administration and management
PhseI shall comprise recommendations for improvement of port operations andpreparation of the suggested changes in the administrative structure and managementsystems of the port. Work concerning Phase II of the study shall commence duringPhase I to allow completion of Phase I within three months of the completion ofPhase I.
Phase shall comprise preparation of the master plan with a phased program ofactions as well as preliminary analyses and recommendations regarding the investmentprogram for rehabilitation and development of the port. Phase III shall be completedwithin two months of the completion of Phase U.
Phase IV shall comprise discussion of the master plan and development programs withthe Government, agencies and enterprises concerned, finalization of the said masterplan and feasibility studies. Phase IV shall start immediately upon completion ofPhase III and shall be completed within two months of the agreement of the relevantauthorities to proceed with finalization of the mater plan.
7. The consultants' services shall include, but not necessarily be limited to, the followingactivities.
- 55 -
ANNEX 3.5Page 4 of 12
Traffic Studies
8. International Trends and Developments. The Consultants shall review internationaltrends concerning methods of packaging, handling, storage, as well as type and size of ships.The Consultants shall also collect information concerning available facilities and level ofservice at competing foreign ports, as well as at the other end of the major trade routes.Based on this review, the Consultants shall assess the changes likely to affect foreign tradeand handling operations at Rijeka.
9. Commodity Flow Forecasts. The Consultants shall review and analyze in so far asthey are available and relevant, data on past traffic, as well as projections made by thegovernment agencies and the port for future traffic. The Consultants will also take intoconsideration the behavior of the major shipping lines and their plans in order to estimate thecompetitive position of Rijeka. Based on this review and on the international trends,complemented by interviews with major exporters, importers, and freight forwarders, theConsultants shall prepare forecasts for the years 2000, 2005 and 2010. The forecasts shallbe given by main commodity groups separated into incoming and outgoing. The Consultantsshall also give their own assessment of the forecast traffic, including transit traffic to andfrom neighboring countries.
10. Estimates of Unitizable Cargeos. Using the above forecasts of commodity flows andin view of the international trends and developments, the Consultants shall estimate theamounts of traffic that could be containerized, pelletized, transported as unit loads aboardroll-on roll-off vessels, or that could be considered for pre-slung or multi-hook cargo modeof carriage (conventional liner, specialized pallet ship, Ro-Ro ship, cellular container ship,specialized semi-bulk carrier).
11. Movements of Vessels. Based on the traffic distribution above, the Consultants shallindicate the likely number, type, size and calling patterns of vessels for 2000, 2005 and2010, taking into account likely changes in maritime trade and international shippingservices.
Preliminary Site Investigations
12. The Consultants shall review such data as is necessary for the purposes of the presentstudy. Based on this review, the Consultants shall define the scope of additional surveys(including subsurface investigations, environmental analyses and laboratory soil tests)required for the study of alternatives, the preparation of the master plan and the feasibilitystudies of the investment proposals to be included in the development programs for the port.
- 56 -
Page 5 of 12
Land Use Survey
13. The Consultants shall prepare an inventory of existing and potential use of allavailable areas in the vicinity of the port, including industrial and urban areas. Theinventory should identify, for each area, its size, land tenure, maritime access, hinterlandconnections, and available services. The Consultants shall review industrial developmentplans and possibilities for each port area in so far as they may affect future land arearequirements for long-term port development. The Consultants shall also review andcomment the zoning plans, land management policies, and legislation affecting the port area.Based on this review, the Consultants shall: (a) determine whether the eventual distributionof port facilities, maritime industries, urban centers, and hinterland connections, is the mostappropriate use of land; and (b) recommend appropriate actions regarding land use, landmanagement policies, and their impact on master plan activities, particularly in view of thepriority given to the efficiency of the port system.
Institutional Framework and Port Policies
14. Ownership and Organization of the Port. The Consultants shall: (i) analyze theinstitutional framework in which the port operates, the respective roles of the Government,the port authority, as well as other agencies and enterprises operating in the port andmaritime sector, especially in respect of ownership, services, rates and investments; (ii)review the organization, particularly the functional responsibilities and authority of thevarious departments; and (iii) review current orientations and recent decisions of theGovernment regarding ownership of ports assets, degree of Government participation, andfuture role of the private sector. The Consultants shall also provide an assessment of thecurrent trends regarding the legal and constitutional basis on which ports are managed in anumber of countries of direct relevance, as well as on recent measures and proposals toincrease the involvement of the private sector in the management of ports. Based on theabove analyses, the Consultants shall: (a) discuss the pros and cons of various alternativesfor ownership and organization of the Rijeka port with their financial, economic and otherconsequences; and (b) provide recommendations regarding the respective roles of theGovernment, local authorities, and the public and private sector, as well as the necessaryconditions for arriving at an optimal solution.
15. Port Policies. Based on a review of the socio-economic changes and discussion withdecision-makers concerned, the Consultants shall assess the broad impact of economicpolicies on port development and policies. The Consultants shall review the current situationregarding financial responsibilities, planning responsibilities, land-use policies, labor policies,investment and tariffs in the port sector. Based on the foregoing, the Consultants shallprepare recommendation for policies requiring revision or further elaboration to achieve theobjectives of providing an efficient port system. In addition, the Consultants shall discusswith relevant authorities the policies, regulations and practices considered to be of relevance
- 57 -
Page 6 of 12
for the future financial position of the port. These may include (but should not be limitedto):
(a) the Governments financial support for port investment and/or port operations;
(b) provisions for depreciation and renewal of port assets; and
(c) pricing of port services (to vessels, cargo, other users).
Recommendations on any of these issues shall be made by the Consultants in Phase I insofaras they are related to the institutional framework and/or to Government policies. Thedialogue initiated in Phase I shall be carried into the subsequent phases of this study to assistin optimizing the organizational structure of the enterprises, as well as to provide a basis forthe financial analysis and tariff recommendations.
Analysis of Present Port Operations and Facilities
16. Review of Current Practices and Facilities. The Consultants shall review all availabledata and information on current handling operations and shipping patterns of the variousterminals. The Consultants shall observe and analyze current operating procedures andpractices and discuss present and prospective operational problems with personnel responsiblefor terminal management and with port users. Special attention shall be given to laborrestrictive practices, if any. The Consultants shall also review inventories or existing portfacilities and equipment and assess the present conditions and future utility of majorcomponents. While the main focus of these studies shall be on operations for existingfacilities, consideration shall be given to the operational impact of future traffic and terminaldevelopments currently under consideration. The Consultants shall, in particular, study themovements of cargo. This shall include the analysis of the facilities, equipment andprocedures used in receiving, transit storage, long-term storage and loading of cargo.Particular consideration should be given to: (i) the present and prospective use of containersand unit loads in international trade and their implication for customs and port services; (ii)the interaction of inland transport modes with shipside and transit operations; (iii) theinteraction of port related inland traffic with urban in the vicinity of the port area.
17. Study of Alternatives for Improvement. Based on the foregoing, the Consultants shallstudy and discuss with the relevant agencies the alternatives for improvement that could beintroduced. This shall result in preparation of a detailed program of recommended actions,designed to increase efficiency and throughput capacity. Operational improvements andorganizational changes to be considered during Phase II of the study shall be limited to thosethat could be introduced without delay and/or with no or minor alterations to existingfacilities and equipment. During Phase III and Phase IV of the study, the Consultants shallprepare other recommended actions requiring significant changes in procedures and/orsubstantial alterations to existing facilities and equipment.
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ANNEX 3.5Page 7 of 12
18. Port Capacity. The Consultants shall make a preliminary assessment of the presentand prospective capacity for various types of cargo. Capacity shall be estimated on the basisof different scenarios: (i) existing conditions including installations, equipment, allocation ofspace, access, and inland transport; (ii) improved operations with little or no investment.The Consultants shall then assess the variations, if any, between this capacity and therequired capacity as established in para. 8 above. They then shall make recommendationsfor investment for the years 2000, 2005 and 2010.
Organizational Structure and Management
19. The Consultants shall review the present organization and make recommendations forthe establishment of an effective organization which will be responsible for theadministration, maintenance, operation and development. The views of Government agenciesand private parties connected with and using the port shall be taken into account informulating the recommendations to ensure effective functioning.
20. Based on their recommendations regarding the organizational structure, theConsultants shall prepare projections of the staffing needs. The Consultants shall alsocompare the staffing needs with the projected natural evolution of the composition and supplyof port labor in order to highlight any surplus or shortfall. Based on the foregoing, theConsultants shall prepare recommendations for ensuring adequation between supply anddemand for labor, including suggestions for retraining and labor redundancy schemes.
21. The Consultants shall discuss with the management and staff of the relevantorganizations the principles and procedures used in the financial management of the port(including such topics as management reporting and control, financial results, auditing,establishment of port tariffs, and forecasting of port revenues and costs). This shall becarried out to the extent necessary to evaluate the financial performance and present financialposition. This assumes access to all relevant materials, including past financial reports. TheConsultants shall also assess the extent to which comparison of revenues with costs for eachservice rendered and by cost centers is obtainable as a basis for devising appropriate cost-based tariffs. Based on the foregoing, the Consultants shall recommend appropriate actionsthat may be required to help management make sound financial decisions.
22. The Consultants shall review the systems of port statistics and performance indicatorsand recommend any improvement deemed necessary in view of the trends in traffic andchanges in the organizational structure. They shall also indicate required developments inthe marketing function and recommend a program of appropriate actions in this regard.
23. The Consultants shall identify areas in port operations, administration, finance,information systems, and marketing in which training overseas, and/or seminars organized inCroatia, would be useful. They shall prepare an outline of the training programs andseminars together with an estimate of the number of staff to receive training.
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ANNEX 3.5Page 8 of 12
Master Plan Studies
24. The Master Plan shall include, but not be limited to, the following primary tasks: (i)broad long-term traffic forecasting; (ii) identification of long-term land and water areasrequirements; (iii) preliminary estimation of long-term investment needs; and (iv) land usestudy.
25. Based on their traffic forecasts and the present cargo handling capacity, theConsultants shall define the need for additional cargo transfer and storage facilities for theperiod up to 2010. The Consultants shall determine the type of commodities and classes ofcargo to be handled at the new facilities and analyze the requirements for navigation channeland harbor basin improvements, berths, transit sheds, open storage and parking areas,warehouses, access by road and rail, cargo handling and floating equipment, all requiredservices (water, oil, electric power, etc.) and auxiliary shore facilities such as offices andmaintenance shops, ship repair and bunkering facilities, emergency equipment.
26. The Consultants shall prepare and evaluate alternative layouts for new developmentsby stages, taking into account the hydraulic, sedimentologic and foundation conditions at thesites, road and rail connections, and the land and water areas required for functional andjurisdictional purposes. The plans shall indicate the general dimensions and locations for allmajor facilities and the proposed sequence of construction by stages. They shall estimate thedemands for water supply, sewerage disposal, power, gas, etc. They shall also carry out apreliminary environmental assessment of the facilities to be developed including anassessment of the compatibility of proposed developments with the urban and socialenvironment of the port. In addition, the Consultants shall provide suggestions regarding theuse of waterfront lands not required for maritime activity.
27. For the stages of construction recommended, the Consultants shall indicate thegeneral dimensions, location and major features of the proposed designs, in sufficient detailto provide an adequate basis for construction quantity and cost estimates. The preliminarydesigns shall specifically include the rail and road access systems insofar as they are locatedwithin the areas under the jurisdiction of the port administration. These designs shall bebased on an operational analysis of capacity requirements.
28. Based on the foregoing, the Consultants shall provide order-of-magnitude investmentsrelated to the different scenarios developed above for traffic distribution (alone and incombination); potential benefits; financing timing and foreign exchange implications, thenrate the scenarios in economic and financial terms as well as probability (includingidentification of policy change requirements). The Consultants shall identify the sensitivityof the solutions to external effects and/or assumptions made, as well as further datarequirements (including field investigations, market analyses and/or efficiency estimates).
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ANNE 3.5Page 9 of 12
Feasibility Studies
29. Engineering Studies. The Consultants shall prepare preliminary engineering designsfor the recommended rehabilitation and development program. The Consultants shall definea program and budget of additional surveys, field investigations and testing which might berequired for detailed engineering. The Consultants shall prepare an appropriate schedule forsuch engineering and identify any operational problem which would need to be consideredduring design, tendering or construction. Special emphasis should be given to potentialenvironmental issues.
30. Cost Estimates. The Consultants shall prepare estimates of the cost of finalengineering, construction, equipment acquisition, operation and maintenance for therecommended investments, with breakdowns of the quantity and unit prices for each major.item of construction. The estimates shall identify foreign exchange and local currencyrequirements and include adequate provisions for physical and price contingencies. TheConsultants shall indicate the basis on which these estimates have been calculated.
31. Economic Studies. The Consultants shall carry out an economic evaluation ofalternative development schemes with a view to determine: (a) the optimum size; and (b) theoptimum time. For this purpose, the Consultants shall evaluate the economic feasibility ofeach investment proposal by a comparison of the economic benefits to be expected from suchimprovements in the context of the overall transport system with the capital, maintenance andoperation costs involved. The benefits to be considered shall include: (1) decreasedmaintenance, operation and servicing costs for the existing and proposed facilities; (ii) lowerinventories and/or cargo losses in transit; (iii) savings in cargo handling costs, ship operatingcosts and transport costs (due to the use of larger ships); and (iv) savings in truck and trainoperating costs related to inter-modal operations. The costs to be considered should includethe costs of improvement, equipment purchase and maintenance of facilities andinfrastructure associated to the proposal.
32. Financial Studies. The Consultants shall make a forecast of the financial situation ofeach of the three target years. Revenues shall be based, in the first instance, on the latestapplicable port tariffs; costs shall include all port operations, terminal facilities, repairs andmaintenance, administration, depreciation and financing charges. The analysis shall forecastthe incremental expenditure and revenue arising from the implementation of the project.
33. Triffs. Based on the financial analysis above, the Consultants shall recommendchanges in the structure and level of port charges that are in their opinion justified to achievesound financial results. The Consultants shall also recommend revisions in tariff policy to:(i) create incentives for the efficient use of port facilities; (ii) distribute the perceived benefitsfrom the investments made between users and the port authority; (iii) maintain the port in ahealthy financial position; and (iv) provide a satisfactory return on investments. The tariffpolicy shall be applied in a recommended structure and level of port charges, taking into
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ANNEX3 3.5Page 10 of 12
account the need to cover all port costs, including a reasonable financial return on fixedassets, and to simplify collection procedures, minimizing administrative costs to the ports.
34. Sensitivity Anlses. The economic evaluation shall include a sensitivity analysiswith respect to the most relevant parameters. The Consultants shall also carry out financialsensitivity analyses, indicating the effects of cost overruns, variations in tariffs and operatingcosts, and traffic uncertainties: These analyses shall identify important financial issues andnecessary actions to be taken by the Government and the port enterprises.
Program of Actions
35. The Consultants shall prepare an outline of all actions required by the Governmentand by the port to implement the proposed changes and investment programs, including therecommended timing of each step. This shall comprise actions considered necessary for:
(a) acquisition or rental of land into now under jurisdiction of the port authority (ifrequired);
(b) coordination with urban and industrial development and other required municipalor regional coordination;
(c) selection, contract negotiation and contract award for required consultingservices;
(d) arrangements for project financing;
(e) preparation, review and approval of contract documents for construction andequipment acquisition;
(f) contractor prequalification, bid advertising, evaluation of bids, contract awardand contract execution;
(g) provisions for adequate maintenance of port facilities;
(h) staff recruitment, and/or training, and/or organizational changes required forimplementation and operation of the new projects;
(i) necessary changes in port and customs procedures to facilitate foreign trade;
0) program for implementation of recommended tariff structure and levels; and
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ANX3.5Page 11 of 12
(k) any other steps recommended by the Consultants to support the developmentprograms and associated measures to ensure effective implementation of therequired improvements.
36. Seminars. Once a month, the Consultants shall give a one-day seminar for officialsconcerned covering the results of work undertaken in the previous month; the design of thework plan for the coming month; and the relationship between progress and total workremaining. The seminar shall also cover the methodology, and in the feasibility studies,relevant techniques. Whenever possible, the Consultants shall arrange for at least one topicto be introduced by a member of the counterpart team.
37. Training Prgam. The Consultants shall review the training program and facilitiesinsofar as they are relevant to the effective implementation of the recommended changes anddevelopment programs Based on this review, the Consultants shall define the. scope, methodsand cost of additional training required during the three-year period following the completionof this study.
Time Schedule and Reporting Requirements
38. The Consultants shall submit the following reports within the time period an dinquantifies indicated:
Number of Cpies Timing (n monthsfrom Starting Date
Phase I Report 20 2Phase II Report 20 4Phase III Report 20 6Phase IV Report 20 8Draft Final Report 20 9Final Report 20 (*)
(*) Within 30 calendar days of receipt of comments on the Draft Final Report.
Half of the requested number of copies of each report shall be submitted in Croat with theother half being submitted in English.
(i) The Interim Reot shall summarize all work performed during therespective Phase of the study and present the findings andrecommendations of the Consultants regarding the tasks performed.
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ANNEX 3.5Page 12 of 12
(ii) The Draft Final Report shall incorporate the Consultants' findings of theprevious reports taking into account the comments received andrecommendations arrived at during discussions of the draft reports. Itshall have a concise executive summary and contain the full text,graphics, charts and tables to be presented in the Consultants' FinalReport, in edited form and suitable for final reproduction. The EW881R=rt shall reflect all revisions the consultants deem appropriate afterreceipt of comments on the Draft Final Report.
39. The reports shall contain a concise summary of all major findings anrecommendations of the Consultants. The estimates of costs and benefits and all economicanalyses shall be presented in sufficient details to permit checking of all calculations withoutsupplementary data. The draft reports shall be carefully edited and complete, so thatproduction of the final reports can proceed without delay. Two sets of maps and drawings inlarge scale shall be provided with the reports for presentation purposes. Floppy disks and areproducible copy shall be provided for the purposes of reproducing the text of the study.
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Amne 3.6Page I of 5
CROATIAFIRST HIGHWAY SECTOR PROJECT
Terms of Reference (TOR) for Consultant Assistancefor Hrvatske Zejeznice (HZ-Croatian Railways)
1. Background
1. Over the past three years (HZ) traffic has declined by about 73% from 10.0 billiontraffic units in 1990 to 2.7 billion units in 1993. In addition, operations on an extensive partof the railway system have been interrupted as outlined in Attachment I (HZ to provide map anddescription). These changes have had a major impact on HZ's financial position requiring majorcontributions from government to enable HZ to continue it's operations. It is essential that thelevel of these subsidies be substantially reduced as soon as possible. To assist HZ in this task.proposals are invited from consultants to review HZ's operations, make recommendations onmethods for reducing costs and increasing productivity and assist in the implementation of theagreed recommendations.
H. Objective of Study
.2. The objective of the study is to identify and implement a program of actions to improveHZ's financial performance and reduce its reliance on Government subsidies to cover operatingexpenditure. The fall in HZ's traffic due to the economic transformation of the former socialisteconomics compounded by the damage and disruption to the rail infrastructure and equipmenthas had disastrous effects on HZ operations and financial results. To mininize the financialimpact of these events on the economy, it is necessary to review all aspects of HZ's operationsincluding train formation and scheduling, staffing, tariff levels etc. with a view to reducing HZ'scost to a minimum, increase productivity and enhance revenue. The consultant is required toassist HZ in undertaking this review and assist in the implementation of approvedrecommendations.
3. To undertake this study, it is envisaged that the Consultant's team would consist of twoor three specialists who have wide experience in the following fields:
- railway tariff setting- railway and government public service obligation (PSO) contracting procedures.- evaluation of the economic viability of railway lines- railway traffic operations/management- repair and maintenance of rolling stock and some knowledge of track maintenance
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Annex L§Page 2 of 5
- contracting procedures for maintenance with third parties.
Special experience in development of short-term strategies improve the financial positionof railway enterprises.
IM. Scope of Consulting Services
4. The consultant shall undertake the studies in close consultation with HZ, Office ofRestructuring and Economies of State Owned Enterprises, which has special responsibilities forrestructuring major state enterprises including HZ, and the Ministry of Transport andCommunications. The consultant should closely co-ordinate his work with his Croatiancounterparts so that they are kept fully conversant with all aspects of the work. The service tobe carried out are outlined below. The consultant may propose other areas to HZ for study.
Current Traffic Levels and Train Schedules
S. - Review current passenger traffic on various segments of track.- Review current freight traffic on various segments of track.- Evaluate current train schedules and train composition and composition.- Make recommendations for revised train schedules.- Quantify savings
Rolling Stock
.6. - Review current levels and conditions of rolling stock- In the light of proposed schedules under three above make recommendations on
levels of rolling stock which should remain in operation.- Make recommendations on mothballing or scrapping of remaining stock.- Make recommendations for purchasing high priority equipment and spare parts.- Quantify savings.
Maintenance Standards
7. - Review HZ's current maintenance practices for infrastructure and rolling stock.- Outline current practices in use in commercially oriented railways.- Make recommendations on proposed new standards for HZ.- Quantify benefits of new standards.
Staffimg Levels
8. - Review current staff levels in both the operations and other departments.- Review work methods.
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Anne 3.6Page 3 of 5
- In the light of recommendations under 3 and 4 above make recommendations onproposed staffing levels.
- Quantify savings.
Staff Remuneration
9. - Review current levels and methods of remuneration of both management andstaff.
- Review levels and methods of remuneration of management and staff in a limitednumber of progressive employers in Croatia.
- Make recommendations for paying of bonuses to managers according toperformance-based criteria.
- Make recommendations for performance-based incentive payments to workers toenable HZ to recruit and retain experienced workers.
Tariffs
10. - Review HZ's current freight and passenger tariff levels for all types of services.- Review tariff levels for road transport services in Croatia.- Review railway tariffs in selected neighboring countries.- Analyze HZ costs for operating a sample of services.- Make recommendations for revised tariffs.- Quantify projected increased revenue.
Public Service Obligation (PSO)
.11. - Review current free and concessional passenger service provided by HZ tovarious groups of customers.
- Identify categories for which there are no social justifications forfree/concessional tariffs.
- For suburban and long-distance services specify the concessions recommended foreach category.
- Provide draft contract between central/local governments and HZ for PSO. payments and method of calculating the level of payments and performance
indicators.- Quantify the annual PSO payments by various categories. (The amount of PSO
payments should be based on the revised tariffs recommended under 7 above.)
Uneconomic Lines
12. - In consultation with HZ, select branch lines representing at least 30% of thesystem for evaluation of economic viability.
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Annex 3.6Page 4 of 5
- Establish criteria and procedures for analyzing the commercial viability of thesebranch lines.
- A projection of traffic in normal times should be made. (It is most unlikely thatfuture traffic levels will exceed the 1990 level except in very specialcircumstances.)
- Calculate projected revenue based on tariff proposed under 7 above.- Estimate operating costs based on HZ current costs.- Make recommendations on the future of each branch line quantifying the saving
that could be made if closure on economic grounds is recommended.
Contracting with Former Units of HZ
13. - In 1992 a number of manufacturing, maintenance, and service units of HZ were. established as separate joint stock companies.
- Review current contracting arrangements between HZ and its former units.- Review current contracting arrangements with other local firms.- Make recommendations on changes in contracting procedures which would reduce
HZ contracting costs.
-Ancillary Services
14. - Review all ancillary services provided by HZ and make recommendations onservices that might be more effectively supplies by the private sector.
- Identify any land, building, or other assets surplus to HZ requirements.
IV. Services to be Provided by HZ
15. HZ will provide the Consultants with the following services andfacilities:
- Office accommodation- Transportation within Croatia- One translator (English /Croatian)
* - bilingual engineers- - economists/accountants
V. Provision of Data
16. One month prior to commencement of work in the field, the Consultant will provide HZwith details of traffic statistics, financial information and other data required for the study.
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Annex 3.6Page 5 of 5
VI. Reports
17. The consultant will prepare an initial report one month after the start of his assignmentdescribing his findings to date and identifying matters requiring decision. In their proposal theconsultant will include a schedule for submission of a draft report on each element of the studywhen completed. It is important that these draft reports be submitted as early as possible so thataction can be taken to implement the agreed recommendations. The last draft report will besubmitted six weeks prior to the completion of the assignment, and a final report at thecompletion of the assignment which take into account the comments of HZ, MMATC and theWorld Bank (comments to be provided within three weeks of receipt of the draft final report).The consultants will provide all reports to HZ and MMATC (12 copies in Croatian and sixcopies in English).
m:\croadalev\hwy \annx3.6
Annex 3.7- 69 - Page 1 of 5
CROATIA
HIGHWAY SECTOR PROJECT
TECHNICAL ASSISTANCE FOR A ROAD SAFETY STUDY
BROAD TERMS OF REFERENCE FOR CONSULTING SERVICES
A. Introduction.
1. Road accidents are taking a great toll on the economy of Croatia. In eachyear approximately 60,000 accidents are registered. There are about 900 fatalities and16,000 injuries in those accidents. Persons have been crippled or injured as a result andwill have a continuing drain on the economy of the country because of their inability towork and their need for extended medical care.
2. Although in terms of fatality rates per vehicle Croatia does not rankamongst the worst countries worldwide, its fatalities per 10,000 vehicles rate is high interms of industrialised economies where rates of around 2 deaths/10,000 are typical.With a rate of about 9 deaths/10,000 vehicles Croatia has a higher rate than somedeveloping countries such as Philippines (7) and'Malaysia (6).
.3. A significant amount of road safety work is already being undertaken inthe country. A National Road Safety Council (NRSC) exists and has initiated a roadsafety plan. This plan sets out a number of proposed actions and calls upon organisationssuch as the Minftry.of the Interior and Road Authority, together with the Educationsector, to co-operate with the implementation of the plan.
4. To assist the Government with its efforts to improve road safety the Bankhas agreed to provide the technical assistance (TA) to review the proposals contained inthe plan, for which these terms of reference have been prepared. The Bank will engagesuitably qualified international consultants who will undertake the activities set Outhereunder. The consultants will be selected and appointed in accordance with the Bank'sGuidelines othe_Uef Consultants.
S. It is possible that the studies which form part of this TA will identify theneed for ongoing assistance. Details of any support programme emerging from theconsultants investigations under this TA package will be required together with a furtherTA package and terms of reference. An appropriate monitoring system to cover theimplementation of this TA, and any further TA proposed, together with the operation ofthe overall road safety programme, should be included to ensure that the measuresproposed are implemented.
B. ScopL9f.the Technical Assistance
6. The TA will include the following broadly defined activities. Consultantsproposing to provide the services will take these into account in. developing theirapproach to the assignment. Each of the activities will require extensive consultation
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with organisations and individuals active in the road safety sector. Consultants shouldbear in mind that this consultation may reveal other avenues not specifically coveredby these terms of reference, but which may be relevant to the achievement of aneffective improvement in the level of road safety in the country.
a Coordination and Management of Road Safety Activities
i. Review existing arrangements, the linkages between groups andassess where improvements are required.
ii. Examine the structure of the National Road Safety Council, reviewits activities, possible methods of funding, structure, membershipand responsibilities.
iii. Establish how the strategic role of the NRSC may be reinforced,and how regional groups may be arranged to provide technical andother support.
b Accident DaaSvte
i. Review the existina data collection and storage systems, policeaccident data collection forms and any development work which
-has taken place in Croatia on any other appropriate systems.
ii. Review the accident locational information system.
iii. Make reccommendations on the best way to develop an appropriatesystem.
C. &QL4_fetvmrovement
i. Review safety aspects of existing traffic engineering and highwaydesign standards recommending improvements if necessary.
Sii. In conjunction with the authority responsible for design standardsestablish a road safety audit system.
iii. Working with local counterparts, devise a road safety designmanual to promote safer road planning and design practices for allclasses of road.
iv. Prepare a short (I week) course on blackspot analysis techniquesand present this to all highway design agencies, tFe traffic policeand existing road-safety orientated committees
Annex 3.7- 71 - Page 3 of 5
v. Review current. information on accident costs in Croatia andidentify any shortcomings in the existing values. Prepare proposalsfor a study to identify any other required elements to produce thetrue costs.
d. Driver Trainini
i. Review the current procedures and systems used in driver trainingand prepare a report outlining areas of improvement to the systemand proposing appropriate action. Identify equipment needs andprovide, after discussion with the executing agency and the Bank,proposals for the installation of such equipment.
e. Emer,zencv Ambulance/Medical Services
i. Review and update the existing studies on the arrangements,comment on the existing arrangements, response times andequipment levels together with any other operational aspects.Recommend improvements not covered by earlier reports whereappropriate.
ii. If not included in earlier reports devise an improved/alternative-system/deployment to improve response times of the ambulanceservice.
f. Monitoring
Devise and introduce a monitoring system capable of:
i. Measuring the success of the implementation of measures resultingfrom this TA package;
ii. Measuring the success of the existing systems in promoting roadsafety; and
iii. Estimating the success of the overall road safety system andidentify the areas which are failing to come up to expectations.
7. The consultant will bring together all of the recommended activities fromeach of the above groups into an action plan.
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C. Consultancy Inputs Required
8. It is expected that a total of around 6 personmonths (pm) of internationalconsultancy inputs will be required to cover the vdrious areas identified above. Theconsultant is at liberty to make alternative proposals if he so wishes. The division of thistime is likely to be as follows:
Project Manager/Leader 3 pmAccident Data System Specialist 1 pmAccident Blackspot Specialist 1 pmDriver Training Specialist 1 pm
6 pm
9. The specific qualifications and experience required for the internationalconsultancy are as follows:
i. Project Manager (3 pm)
Responsible for managing and monitoring the project, he will beresponsible for developing the strategy and coordinating the input of thevarious specialists. Accordingly he will be an acknowledged road safetyspecialist with at least 15 years experience in accident blackspot work,accident data analysis and road user education. Experience in managingsimilar projects successfully in other countries is essential, as is experiencein managing multi disciplinary teams and preparing action/master plans onroad safety issues. He must have a relevant degree or professionalqualification.
ii. Accident System Specialist (1 pm)
The accident system specialist is expected to have had previousexperience of adapting and installing accident data systems in othercountries. Experience in developing accident location coding systems andstaff training would be appropriate. He is expected to have at least 10years experience and to have a relevant degree or professionalqualification.
- 73 - Annex 3.7Page 5 of 5
iii. Accident Blackspot Specialist (1 pm)
The accident blackspot specialist is expected to be an experienced engineer
specialising in road safety. He should have worked in or led a government
agency unit engaged in identifying and improving accident blackspots. He
will have experience in all aspects of identification, analysis, ranking, and
improvement of blackspots together with experience in safety audit
procedures. The specialist should have experience of developingprocedures, the practical training of professional staff and have undertaken
similar work in other countries.A minimum of ten years experience in
addition to a relevant degree or professional qualification is required.
iv. Driver Training Specialist(1 pm)
He is expected to be an approved driving instructor. He may be
academically qualified with at least 5 years experience in appropriate
fields. He should preferably have worked in a government agency andhave a sound knowledge of driver training procedures in a number of
countries.
D. Reoorts.
10. The consultants shall prepare an inception report and submit it six weeks
after commencement of work. Copies are to be submitted to the Government and to the
Bank.
11. Brief (5 pages) progress reports shall be submitted from time to time
during the contract. These reports will summarise progress made during the previous
period. Copies are to be submitted to the Government and to the Bank.
12. A draft final report incorporating the draft findings, action plan and terms
of reference for any further work proposed shall be submitted towards the end of the
contract. The final report shall be submitted within one month of comments on the draftreport being received. Copies are to be submitted to the Government and to the Bank.
13. The consultant should indicate clearly in his proposal when the
documentation required will be nade available. Copies are to be produced in text andon magnetic disc.
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ANNEX 3.8CROATIA
HIGHWAY SECTOR PROJECT
Project Components and Estimated Cost(Millions of US$)
For.Exch. Bank
Project Component Local Foreign Total % Participat.
1 Construction of Trunk Highways 75,24 66.60 141.84 18.73Highway equipment for Ostravica-Delnice 5.15 7.72 12.87 60 10.25Highway equipment for Solin-Klis 1.17 1.75 2.91 60 2.32Highway equipment for Split Bypass 0.96 1.44 2.40 60 1.91Construction of 1 km of highway and 9 km 3.56 3.56 7.12 50 4.25
of pavement in Solin-KlisOther construction of Trunk Highways 61.26 50.03 111.29 45 0.00Construction of Primary and Regional Roads 3.1 5 2.10 5.25 40 0.00
2 Road Betterment and Black Spots 21.12 1 2.2 38.41 45 0.00
3 Highway Resurfacing and Rehabilitation 88.98 72.8Q 161.79 45 42.89
4 Routine Highway Maintenance 79.08 33.89 112.98 30 0.00
5 Highway Maintenance Equip. and Consultants 2. 23.17 43.37 11.49Spare Parts, Vehicles, and Equipment 5.82 13.57 19.39 70 6.71Equipment for Traffic Counting, Road 1.24 2.89 4.12 70 3.28
Monitoring and PMSConsultants for PMS, BMS, Training 0.30 1.20 1.50 80 1.49Projects, Studies, and Miscellaneous 12.85 5.51 18.36 30 0.00
6 Highway Administration 16.8 QQQ 18.2& 0 0-0
7 Repair of War Damages 7.73 7.73 15.46 50 0.0Q
Subtotal Highways 308.95 221.47 530.42 73.11
8 Ports and Railways Component 0.22 .9 .1Z .12HZ Study 0.11 0.45 0.56 80 0.56Rijeka Port Study 0.11 0.45 0.56 80 0.56
9 Road Safety 0.0 0.30 0.37 80 Q.3
Total Base Costs 309.25 222.67 -531.92 42 74.60Price Contingencies 20.86 15.03 35.89 5.40Total Project Costs 330.1 1 237.70 567.81 42 gg.0
Notes:1 Prices as of June, 1994.2 Base Costs include about 10% of physical contingencies3 Price Contingencies reflect anticipated changes in local and international prices of 2.2% per year from June 1994 onwards4 Identifiable taxes and duties are about US$85.0 million and the total project cost, net of taxes, is USS482.90 million
equivalent.
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ANNEX 3.9CROATIA
EIGHWAY SECTOR PROJECTSummary of HC's 1995 Hghway Rehabilitation and Resurfacing Program
GROUP DI (1) 10.0 1,600,000 3/95 DGROUP D2 (2) 15.0 2,400,000 3/95 D
GROUP Al (9) 37.4 935,000 4/95 AGROUP A2 (7) 39.2 980,000 2/95 AGROUP Bl (7) 29.5 1,032,500 4/95 BGROUP B2 (2) 35.6 1,246.000 5/95 BGROUP B3 (2) 23.8 833,000 6195 BGROUP B4 (2) 28.3 990,500 3/95 BGROUP BS (3) 29.0 1,015,000 4/95 BGROUP B6 (4) 30.8 1,078.000 4/95 BGROUP B7 (8) 27.9 976,500 2/95 BGROUP BS (4) 28.9 1,011,500 4/95 BGROUP Cl (6) 30.4 2,128,000 3/95 BGROUP C2 (5) 29.6 2,102,000 5/95 c
GROUP C3 (3) 20.8 1,456.000 4/95 cGROUP C4 (3) 21.1 1,477,000 5095 cGROUP CS (2) 24.8 1,736,000 5/95 C
GROUP B 9 (4) 34.9 965.840 5/95 BGROUP BIO (4) 30.2 835,771 5/95 BGROUP B11 (4) 27.9 772,118 5/95 B
GROUP B12 (3) 19.3 534,119 5/95 BGROUP C 6 (10) 29.9 1,654,936 5/95 cGROUP C 7 (9) 29.4 1,627,262 5/95 CGROUP C 8 (6) 32.0 1,771,168 5/95 cGROUP C 9 (7) 13.6 752,747 5/95 cGROUP C10 (7) 29.4 1,627,262 5/95 cGROUP C11 (6) 14.9 824,702 5/95 CGROUP C12 (6) 25.9 1,433.540 5/95 C
GROUP B13 (7) 30.7 601,720 6/95 BGROUP B14 (7) 16.8 329,280 6/95 B
GROUP C13 (2) 45.1 1,767.920 5/95 c
GROUP C14 (2) 46.6 1,826,720 5/95 cGROUP C15 (3) 41,7 1,634,640 5/95 CGROUP C16 (7) 46.8 1,834,560 5/95 c
Indicated lengths are not contiguous
2. A - Surface Treatment
B - Pavement Planning and Surface Treatment
- 76 -Annex 3.10
CROATIAHIGHWAY SECTOR PROJECT
Tentative Monitoring Indicators for Project Activities
1994 1995 1996 1997 95-97
- Construction of trunk Highways (kIn) 11 12 5 28- Construction of the primary and
Regional Roads (km) 5 5 7 17- Road Improvement & Black Spots 35 30 81 146(km)- HRR program (km)
*Motorways 25 41 41 107*Primary roads 437 187 187 811*Regional roads 287 231 231 749*Local roads 228 246 246 720
- Roads in good condition (%) 34- Roads in fair condition (%) 39- Roads in poor condition (%) 27- Trucks with excesive axle load (%) 17
- 77* -
Annex 3.11
Page 1 of 11
CROATIAHIGHWAY SECTOR PROJECT
CROATIA
HIGHWAY SECTOR PROJECT
IMPLEMENTATION PLAN
Al Investiment
Fl Road maintenance equipment
F2 Other equipment (Pavement/Bridge System)
F3 Services contracts
F4 Project and studies
INVESTIMENT - Implementation Plar,.
Olr 4,, l904s C&r4, Iefi c* i. ig" l e 1 2, o r 3. CArs Okr4, _1W c*DL. Swagt Fi 0 N 0 J F M A J J A N D Jl F M A M J J A 5 0 N D J.W*- D1n1~ f7.2i m..54 f.7.
tD I5 Eqp.ent for -~-uAka87,M»4.JøMiq 3721. .1.51.34 1.7.3-
.1.3.95 I I1.1.3 . receive hda m 1.3.91 -fA."mL
_____ ____ ____ _
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kl bypass J17. S.34 D.W
2.1.1 . pueqiMy 91 9w 31.10 4.12.94
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2.1.3 . rcak bid 4W 27.2.94 21.I.
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F/ OTHER - Implementation Planc*u 4, 1994 G*, i 1995 C 2. 1995 lIr 3, 1995 I 4, 1995 Ci 1, 1996 l r 2, 1996 Ok 3, 1996 c 4. 1996 lcDur. SOaat Finish N D J F M A M J_ Ji A IS 0 N D J F M A M J J A S N D IJ
o u4wTENNC EQurPMENr JL/4M lp.0. . 9.r,97
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24.12.4.1.2 -wIl bidt 8w 6.1.95 1.3.95.-
-
13•receiv bids w 1.3.95 11.4.9 ,
s.8.4 . ea1u.4. bInd sw 12.4.95 2m59 o I I.1.54w
24.5.& z
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gow~ ids 8w .I. 29.3.96
.2.3 .o~ bmås ow 1.3.96 11.4.96
.2.4 . ao,a beds 6w 12.4.9 23.6.96
4W 24.5.6 2..96
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&M 31.10.94 24.12.94 .3.2 • Ibn~ di .1.97 26.2.97
.. -IeiU.7 11.
.3.4 - mha~e hid. 6w 14.4.97 ~2..97..3.5 .w c~ c 4w 26.6.97 26.97
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F/ OTHER Implementation Plan
ou 4. 1 995 C* 1. 19% CJU 4, 1~ <>t i, Iff6 ou :2ý 19" 4. l»6 (XfF~ 0 m M A M i i A 5 0 N D J F I.M A i M i i i i i A i S 1 0 1 N D iIER EQ~AJENr 1Pavømvat~ SM~ 5.1.95 19.12.97
M) Eq.~ t- kw~ ww~ i 4Ø^ IS.Mi"
6.1.95
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&.wd 4W 244» 204.96
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ISIN 11.96
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0H IN3 log 0N J-t F90 lh Mm9 A' ' iM A M lJGi a
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-87 -
Annexc 3.11- - -- Page 11 o1
i ioI
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- 88 -
Amex 3.12
CROATIAHighway Sector Project
Disbursement Forecast(TSs$ million)
IBRD FY Estimated Disburemet Scheduhs(Cumuaive %) Quarter Cumd~dv
FY 1995
June 30, 1995" 0.0 0.0 0.0
FY 1996September 30. 1995 3.0 2.4 2.4December 31, 1995 6.0 2.4 4.8March 31, 1996 12.0 4.8 9.6June 30, 1996 18.0 4.8 14.4
FY 1997September 30, 1996 28.0 8.0 22.4December 31, 1996 38.0 8.0 30.4March 31, 1997 42.0 3.2 33.6June 30, 1997 46.0 3.2 36.8
FY 1998September 30, 1997 54.0 6.4 43.2December 31, 1997 62.0 6.4 49.6March 31, 1998 66.0 3.2 52.lune 30, 1998 70.0 3.2 56.0
FY 1999September 30, 1998 78.0 6.4 .4December 31, 1998 86.0 68.March 31. 1999 86.0 1.6 70.4June 30, 1999 90.01.6 72.0
FY 2000September 30, 1999 92.0 1.6 73.6December 31. 1999 94.0 1.6 75.2March 31. 2000 96.0 1.6 76.8Jane 30, 2000 98.0 1.6 78.4
FY 2001September 30, 2000 99.0 0.8 79.2December 31, 2000 100.0 0.1 80.0
1/ Loan effectivenes estimated in irst quarter 1995.
MINISTRY OF MARITIME AFFAIRS, TRANSPORT AND COMMUNICATIONS
CROATIAN ROAD AUTHORITY
MANAGEMENT BOARD
GENERAL MANAGER'S OFFICE
GENERAL MANAGER
DEPUTIES
ADVISORS
PROJCT LANING,ENGNEEINGDEPARTMENT FOR FINANCIAL,MAINTENANCE DEPARTMENT PROJ TPANNN ENINEERING COMMERCIAL, LEGAL, PERSONNEL
AND CONSTRUCTION OPT & GENERAL ADMINISTRATIVE SERVICES
HEA0 OF DEPARTMENT HEAD Of DEPARTMENT HEAD OF DEPARTMENT
DEPUTY DEPUTY DEPUTY
IDIVSION AND AUDITINGDIVISION FOR ROADS STRATEOIC6 PNNINQ FINANCIALPNNING ANALYSIS
HEAD OF DIVISION HEAD OF DIVISION HEAD OF DIVISION
- Group for monitoring & supervision Group for strategic planning Group for ana!ysis & plannmgGroup for protection of roads -Group for studies and environment - Group for auditmgGrou p for facilities -Group for traffic analysis
- Group for traffic safety- Group for equipment
PLANNING AND PURCHASING ROAD PROJECT ENGINEERIN FINANCIAL DIVISIONDIVISION OIVISION
HEAD OF DIVISION HEAD OF DIVISION HEAD OF DIVISION
Planning and accounting group - Group for surveying - Financial operative unitPurchasing group - Group for road engineering - Special investments group
- Group for road facilities engineering- Group for equipment and installations
DISTRICT OPPICES BRIDOE ENGINEERING DIVISION ACCOUNTING DIVISION
DO MANAGERS HEAD OF DIVISION HEAD OF DIVISION
Group for bridge project engineering - Bookkeeping groupGroup for geomechanics - Accounts group
TECHNICAL SECTION CONSTRUC IO ARRANGEMENTS TOLL COLLECTION DlVISION
CHIEF OF SECTION HEAD OF DIVISION HEAD DIVISION
Group for routine maintenance: superintenence Group for tenders and analysis Operative unitGrup for pavement strenghtening Group for contracting of works - Financial and commercial servicesGroup for equipment Technical servicesJoint service units
ANCILLARY S6RVIE$ CONSTR,TIOI AQ3MENT SUPPORT SERVICIES
CHIEF HEAD OF DIVISION HEAD OF DIVISION
* Financial and commercial group Applied research group Marketing prep group- Property-rights group Group for accounting and small works -Toll colt contracting
1ESEARCH AND DEVEtdPMEN'T LEGAL AND PERSONNEL DIVISION
HEAD OF DIVISIOM HEAD OF DIVISION
- Applied research group Legal services- Informatics Properly Rights group- Infofnation treatment publications and translation Personnel group
IENERAL ADMT#NITRAYVE SERVICES
HEAD OF DIVISION
-Auxiliary services-Register Book and Archives
IPECTION, SAFET TOLL COLLECTIONDIVISION
HEAD OF DIVISION
- Group for inspection of traffice -J,oad st-t- es- Group for inspection of toil colieclion- Supervision group
JBRD 26152
AUSTRI A
*^HUNGARYCR A Ir ~C RO A TIA
TRANSPORT SYSTEM
L ub noB elvar-ROADls
SLOVENIA ZGRE iro TOý~Ns
- T~I C~~T~
- RWETRS
S )
r i oL ITRAK)A OUDRE
BOSNA AN
D FED REP OF '(- -~'~*YUGOSLAVJA
.k -E~T~
Rq4.s s Na-d
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_ _ _ _ _ _ _ _ _ _ _ _ _ __.
