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December 29, 1995

Thailand: Third Highway Sector Project (Loan 3220-TH)

The Implementation Completion Report (ICR) on the Thailand Third Highway Sector project (Loan 3220-TH, approved in FY90), was prepared by the East Asia and Pacific Regional Office, with Part II contributed by the Borrower. The loan for US$50 million equivalent was approved on June 7, 1990 and was closed on its original date December 31, 1994. A balance of US$0.87 million was canceled.

The project, the twelfth in a series begun in 1963 to support the development of Thailand's highway sector, had the following specific objectives: (a) improving the quality of inter-urban roads by focusing on maintenance and rehabilitation; (b) relieving congestion by expanding capacity; (c) improving road traffic safety; (d) reducing vehicle emissions and traffic noise, and (e) improving policies on road transport and road use. The project comprised: specific sub-projects of the Government's road development plan, which accounted for over 80 percent of loan funds, and equipment, technical assistance, studies, and training for the preparation of three action plans dealing with traffic safety, vehicle-induced environmental pollution and road transport services.

The project's physical objectives were fully achieved. Despite the fact that Thailand's sustained economic growth had resulted in the road construction industry operating at full capacity, making it difficult to attract sufficient bids for some of the sub-projects, fifteen road sub-projects were financed at a total cost below appraisal estimates, and 13 were completed ahead of the time stipulated in the contract. Achievement of the institutional objectives was mixed. Preparation of the action plans was complex because many different agencies were involved in it, and the principal implementing agency, the Land Transport Department (LTD), had had little experience with the Bank prior to this project. The action plans dealing with road safety and environmental pollution were prepared satisfactorily and were incorporated into the Seventh Highway Plan. The action plan dealing with road transport services was not prepared, in part because of lack of clear terms of reference at appraisal. Procurement for part of the equipment for the LTD's program to reduce air and noise pollution and improve traffic safety suffered extensive delays, required revisions in the specifications and, in the end, was canceled from the project and incorporated into the subsequent highway project. The economic rate of return of road sub-projects ranged from 17 to 68 percent, well above the minimum rate of 12 percent established at appraisal.

The ICR rates the project's outcome as satisfactory, its institutional development as substantial its sustainability as likely, and the Bank's performance as satisfactory. The Operations Evaluation Department (OED) agrees with these ratings except for institutional development, which it rates as moderate, because no progress was made on improving road transport policies, and the lack of equipment prevented achieving fully the road safety and environmental objectives.

The main lesson of this project is that detailed terms of reference are required at the appraisal stage for the preparation of complex action plans, especially when many agencies are involved and the effort is led by an entity relatively inexperienced with Bank operations.

The ICR is good. It contains a candid assessment of the Bank's weaknesses at appraisal, covers the required topics and provides the necessary statistical information. However, the ICR is sometimes imprecise in portraying the project's achievements.

No audit is planned.

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