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Implementation Completion Report (ICR) Review - Transport Sector Investment

1. Project Data:   
ES Date Posted:
Project Name:
Transport Sector Investment
Project Costs(US $M)
 96.9  74.5
Costa Rica
Loan/Credit (US $M)
 60.0  47.3
Sector, Major Sect.:
Transportation Adjustment,
Cofinancing (US $M)
L/C Number:
Board Approval (FY)
Partners involved
Closing Date
06/30/1997 06/30/2001
Prepared by: Reviewed by: Group Manager: Group:  
Elaine Ooi
John H. Johnson Alain A. Barbu OEDST

2. Project Objectives and Components:

a. Objectives
In accordance with the country's overall strategy for restoring economic growth and fiscal balance, the project supported institutional measures to increase the efficiency of the transport sector and consisted of a slice of the Ministry of Public Works and Transport's 1991-1995 Investment and Maintenance Program (IMP). Project objectives were to:

a) assist the Government's efforts to promote exports by improving the quality and reliability of transport services in the Atlantic and Pacific corridors linking the ports to its major cities; and b) assist the Government to improve the efficiency of resource use by strengthening transport sector management and rationalizing the provision of railway and port services.

b. Components
There were four key components:

  1. Road Rehabilitation and Periodic Maintenance - rehabilitation of 458 km of the national paved road network and periodic maintenance of 878 km
  2. Puntarenas Jetty - replacement of the old Jetty to relief congestion and improve overall grain cargo handling
  3. Equipment - provisions for road maintenance, grain handling operations, in-transit cargo & road safety, laboratory testing, data processing and rail track maintenance
  4. Institutional Measures or Programs - downsizing of the railway, development of strategy for maintenance of cantonal roads, improvement of port operations, ensuring soundness of the sector's annual investment programs, and increased private sector participation.
Revised Components:
There were three amendments to the project components. In response to a major earthquake in 1991,the first amendment (1991)introduced an emergency component which rehabilitated damaged but essential rail lines, bridges, port installations and roads in exchange for scaling back of some roadwork specified in Component One. The second amendment (1994) closed the emergency component, integrated remaining civil works into the original project components and added the construction of Roll-on Roll-off ramp facilities at Port Limon. Technical assistance was broadened in response to reform needs within the Ministry of Public Works and Transportation (MOPT) to support the implementation of Costa Rica's new Law on Concession of Public Works. The third amendment (1996) added the construction of truck axle weight facilities at key sites on the national road network but otherwise consolidated overall project activities.
Components/ sub-components deleted due to redundancy or because they were supported by other bilaterals were: Puntarenas Jetty, workshops at Moin, Matina Bridge, grain handling equipment, tariff/maritime freight assistance and study of the siltation problem at Port Caldera.

c. Comments on Project Cost, Financing and Dates
Actual project costs were $74.5 million against $96.9 million at appraisal. Government contribution was $27.2 million. Actual IBRD loan was $47.3 million versus the appraised $60 due to cancellation of $12.7 million. Cancellation was in response to slow progress in procurement and a fiscal slowdown before the original closing date of June 30, 1997. Nonetheless, the final closing date was extended 5 times until 4 years later on June 30, 2001 to persevere in restructuring of the sector and advancing of concession efforts for rail and port services.

3. Achievement of Relevant Objectives:

The project achieved its overall objectives of improving the quality/reliability of transport services in the main corridors, strengthening transport sector management and rationalizing railway and port services as follows:
  • Rehabilitation of 281 km (including 80 km under emergency program) and periodic maintenance of 94 km (against amended target of 600km) of national paved roads, the majority of which were linked to the main export/import corridors. Ex-post ERR for 7 out of the 18 links (different links from that targeted at appraisal as a result of the emergency amendment) rehabilitated was 33 to 100 % vs the estimated 35% for 10 road links at SAR.
  • Construction of 3 out of the 5 truck axle weight stations at key sites on the road network to prevent overloading
  • Construction of a Roll-on, Roll-off ramp at Port Limon and dredging works at ports Limon and Moin.
  • Reorganization of the MOPT into a policy making body within the sector, and the delegation of management of subsector responsibilities to independent and decentralized councils: National Council for Concessions (CNC), National Council of Roads (CONAVI), National Port Council (CPN) and Council for Road Safety (CSV).
  • Support to the concession process of transport infrastructure, provided for by the Concession Law of 1994 and 1998.
  • Creation of CONAVI which took over functional responsibilities of maintenance and construction of the national road network from MOPT.
  • Skills development in planning/programming of road investments through implementation of computerized the pavement management system based on the Highway Design and Maintenance Model - Version 3.
  • Development of a comprehensive Port Master Plan
  • Concession to the private sector of port operations for both Pacific ports in progress
  • Downsizing of the railway subsector: reduction of personnel from 2,303 to 1,257 with concomitant reduction of rail services
  • Elimination of subsidies to the railways subsector
  • Concession of rail operations initiated - bids received and short listed
  • Separate investment plans for national and cantonal road networks have been drawn up and implemented, although the funding for cantonal remains an issue
  • Road fund created for national road network to be financed from proceeds of a 15% fuel tax.
  • CONAVI has started to finance costs for rehabilitation and maintenance of the national road network.

4. Significant Outcomes/Impacts:

The project persevered and did not lose sight of its institutional objectives for efficiency and productivity, despite the setbacks and additional damage to infrastructure incurred from the earthquake. It took advantage of the circumstances precipitated by the natural disaster and economic slowdown, to move ahead with the structural reforms in the sector. Project M & E was well structured and included detailed action plans for the rationalization of port/rail services. Attention paid to project milestones resulted in good supervision quality and prompted the necessary inputs to speed up execution in 1994 when the project was declared a "problem" project. Other significant outcomes include :
  • Restructuring of MOPT with the establishment of decentralized management councils
  • Increased outreach to private sector participation via the concession of transport infrastructure, and overseen by a dedicated entity CNC
  • Increased government commitment to rehabilitation and maintenance of roads
  • Establishment of independent source of financing for the national road network.
  • Improved efficiency of the port subsector with increased cargo handling capacity of Ports Limon and Moin from 2.7 to 5.1 million tons annually, and of Port Caldera from 1,225 to 3,700 tons daily.
  • Rationalization of railway subsector.
  • Concessions of port and railway operations in progress.

5. Significant Shortcomings (include non-compliance with safeguard features):

A sustainable solution to the funding of cantonal road network operations has not been found.
  • Lack of streamlining in the procurement process, which necessitated coordination between 3 different agencies led to frequent delays in project implementation and the cancellation of $12 million of loan proceeds
  • Management weaknesses in the review of engineering designs and contract management resulting in implementation delays.
  • 6. Ratings:ICROED ReviewReason for Disagreement/Comments
    Institutional Dev.:
    Bank Performance:
    Borrower Perf.:
    Quality of ICR:

    7. Lessons of Broad Applicablity:

    Timely response and outstanding supervision enhances project capability to cope with exogenous shocks, salvage project goals or even achieve greater results than planned.
    • Institutions undergoing rationalization or cut backs, should be fully and strongly supported throughout the process, as in the case of this project's Railway subsector. Support was provided unabated during the 4 years of suspension of operations and the failure of the first concession attempt. Prospects for a second concession look promising.
    • Procurement processes need to be streamlined to gain operational efficiency in achieving sector goals.

    8. Audit Recommended?  Yes

              Why?  To document project experience in 1) achieving reform in a poor fiscal /economic environment and during a natural disaster and 2) concessions and private sector participation in the transport sector which may potentially be included in a larger OED sector study.

    9. Comments on Quality of ICR:

    Quality of ICR is high. Information provided is thorough and consistent, although an organizational chart of the reorganized MOPT would have been helpful. ICR claims and discussion of substantive issues are well supported.

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