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Implementation Completion Report (ICR) Review - Ni Transport II

1. Project Data:   
ICR Review Date Posted:
Project Name:
Ni Transport II
Project Costs(US $M)
 54.5  59.17
Loan/Credit (US $M)
 47.4  48.19
Sector, Major Sect.:
Central government administration, Roads and highways,
Law and justice and public administration; Transportation
Cofinancing (US $M)
L/C Number:
Board Approval (FY)
Partners involved
Closing Date
06/30/2003 06/24/2005
Evaluator: Panel Reviewer: Division Manager: Division:  
Antti P. Talvitie
Peter Nigel Freeman Alain A. Barbu IEGSG

2. Project Objectives and Components:

a. Objectives
The overall objective of the project, in the PAD, was: to improve the efficiency of road transportation in Nicaragua. The specific objectives were:

(i) support Nicaragua's ongoing road rehabilitation program, especially the improvement of the main road link to the Atlantic region;
(ii) improve the management and implementation of road maintenance; and
(iii) continue to strengthen planning and programming in the MTC.

The DCA (and the ICR) have a slightly differently worded objectives:
(i) to improve the efficiency of road transportation in Nicaragua;
(ii) to improve the management and implementation capacity in the sector; and
(iii) to strengthen MCT's planning and programming capacity.

The slightly different wording of objectives is not material. The first PAD specific objective is, in essence, the PART A of the project; and the objective (ii) in the DCA (and ICR) is slightly more encompassing. The wording in the DCA and ICR is better and preferred.

During the project MTC (Ministry of Transport and Construction) was changed to MTI (Ministry of Transport and Infrastructure). The latter will be used hereafter.

During the project a Board approved amendment was made to the objectives with the addition of:
(iv) Emergency program to restoring damaged roads caused by Hurricane Mitch. This was funded by reallocating money from component 1 as described below.

This amendment, approved by the Board of Directors, was requested by the Government of Nicaragua (GON) to finance an Emergency Program and approved by the Bank's Board.

b. Components (or Key Conditions in the case of Adjustment Loans):
1. Rehabilitation of the Portezuelo - San Benito (including Portezuelo - Managua Airport), and Muhan - El Rama sections of the Managua - El Rama road, app 120 km. Appraisal estimate US$30.7m; after restructuring US$10.6m (estimated); actual US$14.92m. US$20m was reallocated to the emergency program, Component 4, by postponing the rehabilitation of Muhan - El Rama section to be financed by the next credit. [Other sections of the road were to be rehabilitated by DANIDA in a separate operation].
2. Road maintenance, including goods. (i) Implementation of routine maintenance by the expansion of the microenterprise component in an ongoing loan and by community organizations on rural roads; and (ii) periodic maintenance by contract for app. 600km of selected roads. Appraisal estimate US$11.8m; after restructuring US$12.3m; actual US$9.42m.
3. Consultant services for institutional development and training to include studies and technical assistance to: (i) prepare economically justified road programs; (ii) implement a pavement management system; (iii) establish and operate the Road Maintenance Fund (RMF); (iv) supervise the road rehabilitation works; (vi) staff training; and (vii) carry out road safety, road engineering, and a reforestation study. Appraisal estimate US$7.0m; after restructuring US$5.9m; actual US8.2m.
4. Emergency program to repair roads damaged by Hurricane Mitch. After restructuring US$17.6; actual US$26.63.
It is noted that the unallocated funds US$8.1m after restructuring went to the emergency program.

c. Comments on Project Cost, Financing, Borrower Contribution, and Dates
The project costs were appropriate and the Borrower contribution fair (18,6%). The project was approved in June 1998 and closed in June 2005 two years after the original closing date with two extensions. The Board approved amendment to project objectives was made at the start-up so all disbursement took place after restructuring. The first extension was due to the implementation of the emergency program, which now included road restoration after the Masaya earthquake. A second extension was needed to complete the TA studies.

3. Relevance of Objectives & Design:

The objectives were and remain relevant, both before and after restructuring, and today; the Hurricane being an unforeseen event to which the project also responded. In road works, the link to El Rama and Bluefields harbor has a high priority for trade with countries/destinations on the Atlantic coast. The funding of maintenance was well thought out and supported by the institutional development and training component. The project design was appropriate and straightforward. It built upon an earlier project and engaged in similar activities supported by a bilateral donor. The establishment of RMF was an important accomplishment.

There also was an important connection to biodiversity and reforestation to mitigate potential social and environmental impacts. The ICR is silent on these issues.

The results framework in the PAD is clear and monitorable, although the PDOs in the results matrix do not exactly match those in the PAD or the DCA. Furthermore, the key performance indicators/Log Frame Matrix in the ICR do not map one-to-one to the results matrix. Nonetheless, there is enough overlap to enable results tracking. In general, when appropriate, it would be useful if the year to year results were expressed as cumulative rather than annual results. [Clearly, there are items, such as the maintenance budget, for which a cumulative number is not illustrative].

4. Achievement of Objectives (Efficacy) :

Objective 1, was achieved, although there is no metric how to assess the "improvement in efficiency in road transportation in Nicaragua". If it is, as the PAD and ICR imply, completion of the project's road rehabilitation program, the degree of achievement is 'high'. It would have been better to use a metric, such as the International (road) Roughness Index, IRI, for the entire network, as suggested in the PAD (Annex 1).
2. Objective 2 was achieved also to a 'high' degree. Microenterprises were expanded, and management by contract was piloted and instituted.
3. The objectives of technical assistance and studies were substantially achieved. There were strong and effective training and human resource developments and road management systems and tools were implemented and applied. No results, except completion, are reported on the reforestation study and connections to the Atlantic Biological Corridor project and its environmental studies as proposed in the PAD.
3. The achievement of the emergency program objective was high. What was intended, was achieved.

5. Efficiency:

The project's efficiency was assessed using the standard engineering-economic methods. The project's road work components were efficient. For the rehabilitation of the sections implemented, the ERR at appraisal ranged from 22 to 87 %, at completion it ranged from 60 to 176%. The increase was mainly due to the higher than anticipated traffic volumes. For the road maintenance component the ERR was not estimated at appraisal, it was calculated at completion for selected sections with the ERR result of 45%.
6. M&E Design, Implementation, & Utilization:

The M&E design was adequate, as noted above. There were minor discrepancies in indicators between the PAD and the ICR. An interesting detail, having to do with an IRI measurement device, acquired in the project, illustrates the difficulties in M&E. One of the project targets was to have 20% of the network in 'good' condition by 2001, without specifying what 'good' was. As it turned out, by the definitions employed in 2005, only 6% of the network was in good condition, but 21% was in good+fair condition. A reasonable achievement when most of the network was in poor condition at project start. Obviously the PAD, could not have predicted hurricane Mitch, an earthquake, or a drought and their effects. Yet, their effects were important, not only to road condition, but to road sector budgets, counterpart funds, etc., and the project responded to them. The target of 20% 'good' condition was not realistic given the probability in Nicaragua of the occurrence of natural disasters. In general, however, the project's M&E data were sufficient and appropriately utilized in the project.
7. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative):

The project was a 'B' category project and had modest environmental impacts and objectives. Perhaps the most interesting is the 'Adoquin' road stabilization method that the project developed and employed. This method uses 'paving stones', with indigenous materials, with labor intensive application, at half the cost of bituminous treatment, and effectiveness against erosion. The project also acquired and implemented an integrated financial administration system, which improved internal financial controls, procurement, contracts, accounting, disbursements and treasury. The project had no reported negative or unintended impacts.

8. Ratings:
ICR Review
Reason for Disagreement/Comments
Highly SatisfactoryHighly Satisfactory
Institutional Dev.: 
HighSubstantialThere was no major restructuring of the road administration. Successful training, completion of studies, application of new road management methods, and the setting up of road fund are noted and captured under 'substantial'.
Highly LikelyLikelySee comment on assessment in Section 10
Bank Perf.: 
Highly SatisfactoryHighly SatisfactoryThis rating is retained notwithstanding the minor shortcomings in M&E metrics and (possibly) in environment mitigation because both the Bank (and the Borrower) response to the difficult emergency situation was highly satisfactory while still keeping the project in the original course. The Bank and the Borrower were extremely flexible and proactive.
Borrower Perf.: 
Highly SatisfactoryHighly SatisfactorySee above comment
Quality of ICR: 

- When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006.
- ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness.

9. Lessons:

The project indicates several lessons, the most important of which are:

1. Importance of sustained IDA presence. IDA's continued presence has improved MTI performance, understanding, proactivity and effectiveness in the transport sector.
2. Importance of borrower's donor coordination. Part of the project's success is due to successful donor coordination, IDA, IDB, DANIDA, which leveraged all financial aid to coordinate and ensure the effects of assistance.
3. Micro enterprise is a highly successful, culture-syntonic method of routine maintenance in Nicaragua. It combines frequent surveillance of road conditions, timely and cost-efficient maintenance actions, emergency response, and an income-generating employment opportunity.

10. Assessment Recommended?  Yes

          Why?  This project is recommended for PPAR. It is an important milestone in improving road management in Nicaragua after it emerged from a period of instability and social turmoil, and also from natural disasters. The establishment of the RMF is significant, although it is not (at the time of ICR) independent of the state budget, and the project supported no financing to the RMF subprojects although that was planned. Equally significant is the completion of the rehabilitation works for the entire Managua - El Rama link under the next Credit (and DANIDA) funding. The El Rama/Bluefields harbor is undoubtedly very important for trade. However, it is located in environmentally sensitive area and requires frequent dredging (both at Bluefields and in the river from El Rama to Bluefields). There are indigenous people living in the area. Thus, there are weighty reasons for conducting an assessment of the project and the follow-on project, which completed the Managua - El Rama road rehabilitation, and the functioning of the RMF and the MTI as institutions. This assessment should also include environmental mitigation in the sensitive area, due the road, dredging, and the harbor, the durability of the Adoquin road stabilization/paving method, and the issues affecting the indigenous population, and logging/forestation. These are among major issues regarding sustainability of the project.

11. Comments on Quality of ICR:

The ICR is satisfactory overall. However, it could have usefully commented on the differences in both the objectives (minor) and the description of the components (more significant) between PAD and the DCA. Careful reading can interpret that they are about equivalent, but it can also be that PAD was not updated after Negotiations, which did expand the project. The ICR is also silent on the environment and makes no reference to the Atlantic Biological Corridor and social impacts in the project area. Finally, the results matrix in the ICR is not consistent with that in the PAD.

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