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December 28, 1995

The Lao People's Democratic Republic: Southern Transport Project (Credit 1846-LA)

The Implementation Completion Report (ICR) on the Lao People's Democratic Republic Southern Transport project (Credit 1846-LA, approved in FY 88) was prepared by the East Asia and Pacific Regional Office, with Appendix B contributed by the Borrower. The credit for US$14.1 million equivalent was approved on December 18, 1987, and closed on December 31, 1994, three years behind the scheduled date. US$99,500 was canceled and a total of US$14.84 million was disbursed. The discrepancy in the original credit amount and the disbursement amount is due to US dollar fluctuations with respect to Special Drawing Rights (SDRs).

The credit was the first Bank-supported transport project in the Lao People's Democratic Republic and had wellfocused objectives. The objectives were to: (a) carry out repairs and maintenance of the principal highway in the three southern provinces; (b) strengthen the road maintenance capacity in the same three provinces; and (c) complete studies for future transport development. The project consisted of a road and bridge rehabilitation and maintenance program; procurement of workshop equipment and construction materials; and consulting services to assist the provincial Road and Bridge Maintenance Societies (RBMSs) in project implementation and to carry out transport studies. The project's objectives were achieved or exceeded. There were no cost overruns. Implementation was delayed because the Borrower had to team procurement processes and because of weather conditions.

The lessons learned include: (i) the complexity and slowness of government administrative and procurement procedures with International Competitive Bidding procurement should have been anticipated and technical assistance considered to supplement the Borrower's initial weak institutional capacity; and (ii) line of authority should have been delegated to the line ministry to manage well-defined projects, particularly with regard to disbursement.

As in the ICR, the Operations Evaluation Department rates the project outcome as satisfactory, its sustainability as likely, its impact on institutional development as moderate, and the Bank's performance as satisfactory.

The ICR is satisfactory. It describes well the project's implementation, arrangements for this operation's future execution, and enumerates the lessons learnt. The project has a high re-estimated Economic Rate of Return (ERR)—72 percent vs. 18 percent at appraisal—because of high traffic levels, underestimated at appraisal, which began to use the renovated highway.

No audit is planned.



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