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Chile: Second Road Sector Project (Loan 3120-CH)

The Implementation Completion Report (ICR) on the Chile Second Road Sector Project (Loan 3120-CH, approved in FY90) was prepared by the Latin America and the Caribbean Regional Office. Comments by the Borrower and the Cofinanciers (the Inter-American Development Bank and the Export-Import Bank of Japan) are included in the ICR. The loan for US$224 million was approved in September 1989, and closed in June 1994, on schedule. US$44 million was canceled because the Borrower decided to reduce the share of Bank financing for the project.

The project's objectives were to continue to support the efficient execution of Chile's road investment and maintenance program, and to consolidate an effectively functioning road maintenance and pavement management organization. The project's components included: (I) investments to increase capacity on heavily-traveled road sections; (ii) a program of periodic and routine maintenance of roads and bridges; (iii) technical assistance and studies to improve transport sector policies, including fostering private sector investment in transport infrastructure and contracting out maintenance; and (iv) training of personnel at all levels of road administration and management.

All the objectives were achieved. The congestion problems targeted at appraisal were solved; rehabilitation and maintenance targets for roads and bridges were exceeded; the efficiency of road maintenance improved, as did managerial and budgetary systems; training was successful; and sector policy changes were implemented. The economic rate of return-- estimated at 31 to over 50 percent at appraisal--was reestimated to range from 23 to over 100 percent. The project also benefited from good macroeconomic management.

The ICR rates the project as highly satisfactory, its sustainability as likely, institutional development as high, and Bank performance as highly satisfactory. The Operations Evaluation Department concurs with these ratings. The project exceeded its major objectives, expanded the project's scope, and yielded high economic returns.

The main lesson learned is that strong commitment by the Government, sector institutions, and beneficiaries all contributed to the setting in place of Chile's efficient road construction rehabilitation and maintenance system, which also involves active private sector participation.

The ICR is satisfactory. It discusses all aspects of the project comprehensively and well. An audit or an impact study of the Bank's overall involvement in the Chilean road sector may be carried out.

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