AFRICAN DEVELOPMENT FUND LANGUAGE : ENGLISH ORIGINAL : FRENCH DISTRIBUTION : LIMITED

GUINEA

TOMBO-GBESSIA ROAD REHABILITATION PROJECT

SUPPLEMENTARY GRANT

This Report is made available only to staff members to whose work it relates. Any further release must be authorized by the Vice-President for operations. INFRASTRUCTURE DEPARTMENT (OINF) JANUARY 2009

TABLE OF CONTENTS Pages

CURRENCIES AND MEASURES, ACRONYMS AND ABBREVIATIONS, LISTS OF ANNEXES AND TABLES, PROGRAMME MATRIX, EXECUTIVE SUMMARY i-v 1 PROJECT ORIGIN AND BACKGROUND 1 2 THE INITIAL PROJECT 2 2.1 Project Objectives and Description 2 2.2 Initial Project Cost and Financing Plan 3 2.3 Project Implementation Status 5 3 APPRAISAL OF THE SUPPLEMENTARY GRANT 6 3.1 Rationale for the Supplementary Grant 6 3.2 Objectives and Description of the Revised Project 7 3.3 Revised Project Cost Estimate 7 3.4 Financing Plan and Implementation Schedule 8 3.5 Environmental and Social Impact 9 3.6 Project Implementation 10 3.7 Procurement of Goods, Works and Services 10 3.8 Disbursement Arrangements 10 3.9 Donor Coordination 11 3.10 Monitoring and Evaluation and Accounting and Financial Auditing 11 4 JUSTIFICATION IN LIGHT OF POLICY ON SUPPLEMENTARY LOANS AND GRANTS 11 4.1 Justification in light of General Conditions 11 4.2 Justification in light of Specific Conditions 12 5 PROJECT SUSTAINABILITY AND RISKS 12 5.1 Recurrent Costs and Project Sustainability 12 5.2 Project Sustainability 13 5.3 Major Risks and Mitigation measures 13 6 ECONOMIC ANALYSIS 13 6.1 Economic Analysis 13 6.2 Economic Rate of Return and Sensitivity Test 14 7 CONCLUSIONS AND RECOMMENDATIONS 14 7.1 Conclusions 14 7.2 Recommendations 15 This report was written by Messrs M. AMARA, Transport Engineer (ext. 2497) and M. MBODJ, Transport Economist (ext. 2348). Questions on this report should be referred to them, or to Mr. A. KIES, Division Manager, OINF.1 (ext. 2282) and Mr. G. MBESHERUBUSA, Director OINF (ext. 2034).

CURRENCY AND MEASURES Currency Equivalents

At initial appraisal of the Project (February 2005) : UA 1 = Euro 1.16647 = GNF 2 941.76 = USD 1.52049

At the appraisal of the supplementary grant (January 2008) : UA 1 = Euro 1.101675 = GNF 7700.58 = USD 1.54027

Fiscal Year : 1 January - 31 December

Weights and Measures : Metric system 1 kilogramme (kg) = 2.205 lbs 1 meter (m) = 3.29 feet (ft) 1 kilometer (km) = 0.621 mile 1 square kilometer (km2) = 0.3861 sq mile 1 hectare (ha) = 2.471 acres

ACRONYMS AND ABREVIATIONS

AADT : Annual Average Daily Traffic ABEDA : Arab Bank for Economic Development in Africa ACGP : Agence de contrôle des grands projets (Major Projects Control Agency) ADF : African Development Fund AFD : French Development Agency DNDIP : National Directorate for Debt and Public Investments DNER : National Directorate for Road Maintenance DNIR : National Directorate for Road Investments DNTT : National Directorate for Land Transport FER : Road Maintenance Fund GNF : Guinean Franc HDM : Highway Development and Management KDF : Kuwait Development Fund MT : Ministry of Transport MTP : Ministry of Publics Works ONCFG : Office National des Chemins de Fer de Guinée (National Railway Corporation) PIA : Project Influence Area PDU : Urban Development Programme PNT : National Transport Plan PRSP : Poverty Reduction Strategy Paper SDF : Saudi Development Fund SDV : Conakry Development Master Plan UA : Unit of Account PMCU : Project Monitoring and Coordination Unit USD : United States Dollar Veh/d : Vehicles/day VOC : Vehicle operating costs

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LIST OF ANNEXES

No. TITLE No. of pages Annex 1 : Map of the Project Area 1 Annex 2 : Implementation and Supervision Schedule 1 Annex 3 : Economic and Sensitivity Analysis 1 Annex 4 : Fulfilment of Grant Conditions 1 Annex 5 : Monitoring of Recommendations from the Study on the Road Works Costs 1

LIST OF TABLES N° TITLE Page Table 2.1 : Initial cost estimate of the entire project 4 Table 2.2 : Initial cost estimate of components financed by ADF and AFD 4 Table 2.3 : Source of Finance of the entire initial project (in UA million) 5 Table 2.4 : Source of Finance of initial ADF/AFD project (in UA million) 5 Table 3.1 : Summary of revised cost estimate by component of the entire project 8 Table 3.2 : Summary of revised cost estimate by component of the ADF/AFD project 8 Table 3.3 : Financing Plan of the entire project (in UA million) 9 Table 3.4 : Expenditure schedule of the revised ADF component

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Updated Results-based Logical Framework Matrix (8 January 2009) Design Team Messrs. M. AMARA, Civil Engineer, M. MBODJ, Transport Economist

HIERARCHY OF OBJECTIVES EXPECTED OUTCOMES by sector and corresponding themes

REACH PERFORMANCE INDICATORS Source and method

TARGET INDICATORS DES AND TIMEFRAME ASSUMPTIONS RISKS

1 GOAL Improve the operation of the transport system in Conakry and its suburbs

LONG-TERM OUTCOMES Operation of the transport system in Conakry and its suburbs improved

Conakry and its suburbs

1. Percentage increase of transport in GDP 2. Percentage increase in urban mobility Sources Ministries in charge of Finance, Transport and Commerce Methods : statistics prepared by the various Ministries

1 Increase in the contribution of the transport sector in GDP from 5% to 7% by 2011 2 Urban mobility in Conakry increases by approximately 20% in 2011 Sources Ministries in charge of Finance, Transport and Commerce Methods statistics prepared by the various ministries

Effectiveness of Government’s transport sector policy improved

2 PROJECT OBJECTIVE Improve traffic flow on the Tombo-Gbessia road and urban mobility in Conakry

2 MEDIUM TERM OUTCOMES 1. Traffic flow between Tombo and Gbessia greatly improved 2. Mobility of people in Conakry increased

BENEFICIARIES Transport users in Conakry and suburbs

1. Percentage reduction of travel time between Tombo and Gbessia 2 Percentage increase in traffic on the Tombo-Gbessia section Sources Ministry in charge of Transport and Public Works Methods statistics prepared by the Ministry in charge of Transport and Public Works and surveys and traffic counts on the expressway

1. Tombo-Gbessia travel time reduces by 80% (from 90 to 15 mm) as from 2011 2. Traffic reaching the city centre increases by 25% by 2011 Sources : Ministry in charge of Transport and Public Works Methods : statistics prepared by the Ministry in charge of Transport and Public Works and surveys and traffic counts on the expressway

1. Effective financing of road maintenance recurrent costs

INPUTS AND ACTIVITIES

1 Tombo-Gbessir Road Rehabilitation (UA 68.04 M) excluding expropriations

2. Project Management (UA 0.45 M) Financing Sources in UA million

Source Initial Updated Difference ADF 8.25 13.42 5.17 AFD 7.72 7.72 0 ABEDA 7.89 9.47 1.58 KDF 13.15 15.78 2.63 SDF 9.87 11.84 1.97 OPEC Fund 3.29 3.95 0.66 Government 5.74 6.31 0.57 Total excl. exprop. 55.91 68.49 12.58 Expropriations 1.87 1.87 0

Short-term RESULTS 1- 2x3 lane Expressways between Tombo and Gbessia including environmental protection works 2. .Project implementation is facilitated; the PIA populations and users of the highway are sensitized to HIV/AIDS, malaria, the road safety, environmental protection

BENEFICIARIES Transport users of Conakry and its suburbs

PERFORMANCE INDICATORS (i) Length of road improved; (ii) number of structures built and length of drainage system built 2.(i) number of people sensitized to infrastructure; and (ii) number of audit and monitoring and impact monitoring and evaluation reports produced Sources: Status, supervision, audit, monitoring and evaluation, counting, completion reports

TARGET INDICATORS -1 As from January 2011: (i) approximately 10.7 km of surfaced road upgraded to 2 X 3 lanes; (ii) 5 interchanges, 2 roundabouts, two bridges and 4 footbridges built; 2. By 2011: (i) at least 15000 people sensitized on road safety, environmental protection and STI and HIV/AIDS; (ii); 3 audit reports produced; and (iii) 2 impact monitoring and evaluation reports Sources: Programme status, supervision, audit, monitoring and evaluation, counting, completion reports

1 Management of the planning of the execution of the works and risks of traffic disruptions during construction phase; 2.Availability of counterpart funds according to disbursement profile and of all the required financing 3. Risks of disruption and stoppage of works due to the political situation or suspension for ADF debt repayment arrears

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EXECUTIVE SUMMARY

1. The Tombo-Gbessia road, Conakry’s main urban thoroughfare, is an extension of National Highway 1 (RN1) to Conakry port. It constitutes the main connection between the capital, the country’s hinterland and countries without a sea front like Mali. Faced with the need to improve traffic flow in Conakry, the Government in 1989 drew up an urban development master plan for Conakry (SDV) within the framework of the first urban development programme (PDU 1) financed by the World Bank. The objective of the SDV was to prepare a planning and development tool for Conakry. The investment plan resulting from this SDV was updated under the various phases of the PDU whose third phase is ongoing.

2. The Tombo-Gbessia Road Rehabilitation Project falls within the scope of the Government’s policy of strengthening the contribution of road transport to the country’s economic development, hence the Government’s request for support from donors, including the Bank. With AFD funding, the complete studies of the Tombo-Gbessia road were undertaken between 1995 and 1999 using a participatory approach (consultation of local residents, local authorities and representatives of the population, users and transport professionals). The studies, which included the provision of the Yimbaya motor park and the Kenien-Bonfi feeder road, were updated in 2003 and 2005. The new motor park will replace that of Madina, which will be demolished for project works to be carried out.

3. As regards the project, the Bank carried out a preparation mission in April 2003, followed by an appraisal mission in June 2003. As the project could not be presented to the Board of the Bank at that time due to sanctions imposed on Guinea, a re-appraisal mission was carried out in February/March 2005. The project was classified in environmental category I and a summary of the environmental and social impact assessment (ESIA) was transmitted to the Board on 22 July 2003 and published on the Website of the Public Information Centre. An addendum to this summary was prepared in 2005 and transmitted to the Board for information. Following this appraisal mission, the Bank on 13/07/2005 approved an ADF grant of UA 8.25 million for the project whose total cost, exclusive of taxes and cost of expropriations, is UA 55.91 million. The other co-financiers are the AFD (UA 7.72 M), ABEDA (UA 7.89 M), Kuwait Development Fund (UA13.15 Mo), Saudi Development Fund (UA9.87 M), OPEC Fund (UA3.29 M) and the Government (UA 5.74 M). Moreover, the Government will completely finance the cost of expropriation estimated at UA 1.87 M. The ADF Grant Agreement was signed on 22/07/2005, and the disbursement conditions are being fulfilled.

4. Regarding the status of the project, it should be noted that the works financed by the other donors which approved their financing in 2003, that is two years before that of the ADF, are completed. However, there is a financing gap of EUR 8 million or UA 6.84 million due to quantity increases and exchange rate fluctuations between payment and loan currencies. For works financed jointly by the ADF and AFD, three invitations to bid were issued. The first two were declared inconclusive for non-qualification of bidders or non-compliance with Bank rules. The 3rd competitive bidding in April 2008 led to the choice of a contractor, but with a financing gap of UA10.66 M. A scenario was established with the Government consisting in completing as a priority the works of the motorway and postponing to another phase, the implementation of the other components, in particular, the Kenien-Bonfi feeder road, the Yimbaya motor park and part of the institutional support. With this scenario, the financing gap of the ADF/AFD lot is UA 5.74 million. The updated cost estimate of the whole project stands at UA 68.49 million, comprising UA 51.49 million in foreign exchange and UA 17.00 million in local currency.

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5. In a letter dated 08/07/2008, the Government requested from Bank a supplementary grant aimed at filling the aforementioned gap, which is due to exogenous as well as endogenous factors, namely: (i) the overall upward trend of construction costs, (ii) delays in the procurement process due to major and frequent changes of staff in charge of monitoring project implementation; (iii) fluctuations of the UA against the GNF and Euro, which are the contract payment currencies; (iv) the country’s socio-political situation which in general dampened the enthusiasm of contractors to bid; and (v) the complexity of the structure, which requires digging deep foundations and working in an urban environment. 6. It should be recalled that the Bank conducted a "study on road construction unit costs in Africa" whose findings were submitted to the Board in December 2007. The main recommendations of this study, within the context of this grant, are presented in Annex 5. It is recommended that the ADF should extend to the Government of Guinea a supplementary grant, not exceeding UA 5.17 million, representing part of the amount of UA 5.74 million required to supplement the financing of the key component of the initial project. This supplementary grant will contribute to the achievement of the main objectives of the project which, despite the increased cost, remains economically viable.

1 PROJECT ORIGIN AND BACKGROUND 1.1 Since 2007, there have been clear indications of rational public finance management. Indeed, in April 2007, the Government focused on macro-budgetary adjustment reforms by accelerating the pace of public finance management-related reforms. For the country’s authorities, the action plans are still centred on three main thrusts, namely: (i) acceleration of economic growth through rehabilitation and development of economic infrastructure, including transport; (ii) development and equitable access to basic services; and (iii) improvement of governance. The Tombo-Gbessia road project, part of which has been completed, remains a top priority even now that the country is going through a transitional phase. 1.2 This Tombo-Gbessia road development project is in conformity with the Government’s policy aimed at increasing the contribution of road transport to the development of the national economy as a result, in particular, of the rehabilitation and construction of developmental roads and national highways. To implement this policy in Conakry, the World Bank in 1989 financed, under the first urban development programme (PDU 1), the preparation of the urban development master plan (SDV). To take into account the town’s recent development, the investment plan stemming from the SDV was updated within the framework of PDU, which is currently in its third implementation phase. 1.3 The project road, which is included in this investment plan, also forms part of the country’s priority road network. Due to its location, this road which is an extension of National Highway No.1 (RN1) to the port of Conakry, handles over 65% of traffic from the country’s hinterland to the capital. Moreover, RN1 is a significant section of the Bamako-Kankan-Conakry corridor serving Mali. The Tombo-Gbessia road is a major link in the primary urban road network. Hence, its development will help improve traffic flow, as well as facilitate the transportation of products to the economic centres of the capital and access of the population to the economic centres and administrative and basic social services of the capital. Under the said programme, AFD financed the final designs of this road in 1999 and their update in June 2003. It also took part in financing the study of the Yimbaya road terminal and the Kenien-Bonfi feeder road. The works cost estimate was updated in 2005. 1.4 Following a request from the Government, the Bank appraised the project in June 2003. As the project at that time could not be presented to the Board of the Bank due to sanctions imposed on Guinea, a reappraisal mission was undertaken in February/March 2005 and on 13/07/2005, the Board of Directors of the Bank approved an ADF grant of UA 8.25 million for the project. The project was classified in environmental category I, and the summary of the environmental and social impact assessment (ESIA) was submitted to the Board on 22 July 2003 and published on the Website of the Public Information Centre, in accordance with the related guidelines. The project falls within the scope of the Poverty Reduction Strategy Paper for 2005-2009, and is based on Pillar I entitled "strengthening of the basic infrastructure and growth-generating sectors". 1.5 The project is jointly financed by the ADF, AFD and the Government concurrently with other donors (ABEDA, KDF, SDF, and OPEC Fund). The ADF Grant Agreement was signed on 22/07/2005 and the disbursement conditions are being fulfilled. For works financed jointly by the ADF and AFD, three invitations to bid were issued. The first two were declared inconclusive for non-qualification of the bidders and/or non-compliance with the rules of procedure of the Bank. The 3rd competitive bidding process led in April 2008 to the

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selection of a contractor, but with a financing gap of UA 10.66 M. On account of the constraints of the financial resources available under Guinea’s allocation, a scenario was agreed to with the Government, consisting in prioritizing the completion of works on the expressway and postponing to another phase, the implementation of the other components, in particular the Kenien-Bonfi feeder road, the Yimbaya motor park and part of the institutional support. With this scenario, the financing gap is UA 5.74 million and the updated project cost estimate stands at UA 68.49 million, comprising UA 51.49 million in foreign exchange and UA 17.00 million in local currency. 1.6 This supplementary grant of UA 5.17 million aims at filling part of the gap which is due to: (i) the overall upward trend of construction costs, (ii) delays in the procurement process; (iii) fluctuations of the UA against the GNF and Euro, which reduces the available financial package; and (iv) the country’s socio-political situation which is dissuasive to prospective contractors. It will be recalled that the Bank conducted a study on "road construction unit costs in Africa" whose findings were submitted to the Board in December 2007. The principal recommendations of this study in the context of the present grant are presented in Annex 5. 2. THE INITIAL PROJECT

2.1 Project Objectives and Description Programme Objectives 2.1.1 The project sector goal is to improve transport, increase its contribution to GDP and open up disadvantaged zones. Its specific objective is to: (i) improve traffic flow and reduce transport cost and travel time on the Tombo-Gbessia road, (ii) contribute to the improvement of the living conditions of the population of Conakry; and (iii) build the technical operational capacities of the National Directorate for Road Investments (DNIR) and the National Directorate for Debt and Public Investments (DNDIP). Project Description 2.1.2 The project components are as follows.

A) Road rehabilitation and ancillary works comprising: (i) rehabilitation of the Tombo-Gbessia main road 10.7 km long, (ii) construction of structures, including interchanges, roundabouts, bridges and footbridges, (iii) construction of the 3.407 kilometre long Kénien-Bonfi feeder road, (iv) construction of the new Yimbaya motor park, (v) hydraulic structures in support of the project; (vi) inspection and monitoring of the said works; and (vii) compensations for expropriations. The works are subdivided in five lots: (a) Lot 1 - Tombo-Moussodougou road section, approximately 1.5 km long and structures, construction of the Kenien-Bonfi feeder road, construction of the new Yimbaya motor park and hydraulic structures in support of the project; (b) Lot 2 - Moussodougou-Madina road section (approximately 2 km); (c) Lot 3 –Madina – Kénien road section (approximately 3 km) and structures; (d) Lot 4 –Kenien-T1 road section (approximately 2.5 km); and (e) Lot 5 – T1 - Gbessia road Section (approximately 2 km) and structures.

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B) Institutional support covering: (i) technical assistance and further training in Guinea and training abroad of the personnel in charge of road and public investments; (ii) procurement and networking of computer and office automation equipment at the DNIR; and (iii) seminars to sensitize the population on road safety, environmental protection, malaria, and the control of water-borne diseases, STI and HIV-AIDS.

C) Project Management comprising: monitoring and coordination of the project

by the USCP, work site organization, technical auditing of works and auditing of project accounts.

2.2 Initial Project Cost and Financing Plan Initial Costs 2.2.1 The project cost estimate, net of taxes and duties and excluding expropriation, is GNF 164,465.51 million (UA 55.91 million), comprising GNF 129 365.97 million (UA 43.98 million) in foreign exchange and GNF 35,099.54 million (UA 11.93 million) in local currency. The cost estimate, net of taxes and customs duties and excluding expropriation of the components proposed for ADF and AFD financing, is GNF 49,622 million (or UA 16.89 million) comprising GNF 37,240 million (UA 12.65 million) in foreign exchange and GNF 12 440 million (UA 4.23 million) in local currency. The provision for physical contingencies is 10% of the base cost. The provision for price escalation of 8.4% represents an annual inflation rate of 2% of foreign exchange costs and 12% of local currency costs. The total amount of compensation for expropriation of private property (to be borne by the Government) represents the equivalent of UA 1.87 million, including UA 0.60 million for the components financed by the ADF and the AFD. The summary of the cost estimate of the components of the whole project and the components financed by the ADF and AFD are given in Tables 2.1 and 2.2 respectively below

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Table2.1 Initial Cost Estimate of the Entire Project

I n G N F m i l l i o n I n UA m i l l i o n Components FE LC Total FE M.L Total

Works 104 268.46. 28 185.32 132 453.53 35.45 9.58 45.03

a.1 Rehabilitation of the Tombo-Gbessia road 92 960.46 24 831.87 117 792..33 31.60 8.44 40.04a.2 Construction of the Kénien – Bonfi feeder road 2 521.10 840.37 3 361.46 0.86 0.29 1.14a.3 Construction of the Yimbaya motor park 3 798.31 1 266.10 5 064.41 1.29 0.43 1.72a.4 Control &Supervision Tombo-Gbessia works 4 516.49 1 129.03 5 645.52 1.54 0.38 1.92a.5 Control &Supervision Kenien-Bonfi road works 188.24 47.06 235.30 0.06 0.02 0.08a.6 Control & Supervision Yimbaya motor park 283.61 70.90 354.51 0.10 0.02 0.12B Institutional Support 2 753.09 1 307.35 4 060.13 0.94 0.50 1.44b.1 Training in Project Management (external) 102.14 102.14 0.03 0.00 0.03b.2 Technical Training/Retraining (in Guinea) 44.99 104.99 149.98 0.02 0.04 0.06b.3 Computer and Office Automation Equipment DNIR 1 523.20 652.80 2 176.00 0.52 0.22 0.74b.4 Technical Assistance to DNIR 1 082.75 270.69 1353.44 0.37 0.09 0.46b.5 Sensitization Seminars 0 428.87 428.57 0 0.15 0.15C Management 2 135.20 271.98 2 407.18 0.73 0.10 0.82c.1 Monitoring and Coordination of the Project c.1.1 Operating costs of the PMCU 975.11 271.97 1 247.09 0.33 0.09 0.42

c.1.2 Expert in Work Site Organization 857.46 0 857.46 0.29 0.00 0.29c.2 Technical and Accounts Audit of the Project 302.628 0.00 302.63 0.10 0.00 0.10Base Cost 109 156..97 29 914. 35 139 070.83 37.11 10.17 47.28Physical contingencies (10%) 10 915.65 2 653.70 13 569.35 3.712 0.90 4.61Price escalation (8.4 %) 9 293.84 2 531.49 11 825.33 3.16 0.86 4.02Total cost EATD and excl. expropriations 129 365.97 35 099.54 164 465.51

43.98 11.93 55.91

Compensation for Expropriation - 5 513.15 5 513.15 0.00 1.87 1.87

Table 2.2

Initial Cost Estimate of Components Financed by ADF and AFD In GNF million In UA million

Components FE LC Total FE LC Total

Components 27 318.46 8 947.98 36 266.44 9.29 3.04 12.33 Works 19 101.00 6 367.00 25 468..00 6.49 2.16 8.66

a.1 Rehabilitation of the Tombo-Gbessia Road 2 521.10 840.37 3 361.46 0.86 0.29 1.14 a.2 Construction of the Kenien – Bonfi Feeder Road 3 798.31 1 266.10 5 064.41 1.29 0.43 1.72 a.3 Construction of the Yimbaya Motor Park 1 426.21 356.55 1 782.76 0.49 0.12 0.61 a.4 Control &Supervision Tombo-Gbessia Works 188.24 47.06 235.30 0.06 0.02 0.08 a.5 Control &Supervision Kenien-Bonfi Road Works 283.61 70.90 354.51 0.10 0.02 0.12 a.6 Control & Supervision Yimbaya Motor Park 2 753.09 1 307.35 4 060.13 0.94 0.44 1.38B Institutional Support 102.14 102.14 0.03 0.03 b.1 Training in Project Management (external) 44.99 104.99 149.98 0.01 0.04 0.05 b.2 Technical Training/Retraining (in Guinea) 1 523.20 652.80 2 176.00 0.52 0.22 0.74 b.3 Computer and Office Automation Equipment DNIR 1082.75 270.69 1 353.44 0.37 0.09 0.46 b.4 Technical Assistance to DNIR 0 428.57 428.57 0 0.15 0.15b.5 Sensitization Seminars 1 160.09 28.20 1 188.29 0.39 0.01 0.40C Management c.1 Monitoring and Coordination of the Project 28.20 28.20 0.01 0.01 c.1.1 Operating costs of the PMCU 857.46 857.46 0.29 0.29 c.1.2 Expert in Work Site Organization 302.63 302.63 0.10 0.10 c.2 Technical and Accounts Audit of the project 31 231.63 10 443.23 41 664.86 10.61 3.55 14.16Base Cost 3 110.91 1 024.31 4 135.22 1.06 0.36 1.42 Physical Contingencies (10%) 2 874.48 946.46 3 790.65 0.98 0.33 1.31Price Contingency (8.4 %) 37 240.60 12 440.58 49 622.00 12.65 4.23 16.89Total cost EATD and excl. expropriations 1 761.49 1 761.49 0.60 0.60

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Initial Financing Plan 2.2.2 The project is financed by the ADF, AFD, ABEDA, KFD, SDF, OPEC Fund and the Government. The ADF interventions concern: (i) works and inspection of works of the Tombo-Moussodougou section jointly financed with the AFD and the Government; (ii) works and inspection of the construction works of the Kenien-Bonfi feeder road and Yimbaya motor park and their inspection jointly financed with the Government; and (iii) project management, in particular operating expenses of the Project Monitoring and Coordination Unit, institutional support, technical, accounting and financial auditing. The AFD will also finance the cost of providing consultancy services for work site organization. The Government will finance the entire compensation for expropriations evaluated at UA 1.87 million, including UA 0.60 million for the components financed by the ADF and AFD. 2.2.3 The interventions of the other donors concern: (i) works on Lots 2 to 5 consisting of the Moussodougou-Madina-Kenien-T1-Gbessia sections with financing from ABEDA, KDF, SDF, OPEC Fund and Government; (ii) inspection and supervision of works on these road sections with financing from ABEDA and KDF; and (iii) equipment and operating expenses of the Project Monitoring and Coordination Unit with financing from the KDF. 2.2.4 The Financing plans by source of the entire initial project, as well as the initial ADF/AFD project, are shown below.

Table 2.3 Sources of finance of entire initial project (in UA million)

Sources of Finance In UA million % ADF 8.25 14.8% AFD 7.72 13.8% ABEDA 7.89 14.1% KDF 13.15 23.5% SDF 9.87 17.7% OPEC 3.29 5.9% Government 5.74 10.3% Total EATD and excl. expropriations 55.91 100%

Table 2.4

Sources of Finance of initial ADF/AFD project (in UA million) Sources of Finance In UA Million

FE LC Total % ADF 6.60 1.65 8.25 48.9% AFD 6.18 1.54 7.72 45.7% Government 0.92 0.92 5.4% Total 12.78 4.11 16.89 100.0%

2.3 Project Implementation Status 2.3.1 Conditions attached to the project: Not all the conditions for first disbursement have been fulfilled by the Government. The last condition concerning the provision of evidence of compensations for eviction is partially fulfilled. Indeed, of the five lots concerned, compensation costs were fully settled for the affected people located in the right-of-ways of lots 2, 3, 4 and 5. For those regarding compensations concerning the main component of Lot

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1, the Government transmitted to the ADF in February 2009 the documents relating to the fulfilment of this condition (see Table in Annex 4).   2.3.2 Works: Lots 2 to 5, which are financed by the other donors, have been completed. Lot 1, which is financed by the ADF and the AFD, is yet to be implemented. The delay incurred in implementing the lot financed by the ADF and AFD, as compared to the other lots, is due to: (i) time lag between financing approvals; the ADF approved its financing two years after that of the other donors; and (ii) the works procurement process was completed only after three invitations to bid. The two first were declared inconclusive for non-qualification of the bidders or non-compliance with the rules and procedures of the Bank. Indeed, the first bids were invited in June 2006, but during the analysis of the bid evaluation report, the Bank noted that the BDs issued were not only completely different from those which it had approved, but were not in conformity with the standard documents of the Bank. Consequently, the Bank did not give its no-objection. Another invitation to bid was issued on 16 December 2006, but due to unrest in the country in early 2007, only three bids were received, none of which fulfilled the qualification criteria. The competitive bidding was again declared inconclusive. A 3rd invitation to bid was issued on 30/10/2007 and in April 2008 led to the selection of a contractor but with a financing gap of GNF 61.46 billion or UA 10.66 million. A scenario was established with the Government consisting in completing as a priority the works of the expressway and postponing to another phase the other components, in particular, the Kenien-Bonfi feeder road, the Yimbaya motor park and part of the institutional support. With this scenario, the financing gap is GNF 39.73 billion, or UA 5.74 million. 2.3.3 In order to complete the project, the Government: (i) requested the contractor, who agreed, to extend the validity of the bid up to 30/03/2009; and (ii) requested supplementary financing from the two donors which had monitored the lot 1 award, namely the AFD and the ADF. In its request to the Bank, the Government indicates that one of the priorities under ADF XI is to mobilize additional resources through its country-allocation to finance this project; which is the subject of this supplementary grant.

3 APPRAISAL OF THE SUPPLEMENTARY GRANT 3.1 Rationale for the Supplementary Grant

The Tombo-Gbessia road development project falls within the scope of the government policy which

aims at strengthening the contribution of road transport to the country’s economic and social development. The project is in conformity with the Bank’s operations strategy for Guinea over the

2005-2009 period, and is based on Pillar I entitled "strengthening of basic infrastructure and growth-generating sectors” of the Bank’s PRSP.

Since the first financing was provided by project donors in 2003, a good part of the works have been completed (Lots 2 to 5 financed by the other donors), but finally with a financing gap due to quantity

increases and exchange rate variations between payment currencies and loan currencies. The Government is in the process of negotiating with these donors to finance this gap.

3.1.3 For the lot financed by ADF/AFD which constitutes the essential link of the expressway, after several invitations to bid, the process ended in the choice of a contractor, but with a gap varying between UA 10.66 million and UA 5.74 million depending on the scenarios. The Government requested the Bank to finance this gap through its country allocation under ADF XI. This gap is due to exogenous as well as endogenous factors which are mainly: (i) the overall upward trend of construction costs, (ii) delays in the procurement process due to major and frequent changes of staff in charge of monitoring project

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implementation; (iii) fluctuations of the UA against the GNF and Euro, which are the currencies of payment of the contracts; (iv) the country’s socio-political situation which in general resulted in weak competition in the bidding; and (v) the complexity of the structure which requires digging deep foundations and working in an urban environment. It should be recalled that the Bank conducted a "study on road construction unit costs in Africa" whose findings were submitted to the Board in December 2007. The study helped to determine the main causes and formulate recommendations to alleviate these unforeseen constraints. The main recommendations of this study within the context of the present grant are presented in Annex 5 3.2 Objectives and Description of the Revised Project Objectives of the revised project 3.2.1 The project matrix has been updated to results-based matrix format and to take into account the fact that the implementation of certain components will be deferred to another phase. In that light, the purpose of the project is to improve the operation of the transport system in Conakry and its suburbs. Its specific purpose is to improve traffic flow on the Tombo-Gbessia road and urban mobility in Conakry. Description of the Revised Project 3.2.2 The project components financed jointly by the ADF and AFD complement the components financed by ABEDA, KDF, SDF, OPEC Fund and the Government. For the lot financed by ADF/AFD, which represents the essential link of the expressway, after several invitations to bid, the process ended in the selection of a contractor, but with a gap of UA 10.66 million. However, taking into account the financial resource constraints of Guinea’s allocation, a scenario was agreed with the Government consisting in prioritizing the completion of the expressway and postponing to another phase, the implementation of the other components, in particular, the Kenien-Bonfi feeder road, the Yimbaya motor park and part of the institutional support. With this scenario, the financing gap is UA 5.74 million 3.2.3 In light of the foregoing, the components of the revised project are:

A) Works: They comprise: (i) rehabilitation of the Tombo-Gbessia main road (approximately 10.7 km), construction of structures (interchanges, roundabouts, bridges and footbridges), (ii) inspection and supervision of the said works; and (iii) population sensitization seminars on road safety, environmental protection, malaria, and control of water-borne diseases, STI and HIV/AIDS and (iv) expropriations of project affected people

B) Project management comprising assistance with work site organization, accounts and financial auditing of the project.

3.3 Revised Project Cost Estimate 3.3.1 The updated project cost, net of taxes and customs duties and excluding the cost of expropriations, is UA 68.49 M. This updated cost takes into account the participation of the other donors in lots 2 to 5. The ADF/AFD project cost rises from UA 16.89 M to UA 22.62

8

M, excluding expropriations. The costs by component are shown in Tables 3.1 and 3.2 below.

Table 3.1 Summary of Revised Cost Estimate by Component of the Entire Project

GNF Million

UA Million COMPONENTS

FE LC Total FE LC Total A Works

a,1 Rehabilitation of the Tombo-Gbessia Road 322 125.07 110 257.57 432 382.65 41.83 14.32 56.15a,2 Control &Supervision of Tombo-Gbessia Works 11 872.45 2 912.67 14 785.11 1.54 0.38 1.92a.3 Sensitization Seminars 1 155.09 0.00 1 155.09 0.00 0.15 0.15B Management 0.00 b.1 Expert in Work Site Organization 2 233.17 0.00 2 233.17 0.29 0.00 0.29b,2 Technical and Accounts Audit of the Project 770.06 0.00 770.06 0.10 0.00 0.10Base Cost 338 155.83 113 170.24 451 326.07 43.76 14.85 58.61Physical Contingencies (10%) 33 815.58 11 317.02 45 132.61 4.38 0.90 5.86Price escalation (6.24 %) 25 926.41 5 029.92 30 956.33 3.36 0.86 4.02Total Cost EATD and excl. expropriations 397 897.82 129 517.19 527 415.01 51.49 17.00 68.49Compensation for Expropriation - 5 513.15 5 513.15 0.00 1.87 1.87

Table 3.2

Summary of Revised Cost Estimate by Component of the ADF/AFD Project GNF Million

UA Million

COMPONENTS FE LC Total FE LC Total

A Works

a.1 Rehabilitation of the Tombo-Gbessia road 0.00 139 221.57 139 221.57 0.00 18.08 18.08a.2 Control & Supervision of Tombo-Gbessia works 0.00 4 697.35 4 697.35 0.49 0.12 0.61a.3 Sensitization Seminars 0.00 0.00 B Management 0 1 155.09 1 155.09 0.15 0.15b.1 Expert in Work Site Organization b,2 Technical and Accounts Audit of the Project 2 233.17 2 233.17 0.29 0.29Base Cost 770.06 0.00 770.06 0.1 0.1Physical Contingencies (10%) 3 003.23 145 074.01 148 077.23 0.88 18.35 19.23Price escalation (6.24 %) 300.32 14 507.40 14 807.72 1.44 0.48 1.92Total cost EATD and excl. expropriations 8 514.81 2 838.27 11 353.08 1.11 0.37 1.47Compensation for Expropriation 11 818.36 162 419.68 174 238.04 3.43 19.20 22.63

3.4 Financing Plan and Expenditure Schedule

3.4.1 The financing plans of the entire project and of the ADF/AFD project are shown in

the tables below.

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Table 3.3 Financing Plan of the Entire Project (in UA million)

Source Initial Updated Difference ADF 8.25 13.42 5.17 AFD 7.72 7.72 0 ABEDA 7.89 9.47 1.58 KDF 13.15 15.78 2.63 SDF 9.87 11.84 1.97 OPEC Fund 3.29 3.95 0.66 Government 5.74 6.31 0.57 Total 55.91 68.49 12.58

3.4.2 updated expenditure schedule of the part financed by the ADF is shown in the table

below.

Table 3.4 Expenditure Schedule of the Revised ADF Component

UA million Source 2009 2010 2011 Total

ADF 4.7 6.04 2.67 13.41 AFD 2.7 3.5 1.52 7.72 GOV 0.52 0.67 0.30 1.49 Total 7.92 10.21 4.49 22.62 Total as % 35% 45% 20% 100%

3.5 Environmental and Social Impact 3.5.1 At appraisal, the initial project was classified in category 1 in accordance with the relevant guidelines of the Bank. For this reason, a summary of the Environmental and Social Impact Assessment (ESIA) was submitted to the Board on 22 July 2003 and published on the Website of the Public Information Centre. An addendum to this summary was prepared in 2005, and submitted to the Board for information. The supplementary grant will be used to finance only activities which were already envisaged in the initial project, so the present classification will not change. However, taking into account the financing gap, the construction of the new motor park at Yimbaya and the Kenien-Bonfi feeder road having been postponed, accordingly the freeing up of the rights-of-way and expropriations concerned by them will be postponed to a later phase. Climate Change 3.5.2 Climate change was taken into account in the project design by waterproofing the road sections to be constructed and sizing the hydraulic works on the basis of rainfall in the project area. Concerning the impact of greenhouse gas emissions, it should be noted that Guinea imports its fuel from the Refineries of the Sub-region (Dakar, Côte d’Ivoire) that have implemented the 2001 Dakar Declaration on the phasing out of the production and sale of leaded gasoline no later than 31/12/2005. Emissions of exhaust fumes (mainly CO2) into the atmosphere will also be reduced as a result, in particular, of: (i) shorter travel times; and (ii) fewer vehicle manoeuvres while driving.

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Impact on Poverty and Gender 3.5.3 Many benefits are expected from the project during both the construction and operational phases of the structures. The most expected outcomes are: (i) increased mobility of about 600 000 people in the PIA (users of transport services, including women); (ii) reduced fuel consumption, which could lead to a reduction in fares, due to improved vehicle speeds and substantial reduction in the number of congestion points; (iii) increased transport supply of about 20%; (v) improved comfort and safety of population, easy accessibility to employment zones (administrative and basic social services, commercial centres, etc), economic activity areas, especially for women of the PIA and those from the country’s hinterland, resulting in the development of trade, income opportunities and improvement through increased sales of products; and (vi) over 80% reduction in travel time from Tombo to Gbessia (15 mn instead of one and half hours currently). 3.6 Project Implementation Executing Agency and Institutional Arrangements 3.6.1 The project executing agency is the Ministry of Public Works through the DNIR which has set up a Monitoring and Coordination Unit comprising a coordinating Engineer, a project monitoring engineer, an environmentalist and an accountant. These arrangements have been maintained. Revised Implementation and Monitoring Schedule of the Programme 3.6.2 The entire project will be implemented from February 2006 to June 2011. The implementation schedule of the project and the estimated supervision schedule are given in Annex 2. 3.7 Procurement of Goods, Works and Services 3.7.1 The procurement arrangements defined in the appraisal report and the initial Grant Agreement remain unchanged, i.e. international competitive bidding for works and short-lists for consultancy services. 3.7.2 The resources of this supplementary grant will be allocated to financing the cost of the Tombo –Gbessia road works, in particular the works of Lot 1 – Tombo-Moussodougou section, for which a contractor was selected following international competitive bidding and the no-objection of the Bank and AFD subject to the mobilization of resources to finance the gap. Negotiations were undertaken with the contractor who agreed to extend the validity of his bid up to 30/04/2009. 3.8 Disbursement Arrangements The direct disbursement method is adopted for works and the control of works financed by the initial ADF grant. The same will apply to the construction contract financed by this supplementary grant.

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3.9 Donor Coordination 3.9.1 Transport sector assistance is coordinated as part of the monitoring of the actions of the National Transport Program (PNT) of which the urban transport sector forms part. For this project, consultations were held with the donors involved. Concerning the AFD which is financing jointly with the Bank, besides the joint preparation and appraisal missions between 2003 and 2005, regular contacts are maintained, including the meeting of February 2009 in Paris in the presence of representatives of the Guinean Administration. Joint AFD/ADF missions are envisaged for the launching of the project once the supplementary grant is approved and for supervision during the project implementation phase. 3.10 Monitoring and Evaluation and Accounting and Financial Audit 3.10.1 Monitoring and evaluation as envisaged in the appraisal report of the initial project will cover the supplementary grant. Such monitoring and evaluation includes internal and external monitoring, supervision missions of the Bank and other co-financiers, a mid-term review and a final evaluation including the completion reports of the Borrower and the Bank. In addition, the services of the works control mission will be extended to permit the conduct of a study on the adjustment of benchmark impact indicators and monitoring of their trend until implementation is completed. This should facilitate the continuous monitoring of these indicators by the Services of the Administration during the lifespan of the project. The indicative supervision schedule is given in Annex 2. 3.10.2 Since the ADF-financed components having not yet started, the project has not yet been audited. Resources are allocated from the initial grant to conduct the accounting and financial audit of the project, including the audit of the supplementary grant. A firm will be recruited to carry out the audit up to 2011. 4 JUSTIFICATION IN LIGHT OF POLICY ON SUPPLEMENTARY LOANS

AND GRANTS 4.1 Justification in light of the General Conditions 4.1.1 The envisaged supplementary grant fulfils the conditions set out in the Bank Group Policies and Procedures relating to supplementary financing (Document ADF/BD/WP9790 of 11 August 1997). The additional costs are due mainly to: (i) increasingly difficult control of input prices, in particular, hydrocarbon products and building materials, which rose significantly between 2005 and 2009, and (ii) the fluctuation of the UA against the Euro (75% of the contract denominated in foreign exchange) leading to a fall in the ADF resources available. The increased costs are beyond the Borrower’s control. 4.1.2 The supplementary financing envisaged also satisfies the other general conditions stated in section (iii) Bank Group Policies and Procedures on supplementary financing. The amount of UA 5.17 million requested under this supplementary grant is well below the level of the ADF-XI resource allocation to the country. Similarly, the activities to be financed are in conformity with the pillars of the 2005-2009 CSP: (i) strengthening of basic infrastructure and growth-generating sectors; and (ii) improvement of the basic social services.

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4.2 Justification in light of the Specific Conditions 4.2.1 This proposed supplementary grant fulfils the specific conditions set out in Section (iv) of the Bank Group Policies and Procedures on supplementary financing:

The country is eligible for ADF resources on the basis of its Country Policy and Institutional Assessment (CPIA) rating;

The Government is making determined efforts to achieve the national

development goals of the project and mobilization of internal and external resources;

The implementation framework of the project is favorable and the Government

is firmly committed to achieving the development goals pursued by the project. This Tombo-Gbessia Road Rehabilitation Project is in conformity with the Government’s policy aimed at increasing the contribution of road transport to the development of the national economy, as a result, in particular, of the rehabilitation and construction of developmental highways and the trunk roads. To implement this policy in Conakry, the World Bank in 1989 financed under the first Urban Development Programme (PDU 1) the preparation of the Urban Development Master Plan (SDV). To take into account the recent development of the town, the investment plan resulting from the SDV was updated within the framework of the PDU which is currently in its third implementation phase.

The cost overruns are due to exogenous as well as endogenous factors which

are mainly: (i) the overall upward trend of construction costs (ii) delays in the procurement process due to major and frequent changes of personnel in charge of monitoring project implementation; (iii) fluctuations of the UA against the GNF and Euro, which are the contract currencies of payment; (iii) Guinea’s socio-political situation which generally dampened the contractors’ interest in bidding; and (iv) the complexity of the structure which requires digging deep foundations and working in an urban environment.

The Government is unable to finance the cost overrun. The project is

technically and economically viable, despite the cost overrun. 5 PROJECT SUSTAINABILITY AND RISKS 5.1 Recurrent Costs and Project Sustainability 5.1.1 The recurrent project costs mainly concern routine maintenance costs, and to a lesser extent, periodic maintenance costs owing to the dense bituminous mix surfacing used on the structure whose lifespan is long (20 years). In the “without project” situation, the annual routine maintenance costs of the road are GNF 906.43 million, while for periodic maintenance the cost is GNF 6756.75 million every five years. In the “with project” situation, the annual routine and periodic maintenance costs stand at GNF 561.8 million and GNF 8164.13 million respectively every ten years. The level of mobilizable resources by FER, which is about GNF 20 billion, will make it possible to finance these recurrent costs.

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5.2 Project Sustainability 5.2.1 The sustainability of the project depends on the quality of the works and the road operating conditions. Technical studies have identified in the PA, the quality materials to be used. The structure of the infrastructure is in conformity with technical standards. The road works will be inspected by a qualified consultant, who will be responsible for quality assurance of the work done. Once the project is completed, the road will be managed by DNER to carry out maintenance with FER funding. 5.3 Key Risks and Mitigating Measures 5.3.1 The project risks are: (i) availability of counterpart funds according to the disbursement profile and of all the required financing and the disruption or stoppage of works owing to the political situation or suspension for debt repayment arrears by the ADF; (ii) effective financing by FER of the road maintenance recurrent costs with timely availability of adequate resources; and (iii) management of the implementation schedule to limit traffic disruptions during the construction phase. 5.3.2 The first risk is mitigated by the fact that the country’s current political situation, which is being monitored by ECOWAS and the International Community, is expected to lead to elections before end- 2009, as a prelude to improved governance. In addition, attainment of the HIPCI completion point initially envisaged at the end of December 2008/early January 2009 has been postponed, but remains in sight with the expected resumption of the PRGF programme with the IMF. The 2nd risk is mitigated by the fact that Guinea has set up a 2nd generation road fund, and normally has the potential enabling it to meet the resource needs for financing road maintenance if governance is improved, which is the purpose of the mitigation measures of the 2nd risk. The 3rd risk is mitigated by the fact that, under the project, the AFD will finance the services of an expert in work site organization. 6 ECONOMIC ANALYSIS 6.1 Economic Analysis 6.1.1 The expected project benefits are: decongestion of Conakry, improved accessibility of the port of Conakry, Guinea’s only commercial port, the international airport of Conakry-Gbessia, increased mobility of people and goods. The quantifiable economic benefits expected as from the commissioning of the whole road are: (i) an average reduction of 30 to 40% in vehicle operating costs (VOC); (ii) an average reduction of 40% in maintenance costs; and (iii) over 80% of time saved. 6.1.2 The assessment of the economic viability of the project was made by comparing the economic costs and benefits in the ‘without project’ situation "without project" (surfaced road and feeder road in very bad condition with poor drainage, the motor park is also in very bad condition, congested and with poor drainage) and in the ‘with project’ situation (road and roadway surfaced and in good condition, structures and motor park in good condition), over a lifespan 20 years at a discount rate of 12%. The economic costs of investment given cover expenditure related to works on the road, bridges and structures (interchanges, roundabouts and footbridges) and the motor park, supervision of works, project monitoring and coordination, environmental protection measures, expropriations as well as physical contingencies.

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6.1.3 On the basis of 2005 traffic data and growth rates which had been established, the traffic in 2008 varies from 34,000 to 52,000 veh/d according to road section. The weighted average traffic in 2008 was 44,000 veh/d, the modest traffic forecast rates adopted are: (i) 4% as from the commissioning of the works and during the first five years of operation; and (i) 3% beyond. 6.1.4 The economic analysis was conducted using the HDM-4 model. It is based on an updated monetarized assessment of the project costs and benefits. The HDM-4 model was used as a methodological framework to calculate the project economic rate of return. This model is based on: - degradation of structures – its effects (road maintenance and development works) on surface quality and the structure of the road and its feeder road - its effects on users (wear and tear of vehicles, travel speeds etc) – current traffic and its trend - maintenance policy and strategy and various unit costs collected during the mission and concerning road development and maintenance and use of vehicles. 6.2 Economic Rate of Return and Sensitivity Test 6.2.1 Economic rate of return (ERR): On the basis of traffic data, estimated cost of works and supervision of works excluding price contingencies, annual routine maintenance and periodic maintenance costs, the project ERR stands at 32% which is lower than the initial rate of return which was 37.2%. This decline in ERR is due to an increase in the cost of works and a modest traffic growth forecast. In spite of everything, the ERR remains high due in particular, to savings in overall transport costs (savings in operating costs and travel time). The ERR of the road section financed by the ADF is 33.93%. This ERR justifies the investment. 6.2.2 Sensitivity Test : The sensitivity tests conducted to measure the impact of the various parameters concerned show that the EIRRs are relatively stable vis-a-vis cost variations (+10%) and benefits (-10%) and with the combination of the two assumptions. Indeed, in the worst-case scenario (increased cost and reduced benefits), the ERR of the project stands at 30.64% for the whole project and of 28.75% for the ADF project. The project is thus economically justified. 7. CONCLUSIONS AND RECOMMENDATIONS 7.1 Conclusions 7.1.1 Implementation of the project will contribute to the enhancement of co-operation and regional economic integration through the reduction of non-tariff barriers and "invisible" costs. It will foster the development of commercial activities along the corridor due to savings from the reduction of illicit payments along the corridor. 7.1.2 This supplementary grant, which will contribute to the achievement of the goals of PR1, is justified by a significant increase in the costs of the main inputs (bitumen, fuel) and the fluctuation of the UA against the CFAF, which reduced the ADF resources available. Despite increased costs, the project remains economically viable.

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7.2 Recommendations 7.2.1 It is recommended that the ADF should extend to the Government of Guinea a supplementary grant not exceeding UA 5.17 million, representing part of the UA 5.74 million required to finance the entire road works of lot 1.

A. Conditions Precedent to Effectiveness of the Supplementary Grant 7.2.2 Effectiveness of the Grant Agreement will be subject to fulfilment by the Borrower of the conditions set out in Section 5.0.1 of the General Conditions applicable to Grant Agreements and Guarantee Agreements.

B. Conditions Precedent to First Disbursement 7.2.3 The conditions precedent to first disbursement of this supplementary grant set out below replace those of the initial Grant Agreement No. 2100155005368 signed on 22/07/2005. The Donee shall, to the satisfaction of the Fund:

(i) provide evidence of effective payment of the compensation for expropriation concerning the main component of lot 1;

(ii) provide evidence of the opening, at the Central Bank, of a special account to

lodge the counterpart funds.

C. Other Conditions 7.2.4 The Other conditions of the initial grant are maintained for the supplementary grant except for the conditions which involve components that were not finally adopted. The following conditions replace those featuring of the initial Grant Agreement No 2100155005368 signed on 22/07/2005. The Donee shall:

(i) Provide the Fund with evidence each year of the regular replenishment of the special account for the project counterpart funds;

(ii) Submit each year to the Fund, as from 2011, the road network maintenance programme, including the Tombo-Gbessia road

(iii) Submit to the Fund, not later than six months after the commissioning of the Tombo-Gbessia road, the results of traffic counts on this road;

(iv) Provide the Fund, not later than 30 June 2011, with evidence of the increase in

the resources of FER;

(iv) Submit to the Fund, before 31 December 2009, the performance contract of the Project Monitoring and Coordination Unit; and

(v) Provide the Fund with evidence of the adoption of the recommendations of the study on improving traffic in Conakry and its suburbs.

ANNEX 1

ANNEX 2

Table: Implementation Schedule

Initial Schedule Updated Schedule

ACTIVITIES Responsibility/actions Starting

Date End Date

Starting Date

End Date

PRELIMINARY ACTIVITIES 1.1 Approval initial grant ADF June-05 June-05 13-July-05 1.2 Publication general procurement notice GVT /ADF July-05 July-05 1.3 Approval supplementary grant ADF Apr-09 May-09 2. PROJECT IMPLEMENTATION 2.1 Project Coordination USCP/DNIR July-05 Janv-09 July-05 Dec-11 2.2 Works control & work site organization

* Procurement process DNIR/ ACGP/ADF/AFD July-05 Mar-06 June-06 Dec-06

* Works control services Consultants Apr-06 Jan-09 June-09 Aug-11 2.3 Road and Motor Park

* Procurement process DNIR/ACGP/ADF/AFD July-05 Apr-06 June-06 Apr-08 * Completion of the work Contractors May-06 Dec-08 July-09 July-11

2.4 Technical assistance (TA) to DNIR Activities not selected * Procurement process DNIR/ACGP/ADF Jan-07 Sept-07 * TA Consultancy Services Consultant Oct-07 Oct-08

2.5 Training/Retraining of Officials Activities not selected * Procurement process DNIR/ACGP/ADF Aug -2006 Mar-07 * Training/Retraining Services Consultant Apr-07 May-08

2.6 Sensitization seminars * Procurement process DNIR/ADF Nov-05 May-06 June-09 Dec-09 * Sensitization services NGO Aug-06 Jan-09 June-10 Dec-11

2.7 Financial and technical auditing of the project • Procurement process DNIR/ACGP/ADF Sept-05 Apr-06 June-09 Dec-09

* Auditing services Consultant May-06 Jan-09 June-10 Dec-11

Table: Estimated supervision schedule

Approximate date Activity Composition of mission Staff-weeks

11/09/2005 Launching

Project officers, a disbursement office rand a procurement officer

3

13/03/2006 Joint supervision by donors Project officers 5 08/03/2007 Supervision and support to DNIR Project officers 1.5 23/12/2007 Supervision and support to DNIR Project officers 1.5 23/10/2008 Supervision Project officers 1.5 27/11/2009 Supervision Project officers 2 26/05/2010 Joint supervision by donors Project officers 2 22/11/2010 Supervision Project officers 2 21/05/2011 Supervision Project officers 2 17/11/2011 Joint supervision by donors Project officers 2 15/05/2012 Completion report Transport Economist and Civil Engineer 7

Total 29.5

ANNEX 3 HDM 4

GUINEA TOMBO-GBESSIA ROAD DEVELOPMENT PROJECT

1- ECONOMIC ANALYSIS in USD million

Additional Administrative Costs User Cost Saving Net benefits

Year Investment. Operation Special VOC mot. Time mot. Time +

VOC non mot.

Accidents Net

exogenous benefits

Net overall benefits

2003 11.72 -1.31 0.00 0.00 0.00 0.00 0.00 0.00 -10.41

2004 25.09 -0.08 0.00 -6.61 -55.24 0.00 0.00 0.00 -86.86

2005 29.69 -0.08 0.00 -8.35 -73.08 0.00 0.00 0.00 -111.03

2006 12.83 0.46 0.00 -6.88 -41.21 0.00 0.00 0.00 -61.38

2007 0.00 0.88 0.00 0.83 69.70 0.00 0.00 0.00 69.66

2008 0.00 0.00 0.00 1.58 75.39 0.00 0.00 0.00 76.96

2009 8.44 0.00 0.00 2.57 84.51 0.00 0.00 0.00 78.64

2010 16.88 0.00 0.00 3.40 92.74 0.00 0.00 0.00 79.27

2011 8.44 -0.17 0.00 5.06 115.19 0.00 0.00 0.00 111.99

2012 0.00 -0.28 0.00 12.84 228.27 0.00 0.00 0.00 241.39

2013 0.00 -1.29 0.00 18.21 259.28 0.00 0.00 0.00 278.78

2014 0.00 0.00 0.00 12.88 240.86 0.00 0.00 0.00 253.74

2015 0.00 0.00 0.00 14.37 252.78 0.00 0.00 0.00 267.15

2016 0.00 0.61 0.00 15.84 254.38 0.00 0.00 0.00 269.61

2017 0.00 0.88 0.00 17.85 255.49 0.00 0.00 0.00 272.46

2018 0.00 -0.02 0.00 20.60 286.35 0.00 0.00 0.00 306.97

2019 0.00 -0.04 0.00 21.87 283.90 0.00 0.00 0.00 305.81

2020 0.00 -0.07 0.00 22.38 276.29 0.00 0.00 0.00 298.74

2021 0.00 -0.21 0.00 22.53 263.04 0.00 0.00 0.00 285.78

2022 -9.79 -0.15 0.00 22.74 270.13 0.00 0.00 0.00 302.81

Total 103.30 -0.88 0.00 193.72 3 138.76 0.00 0.00 0.00 3 230.07

IRR = 32.00%

NPV= 577.11 USD Mo

2 –SENSITIVITY ANALYSIS Lot 1 Tombo-Moussoudougou (ADF/AFD/Gov) All road sections of the project

Case 1 Case 2 Case 3 Case 4 Case 1 Case 2 Case 3 Case 4

Discount rate (%) 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 Multiplier Factor for net benefits

* Capital and recurrent expenditure 1.00 1.10 1.00 1.10 1.00 1.10 1.00 1.10 *Vehicle operation 1.00 1.00 0.90 0.90 1.00 1.00 0.90 0.90 ------- ------- ------- ------- ------- ------- ------- -------

Discounted earnings (USD million) 23.56 22.28 19.92 18.64 577.11 569.87 512.16 504.91

IRR. (%) 33.93% 31.40% 31.14% 28.75% 32.00% 31.37% 31.30% 30.64%

ANNEX 4 GUINEA- TOMBO-GBESSIA ROAD DEVELOPMENT PROJECT - SUPPLEMENTARY GRANT

CONDITIONS ATTACHED TO THE PROJECT

CONDITIONS OF THE INITIAL GRANT STATUS SUPPLEMENTARY GRANT AND INITIAL GRANT CONDITIONS

A UNDERTAKINGS (i) Include in the work specifications, environmental and social

protection measures envisaged in the Environmental and Social Management Plan (ESMP) already accepted by the Fund

Already included in the specifications of the construction contract

(ii) Finance the national counterpart of the project according to the expenditure schedule

(iii) Ensure that the private operator carries out efficient management of the Yimbaya new motor park, in terms of operation and maintenance of the infrastructure put in place under the project

Component dropped

(iv) Provide to the Fund the traffic count results on the Tombo-Gbessia road

See other conditions See other conditions

(v) Reclassify the Kénien-Bonfi feeder road from the secondary to the primary network of Conakry, eligible for the road maintenance Fund (FER) , in conformity with the provisions of the instrument governing the operation of FER

Component dropped

B-CONDITIONS PRECEDENT TO FIRST DISBURSEMENT (i) Provide the text laying down the method of management of the

Yimbaya new road terminal Component dropped

(ii) Provide evidence of the effective payment of compensations for expropriation

Ok for the lots financed by the other donors whose works were completed in 2007- Remainder for t lot 1

Provide evidence of effective payment of the compensation for expropriations concerning the main component for lot 1

(iii) Provide evidence of the availability of the site of resettling the displaced population

Component dropped (road terminal)

(iv) Evidence of the opening at the central Bank: (i) of a special account for the counterpart funds ; and (ii) of a special account intended for the resources of the grant for payment of operating expenses of the Project Monitoring and Coordination Unit (PMCU) and population sensitization seminars

The financing of support to the PMU is stopped. Thus, a special account to receive part of the ADF resources is no longer necessary

Provide evidence of the opening at the central Bank of a special account to keep the counterpart funds

(v) Provide the order on (a) creation of the Project Monitoring and Coordination Unit , ( b) appointment of the Head of the PMCU, the Works Monitoring Engineer, the Accountant and the Environmentalist of the project whose qualifications and experience shall have been submitted beforehand to the Fund for approval

Order already issued and personnel appointed

C OTHER CONDITIONS (i) Provide to the Fund, before 31 July 2007, evidence of the

contract signed with the private operator in charge of management of the ne motor park at Yimbaya

Component dropped

(ii) Provide each year to the Fund, evidence of the regular funding of the special account for the counterpart funds to the project

Provide each year to the Fund, evidence of the regular funding of the special account for the counterpart funds to the project

(iii) Provide each year to the Fund, as from 2008, the road network maintenance programme including the Tombo-Gbessia road and the Kénien-Bonfi feeder road

Provide each year to the Fund, as from 2010, the road network maintenance programme including the Tombo-Gbessia road and the Kénien-Bonfi feeder road

(iv) Provide each year to the Fund, as from 2007, the programme of maintenance of the road terminal of Yimbaya

Component dropped

(v) Provide to the Fund before 31 December 2006, the performance Contract of the project monitoring and coordination Unit

Provide to the Fund before 31 December 2009, the performance Contract of the project monitoring and coordination Unit

(vi) Provide to the Fund, no later than six months after the commissioning of the Tombo-Gbessia road, the traffic count results of on this road

Provide to the Fund, no later than six months after the commissioning of the Tombo-Gbessia road, the traffic count results of on this road

(vi) Provide to the Fund, no later than 30 June 2007, evidence of increase of the resources of FER

Provide to the Fund, no later than 30 June 2011, evidence of increase of the resources of FER

(viii) Provide to the Fund, no later than 30 December2006, evidence of the reclassification of the Kénien-Bonfi feeder road from the secondary to the primary network of Conakry

Component dropped

(ix) Provide to the Fund, evidence of the adoption of the recommendations of the study on improving traffic in Conakry and its suburbs.

Provide to the Fund, evidence of the adoption of the recommendations of the study on improving traffic in Conakry and its suburbs.

ANNEX 5 GUINEA- TOMBO-GBESSIA ROAD DEVELOPMENT PROJECT - SUPPLEMENTARY GRANT

RECOMMANDATIONS FROM THE STUDY ON ROAD CONSTRUCTION UNIT COSTS OBJECTIVES / RECOMMENDATIONS ACTIONS Objective 1: Accurately determine the estimated costs Ensure that the design of projects or review of design is carried out by renowned consulting firms, recruited according to an appropriate process of selection, in accordance with the guidelines of the Bank and the TOR specifically requiring an analysis of the supply chain of the contractor’s market as well as availability of the main inputs and price projections made when determining the estimated costs envisaged by the engineer (countries and the Bank).

The amount of the supplementary grant was determined following the invitation for bids. The successful bidder for the construction contract having already been chosen, the costs are thus the real prices which will be applied for the implementation of the said works.

Require an adequate level of geotechnical study at the design stage (the Bank and countries). The necessary geotechnical studies were conducted and the review of these studies was made by specialists in the domain

Systematically update the estimated costs when projects incur delays, and carrying out cost reviews at appraisal and complete design reviews, more than 2 years after the initial design (the Bank and countries).

The costs considered result from the invitation for bids and are thus market-based. Concerning contract whose durations are over 18 months, a price adjustment is envisaged. Price indices will be monitored during the period of implementation of work, both by the Bank and the administration.

Encourage, if that is justified, standardization of the requirements as regards design of projects at the national level or regional level in the case of the multinational corridors (the Bank and donors)

The design of the project is in conformity with the urban development plan (PDU 1) financed by the World Bank and with the Conakry urban development master plan (SDV)

Objective 2: Further improve competitiveness of bids Systematically review, by country, the rationale to promote the participation of the local contractors, and define measures related to the design of projects by the appraisal team – for example, the preparation of bidding documents, national preference, prequalification criteria, etc (the Bank and countries).

The successful bidder for the contract was chosen by the Government following the Bank’s no-objection. All the rules of procedure of the Bank as regards procurement were complied with

Continue the publication and execution of invitations for bids, as well as thorough examination of procurement procedures by executing agencies and their capacity (the Bank).

This stage has already been done

Monitor procurements to ensure competitiveness, and intervene when the invitations for bids tend to limit competition (the Bank and countries).

Stage already done

Objective 3: Strengthening knowledge management on the costs of roads and the road construction industry

Support the development of updated national data bases on active contractors on the roads and construction market, by exploring the information provided by project implementation reports and PCR (countries, the Bank and donors).

A road data base on the prices of works exists. It will be updated with the support of the consulting firms

Support the development of updated data bases on the unit costs of roads for the various types of projects (scope, scale, site and context – on the basis of results of the Africa Infrastructure Country Diagnostic Study on the estimate of the unit costs of infrastructure (countries, REC, the Bank and other donors).

This update will be based on the reports of the works inspection firms and the results of the completion reports

Monitor the fluctuations in world and local prices of the main inputs, through an early warning system of price hikes on the markets (countries). Organize internal and external workshops on the conclusions and recommendations of the study and on the proposed action plan (the Bank).

To be followed up by the Bank and the Government

Systematically apply FIDIC conditions for price adjustment formulas in contracts (countries and the Bank).

Action in progress by ORPF.

Objective 4: Minimize Project Implementation Delays Thoroughly assess the capacity of executing agencies and to include in the project components appropriate capacity building, where necessary (the Bank and countries).

The delays incurred in the implementation of the project are due mainly to the inconclusive invitations for bids and unrest in the country

Ensure effective supervision of projects and compliance with realistic procurement schedules (the Bank).

The monitoring program envisages 2 supervisions per year

Continue, as far as possible, to minimize the non-essential conditions precedent to effectiveness of loans or disbursement, for example, by excluding the conditions related to sector policy reform which must be formulated through sector reform or development policy loans (the Bank).

The majority of the conditions were fulfiled except the one concerning expropriations. The resizing of the project will induce a reduction in the amount of compensation to be paid

Examine systematically by using the advance procurement action procedure (the Bank). Procurement already carried out Ensure that the appropriate procedures are followed for the evaluation of the qualification of bidders (the Bank and countries).

Procurement was carried out in accordance with the rules of procedure of the Bank as regards procurement

Ensure continuity as concerns personnel in charge of project supervision and implementation (the Bank and countries).

It is envisaged as a condition of the project that high mobility of personnel of the Ministry of Public Works does not affect the Project Monitoring Unit

Study the possibility of using other procurement methods, such as the design-build-maintain method, and how to improve/harmonize the relevant procurement directives (the Bank and donors).

This provision is not applicable as procurements have already been carried out

Continue to support institutional reform of the road sector and capacity building (the Bank and countries).

Action in progress

Objective 5: Be well prepared to cope with possible price hikes Agree with borrowers to a mitigation plan when the price hike exceeds the provision made in this regard under the project, including increase in counterpart funds and other measures (countries and the Bank).

The supplementary grant resolves this problem.

Justify the provisions for price contingency and risks in the estimated costs of projects to properly reflect the characteristics of the projects and country, the perceived validity of the estimated costs of design, and future price changes envisaged for the main inputs (the Bank).

The fluctuations adopted are justified