AFRICAN DEVELOPMENT BANK MRS/PTTR/2000/01 LANGUAGE : ENGLISH ORIGINAL : ENGLISH

REPUBLIC OF MAURITIUS

SOUTH EASTERN HIGHWAY PROJECT

APPRAISAL REPORT

NB: This document contains errata or corrigenda (see Annexes)

INFRASTRUCTURE & INDUSTRY DIVISION COUNTRY DEPARTMENT OCDE EAST REGION JUNE 2000

TABLE OF CONTENTS

PROJECT INFORMATION SHEET, CURRENCY AND MEASURES, LIST OF TABLES, LIST OF ANNEXES, LIST OF ABBREVIATIONS, BASIC DATA SHEET, PROJECT LOGICAL FRAMEWORK, EXECUTIVE SUMMARY 1. ORIGIN AND HISTORY OF THE PROJECT 1 2. THE TRANSPORT SECTOR 1 2.1 Transport System 1 2.2 Transport Policy, Planning and Co-ordination 3 3. THE ROAD SUB-SECTOR 4

3.1 Road Network, Vehicle Fleet and Traffic 4 3.2 Road Transport Industry 5

3.3 Road Administration and Training 6 3.4 Road Planning and Financing 6 3.5 Road Engineering and Construction 7 3.6 Road Maintenance 8 4. THE PROJECT 8 4.1 Project Concept and Rationale 8 4.2 Project Area and Project Beneficiaries 9 4.3 Strategic Context 10 4.4 Sector Goal/Project Objective 10 4.5 Project Description 11 4.6 Traffic Demand and Road User Prices 14 4.7 Environmental Impact 14

4.8 Social Impact 15 4.9 Project Costs 17 4.10 Sources of Finance and Expenditure Schedule 18 5. PROJECT IMPLEMENTATION 19 5.1 Executing Agency 19 5.2 Institutional Arrangements 19 5.3 Supervision and Implementation Schedules 19 5.4 Procurement Arrangements 20 5.5 Disbursement Arrangements 21 5.6 Monitoring and Evaluation 21 5.7 Financial Reporting and Auditing 22 5.8 Aid Co-ordination 22 6. PROJECT SUSTAINABILITY AND RISKS 22 6.1 Recurrent Costs 22 6.2 Project Sustainability 23 6.3 Critical Risks and Mitigation Measures 23

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7. PROJECT BENEFITS 24

7.1 Economic Analysis 24 7.2 Social Impact Analysis 25 7.3 Sensitivity Analysis 25

8. CONCLUSIONS AND RECOMMENDATIONS 26 8.1 Conclusions 26 8.2 Recommendations and Conditions for Loan Approval 26 This appraisal report was prepared by Messrs. A. BABALOLA (Senior Transport Engineer, Ext. 4682) L. JOOTTUN (Senior Environmentalist, Ext. 4284) and a Transport Economist Consultant following their mission to Mauritius in June, 2000. Any inquiries relating to this report may be referred to either the authors or to Mr. G. MBESHERUBUSA, Division Manager, OCDE.4, Ext. 4131.

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AFRICAN DEVELOPMENT BANK

01 B.P. 1387 - ABIDJAN Tel: 20 20-44-44

Fax: (225) 20 20-49-86 Telex: 23717, 22202, 22203

PROJECT INFORMATION SHEET

The information given hereunder is intended to provide some guidance to prospective suppliers, contractors and consultants and to all persons interested in the procurement of goods and services for project approved by the Board of Directors of the Bank Group. More detailed information and guidance should be obtained from the Executing Agency of the Borrower. 1. COUNTRY : Mauritius 2. PROJECT TITLE : South Eastern Highway Project 3. LOCATION : Flacq and Grand Port Districts 4. BORROWER : Government of Mauritius. 5. EXECUTING AGENCY : Ministry of Public Infrastructure/ Road Development Authority 9th Floor, Moorgate House Sir William Newton Street, Port Louis Mauritius Tel: (230) 2107292 Fax: (230) 208 7149 6. FINANCING ADB Loan a) Amount : Not exceeding UA 14.87 million b) Currency : US$ and Euro. c) Terms (i) Interest : Floating Rate. (ii) Commitment Charge : 0.75% per annum on the undisbursed balance of the loan commencing sixty (60) days after the signature of the loan agreement. (iii) Duration : 20 years including a five-year grace period; (iv) Repayment : : In. 30 consecutive semi-annual instalments starting from the end of the grace period. Other Financiers : Government of Mauritius

ii 7. DESCRIPTION : The project consists of:

Construction and upgrading works for the 25.05-km highway with 40-mm asphalt concrete surfacing, 7.0-m wide carriageway and 1.5 m shoulder on either side between the towns of Mahebourg and Bel Air.

8. TOTAL COST : UA 21.15 million i) Foreign Exchange : UA 14.87 million ii) Local Cost : UA 6.28 million 9. BANK GROUP LOAN ADB : UA 14.87 million 10. OTHER SOURCE OF FINANCE GOM : UA 6.28 million 11. DATE OF APPROVAL : October, 2000 12. ESTIMATED STARTING DATE OF PROJECT AND DURATION : October, 2001 – March, 2005 (42 months) 13. PROCUREMENT OF

GOODS AND WORKS : International Competitive Bidding (ICB) with prequalification for construction works, among contractors from member countries of ADB and ADF State participants in accordance with the Bank's "Rules of Procedure for Procurement of Goods and Works".

14. CONSULTANCY SERVICES

REQUIRED AND STAGE OF SELECTION : Consultancy services required for the supervision of

construction works have already been procured by the Government of Mauritius.

: Project audit services will be provided by the Government Auditor. 1 SDR = UA 1 1 UA = US$ 1.33728 (June, 2000) 1 UA = MRs 34.2156

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CURRENCY AND MEASURES

Currency Equivalents

(June, 2000 Exchange Rates)

Currency Unit = Mauritius Rupees (MRs) 1 UA = MRs 34.2156 1 UA = US$ 1.33728 1 US$ = MRs 25.5860 WEIGHTS AND MEASURES 1 tonne (t) = 2,205 lbs 1 kilogramme (kg) = 2.205 lbs 1 metre (m) = 3.281 ft 1 foot (ft) = 0.305 m 1 kilometre (km) = 0.621 mile 1 square kilometre (km2) = 0.386 square mile 1 hectare (ha) = 0.01 km2 = 2.471 acres FISCAL YEAR July 1 - June 30

LIST OF TABLES

Table 3.1 : Road Capital and Maintenance Expenditure Table 4.1 : Summary of Project Cost by Components and by Category of Expenditure Table 4.2 : Sources of Finance Table 4.3 : Expenditure Schedule by Component Table 4.4 : Expenditure Schedule by Sources of Finance Table 5.1 : Summary of Procurement Arrangements Table 7.1 Results of Sensitivity Analysis

LIST OF ANNEXES Annex. Titles No of Pages 1. Map of Country and Project Area 2 2. Project Organisational Chart 1 3 Project Implementation Schedule 1 4. Provisional List of Goods and Services 1 5. Summary Financial and Economic Analysis 3 6. Environmental Evaluation 2 7. Summary of Existing Portfolio as at 31/12/99 1 8. List of Annexes in Project Implementation Document 1

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LIST OF ABBREVIATIONS

AADT = Annual Average Daily Traffic AASHTO = American Association of State Highways and Transportation Officials ADB = African Development Bank BBD = Benkelman Beam Deflection BCR = Benefit-Cost Ratio DBM = Drilling Blasting and Mucking DCP = Dynamic Cone Penetrometer CBR = California Bearing Ratio EIA = Environmental Impact Assessment EIRR = Economic Internal Rate of Return EMP = Environmental Management Plan ESA = Equivalent Standard Axle EU = European Union FE = Foreign Exchange FY = Financial Year GPN = General Procurement Notice GOM = Government of Mauritius HDM = Highway Design and Maintenance Model ICB = International Competitive Bidding INTSS = Integrated National Transport Strategy Study IRI = International Roughness Index IVTB = Industrial Vocational Training Board JICA = Japanese International Cooperation Agency MOA = Ministry of Agriculture MEC = Ministry of External Communications MOF = Ministry of Finance MOL = Ministry of Lands MLG = Ministry of Local Government MPI = Ministry of Public Infrastructure MRs = Mauritian Rupees MEUD = Ministry of Environment and Urban Development MEDPRD = Ministry of Economic Development, Productivity and Regional Development MLTSPD = Ministry of Land Transport, Shipping and Port Development NPV = Net Present Value NTA = National Transport Authority NTC = National Transport Corporation NPDP = National Physical Development Plan O-D = Origin-Destination PCR = Project Completion Report RDA = Road Development Authority RMR = Rock Mass Rating ROW = Right-of-Way RSDP = Road Sector Development Program SADC = Southern African Development Community SBD = Standard Bidding Document TBM = Tunnel Boring Machines UNDP = United Nations Development Programme VOC = Vehicle Operating Costs

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MAURITIUS SOUTH EASTERN HIGHWAY PROJECT

Year Mauritius Africa Developing DevelopedCountries Countries

Basic IndicatorsArea ( '000 Km²) 2 30,061 80,976 54,658Total Population (millions) 1998 1.1 748.0 4,718.9 1,182.2Urban Population (% of Total) 1998 41.5 38.2 39.6 75.6Population Density (per Km²) 1998 559.4 24.9 58.3 21.6GNP per Capita (US $) 1998 3,740 687 1,250 25,890Labor Force Participation - Total (%) 1998 43.0 43.7 … …Labor Force Participation - Female (%) 1998 13.8 37.0 … …Gender -Related Development Index Value 1997 0.8 0.5 0.6 0.9Human Development Index (Rank among 174 countries) 1997 59 n.a. n.a. n.a.Population Living Below $ 1 a Day (% of Population) 1989-94 ... 45.0 32.2 …

Demographic IndicatorsPopulation Growth Rate - Total (%) 1998 0.7 2.4 1.6 0.3Population Growth Rate - Urban (%) 1998 1.5 4.3 3.1 0.6Population < 15 years (%) 1998 26.2 42.9 33.2 18.8Population >= 65 years (%) 1998 6.0 3.2 19.7 26.7Dependency Ratio (%) 1998 72.6 86.9 61.7 48.8Sex Ratio (per 100 female) 1998 99.6 99.3 103.3 94.8Female Population 15-49 years (millions) 1998 0.3 176.2 1,213.4 296.8Life Expectancy at Birth - Total (years) 1998 72.1 52.7 64.0 75.4Life Expectancy at Birth - Female (years) 1998 75.7 53.4 65.8 79.1Crude Birth Rate (per 1,000) 1998 16.0 37.7 23.8 11.0Crude Death Rate (per 1,000) 1998 6.5 13.7 8.4 10.3Infant Mortality Rate (per 1,000) 1998 14.5 80.7 58.9 9.0Child Mortality Rate (per 1,000) 1998 15.4 116.1 76.2 10.4Maternal Mortality Rate (per 100,000) 1996 112 698 488 30Total Fertility Rate (per woman) 1998 1.9 5.0 2.9 1.6Women Using Contraception (%) 1991 75.0 … 56.0 70.0

Health & Nutrition IndicatorsPhysicians (per 100,000 people) 1990-96 85 23 76 253Nurses (per 100,000 people) 1988-96 255 89 85 780Births attended by Trained Health Personnel (%) 1987 85 … 54 99Access to Safe Water (% of Population) 1990-97 100 55 72 100Access to Health Services (% of Population) 1995 100 60 80 100Access to Sanitation (% of Population) 1990-97 100 45 43 100Percentage of Adults (aged 15-49) Living with HIV/AIDS 1997 0.1 5.7 … …Incidence of Tuberculosis (per 100,000) 1995 50 201 157 24Child Immunization Against Tuberculosis (%) 1996 84 77 88 93Child Immunization Against Measles (%) 1996 84 63 79 90Underweight Children (% of children under 5 years) 1990-97 15 26 31 …Daily Calorie Supply 1996 2,926 2,406 2,650 3,222Public Expenditure on Health (as % of GDP) 1995-97 2.2 1.4 1.8 6.3

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 1996 106.7 79.5 100.0 103.0 Primary School - Female 1996 106.2 73.0 93.8 103.2 Secondary School - Total 1996 64.5 28.3 50.4 100.3 Secondary School - Female 1996 65.8 25.7 45.3 101.8Primary School Female Teaching Staff (% of Total) 1996 51.3 45.0 51.0 82.0Adult Illiteracy Rate - Total (%) 1997 17.0 43.5 28.2 1.3Adult Illiteracy Rate - Male (%) 1997 13.1 33.0 19.6 1.0Adult Illiteracy Rate - Female (%) 1997 20.8 51.6 35.8 1.5Percentage of GDP Spent on Education 1995 2.9 3.5 3.9 5.9

Environmental IndicatorsLand Use (Arable Land as % of Total Land Area) 1996 49.3 5.9 9.9 11.6

COMPARATIVE SOCIO-ECONOMIC DATAMAURITIUS : BASIC DATA SHEET

Population Growth Rate (%)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1990 1991 1992 1993 1994 1995 1996 1997 1998

Mauritius Africa

GNP Per Capita ( US $ )

0500

10001500200025003000350040004500

1990 1991 1992 1993 1994 1995 1996 1997 1998Mauritius Africa

Life Expectancy at Birth ( Years )

0

10

20

30

40

50

60

70

80

1990 1991 1992 1993 1994 1995 1996 1997 1998

Mauritius Africa

Infant Mortality Rate ( Per 000 )

0

20

40

60

80

100

120

1990 1991 1992 1993 1994 1995 1996 1997 1998

Mauritius Africa

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MAURITIUS South Eastern Highway Project

PROJECT MATRIX

REVISION DATE: June 2000 DESIGN TEAM: A. BABALOLA/Consultant

Narrative Summary (NS)

Verifiable Indicators (VI)

Means of Verification

Assumptions

1. Goal:

Provide efficient and effective road transport services in support of tourism and productive sector of the economy, and poverty reduction.

1.1 Improved capacity of

road infrastructure in 2005.

1.2 Increase in traffic Level in 2005.

1.3 Reduce traffic Congestion on the

Motorways by year 2005.

1.1 Length of paved and unpaved road surfaces. 1.2 Pavement evaluation

statistics 1.3 Traffic statistics.

(Goal to supergoal)

2. Project Objective: 2.1 Reduce vehicle operating costs, travel time costs, road maintenance costs, between Mahebourg and Bel Air, and reduce traffic congestion on the existing motorway.

2.1 Vehicle operating costs

reduced by 60% by year 2005.

2.2 Travel time reduced by 30 minutes by year 2005.

2.1 Calculate VOC 2.2 Travel time survey. 2.3 Origin-Destination

survey.

(Project objective to Goal) 2.1 Adequate Government commitment to successful imple- mentation and maintenance of the project. 2.2 GOM commitment to axle load limit 2.3 Road Development Authority is effective in project implementation.

3. Outputs 3.1 25.05 km long highway with with asphalt concrete surfacing generally 7.0m wide carriageway and 1.5m shoulder on either side.

3.1 25.05 km of

Asphalt concrete road completed between Mahebourg and Bel Air in the year 2005.

3.1 Quarterly Progress

Reports (QPRs) 3.2 Supervision Reports

(SRs). 3.3 Project Completion

Report (PCR). 3.4 Consultant final

Construction Report. 3.5 Audit Reports.

(Outputs to Project Objective) 3.1 GOM will maintain the road

after its completion.

4. Activities 4.1 Project Construction: 4.1 Pre-qualification of contractors 4.2 Issue and receipt of tenders 4.3 Evaluation, negotiation and

award of contract for construction of 25.05 km highway.

4.2 Consultancy Services

Inputs/Resources 4.1 Inputs million UA (i) Construction 16.57 (ii) Supervision of works 1.00 (iii) Contingencies:

- Physical 1.76 - Price 1.82

Total 21.15 4.2 Resources

ADB 14.87 GOM 6.28

Total 21.15

4.1 QPR. 4.2 SRs 4.3 PCR. 4.4 Audited Accounts 4.5 Disbursement

Records.

(Activity to Output) 4.1 Timely acquisition of the

Right-of-Way. 4.2 Loan will not be cancelled. 4.3 All procurement actions are

on schedule. 4.4 Payments for invoices are

not delayed. 4.5 GOM will make timely

payment of counterpart local funds.

4.6 Effective supervision by the Bank and consultant.

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EXECUTIVE SUMMARY

Project Background

1.1 The Government of Mauritius (GOM) developed a National Physical Development Plan (1994) in which it was recommended that a separate development strategy was required for the east coast road to enhance the fast movement of through traffic between southern and the north-eastern part of the country. In addition, tourism is growing rapidly in the country and the existing route between Mahebourg and Belle Mare (now limited to Bel Air) is congested and its improvement is not economically and environmentally viable. Hence, the GOM proposed a second alternative to introduce a new road connecting Mahebourg to Ferney Community Centre and Ferney Sugar Estate and Kewal Nagar and concomitantly strengthening the segments on either side of the new alternative.

1.2 With the bilateral aid extended by the Government of India, under the Indian Technical and Economic Co-operation (ITEC) Programme, GOM recruited a consulting firm in 1996 to carry out an economic feasibility study of both the existing road and the proposed new road and subsequently, to carry out a detailed engineering design of the selected alternative. The Study recommended the construction and improvement of the project road based on its feasibility and suitability.

1.3 In view of the foregoing, GOM approached the Bank for financing of the proposed 25.05 km highway project. Subsequently, the Bank Mission visited Mauritius in June 2000 to appraise the road project. The economic parameters were updated during the appraisal mission and resulted in an EIRR of 14.83% and NPV of MRs 137.59 million. In addition, the project road is economically viable considering 'with' and 'without' the project road. Thus, the construction and upgrading of the road will contribute to the economic development of the country through enhancement of the activity of the national road network, the provision of accessibility to agricultural area between Ferney Sugar Estate and Kewal Nagar, development of industrial activity along the project road, and fast movement of passengers and freight between the southern and the north-eastern part of the country. Purpose of the loan 1.4 The ADB loan of UA 14.87 million, amounting to 70.3% of the total project cost (UA 21.15 million), will be used to finance 94.3% of the foreign exchange cost of the project. Sector Goal and Project Objectives 1.5 The project will contribute towards achieving the following sector goals:

i. Provision of efficient and effective road transport services; ii. Support productive sector of the economy; and iii. Promote tourism.

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The project objectives are to reduce vehicle operating costs, travel time costs and road maintenance costs between Mahebourg and Bel-Air, reduce traffic congestion on the existing motorway and enhance poverty reduction.

Brief Description of the Project’s Outputs 1.6 In order to achieve these objectives, the project is focused on:

i. Construction of a new 6.19 km road link from Mahebourg to Ferney

Community Centre; ii. Upgrading of the existing 2.34 km road link between Ferney Community

Centre and Ferney Sugar Estate; iii. Construction of a new 7.12 km road link between Ferney Sugar Estate and

Kewal Nagar; iv. Construction of a 608-m tunnel in Grand Port Mountain; v. Upgrading of the existing 8.69 km road link between Kewal Nagar and Bel

Air; and vi. Construction of 4 Bridges and 1 Underpass.

Project Cost 4.7 The total project cost is estimated at UA 21.15 million out of which UA 15.77 million (74.6%) will be in foreign currency and UA 5.38 million (25.4%) will be in local currency. The total cost estimate of UA 21.15 million (US$ 28.28 million) appears to be relatively high for the 25.05 km road i.e. US$ 1.13 million per km. However, a close examination of the detailed cost estimates indicates that the project is not a typical road construction project as it has some major and peculiar components such as:

i. 608 m of tunnel works amounting to UA 4.32 million or 26.1% of civil works base

cost estimate. ii. Bridge works (5 No.) amounting to UA 1.52 million or 9.2% of civil works base cost

estimate. iii. Road works amounting to UA 8.52 million or 51.4% of civil works base cost estimate

of UA 16.57 million. The earth works alone accounts for about 33% of the cost for the road works because of the nature of the terrain.

iv. Others are general items, monitoring of environment input, lighting etc. amounting to

13.3% of total project cost. In view of the complexity of the project, the total cost estimate is reasonable. Sources of Finance 1.8 The Project will be jointly financed by the African Development Bank (ADB) and the Government of Mauritius (GOM). ADB will finance UA 14.87 million and GOM will finance UA 6.28 million. The ADB contribution covers 94.3% foreign costs whereas the GOM’s contribution will cover the total local cost and 5.7% of foreign cost. The GOM’s contribution of UA 6.28 million, represents 29.7% of the total project costs. The GOM will finance the consultancy supervision services for which a consortium of firms has already been appointed.

ix Project Implementation 1.9 The duration of implementation of physical works is 42 months from October 2001 to March 2005. The Ministry of Public Infrastructure will be the Executing Agency for the project until the Road Development Authority (RDA) which was established under the Act No.6 of 1998 by the Parliament of Mauritius, to function as a body corporate within the framework of MPI is fully staffed. The executive functions of MPI such as planning, design, construction supervision, maintenance and improvement of motorways and main roads shall be transferred to RDA at latest by September 2001, when the Authority will be fully staffed and operational. The capability of MPI to undertake the project has been reviewed and found satisfactory on the premise of the number and quality of the engineers in the ministry. Conclusions and Recommendations 1.10 The upgrading of the Kewal Nagar–Bel Air segments and the new construction of Mahebourg-Ferney and the Ferney – Kewal Nagar sections are in line with the National Physical Development Programme of 1994. The project will create an efficient and effective transport system are between the Southern and North – Eastern part of Mauritius by easing the movement of passengers and freight. In addition, the project road will enable the agricultural exploitation of the land and the industrial development of the area between Ferney and Kewal Nagar. 1.11 The project is consistent with the Bank Group country assistance strategy of 2000-2002 which supports the transport, public utilities and social sectors. 1.12 It is recommended that a loan not exceeding UA 14.87 million, from ADB resources be granted to the Government of Mauritius for the implementation of the project road as described in this report, subject to conditions specified in the loan agreement.

1. ORIGIN AND HISTORY OF THE PROJECT 1.1 The Government of Mauritius (GOM) developed a National Physical Development Plan (NPDP) in 1994 in which a separate road development strategy was recommended to develop the east coast road and to enhance the fast movement of through traffic between the southern and north-eastern parts of the country. In addition, the road would support tourism, reduce traffic congestion, support agricultural production, and facilitate development in the least developed region of the country. 1.2 As part of the Government's effort to actualize the road development strategy a consultant, was recruited under the Indian Technical and Economic Co-operation (ITEC) to carryout the required economic feasibility study, Environmental Impact Assessment and preliminary engineering design. The corresponding reports were submitted in November 1996. Two options were considered by the consultants: improvement of the existing coastal road as Alternative I, and the development of a new route between Mahebourg and Belle Mare (now limited to Bel Air) involving a new road and a tunnel across the Grand Port Mountain as Alternative II. The second alternative was found to be economically more viable than Alternative I and was recommended for detailed engineering design. 1.3 The GOM, in May 1997, requested the Bank to participate in the financing of the 25.05 km highway project. However, the proposal was not approved for lack of detailed engineering design and firm project cost. Subsequent to this, the GOM forwarded the required documents in April 2000. Hence, the Bank undertook an appraisal mission to Mauritius in June 2000 in respect of the road project. 1.4 The Bank’s portfolio in Mauritius has previously been adversely affected by frequent requests for partial and full loan cancellations. As such, a task force has been set up to investigate the causes that may have led to this situation and propose means and measures of improving it. Following the discussion of the Bank Group’s previous experience in operations in the country during the appraisal mission, the Bank has been assured by the Government that the loan for this project, when secured, will not be cancelled. This appraisal report is based on the documents provided by GOM, discussions held with the Government and the agencies, and additional information collected by the Bank mission. The highway project is in line with the Bank Group assistance strategy as contained in the 2000/2002 CSP which supports transport, public and social sectors. 2. THE TRANSPORT SECTOR 2.1 Transport System General 2.1.1 The existing transport modes in Mauritius are land, water and air with land transport consisting of only roads. With the small size of the country and intense population density, Mauritius has well developed and extensive road transport. The total length of the road network is 1910 km of which 96 percent is paved and the remaining 4 percent unpaved. Handling about 4.33 million tonnes of cargo, water/maritime transport plays a significant role in the economic development of the country. Similarly, air transport plays a significant role in transporting tourists in and out of the country. Air Mauritius transports about a million passengers and about 25 thousand tonnes of cargo every year.

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2.1.2 Tourism industry is one of the major sources of revenue for Mauritius. In 1999, about 530,800 tourists visited the country and generated gross earnings of MRs 11.9 billion which was about 16 percent of the GDP in the same year and it has been growing by annual average of 8.0 percent between 1990 and 1999. The destination of tourists within the country are hotels and resorts areas located in different parts of the country. Tourists use road transport for their movements which is the dominant mode in the country. The estimated AADT on the project road attributed to tourism is 288 which is about 35 percent of the total vehicle fleet on the project road. 2.1.3 Road is the dominant mode of transport in Mauritius. The non-existence of railway transport and the limited domestic air transport makes the country exclusively dependent on road transport. Currently, the GOM is strengthening its road infrastructure through rehabilitation and maintenance of roads, bridges, foot-bridges and road safety audits. Traffic management has become an important and prominent issue due to prevalence of serious congestion in the country’s road network. Details of road transport activities are provided in Chapter 3. Waterways/Maritime Transport 2.1.4 Maritime transport plays a significant role in the economic development of Mauritius. More than 95 percent of Mauritius’ trade is handled by sea since it is heavily dependent on foreign trade. About 4.33 million tonnes of cargoes are handled every year. Port Louis is the principal port in the country which is established within the Ministry of Land Transport, Shipping and Port Development. There are three offices under the Ministry that are concerned with the activities of maritime transport: Shipping Division, Mauritius Port Authority and Shipping Management Services. 2.1.5 Port Louis harbour is a modern port with 5 deep-water quays and two bulk terminals, to handle exports and agricultural commodities. There are container quays and yards exclusively used for containerised traffic. In 1996, the number of calling ships was 1,488 which increased to 1,782 in 1999 with average annual increase of about 10 percent. During the same period, cargo traffic increased to 4.2 million from 3.7 million tonnes with average annual increase of about 4.5 percent. 2.1.6 The harbour provides normal cargo services, including transhipment. Container handling and warehousing operations are envisaged to become very efficient over the next several years, after the implementation of the World Bank-funded modernisation project. The USD 114 million project includes construction of a terminal, a container park/operation area, a cement terminal and deep quays. A new container terminal has recently come into operation. It is equipped with ship-to-shore gantry crane which is capable of handling 400 twenty-foot container equivalent units (TEUs) per day. The Port is an efficient transhipment hub in the region. Container handling was 16.8 TEUs per hour in 1999 and the target is to increase to 25 TEUs per hour in 2005. Air Transport 2.1.7 Air transport plays an important role in the external communication of Mauritius, mainly with the movements of tourists into and outside the country. The International Airport located at Plaisance has one paved runway handling wide-bodied aircraft, and is a transit route for tourism activities between Europe, Africa and Far East. Aircraft movements have increased at the airport. In 1996, aircraft movements totalled 12,526 and increased to 15,204 in 1999 with average annual growth rate of 7.2 percent. Similarly, passenger movements increased from 1.28 million in 1996 to 1.54 million in 1999 with an annual increase of 6.9 percent and air freight

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traffic increased to about 41 thousand tonnes in 1999 from 36 thousand tonnes in 1996 with average annual increase of about 5 percent. At the moment, a new airport Master Plan study is underway and the draft final report is forthcoming. 2.1.8 The country’s only airline is Air Mauritius Ltd. At the end of 1998/99, Air Mauritius had 10 aeroplanes with route network included in 30 destinations in four continents. In 1998/99, Air Mauritius transported 0.81 million passengers and 25,670 tonnes of cargo and earned MRs 6.21 billion with a profit of Rs 407 million from the previous year. During the same period, passenger revenue rose by 9.9 percent to MRs 5.26 billion. Similarly, freight revenue grew by 6.7 percent and cargo traffic increased by 3.5 percent, from 24.7 thousand tonnes in 1997/98 to 25.6 thousand tonnes in 1998/99. Air Mauritius is a share company with 40.6 percent owned by GOM and the rest is owned by private companies. The Government is considering the total privatisation of the company. 2.1.9 The rapid growth of passenger traffic, which has been due to the country's popularity as a tourist destination and the improved incomes of Mauritians, is exerting a pressure on the airport infrastructure, as evident from the growing congestion in the passenger terminal during peak hours. The Government is considering smoothing of flights to solve peak hour congestion. Railways 2.1.10 Currently, rail transport is non-existent in Mauritius. However, due to road congestion and delays in travel time, the Government is planning to establish a mass transit system in the long-term. In principle, a decision has been reached to introduce a light rail transit system to supplement the existing road transport between Port Louis and Curepipe with modernisation of public transport in the capital city, Port Louis. This action will establish an efficient intermodal system between rural and urban bus transport. Overall, the transport modes are complementary and are supporting economic and social activities in the country. 2.2 Transport Policy, Planning and Co-ordination 2.2.1 The major objective of the transport sector policy in Mauritius is the establishment of an efficient transportation system and thus improve the standard of living of the people through optimal use of resources and promotion of regional integration. An efficient transportation system involves the provision of fast and safe movement of people and freight in the shortest time and at least-costs to the economy. 2.2.2 GOM is a member of the Southern African Development Community (SADC) that is committed to implementing measures and reform aimed at achieving regional integration. As part of the GOM’s effort to abide with the SADC Protocol on Transport and Communication signed in August 1996 to provide a framework and give a clear policy direction to all stakeholders for achieving economically viable integrated transport provision in the region, an Integrated National Transport Strategy Study (INTSS) has been commissioned. The study will be completed by December 2000. 2.2.3 The implementation of the SADC Protocol for the road sub-sector requires: (i) institutional restructuring and the establishment of an independent Road Agency/Authority; (ii) Economic restructuring and the improvement of funding sources for roads; (iii) Road Safety; and (iv) Overloading Control. In accordance with these requirements, GOM has established a Road Development Authority (RDA) as described in Sections 3.3. and 3.4.5 and a Traffic Management Units (TMU) in charge of safety and axle load control as discussed in Section 3.1.5 and 3.1.6.

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2.2.4 The role of the government in the establishment of an efficient transportation system is the creation of a conducive environment to all stakeholders through the provision of appropriate guidelines and regulatory framework with the development of cost-effective and adequate transport network both domestically and internationally. Such a conducive transport environment should eliminate constraints that hinder the marketing of commodities and the provision of essential services for passengers and freight. 2.2.5 The major government agencies that provide transport services in Mauritius are: the Ministry of Land Transport, Shipping and Port Development (MLTSPD), Ministry of Public Infrastructure (MPI), the Ministry of External Communications (MEC) and the Ministry of Economic Development, Productivity and Regional Development (MEDPRD). The MLTSPD is responsible for the administration of land and water transport through its departments of Land Transport, Traffic Management Unit, Road Safety Unit, National Transport Company, Fire Services, Merchant Shipping and Sea Training School. The respective departments formulate policies for planning, management and economics of road transport; regulate, control and co-ordinate transport services in general; and facilitate maritime transport through framing and implementation of appropriate shipping policies. The MEC is responsible for the efficient operations of Air Mauritius and the international airport at Plaisance whereas MEDPRD is responsible for overall transport policy, planning and inter-sectoral co-ordination. 2.2.6 MPI is responsible for the construction, improvement and maintenance of roads, bridges; and other public works including architecture and the maintenance and furnishing of Government buildings. MPI has two offices in the execution of its responsibilities: Road Development Authority (RDA), and Development Works Corporation (DWC) (see Annex 2). In general, the on-going transport policy, planning and co-ordination are consistent with the SADC Protocol on Transport and Communications. 3. THE ROAD SUB-SECTOR

3.1 Road Network, Vehicle Fleet and Traffic 3.1.1 The total road network in 1999 was 1,910 km comprising of 36 km (2%) motorways, 902 km (47%) main roads, 582 km (31%) secondary roads, and 390 km (20%) other roads. More than 95 percent of the road network is paved and the density of the total road network per sq. km of area is 1.02 km which is among the highest in the world. More than 60 percent of the road network are in good condition. 3.1.2 Almost all the motorways are outside the district of Port Louis providing services to the congested traffic while the main roads connect district headquarters and main urban centres. The secondary roads provide services by connecting the major economic centres to the main road network while other roads which are unclassified roads serve the local population and agricultural areas by connecting to secondary roads. The southern, south-eastern and northern part of the country have a well developed road network while the south-western part is under developed due to the mountainous nature of the area. 3.1.3 In 1999, the total number of vehicles in Mauritius was 227,753. The number of persons per vehicle was 5.1 while the number of vehicles per 1000 persons was 194. Similarly, the number of vehicles per km of road was 119.2. The number of vehicle population has been growing significantly in the past. Overall, the national vehicle fleet has increased by 625 percent since 1972. 3.1.4 In 1999, the total number of road accidents was 3414 comprising of 172 (5.0%) fatal,

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214 (6.3 %) serious injury and 3028 (88.7%) slight injury. The accident rate per 100000 population rose from 14.3 in 1994 to 15.5 in 1999. On the other hand, the accident rate per 1000 registered vehicles has been going down with 0.9 in 1994 and 0.8 in 1999. The fatality index (the ratio of the number of fatalities to the number of casualties) has increased from 3.9 percent in 1994 and to 5.0 percent in 1999. The average fatality index between 1994 and 1999 was about 4.0 percent. 3.1.5 GOM is concerned about the increasing number of road accidents in the country and protection of road investment. Accordingly, it has introduced traffic control and axle load control mechanisms through the installation of four weigh bridges, to minimise road accidents and to protect the deterioration of roads. The enforcement of the axle load control has been made a condition of the loan. Traffic signs and signals have been also installed at intersections to control vehicle speeds. Bus terminals, bridges and major intersections have been improved. The Government is determined to improve road transport services by reducing travel times and accidents through the introduction of by-passes, ring roads and other modes of transport. 3.1.6 The Traffic Management Unit (TMU), is responsible for carrying out traffic surveys for specific needs, although it is not on a continuous basis. In this respect, there is need to make regular traffic count a condition of the loan. The Government has found traffic management to be the most preferred option for reducing congestion and road traffic accidents. Accordingly, the National Road Safety Council, which comprises representatives of the general public, transport operators and relevant public sector institutions will be strengthened in order to promote road safety. The Council will advise the Government on measures that minimise road accidents through more efficient law enforcement, stricter vehicle inspection, improvement in driver training, better safety education for the population, and carry out research to identify the principal causes of accidents. Overall, the Government effort to reduce road accidents is satisfactory. 3.2 Road Transport Industry 3.2.1 The National Transport Authority (NTA), under the MLTSPD is a regulatory body of road transport which controls and co-ordinates land transport services. NTA monitors transport operations and also issues permits for the freight and passenger transport operators. 3.2.2 The National Transport Corporation (NTC) is the major establishment for the movement of passengers in Mauritius. NTC is a parastatal organisation which renders public transport services in the country. NTC has 500 buses; covers about 83,000 km a day; transports about 200,000 passengers per day; and generates a revenue of about MRs 460 million per year. There are also other bus companies and individual operators with a total fleet of more than one thousand buses. The Government has no plan of privatizing NTC. 3.2.3 There are major companies and private operators involved in the haulage of freight in Mauritius. There are no restrictions for entry into the haulage activity and no official tariff exists. Competition is very stiff and profits are low resulting in financial constraints of the haulers. The Government monitors the operations of freight hauliers to ensure the financial viability of the industry. GOM envisages improvement in freight transport by reviewing the existing haulage of containers.

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3.3 Road Administration and Training 3.3.1 MPI is responsible for the construction, improvement and maintenance of roads. In addition to roads, the Ministry is in charge of public works in the areas of architecture and the maintenance and furnishing of Government buildings. The Ministry executes its responsibilities through the offices of the Development Works Corporation and the Road Development Authority. Rural roads are administered by district offices whereas the improvement and maintenance of urban roads are carried out by respective municipalities.

3.3.2 In line with SADC protocol on Transport and Communications, RDA was established under the Act No. 6 of 1998 as a corporate body under MPI. It is currently in the process of appointing the required senior staff for its operation. The mode of staff recruitment will be such that the bulk of the staff would be transferred from the Engineering Division of MPI. There is one Chief Engineer, one Deputy Chief Engineer, two principal engineers, three senior engineers and nine engineers under MPI. The RDA shall be administered by the Road Development Authority Board. The duties and responsibilities of RDA incorporates: the planning, design and supervision of the construction of roads which are classified as motorways and main roads; maintenance of existing bridges, tunnels and associated works on motorways and main roads; preparation and implementation of road development schemes; and conduct and co-ordinate research and investigation on materials required for road construction. RDA has recently developed an organogram of the Authority and is in the process of presenting it to the Board for approval. When operational, the Authority would have a general manager, a deputy general manager, three senior managers, six managers, 12 assistant managers and junior staff as required (see Annex 2). Hence, the time when RDA will be fully operational has been made a condition of the loan. In general, the staffing arrangement for RDA has been very slow since 1998.

3.3.3 Facilities for training of staff in the areas of civil works are well established in Mauritius. Training in the areas of civil, mechanical and electrical engineering are offered by the University of Mauritius. In addition, in-house training courses are provided for non-professionals by the Industrial Vocational Training Board (IVTB). IVTB offers courses in the field of mechanical engineering, masonry and concrete works, welding and metal fabrication and other pertinent courses. Lycee Polytechnique which was established in 1982 also offers courses in civil, mechanical and civil engineering. 3.4 Road Planning and Financing Road Planning 3.4.1 The planning and design section of MPI in the meantime, prepares and monitors road development projects in consultation with MEDPRD. MEDPRD is responsible for sectoral co-ordination in the preparation and execution of NPDP. 3.4.2 Major road studies like feasibility and detailed engineering design, are normally carried out by consulting firms while minor field investigations and traffic studies are the responsibility of TMU of MLTSPD. 3.4.3 At the moment, GOM is planning to reduce road congestion which has been exacerbated as a result of increase in vehicle fleet since 1987. Accordingly, the planning, design and execution of road projects are geared to the alleviation of traffic congestion. In this respect, the project road is expected to significantly reduce traffic congestion on the road network between the southern and the north-eastern part of the country. At the moment, GOM has recruited a consultant to carry out an Integrated National Transport Strategy Study

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(INTSS) with a total cost of US$ 590 thousand. INTSS is expected to assist the government in the formulation and integration of a national transport strategy with the preparation of prioritised transport sub-sectors. Together with identification of other policy and institutional measures, INTSS will ultimately improve the national transport planning and programming processes and assist in the implementation of an integrated transport plan. Road Financing 3.4.4 Financing of road construction, improvement and maintenance activities is provided through the MOF. Road construction and major improvements are financed from the provision of Capital Development Budget while maintenance activities are financed from recurrent budget. Table 3.1 shows the road expenditure between 1991/92 and 1999/2000. As shown in the table, the percentage share of road expenditure have been going down. The capital expenditure went down in 1997/98-1998/99 whereas, maintenance expenditure went down in 1996/97 but began to go up in 1997/98. The budget for 2000/2001 is even significantly higher than the previous. This is because GOM is committed on sustaining the existing road infrastructure which is in good condition at the moment.

Table 3.1 Road Expenditure (MRs in Million)

Capital Maintenance

Year Total Revised Expenditure Amount % Amount %

1991/92 261.30 131.3 50.2 130.00 49.8 1992/93 421.5 256.5 60.9 165.00 39.1 1993/94 551.6 436 79.2 115.00 20.8 1994/95 483.3 273.3 56.5 210.00 43.5 1995/96 341.2 196.2 57.5 145.00 42.5 1996/97 172.6 122.6 71.0 50.00 29.0 1997/98 134.0 79.0 59.0 55.00 41.0 1998/99 60.0 0 0 60.00 100.0 1999/00 159.0 59.0 37.1 100.00 62.9

2000/2001 366.3 196.3 53.6 170.00 46.4

Source: Ministry of Public Infrastructure, Mauritius + N.A. = Not Available 3.4.5 Road Fund Office had existed previously but had to be abolished with the establishment of RDA. The Office was established in 1991 and was the major source of road maintenance financing up to 1998. The financial source of the defunct Road Fund was voluntary contribution from organisations and a levy of MRs 0.10 per litre on petroleum products. RDA, upon becoming fully operational, is empowered by the Act to collect and administer road user charges among others. In FY 2000/01, the recurrent maintenance budget has been increased to MRs 170 million from MRs 100 million in FY 1999/2000. 3.5 Road Engineering and Construction 3.5.1 The MPI has the responsibility of implementing road projects in the country. The minor works and designs are usually carried out directly by the Engineering Section, while the major ones are contracted to consultants and contractors. MPI has some well-qualified engineers. The MPI manages its projects, and has established design standards which are being applied to all rehabilitation projects. With the establishment of the RDA, all the major

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road projects in the country are to be implemented by the private sector, with RDA acting mainly as a contract management agency. 3.5.2 There are a few local consultants in the country that often associate with international consultants to carry out major road studies and designs. In addition, the contracting capacity of the country to undertake small and medium-scale routine and periodic road maintenance works is fairly adequate. Similarly, there are a few contractors that can handle large-scale road works. Most contractors are more experienced in building than road works. 3.5.3 There are three material laboratories located in MPI (at Phoenix), University of Mauritius and Mauritius Standard Bureau (in Port Louis) which carry out tests of construction materials used in civil engineering works. These laboratories are quite adequate for the present and future demand of the construction industry. 3.6 Road Maintenance 3.6.1 The Road Maintenance Section of MPI, headed by the Principal Engineer, is directly responsible for maintaining the classified road network. To expedite administration and management of maintenance activities, the Ministry has divided the country into three divisions, namely; east, west, and north for operational purposes. The divisions operate under the senior engineers and are sub-divided into nine maintenance districts which are managed by district engineers. 3.6.2 While routine road maintenance works are carried out by direct labour using force account, it is the Government's policy to carry out periodic maintenance works, mainly resurfacing using private contractors. The road maintenance practice in the country is effective since the road network is in good condition. 4. THE PROJECT 4.1 Project Concept and Rationale 4.1.1 Following the NPDP, the South Eastern Highway project was conceived within the context of: decongestion of the motorways between the International Airport at Plaisance and Port Louis, provision of quicker access to tourists to the east-coast hotels and beaches, and development of the eastern side of the Island, where there are pockets of poverty. Two options were considered: Alternative 1 : Improve the existing coastal road; Alternative 2: Develop a new route between the terminal points which involves the construction of a new road and a tunnel across the Grand Port Mountain. Based on the results of the study, Alternative 2 was recommended for detailed engineering design. Since tunnels are normally expensive, a possibility of constructing a surface route over the mountains was explored. However, because of the height difference of over 130m between Ferney and Kewal Nagar, the entire route is winding with occasional high gradients and no economy was achieved on the route length or travel times. Hence, the tunnel option provides a more convenient alignment under favourable geological conditions. The 608 m tunnel will be constructed using the most cost-effective method of Drilling, Blasting and Mucking (DBM) rather than using sophisticated and expensive Tunnel Boring Machines (TBM).

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4.1.2 The Bank Group has intervened in the development of Mauritius by approving 24 operations since 1975 to finance 17 projects, one policy-based lending, one equity investment, one study and 4 lines of credit for a total amount of UA 187.98 million. (Annex 7) However, about 50% of the total commitments have been cancelled, resulting in a net commitment of UA 93.19 million of which, UA 86.84 is from ADB, UA 3.47 million from ADF and UA 2.88 million from NTF resources. Effectively, 13 operations have been completed, 8 operations cancelled, two projects newly completed and one equity investment cancelled from the private sector completely. The net financing are distributed by sector as follows: Industry (36.0%), Public Utilities (31.1%), Transport (26.8%), social (3.7%), Agricultural (2.4%). 4.1.3 The major generic lessons learnt from the experience of the Bank's previous interventions in the road sub-sector, as summarised below, have been taken into account in the conception of this project. i) Lack of timely communications between the Bank and the Borrower had resulted

in delays at project start-up and execution of Grand River North-West Bridge between (1992 and 1995). Frequent supervision missions, electronic communication facilities and creation of RDA will improve the situation.

ii) The Borrower did not participate in the financing of Port Louis-through Road

Project which was implemented between 1986 and 1990, due to lack of counterpart fund. Since then, the economy has improved, and adequate budget provision is being made for the counterpart fund in general.

iii) A loan for Rose Hill-Reduit Roundabout Providence Road project, which was

approved in 1994, was cancelled because the Borrower wanted to issue bidding document to a local contractor that was not previously shortlisted. Effort has been made to ensure that the Borrower and Executing Agency are conversant with the Bank’s rules of procurement of works and goods to eliminate misunderstanding that could arise therefrom. The implementation of the recommendations of the Task Force that was set up, to address such issues, would also reduce incidence of loan cancellations.

4.2 Project Area and Project Beneficiaries A) The Project Area 4.2.1 The project road traverses the districts of Flacq and Grand Port. The total area of the two districts is 558.2 sq. km which is about 28 percent of the total area of the country. The 1999 estimated population of the two districts was 244,766 which was about 20 percent of the total population of Mauritius. The average population density of the two districts was 438 persons per sq. km. The population density of both districts is below the national average of 589, including the Island of Rodrigues and far below the 603 persons per sq. km of the main Island. Both districts are within the main Island. 4.2.2 Both Flacq and Grand Port districts have accessible roads branching to villages. There are 410 km of paved roads in Flacq district of which 138 km are classified and 272 are unclassified. In the case of Grand Port district, there are a total of 268 km of roads comprising of 101 km classified roads, 11 km motorways, 156 km public roads and 11 km unclassified roads. Most of the roads in the district are paved.

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4.2.3 The project area is relatively less developed, though it has huge potential for agricultural and industrial development. The project area is predominantly agricultural with sugar as the major produce. The two districts have 7 sugar mills out of the 19 in the whole nation. In respect of industry, there are 67 textile manufacturing establishments in both districts out of the 388 in the country; thirty-one of them are located in Flacq district and the rest in Grand Port district. The total number of employment in the textile factories of both districts was 10,641, Flacq and Grand Port districts each having 5217 and 5424 respectively. In addition, the two districts have limitations to easy access to the international airport at Plaisance. 4.2.4 Different kinds of economic activities exist in both districts. There are 4662 licensed economic activities in the 23 village councils of Grand Port district. The economic activities are different in kind and in size which include: sellers of slabs, bricks, tiles and cement blocks; pottery manufacturers; shoemakers; bakers; beach hawkers; taxi car owners; butchers, etc. In Flacq district, there are 106 major economic activities which are mainly: garment and sugar factories, stone crushers, hotels, banks, supermarkets and restaurants. In addition, tourism is the major activity in the area.

B) Project Beneficiaries

4.2.5 Different stakeholders and the country as a whole would benefit from the construction and improvement of the project road. Transport operators and passengers would be the direct beneficiaries of the road. The project road is shorter by 6.44 km than the existing coastal road and thus, vehicle operators will incur less in vehicle operating costs as a result of reduced distance and improved road surfaces. Passengers would travel safely and comfortably with shorter travel times. 4.2.6 The country as a whole is the major beneficiary of the road project. The project road will foster balanced development of the country by satisfying the primary objective of the NPDP. The project road will relieve the congested motorway section between Phoenix and Port Louis; serve in retaining the existing coastal road as a scenic road for tourist attractions; generate additional employment opportunities for local population both during construction and operation stages. Benefits would also accrue to the nation as a result of reduced accidents and improved social and economic activities including generated employment. 4.3 Strategic Context The GOM has prepared a ‘Technical Supplement’ document as a ‘National Strategy for Sustainable Development 1999-2005 with the consideration of NPDP. As depicted in the document, the Government is committed to improve all transportation sub-sectors in order to enhance the national image and also improve the standard of living of the citizens by reducing road congestion through road construction and upgrading/ improvements. 4.4 Sector Goal/Project Objective The sector goal is to provide efficient and effective transport services in support of tourism and production sector of the economy, and poverty reduction. Specific objectives of the project road are to reduce vehicle operating costs, travel time cost and road maintenance costs between Mahebourg and Bel Air to reduce traffic congestion on the existing motorway.

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4.5 Project Description 4.5.1 The project consists of the following components: A) Construction and upgrading works of the 25.05-km highway with 40-mm asphalt

concrete, generally 7.0 m wide carriageway and 1.5 m shoulder on either side between the towns of Mahebourg and Bel Air, involving:

i. Construction of a new 6.19 km road link from Mahebourg to Ferney

Community centre; ii. Upgrading of the existing 2.34 km road link between Ferney Community

Centre and Ferney Sugar Estate; iii. Construction of a new 7.12 km road link between Ferney Sugar Estate

and Kewal Nagar;

iv. Construction of a 608-m tunnel in Grand Port Mountain. v. Upgrading of the existing 8.69 km road link between Kewal Nagar and

Bel Air; and vi. Construction of 4 Bridges and 1 Underpass.

B) Consultancy services for the supervision of the construction works. 4.5.2 The 25.05-km highway essentially consists of 14.02 km of a new road to be constructed and 11.03 km of an existing road to be upgraded. The highway is located in a combination of flat, rolling and mountainous terrains. Geometric Design 4.5.3 The horizontal and vertical alignments and the cross-section of the new road link have been designed in accordance with the geometric design standards for a two-lane highway. The design speed of 80 km/h, maximum super-elevation rate of 7%, minimum horizontal radius of 150 m, maximum longitudinal gradient of 5% and minimum longitudinal gradient of 0.3% have been adopted. The width of carriageway is generally 7.0 m with a 1.5-m shoulder/footpath on either side of the road. In addition, the pavement camber is 2% while the shoulder crossfall is 3%. The Right-of-Way for the road link varies from 25 m to 40 m. 4.5.4 The alignment for the 8.69 km existing road between Kewal Nagar and Bel-Air is adequate, and the width of the carriageway and shoulder conform to the geometric standards for the proposed road. The road link between Ferney community centre and Ferney Sugar Estate is a 2.34-km long tangent section of the existing coastal road. The width of the carriageway is 6.5m, and will be retained to avoid short width widening or land acquisition. But 1.5m width of turfed shoulder is proposed on either side of the road to widen the roadway. Rotary Junction 4.5.5 There are seven major junctions that require improvement under this project. Rotary junctions (roundabouts) with a minimum diameter of 20-m, central islands and associated directional Islands have been adopted to facilitate the flow of traffic. These

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channelling islands are either raised with concrete kerbs or mere pavement marking depending on the size of the islands. The road is flared from two -lane to four-lane at each junction. Pavement Design 4.5.6 The highway pavement structures have been designed taking into consideration the strength of the subgrade for the new road and the residual strength of the existing road pavement, and the cumulative number of Equivalent Standard Axle (ESA) that will pass over the design lane during the analysis period. With the design period of 10 years and rebound Benkelman Beam Deflection (BBD) values, Dynamic Cone Penetration and CBR data, the existing road will require an overlay of 40mm Asphalt Concrete. Also, adopting the design period of 20 years and design CBR value of 6% for the subgrade (with the exception of the rocky sections and in the tunnel where the subbase is to be omitted) the pavement structure for the new road will consist of 40-mm Asphalt Concrete, 50mm Drilling, Blasting and Mucking (DBM) binder course, 150mm Aggregate base course and 200mm aggregate sub-base. Tunnel 4.5.7 The proposed 608-m tunnel, which will be the first in the country, is located between Ferney and Kelwal Nagar in the Grand Port Mountain, which rises generally to a height of over 200m from the adjacent ground. It is located on the narrowest neck of the topography. The mountain range is constituted generally of massive and dense basalt, which has been found from geological investigation to be relatively impervious and self-supporting. The southern and northern portal is located at elevation, EL 144.55m and EL 157.33m respectively. The tunnel is 8.4m wide and 7.2m high to support a two-lane traffic. 4.5.8 The rock loads have been determined primarily by Rock Mass Method. The tunnel section has been analysed by plane frame method for vertical roof load and horizontal pressures from either side with a friction angle of 50°. Stresses have been evaluated at points where forces and moments are high. 4.5.9 The tunnel consists also of reinforced concrete slab, beams and walkways, and a false ceiling suspended by grouted rock-bolts. The portals are designed as structural members supporting earthrock pressure, to resist bending, overturning and sliding. The tunnel has been designed in line with the “Model Specifications for Tunnelling” by British Tunnelling Society and the Institute of Civil Engineers. 4.5.10 Ventilation is an integral part of a tunnel for the purpose of diluting vehicle emission contaminants and effecting smoke control in case of fire emergency. A semi-transverse system of ventilation has been designed according to the international standards. This will require installation of air exhaust grills along the entire length of the tunnel and fan rooms, and fire dampers. The tunnel and its approaches will be electrified with standard lighting facilities to provide safety for road users in all seasons. 4.5.11 Tunnelling is relatively not a common engineering practice. Depending on the lengths of tunnels, sophisticated Tunnel Boring Machines (TBM) have been used successfully on tunnels in excess of 10 km with economy of scale, while Drilling, Blasting and Mucking (DBM) system has been used on relatively short tunnels. Considering the relative economy and convenience in mobilization and operation, DBM will be adopted for excavation of about 41,000 cubic metres of rocks. The procedure is such that it requires up to 100 No. 32-mm diameter 3-m long holes for heading, charging with short delay detonators,

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blasting, defuming/ventilation, scaling, supporting roof arch by rock bolts, shotcreting, mucking and hauling of excavated material per operation. Each operation will take about 10 hours for a pull of 2.5 m or about 150 cubic metre of rocks. The excavated rocks will be used as aggregates in the construction of the project road. Drainage 4.5.12 From hydrological and hydraulics consideration of the project catchment area, the existing cross and longitudinal drains are adequate. However, there is the need to extend the existing culverts where the roadway has been widened. 4.5.13 The design peak flow of the expected run-off in each catchment area of the new road link has been used in estimating the maximum discharge and the drainage requirements. There are 6 No. concrete pipe culverts of diameters from 0.9 to 1.2 m and 25 No. reinforced concrete box culverts ranging from 1.5m x 1.5m to 6.0 x 4.0m (WxH). In addition, there are 13 segments of longitudinal drains on both the seaside and landside of the highway and five Manhole chambers. Bridges and Underpass 4.5.14 There are 4 No bridges and 1No. Underpass in the highway project: (i) a 50m long, 8.9m wide and 3-span pre-stressed concrete bridge across Grand River South-east, (ii) a 100-m long, 8.9m wide and 5-span pre-stressed concrete bridge across River Des Creoles; (iii) a 60-m long, 8.9m wide and 3-span pre-stressed concrete bridge across River La Chaux, (iv) a 30-m long, 8.9m wide and 3-span solid slab type reinforced concrete bridge across River Mollineaux, and (v) a 10-m long, 8.9m wide and 1-span solid slab type reinforced concrete underpass at Chainage 5.613km. All the bridges and their ancillary features have been designed in accordance with the Standard Specifications for Highway Bridges by AASHTO. Road Furniture and Highway Materials 4.5.15 The highway design has made provisions for pedestrian sidewalks, guard-rails, road signs, pavement markings, and lighting of roundabouts, tunnel and sharp bends for the safety and freeflow of traffic. In addition to the excavated rocks from the tunnel, three potential quarry sides for the production of suitable aggregates and rock sand have been identified within 2 to 7 km from the project road. Also, the soils required for the construction of road re-embankments are available within a maximum haulage of 5km. The engineering properties of these materials have been tested and found adequate for construction purposes. Consultancy Services 4.5.16 Consultancy services for the supervision of the road construction works will be carried out by the consultant on behalf of the MPI/RDA. The responsibility of the already selected firm will include contract programming and administration, inspection of works, quality testing of construction materials and project cost management. The consultants will be required to liaise effectively with the MPI/RDA and the Bank during project implementation. In addition, the project audit services will be carried out by the Government Auditor.

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4.6 Traffic Demand and Road User Prices

Traffic Demand

4.6.1 The Feasibility and Detailed Engineering Design Study of the project road was carried out in 1996 and 1999 respectively by a Consultant. The Consultant conducted traffic counts and origin-destination (O-D) surveys. Based on the traffic survey, the normal traffic on Kewal Nagar–Bel Air section was estimated at 3106 vehicle per day comprising of 2151 (69.3%) cars 536 (17.3%) pick ups, 141 (4.5%) buses and 256 (8.2%) medium trucks, 7 (0.2%) heavy trucks and 15 (0.5%) articulated trucks. These traffic were estimated for 1996 and were adjusted for 2000 based on the 1996-2000 economic performance and social development of Mauritius. 4.6.2 Diverted traffic was estimated for Ferney Sugar Estate-Kewal Nagar section. In addition, generated traffic were estimated at 174 and 94 vehicles per day for Mahebourg-Ferney Community Centre and Ferney Sugar Estate-Kewal Nagar Sections respectively. Generated traffic comprised 22.6 percent of the total traffic on Meheboug-Ferney Community Centre and 14.8 percent on Ferney Sugar Estate-Kewal Nagar road section. 4.6.3 Future traffic were projected with the consideration of economic and social factors such as: area economic growth rates, structural changes in the economy, size of urban population, and shift on personalised travel modes over time. The economic and social indicators actually accounted for in the estimation of future traffic were: population, gross domestic product, vehicle population, and petroleum consumption. Annex 5 shows the total projected traffic on each segment of the project road. Road User Costs 4.6.4 Road user costs is comprised of vehicle operating costs (VOCs), passenger and freight time costs, congestion and environment costs. The VOC components are: vehicle depreciation costs, fuel and lubricant costs, tyre costs, interest rates, maintenance crew costs, and wages of drivers and assistants. Passenger and freight time costs are costs resulting from reduced distance, and congestion costs are VOCs as a result of heavy traffic volume. All these costs were expressed at year 2000 market prices. 4.6.5 In order to determine the true resource consumption to the country, economic costs have been estimated from financial costs. The financial costs are based on market prices of the cost components which normally include taxes and transfer payments. Taxes and transfer payments are not accounted in economic costs. 4.7 Environmental Impact 4.7.1 An Environmental Impact Assessment (EIA) was undertaken along with the feasibility study of the project. All major mitigation measures have been integrated in the project design and the necessary funds for their implementation are included in the project. The EIA classification of the project is category 2. Details on environmental impacts and mitigation are presented in Annex 6. Positive Environmental Impacts 4.7.2 Some of the important benefits are: (i) increased socio-economic development in the region; (ii) minimization of traffic congestion and reduction of travel time between

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Mahebourg Plaisance (airport) and Bel Air (iii) creating an alternate and a reliable all weather road; and iv)) the project will also promote poverty alleviation as well as tourist-related and other industrial development activities. Negative Environmental Impacts 4.7.3 The impacts during construction are the typical impacts associated with this type of works such as increase dust level, limited land clearing, traffic noise, waste from workers settlements, water and air pollution, borrow pits, etc. They are essentially limited in time and space, and would not induce irreversible damages. The contractor would be required to put in place all the necessary safeguards to control these adverse impacts. Vehicle operation will produce limited level of emissions. In the tunnel appropriate ventilation is provided to properly minimise the air pollution from vehicle emission, and maintain air quality within acceptable standards. With the implementation of the project road, uncontrolled land development could lead to destruction of physical and environmental resources. Also, disposal of excavated rocks from the tunnel could have some impacts on the environment. Mitigation Measures 4.7.4 Most of the negative impacts will be temporary in nature that can be mitigated through the appropriate design, implementation and monitoring of the mitigation measures. Since the road traverses scenic landscape, various environmental enhancement measures will be implemented including planting of avenue trees, landscaping certain areas, creation of view points, and rehabilitation of children’s play ground, ramps for disabled. Trees and grass will be planted and slopes will be protected against erosion. The contractor will be required to put in place all the necessary safeguards to control various types of pollution; and uncontrolled land development will be regulated by enforcement and compliance of the relevant laws. The excavated rocks will be re-used in the highway construction. The quantity is not even sufficient and other quarry sites have been identified. Environmental Management Plan (EMP) 4.7.5 The implementing agency is required to design, at the beginning of the project implementation, an Environmental Management Plan (EMP). The aforementioned measures would be implemented by the RDA, through the supervising engineer, and budgeted for in the project with the assistance of an environmentalist from MEUD. This has been made a condition of the loan. To further safeguard the protection of the environmental resources, special conditions have been included in the bid document, which the successful contractor must follow. UA 0.36 million has been set aside for grass and tree planting, sensitization and monitoring, while a sum of UA 0.55 million is provided for fire safety, ventilation and lighting in the tunnel, roundabouts and sharp turns.

4.8. Social Impact 4.8.1 The project area is predominantly agricultural with sugarcane as the major produce. Most of the people are engaged in agricultural activities and the rest of them participating in small scale industries and trading practices. There are service providers in the project area such as hotels, bars restaurants, beach hawkers and hair dressers. There are also stone crushers, manufacturing, shoemaking and banking activities. The proposed project will have social impacts, either positive or negative during both the construction and operation period of the project road.

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(a) Positive Impact 4.8.2 During construction of the road, employment is likely to be created both to local and migrant workers and both to men and women. It has been estimated by the consultant that a total of more than 1000 skilled and unskilled labourers would be employed during the construction period. The incomes generated from the employment will improve the livelihood of the people in the project area of influence. At the moment, women are usually employed in sugar and textile factories but, have never experienced employment in road construction activities. Thus, the possible engagement of women in the construction activity will be a new phenomenon in Mauritius, and opening opportunities for future endeavours. In this respect, about 50 women would be involved during the construction period in associated activities such as office, clinic and restaurant works. (b) Negative Impact 4.8.3 The introduction of the road will expose the community, including women, to social problems. The relatively high disposable income of the labour force and the availability of hotels and bars could spread sexually transmitted diseases including, unwanted pregnancies. Secondly, during the operation of the road, traffic accidents are likely to increase due to high speed. In addition, traffic noise and greenhouse gas emissions from motor vehicles can be health hazard during the operation of the project road. 4.8.4 The 608m tunnel is long enough to encourage crimes; and poor lighting and lack of proper ventilation in the tunnel could lead to road accidents and health hazards respectively. Escape possibilities, power outage and fumes are other potential impacts of the tunnel. 4.8.5 The possible price increase in local products will affect the livelihood of the people in the project area especially those with lower incomes. Retirees and elderly people can be adversely affected both socially and economically, as a result of local inflation of goods and services.

(b) Mitigating Measures 4.8.6 Orientation of construction workers on socially transmitted diseases will reduce the risk of sexually transmitted diseases. In addition, the availability of protection materials together with sensitization of the community will significantly reduce the risk. These materials would be provided by the contractor in the construction camps. 4.8.7 The Road Safety Office of MLTSPD will contribute to the reduction of road accidents through the installation of traffic signs and speed-break devices at the appropriate locations. In addition, sensitization of the local community through road safety campaigns would prevent road accidents. The project road is designed to have a 1.5 m shoulder on either side of the carriageway which can be used by pedestrians and cyclists during traffic congestion and thus contributing to road accident reduction. 4.8.8 The contractor would take maximum precaution in the installation of the required furniture along the road both in the open and within the tunnel. The tunnel has been designed according to international safety and technical standards with provisions for u-turns, battery back-up lights, and fume extractors. Appropriate costs have been provided for lighting, ventilation and fire dumps. The Government will establish a police post close by the tunnel to control crimes in the surroundings.

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4.9 Project Costs 4.9.1 The project cost estimate of UA 21.15 million (net of taxes) is made up of UA 14.86 million (70.2%) in foreign exchange cost and UA 6.28 million (29.8%) in local cost. A provision of 10% was made to accommodate physical contingency and price escalation of 5% and 6.5% per annum for foreign and local costs respectively. An amount of UA 1.20 million (inclusive of contingencies) or about 6% of total cost was also provided for supervision consultancy services. The project cost has been based on the detailed engineering design, detailed cost estimate from the consultant in December 1999 and recent costs of road construction works in the country. 4.9.2 A summary of the project cost by components and by category of expenditure is presented in Table 4.1. The total cost estimate of UA 21.15 million (US$ 28.28 million) appears to be relatively high for the 25.05 km road i.e. US$ 1.13 million per km. However, a close examination of the detailed cost estimates in Table 4.1 and Annex 4 indicates that the project is not a typical road construction project as it has some major and peculiar components such as:

i. 608 m of tunnel works amounting to UA 4.32 million or 26.1% of civil works base cost

estimate.

ii. 5 no. bridges amounting to UA 1.52 million (9.2%) of civil works base cost estimate.

iii. Road works amounting to UA 8.52 million or 51.4% out of civil works base cost estimate of UA 16.57 million. The earth works alone accounts for about 33% of the cost for the road works because of the nature of the terrain. This is relatively high for a road project.

iv. Others are general items, monitoring of environmental impact, lighting etc. amounting to 13.3% of total project cost.

Table 4.1

*Summary of Project Cost by Components and by Category of Expenditure

MRs millions UA Million Component/Category

Foreign Exchange

Local Costs

Total Costs

Foreign Exchange

Local Costs

Total Costs

% F.E.

A. B.

Civil Works+ -Road works (51.4%) -Tunnel works (26.1%) -Bridge works (9.2%) -Others (13.3%) Sub-Total Consultancy Services:

218.52 110.74 39.09 56.83

425.18

25.51

72.84 36.92 13.03 18.94

141.73

8.50

291.36 147.66 52.12 75.77

566.91

34.01

6.39 3.24 1.14 1.66

12.43

0.75

2.13 1.08 0.38 0.55

4.14

0.25

8.52 4.32 1.52 2.21

16.57

1.00

75% 75%

Total Base Cost Physical Contingency (10%) Price Contingency

450.69 45.07 43.27

150.23 15.02 18.93

600.92 60.09 62.20

13.18 1.32 1.27

4.39 0.44 0.55

17.57 1.76 1.82

75% 75% 69.8%

Total Project Costs

539.03

184.18

723.21

15.77

5.38

21.15

74.6%

*The tables have been combined to avoid repetition since the components and categories are the same for this project. + See Annex 4 for details. In view of the complexity of the project, the cost estimate is reasonable.

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4.10 Sources of Finance and Expenditure Schedule 4.10.1 The Project will be jointly financed by the African Development Bank (ADB) and the Government of Mauritius (GOM). ADB will finance UA 14.87 million and GOM will finance UA 6.28 million. The ADB contribution covers 94.3% foreign costs whereas the GOM’s contribution will cover the total local cost and 5.7% of foreign cost. The GOM’s contribution of UA 6.28 million, represents 29.7% of the total project costs. The GOM will finance the consultancy supervision services for which a consortium of firms have already been appointed. The source of finance is presented in Table 4.2 below.

Table 4.2 Sources of Finance (In UA Million)

Source Foreign Exchange Local Costs Total Costs % of Total

ADB Government (GOM)

14.87 -

- 6.28

14.87 6.28

70.3 29.7

Total 14.87 6.28 21.15 100% 4.10.2 The counterpart fund for the project comprises 25% of civil works, 100% of consultancy supervision services. This is in accordance with the GOM's request to finance the entire consultancy services and to use the Government Auditor for the audit services. Request for proposal was distributed to 10 short-listed consulting firms. An Indian consultant in association with two other consultants was eventually selected for the supervision of works. The selection procedure was based on combined technical quality and price consideration. Besides these consideration, the selected firms include the firm that conducted the feasibility study, preliminary and detailed engineering designs. This is advantageous in that the consultant is already conversant with the project. The procurement of the consultants has been reviewed and found satisfactory. But the proceed of the loan would not be used to finance the supervision services since the firms were not procured by using the Banks’ Rules of Procedure for the Use of Consultants. 4.10.3 The proposed expenditure schedule has been developed from the total estimated cost of the project spread over the implementation programme in proportion to the works and services programmed for each year of project implementation. The yearly expenditure plans by component and by sources of finance are shown in Tables 4.3 and 4.4.

Table 4.3 Expenditure Schedule by component

(In UA million)

Component 2000 2001 2002 2003 2004 2005 Total A. Civil Works - 5.59 5.59 5.59 2.70 0.48 19.95 B.

Consultancy Services: - Supervision

0.32

0.24

0.24

0.24

0.13

0.03

1.20

Total 0.32 5.83 5.83 5.83 2.83 0.51 21.15

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Table 4.4 Expenditure Schedule by Sources of Finance

(In Million UA) Source 2000 2001 2002 2003 2004 2005 Total ADB

-

4.19

4.19

4.19

2.03

0.27

14.87

GOM

0.32

1.64

1.64

1.64

0.80

0.24

6.28

Total

0.32

5.83

5.83

5.83

2.83

0.51

21.15

5. PROJECT IMPLEMENTATION 5.1 Executing Agency The Ministry of Public Infrastructure will be the Executing Agency for the project until the Road Development Authority (RDA) is fully staffed. RDA was established under the Act No.6 of 1998 by the Parliament of Mauritius, to function as a body corporate within the framework of MPI is fully staffed. The executive functions of MPI such as planning, design, construction supervision, maintenance and improvement of motorways and main roads shall be transferred to RDA at latest by September 2001, when the Authority will be fully staffed and operational. In this respect, GOM would be required to submit the instrument of transfer of projects being implemented by MPI to RDA to the Bank, as one of the ‘other’ conditions of the loan. The capacity of MPI to undertake the project has been reviewed and found satisfactory on the premise of the number and quality of the engineers in the ministry (section 3.3.2). 5.2 Institutional Arrangements 5.2.1 After RDA becomes fully functional, the MPI will hand over its responsibilities in respect of road infrasucture management. RDA already has a Board that is composed of nine members. The Board has a Chairman and a representative each from the MPI, Prime Minister’s Office, MOF, MLTSPD, Commissioner of Police, and three persons from the public, other than the public officers or employees of statutory body. The three persons should have experience in road construction, traffic management, road transport, commerce, and administrative matters. The Chairman has been appointed by the Minister of MPI. The organogram of MPI/RDA has been discussed in Section 3.3.2 with reference to Annex 2. The transitional arrangement between MPI and RDA will not affect the implementation of the project. 5.2.2 A Project Co-ordinator/Engineer, whose qualification and experience will be subject to the acceptance of the Bank, will be fully assigned by the Authority for the proposed project. The construction works and procurement of equipment will be the responsibility of a road construction contractor and the construction supervision will be carried out by the selected consulting firms. 5.3 Supervision and Implementation Schedules 5.3.1 The road construction works will be executed by the selected contractor under a unit price contract. The works will be supervised by the appointed civil engineering consulting firm on behalf of the Executing Agency. The construction works will be implemented over a period of 30 months commencing in October 2001 and ending in March 2004, followed by a 12 months maintenance guarantee period.

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5.3.2 The consultancy services for the supervision of works will commence in August 2000 and terminate in March 2005. The consultant will be responsible for the day-to-day supervision of the works, quality control and certification of the works done. The project implementation schedule is presented in Annex 3. The Bank will launch more frequent supervision missions since the consultancy services will be solely financed by GOM. 5.4 Procurement Arrangements 5.4.1 The procurement arrangements under the project are summarised in Table 5.1. All procurement of works financed by the Bank would be in accordance with the Bank's 'Rules of Procedure for Procurement of Goods and Works using the Bank Standard Bidding Documents (SBD) for large works.

Table 5.1 Summary of Procurement Arrangements

(UA Million)

UA ‘000 Project Categories

ICB

NCB

Other

Shortlist Non-Bank

funded

Total

1. Civil Works

19.95 (14.87)*

19.95 (14.87)

2. Consulting Services+

- Supervision

1.20

1.20 (0.0)

TOTAL 19.95 (14.87)

1.20

21.15 (14.87))

*ADB Contribution in parenthesis. +Already processed by GOM. Civil Works 5.4.2 The civil works contract has been packaged into one Lot of UA 19.95 million which will be procured on the basis of International Competitive Bidding (ICB) with prequalification of bidders; and, "Domestic and Regional Preference Margins" shall be considered during the evaluation of bids as per GOM's request. The package has been designed to be executed by a firm or a consortium of construction firms that have a great deal of experience in tunnel, bridge and road works, and to facilitate better co-ordination of activities on site. Consulting Services for Supervision 5.4.3 The GOM has already appointed a consultant for the supervision of works (see Section 4.10.2) through a short list Since the services are financed by the Borrower, but which have a considerable impact on the Bank-financed project, the Bank has reviewed the Terms of Reference the consultant’s qualifications and conditions of employment and found them satisfactory. However, GOM would be required to forward the reports prepared by the consultant to the Bank; and this has been made a condition of the loan.

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Project Audit Services 5.4.4 The Office of the Director of Audit, which by law has the authority to audit all public accounts including those of RDA, shall be used to provide audit services for the project. 5.4.5 The text of a General Procurement Notice (GPN) has been agreed with the Executing Agency and it will be issued for publication in Development Business, upon approval of the loan proposal by the Board of Directors. Review Procedures 5.4.6 The following documents are subject to review and approval by the Bank before promulgation :

• Specific Procurement Notices. • Prequalification document. • Tender documents. • Tender evaluation report, including recommendations for contract award. • Draft contract for works, if there are changes in Bank's SBD.

5.4.7 The MPI will be responsible for the procurement of works. The procurement capacity of MPI has been reviewed and found satisfactory (Section 3.3.2 and 5.1.1).

5.5 Disbursement Arrangements The GOM has opted for both direct payment and reimbursable methods for disbursement of the loan for the civil works. The loan disbursement for this project will require a more frequent supervision. 5.6 Monitoring and Evaluation 5.6.1 Quarterly progress reports in line with the Bank's format covering all aspects of the project will be prepared by RDA and forwarded to the Bank not later than one month after the end of each quarter. These reports will include progress achieved against agreed implementation and disbursement schedules, key performance indicators, work programmes and cost estimates for the next quarter. The progress report will provide an updated information on project implementation, highlighting key issues and problem areas, and recommending action plans for resolving identified bottlenecks. 5.6.2 The EIA mitigative measures will be supervised by the consultant and also monitored by the MEUD. The nomination of an Environmentalist from MEUD on a part-time basis has been made a condition of the loan. The consultant will prepare a quarterly brief on the implementation of the identified mitigative measures and forward to the Bank, RDA and MEUD. The consultant is required to prepare and submit to the Executing Agency and the Bank a final report at the completion of the project. Thereafter, RDA will prepare and submit to the ADB the Borrower's Project Completion Report (PCR) not later than three months after project completion. The consultants' final reports and the Borrower's PCR will provide the background documents for the preparation of the Bank's PCR required to facilitate post evaluation of the project.

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5.7 Financial Reporting and Auditing The Finance and Administration Division of RDA will be responsible for financial management and reporting procedures for the project. RDA will be required to operate a separate account for the project in order to facilitate verification of expenditures by component/category and source of finance. The project audit will be carried out once every year and a final audit will be prepared at the completion of the project in line with the Bank's Guidelines for Project Auditing and Reporting. The certified audit report shall be submitted to the Bank not later than three months after the completion of the project audit. 5.8 Aid Co-ordination 5.8.1 Aid co-ordination is carried out at the Government and at donor levels in Mauritius. The Ministry of Economic Planning and Development acts as the focal point for the management of external resources, working in close collaboration with the technical ministries for seeking funds for their programmes/projects retained within the development strategy. The ministry maintains a constant dialogue with the donor community for a smooth co-ordination of all aid programmes. For programmes/projects which relate to several Ministries, the Inter-ministerial Aid Co-ordination Committee, through close monitoring, efficient supervision and timely implementation of projects, the Ministry of Finance is responsible for handling the loan management including the lending from the Bank Group. Outside the Government, there is no formal, comprehensive aid coordination mechanism such as Round Table and Consultative Group Meetings. As in the case of many other countries, the UNDP Resident Representative Office co-ordinates various activities within the UN systems as well as plays a complementary role to the Government's aid co-ordination efforts by having regular donors meeting in Mauritius, as well as co-ordination among the local NGOs. In Mauritius the private sector has played an important role in aid co-ordination, especially in mobilising the aid for important projects. 5.8.2 At the moment, there is little aid co-ordination in the Transport Sector. However, there are some donors that are operating in the sector. The World Bank is financing the port project, EDF is funding the upgrading of Roselle Belle-Novelle France Road, while the Japanese is financing the Integrated National Transport Strategy Study (INTSS), which is being administered by the World Bank. 5.8.3 In addition to INTSS, there are Port Master Plan Study and Airport Master Plan Study; and the outcome of these studies cannot be implemented by the Government alone without a proper donor-coordination. Subsequent to the completion and review of these reports, the GOM would formulate a development programme with a view to bringing all donors to a conference in the transport sector. 6. PROJECT SUSTAINABILITY AND RISKS 6.1 Recurrent Costs During the defect liability period, which is 12 months after completion of the construction works of the project road, the construction firm will be responsible for the maintenance of the road project. Thereafter, the road will be handed over to RDA for management with maintenance costs to be channelled from MOF. According to the Act of 1998 establishing the RDA, it has been stated that the Authority shall receive any money appropriated from the Consolidated Fund, Capital Fund or Privatisation Fund including any other money lawfully accruing to the Authority from any other source. In addition, the Authority can raise funds from other sources through debentures or bonds with the approval of the Minister. At the

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moment, about MRs 300 million is required for road maintenance annually of which 85 percent has been secured already. 6.2 Project Sustainability 6.2.1 The GOM has established RDA in order to have a properly planned, designed and maintained road network in the country. RDA is mandated to prepare and implement road development schemes, and conduct a co-ordinated research and investigation activities on materials required for road construction. Accordingly, the Authority is committed to generate finance and to closely follow road sustainability. It is well understood by the MPI that the recurrent budget of MRs 100 million for road maintenance is not enough. As a result, additional local sources have been identified and subsequently endorsed by GOM. Thus, the overall annual recurrent maintenance budget becomes MRs 170 million, an increase of 70% for 2000/01. 6.2.2 Recurrent budget has been allocated for road maintenance in order to sustain the structures and surfaces of motorways and main roads. As depicted in Table 3.1, more than 45 percent of the road expenditure was incurred on maintenance during the period 1991/92-1999/2000. In addition to MRs 170 million stated above, MPI is in the process of securing additional MRs 87.5 million from vehicle licensing solely for road maintenance. It is important to recognize that the condition of the road in Mauritius is good due to a reasonable amount of financial allocation to the sub-sector and also due to the institutional strength of MPI. 6.2.3 The project under consideration requires periodic maintenance expenditure of MR 5.59 million (US$ 220,000) at 2014; MR 1.37 million (US$ 54,000) at 2015; MR 8.33 million (US$ 326,000) at 2020 and MR 1.37 million (US$ 54,000) at 2023. In addition, the routine maintenance expenditure has been estimated as MR 350,000 (US$ 14,000) per year. Since the project road will be constructed with asphalt concrete, the initial investment is high but the routine maintenance cost is low. 6.2.4 Although collection of toll levy has not yet been implemented on highways in Mauritius, the Government is considering it as a possibility generating additional revenue for road maintenance. Against this background, the sustainability of the project road could be further enhanced by tolling the tunnel and dedicating the revenue raised to the maintenance of the road, in addition to the general maintenance budget. 6.3 Critical Risks and Mitigation Measures 6.3.1 The execution of the project hinges on six main assumptions, each of which constitutes a potential risk factor. These assumptions and associated risks are discussed as follows: 6.3.2 The first potential risk associated with the implementation of the project is the timeliness of land acquisition for the Right-of-Way (ROW) for the new segment of the highway project. If this is affected by cash flow, it may cause a delay in effectiveness. In order to avoid protracted land litigation during the implementation of works, acquisition of ROW and compensation to the affected land owners have been made conditions of the loan precedent to first disbursement of the loan. 6.3.3 Second, it is assumed that the loan, when secured, will not be cancelled either by GOM or the Bank, or both, and that the project will be implemented successfully. The conditions of the loan has been set out in a fashion that GOM can easily fulfil to avoid paying commitment fee without utilising the loan. The Bank’s procurement rules have been discussed thoroughly with GOM to eliminate any misunderstanding that might arise there from. The

24

outcome of the Task Force that has been set up by the Bank on Mauritius will also help to reduce the risk of loan cancellations. 6.3.4 Third, it is assumed that procurement actions will be on schedule. With the quality of engineers in MPI, the associated risks would be mitigated to avoid cost overrun. 6.3.5 Fourth, it is assumed that payment certificates will not be delayed, with RDA fully staffed, the associated risks would be reduced. 6.3.6 Fifth, the assumption that the GOM would provide adequate counterpart fund and make timely release of fund to the project in its budget has its associated potential risk. The GOM has already made budgetary provision for the project in the FY 2000/01 and if this commitment is sustained throughout the project implementation period, then the risk factor would be reduced. The project account for the payments of the counterpart fund will be monitored by the Bank’s supervision missions. 6.3.7 Sixth, it is assumed that the implementation of works, will be carried out as per the technical specifications and the implementation schedule. Delays in the implementation of works could result in additional cost to the project. In order to minimise the risk of this assumption, GOM has already selected the consultants that did the detailed design for the supervision of works. And, procurement of internationally sourced experienced contractor and Bank's supervision mission of twice a year will further reduce the risk factor. 7. PROJECT BENEFITS

7.1 Economic Analysis

7.1.1 Economic analysis was based on real resource consumption. The major inputs considered in respect of costs were investment and maintenance costs whereas, the major inputs in respect of benefits were: vehicle operating cost (VOC) savings, and time savings. The major inputs used in the analysis of VOCs were prices, tyres, fuel and lubricants; crew costs; and wages of bus and truck operators.

7.1.2 Conventionally, economic costs exclude taxes and are expressed at border prices. The economic prices used in the analysis did not consider shadow prices and wage rates due to insignificant prevailing distortions. Thus both cost and benefit components were expressed less of taxes. The economic benefits considered in the study consisted of: savings in VOCs, time savings for passengers and goods in transit, road maintenance cost savings, and VOC savings to generated traffic which was accounted for 50 percent of normal traffic.

7.1.3 Based on the foregoing, economic evaluation was carried out within the broad framework of cost-benefits analysis. Cash flows were developed in respect of investment costs and project benefits. Subsequently, net cash flow were calculated by subtracting project costs from project benefits. Based on the net cash flows, Net Present Value (NPV), Economic Internal Rate of Return (EIRR) and Benefit-Cost Ratio (BCR) were calculated at the opportunity cost of capital of 12 percent. The 12 percent opportunity cost of capital has been accepted by GOM and is practised by MEDPRD. Accordingly, NPV of MRs 137.6 million, EIRR of 14.8 percent and BCR of 1.30 were found to be the results of the economic analysis. Annex 5 depicts the methodology, cash flows, and the results of the economic analysis.

7.2 Social Impact Analysis

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7.2.1 The project road will generate direct and indirect employment for the people within the area of influence of the road by raising the income of households. As a result, the standard of living of the people in the country, in general, and in the project area in particular, will be improved. The project will contribute to improving the linkage of rural production centres to markets and to social amenities, such as health, education and other facilities. 7.2.2 Both men and women in the project area will benefit during the construction of the road and also after the road becomes operational by gaining employment opportunities which will enhance their income levels. At the moment, women in Mauritius are employed in sugar and textile factories than construction industry. In 1997, the gender-related development index value of Mauritius was 0.8 which was significantly higher than that of Africa which was 0.5 and slightly lower than the developed countries which is 0.9. People in the project area of influence will also benefit during the operation of the road due to easy access to transport thus, providing more time to their families. The incomes of people engaged in small businesses can be augmented as a result of easy access to industrial commodities, markets and public transport. All these will contribute to the enhancement of the economic and social well-being of the people in the target area. 7.3 Sensitivity Analysis 7.3.1 The project is sensitive to changes in inputs mainly: traffic growth and construction costs. The decrease in traffic growth rates will decrease the benefits in VOC savings on the other hand, increase in traffic will perform otherwise. Similarly, the increase in construction and maintenance costs is likely to underestimate benefits resulting in lower economic parameters. In view of the above, sensitivity tests were conducted either by lowering benefits or by increasing investment costs or both. 7.3.2 Sensitivity analysis were also performed by testing how high the estimated costs can go, benefit remaining the same, and the project still being viable at the opportunity cost of capital. Similarly, by how much can benefits be reduced, investment costs remaining the same, and the project being viable at 12 percent opportunity cost of capital. Results of sensitivity analysis are depicted in Table 7.1 below. As shown in the table, the project is viable at all tests.

Table 7.1 Results of Sensitivity Analysis

Economic Parameters

Tests NPV (MRs million)

EIRR (%)

B-C Ratio

Normal 137.6 14.8 1.30 Investment Cost Increased by 10% 91.50 13.8 1.18 Benefit Reduced by 10% 77.7 13.6 1.17 Investment cost increased by 10% and benefit reduced by 10% 31.6 12.6 1.05 Pessimistic Traffic Growth 55.3 13.3 1.15 At the opportunity cost of capital, by how much can Investment Costs be increased, benefit remaining the same and the project still be viable?

29.8%

At the opportunity cost of capital, by how much can benefit be reduced, investment costs remaining the same and the project still be viable?

23.0%

26

8. CONCLUSIONS AND RECOMMENDATIONS 8.1 Conclusions 8.1.1 The upgrading of the Ferney Community Centre-Ferney Sugar Estate (2.34 km) and Kewal Nagar-Bel Air (8.69 km) and the new construction of Mahouberg Ferney Community Centre (6.19 km) and Ferney Sugar Estate-Kewal Nagar (7.83 km) segments of the project road is in line with the National Physical Development Plan (NPDP) of Mauritius. NPDP envisages growth in several places in the eastern parts of Mauritius. As the development takes place, there will be a need for improved inter-connection between towns resulting in benefits for tourism, including better access to resort areas from the International Airport at Plaisance. The project will create an efficient and effective transportation system between the southern and the north-eastern part of the country through reduced congestion and easy movement of passengers and freight. In addition, the project road will foster balanced development of the country with new opportunities in the northern and north-eastern parts which have been lagging behind so far. 8.2 Recommendations and Conditions for Loan Approval It is recommended that a ADB loan not exceeding UA 14.87 million be given to the Government of Mauritius for the South Eastern Highway Project, subject to the loan conditions below. A. Conditions Precedent to the Entry into Force of the Loan Agreement The entry into force of the loan agreement shall be subject to the conditions of

Section 5.01 of the General Conditions Applicable to Loan Agreement and Guarantee Agreements of the Bank.

B. Conditions Precedent to First Disbursement

The obligations of the Bank to make first disbursement of the loan shall be subject to the following conditions:

The Borrower shall:

i. Provide evidence that a sufficient 'Right-of-Way' has been acquired for the

construction of new road links in the South Eastern Highway Project (para. 6.3.2);

ii. Provide agreeable time table for compensating the land owners affected by

the ‘Right-of-Way’ (para. 6.3.2);

iii. Provide evidence that the Road Development Authority has been fully staffed in accordance with RDA’s approved organogram (paras. 3.3.2 and 5.2.2);

iv. Nominate from Road Development Authority, a full-time Project Co-

ordinator for the implementation of the road project, whose qualifications and experience are acceptable to the Bank (para. 5.2.3); and

v. Nominate from the Ministry of Environment and Urban Development, a part-time Environmentalist for the monitoring of compliance and

27

implementation of environmental mitigation measures, whose qualifications and experience are acceptable to the Bank (para. 4.7.5).

C. Other Conditions

i. Provide evidence that the axle-load control measures are being enforced on the

motorways and main roads (Para. 3.1.5);

ii. Submit to the Bank traffic count reports on a regular basis on the project road and at other important locations on the road network at least once every six months; (Para. 3.1.6) ;

iii. Submit to the Bank the instrument to transfer the project implementation from

MPI to RDA (para. 5.1.1). iv. On a timely basis, forward to the Bank reports prepared by the consultant

supervising the civil works (Para. 5.4.3).

ANNEX 1 Page 1 of 2

MAURITIUS SOUTH EASTERN HIGHWAY PROJECT

MAP OF PROJECT AREA

Cap MalheureuxCannoniersPoint

Grand BaieGoodlands

Poudre d’Or

Ile d’Ambre

Triolet RIVIEREDU REMPART

Riviere duRempartPamplemousses

PAMPLEMOUSSES

Valton

PORT-LOUIS

Port-Louis

Bon AcceuilLalmatie

Centrede Flacq

Trou d’EauDouce

Bel Air

MontagneBlanche

FLACQ

Moka L’Agrement

QuatierMilitaire

MOKA

PetiteRiviere

PointPetite Riviere

Bambous

QuatreBornes

Tamarin

BLACKRIVER

BeauBassin

Rose Hill

VacoasPhoenix

Curepipe

PLAINESWILHEMS Nouvelle

France

GRANDPORT

PointeQuatre Cocos

Ile aux Cerfs

Pointe du Diable

Pavillon duGrand Port

Mahebourg

PlaineMagnien

RoseBelle

L’Escalier

GrandBois

Riviere des Anguilles

SurinamSouillac

CheminGrenier

SAVANE

Bel OmbreBaie du CapPointe

Sud-Ouest

Ile auxBénitiers

A7

A7

A7

Wooton

B6

B27

B28 Moulineux

S.S.R.International Airport

INDIAN OCEAN

INDIAN OCEAN

PortMathurin

GrandeMontagnePetit

GabrielLa Ferme

CrabIsland

PointCorail INDIAN

OCEAN

FlatIsland

Gunner’sQuoin

GabrielIsland

RODRIGUES

Project Road

00

5 km5 Ml

This map is intended exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its members any judgement concerning the legal status of a territory nor any approval or acceptance of these borders.

ANNEX 1 Page 2 of 2

MAURITIUS SOUTH EASTERN HIGHWAY PROJECT

MAP OF PROJECT AREA

This map is intended exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its memjudgement concerning the legal status of a territory nor any approval or acceptance of these borders.

Moulineux

Tunnel

BridgeProject Road

Ferney Sugar Estate

Ferney Community Centre

Mahebourg

Airport

Plaisance

Bel Air

KewalNagar

Grand PortMountains

Scale 1:100 000(1cm: 1km)

ANNEX 2

MAURITIUS SOUTH EASTERN HIGHWAY PROJECT

(Proposed Project Implementation Organization Structure)

Permanent Secretary (MPI)

Administration/Finance Division

Architects Division

Quantity Surveying Section

Engineering Section -Buildings

Deputy General Manager

MINISTER OF PUBLIC INFRASTRUCTURE

Senior Manager

(Research Dev. Planning)

Senior Manager (Adm. - Finance)

Senior Manager (Maintenance -

Operations)

General Manager

Manager Manager Manager Manager (Finance)

Manager (HRM)

Development Works Corporation

Chairman, Road Development Authority (RDA)

Management Board

Manager

ANNEX 3 Page 1 of 2

MAURITIUS SOUTH EASTERN HIGHWAY PROJECT

Project Implementation Schedule

Activities Date Agency Responsible

Approval/ADB

Oct. 2000

ADB

Publication (GPN) Nov. 2000 MPI/RDA/ADB Consultancy Service for Supervision Award of Contract July 2001 MPI/RDA/ADB Commencement of Consultancy Services Aug. 2001 MPI/RDA Completion of Consultancy Services March 2005 RDA Construction of Works Contract

Advertisement and Notification (SPN) Dec. 2000 MPI/RDA/ADB Pre-qualification of Contractors Feb. 2001 MPI/RDA Call for tenders March 2001 MPI/RDA Receipt of Tenders June 2001 MPI/RDA Evaluation & approval Award of Contract

Aug. 2001 Sept. 2001

MPI/RDA/ADB MPI/RDA/ADB

Civil works commenced Oct. 2001 RDA Construction completed End of Maintenance Period

March 2004 March 2005

RDA RDA

Source: GOM/ADB Mission

Page 2 of 2

ANNEX 4 MAURITIUS

SOUTH EASTERN HIGHWAY PROJECT

Provisional List of Goods and Services Local Currency

MRs Million

UA Million UA Million

Co-financiers

Category

F.E. Local Cost

Total

F.E.

Local Cost

Total

ADB

GOM

1. Works 425.18 141.73 566.91 12.43 4.14 16.57 12.43 4.14 2. Consulting

Services

25.51

8.50

34.01

0.75

0.25

1.00

0.0

1.0 Base Cost 450.69 150.23 600.92 13.18 4.39 17.57 12.43 5.14 Phys. & Price Contingencies

88.34

33.95

122.29

2.59

0.99

3.58

2.44

1.14

Total Cost

539.08

184.18

723.21

15.77

5.38

21.15

14.87

6.28

----------------------- +See detail below.

Summary of Detailed Civil Works

ITEM TOTAL TOTAL (Rupees Million) (UA Million ) CIVIL WORKS: General 34.27 1.00 Clearing, Grubbing and Earthworks 96.81 2.83 Sub-base and Base Course 33.00 0.96 Bituminous Work 57.57 1.68 Protection Works (Slopes and Drains) 38.92 1.14 Ancillary Works (Road Furniture) 32.30 0.95 Cross-Drainage Structure 32.76 0.96 Bridges (4 No.) and Underpass (1 No.) 52.12 1.52 Tunnel Work (608 m) 147.66 4.32 Lighting (tunnel, 2 No. sharp turns & 5 No. Roundabouts

12.08 0.35

Day-Works 24.42 0.71 Environmental Impacts mitigation 5.00 0.15 TOTAL 566.91 16.57

Source: GOM/ADB Mission

ANNEX 5 Page 1 of 3

MAURITIUS SOUTH EASTERN HIGHWAY PROJECT(SUMMARY OF ECONOMIC ANALYSIS)

The project incorporates the upgrading of two sections (11.03 km) and the construction of another two sections (14.02 km), all sections being components of the same project road. This is considered as a “with project” case. If the project is not undertaken, the existing coastal road would be maintained and continue to serve the future traffic. This scenario is considered as the “without project” case. In view of the above, the methodology applied for the economic evaluation of the project road was based on net incremental benefit by comparing “with project” and “without project” scenarios. The 2000 economic prices were used in the analysis.

The economic benefits considered in the study consisted of: vehicle operating costs savings, time savings for passengers and goods in transit, savings in road maintenance costs, and benefits to generated traffic taken which was accounted for 50 percent of the normal traffic. The inputs used in calculating vehicle operating costs were base year traffic and traffic growth rates; prices of vehicles, tires and lubricants. The economic benefits were based on economic prices, net of taxes, duties and royalties. The economic prices used in the analysis relate to border prices. Due to insignificant prevailing distortions, shadow prices and shadow wage rates were not applied for any foreign content in goods and services and in labour costs. These are commonly practiced by MEDPRD.

Cash flows in respect of each cost component and each benefit component were developed for the life of the project i.e. 20 years. The “without project” cash flows were subtracted from “with project” cash flows and then a single column of net cash flows was finally developed by subtracting costs from benefits. Salvage value of the road at the terminal period was accounted for 20 percent of the investment cost and was included in the benefit stream. Based on the net cash flows, NPV and EIRR were calculated using 12 percent discount rate as recommended by MEDPRD.

Cash Flows and Economic Parameters (MRs Million)

Year

Calendar

Economic Agency Capital

Economic Agency

Recurrent

Economic Vehicle

Operation

Economic

Travel Time

Economic Exogenous

Cost Benefit

Net Economic Benefits

(with Time

Savings) 1 2000 11.291 0.000 0.000 0.000 0.000 -11.291 2 2001 189.970 0.000 0.000 0.000 0.000 -189.970 3 2002 179.370 0.000 0.000 0.000 0.000 -179.370 4 2003 179.370 0.000 0.000 0.000 0.000 -179.370 5 2004 102.520 0.000 0.000 0.000 0.000 -102.520 6 2005 0.000 0.350 62.050 30.550 0.000 92.250 7 2006 0.000 0.350 66.580 32.620 0.000 98.850 8 2007 0.000 0.350 72.460 35.040 0.000 107.150 9 2008 -5.350 0.350 79.610 37.740 0.000 122.350 10 2009 0.000 0.350 71.010 38.560 0.000 109.220 11 2010 0.000 0.350 75.470 41.190 0.000 116.310 12 2011 0.000 0.350 80.260 43.980 0.000 123.890 13 2012 0.000 0.350 85.410 47.040 0.000 132.100 14 2013 0.000 0.350 91.070 50.420 0.000 141.140 15 2014 5.590 0.350 97.350 54.150 0.000 145.560 16 2015 1.370 0.350 116.830 59.380 0.000 174.490 17 2016 -5.350 0.350 130.640 64.570 0.000 200.210 18 2017 0.000 0.350 119.550 66.730 0.000 185.930 19 2018 0.000 0.350 127.820 71.800 0.000 199.270 20 2019 0.000 0.350 136.650 77.300 0.000 213.600 21 2020 8.330 0.350 146.460 83.410 0.000 221.190 22 2021 0.000 0.350 162.940 90.500 0.000 253.090 23 2022 0.000 0.350 177.060 98.280 0.000 274.990 24 2023 1.370 0.350 194.020 107.180 0.000 299.480 25 2024 -99.176 0.350 216.430 117.560 0.000 432.815

EIRR 14.83% NPV@12%= 137.59

B-C Ratio 1.30 Source: GOM/ADB Mission

ANNEX 5 Page 2 of 3

MAURITIUS

SOUTH EASTERN HIGHWAY PROJECT

Estimated AADT on Mahebourg Bypass-Ferney Sugar Estate-Bel Air Road

Road Section

Distance (km)

Traffic Type

Car

P/Up

Bus

M/T

H/T

Articulated Truck

Total

Mahebourg-Ferney Community 6.19 Normal/ Diverted

563 135 57 23 1 13 792

Generated 167 40 17 6 0 1 231

Total. 780 175 74 29 1 14 1023

% 71.4 17.1 7.2 2.8 0.1 1.4 100

Ferney Community-Ferney Sugar Estate

2.34 Normal 1128 358 156 231 2 2 1877

% 60.1 19.1 8.3 12.3 0.1 0.1 100

Ferney Sugar Estate-Kewal Nagar

7.83 Diverted/ Normal

517 119 15 45 2 2 700

Generated 94 18 2 7 0 1 122

Total 611 137 17 52 2 3 822

% 74.3 16.7 2.1 6.3 0.2 0.4 100

Kewal Nagar-Bel Air 8.69 Normal 2871 743 175 322 7 19 4137

Total 25.05 % 69.4 18.0 4.2 7.8 0.2 0.4 100

Traffic Growth Rates

Projection Period

Vehicle Type 1995-2000 Consultant

2000-2010 2010-2020+

Auto Cycle 9.6 (8.4) 9.0 (7.4) 8.6 (6.8) Motor Cycle 8.0 (7.0) 9.9 (8.1 10.6 (8.4) Car/Jeep 5.2 (4.6) 5.4 (4.4) 5.8 (4.6) Bus 3.6 (3.2) 4.1 (3.3) 4.3 (3.4) Van 9.2 (8.1) 9.0 (7.4) 8.6 (6.8) Goods Truck 5.6 (4.9) 5.4 (4.4) 4.8 (3.8)

Note: Figures within brackets pertain to pessimistic growth in GDP.

Source: GOM/ADB Mission

ANNEX 5 Page 3 of 3

MAURITIUS SOUTH EASTERN HIGHWAY PROJECT

TOTAL TRAFFIC

Year

Mehouberb-Ferney Community Centre Optim Pessimistic

Ferney Community- Ferney Sugar State Optimist Pessimistic

Ferney Sugar Estate- Kewal Nagar

Opti Pessimistic

Kewal Nagar - Bel Air Optimistic Pessimistic

2000 1023 1023 1877 1877 822 822 4137 4137 2001 1084 1072 1989 1969 871 862 4385 4339 2002 1148 1124 2109 2065 923 904 4648 4552 2003 1216 1179 2236 2166 979 949 4929 4776 2004 1289 1237 2371 2273 1038 995 5227 5012 2005 1367 1297 2514 2385 1100 1044 5544 5260 2006 1449 1361 2668 2504 1167 1096 5882 5521 2007 1536 1428 2831 2628 1238 1150 6242 5796 2008 1630 1498 3004 2760 1314 1207 6625 6085 2009 1729 1572 3190 2898 1394 1267 7033 6390 2010 1835 1650 3387 3043 1480 1331 7467 6711 2011 1982 1731 3626 3168 1598 1395 8040 7018 2012 2107 1817 3853 3324 1699 1464 8548 7367 2013 2240 1907 4096 3489 1806 1537 9089 7735 2014 2381 2002 4354 3662 1921 1614 9666 8121 2015 2532 2102 4630 3844 2043 1695 10282 8528 2016 2693 2207 4924 4035 2173 1780 10938 8955 2017 2864 2317 5237 4237 2312 1869 11637 9405 2018 3047 2433 5572 4449 2459 1963 12384 9879 2019 3242 2555 5929 4672 2617 2062 13180 10378 2020 3450 2684 6310 4907 2785 2166 14030 10903 2021 3672 2819 6717 5155 2965 2276 14937 11455 2022 3909 2962 7151 5415 3156 2391 15906 12037 2023 4161 3112 7615 5690 3361 2512 16940 12649 2024 4431 3270 8110 5979 3579 2640 18044 13294 Source: GOM/ADB Mission

ANNEX 6 Page 1 of 2

MAURITIUS SOUTH EASTERN HIGHWAY PROJECT

ENVIRONMENTAL EVALUATION

1. INTRODUCTION The project has been classified in Category 2 in view of the fact that the environmental impacts it is likely to generate can be easily identified, evaluated and mitigated by applying specific measures or changes in the project design. Furthermore, no displacement and resettlement of population is involved. An EIA has, nevertheless, been carried out to satisfy national environmental legislation, and mitigation measures have been integrated in the project design and budgeting. Its preparation satisfies Bank’s guidelines in that matter and was based on extensive consultations with stakeholders, like relevant government ministries, sugarcane planters, sugar industries, local residents, NGOs and professionals in the field of environment. 2. ENVIRONMENTAL ISSUES AND THE INSTITUTIONAL FRAMEWORK 2.1 The remarkable economic growth and development experienced in Mauritius over the past two decades have generated a whole range of externalities that have, unfortunately, not been adequately dealt with. These externalities have manifested themselves in continued degradation of some of its vital resources and threats to human health. While the country has succeeded in avoiding environmental problems of the type experienced by many industrial economies at similar levels of development, such threats are more acute because of its small island status. The National Environmental Action Plan 1 (NEAP1) has been fairly successful in meeting some of its key objectives, particularly with the establishment of a policy, legislative and institutional framework for environmental management, and raising environmental awareness. The accompanying Environmental Investment Programme (EIP), which ended in 1998, enabled the launching of a number of public infrastructure rehabilitation programmes. Government is now in the process of finalising a new National Environmental Strategy that will address a whole range of environmental problems that require urgent solutions, among which solid waste management, biodiversity, degradation of coastal resources, urban planning, degradation of fresh water resources, transport and infrastructure, degradation of lagoon waters, industrial pollution and hazardous and toxic waste.

2.2 The Ministry of Environment, created in 1989, is responsible, among others, for the formulation of environmental policies, setting environmental standards, reviewing E.I.A. and granting E.I.A. licence, managing hazardous wastes, coordinating enforcement of environmental laws. Other enforcing agencies on environmental aspects are Ministry of Health, responsible for controlling drinking water quality, air and noise pollution; Ministry of Local Government, for managing solid wastes; Ministry of Fisheries and Marine Resources for controlling water quality and marine pollution; Ministry of Housing and Lands for land use planning; Ministry of Agriculture and Natural Resources for the protection and management of territorial biodiversity. The local authorities such as the District Councils and Municipalities also exercise certain control on developing planning, regulating trade, managing solid wastes. Private institutions such as NGOs, village groups, social workers, spiritual groups and youth clubs contribute significantly to the protection and management of the environmental resources.

3. POTENTIAL ENVIRONMENTAL IMPACTS 3.1 The proposed road alignment passes through agricultural lands, Bambous mountain and existing road. The climate is subtropical, average temperature during summer varies between 25° and 30°C and during winter from 16° to 22°C. The average annual rainfall is 2000 mm. The predominant wind direction in easterly and south easterly. The project area is relatively less developed, though it has huge potential for agricultural and industrial development. 3.2 On the positive side, a number of important benefits that could result with the implementation of this project: increased socio-economic development in the region; minimization of traffic congestion and reduction of travel time between Mahebourg Plaisance (airport) and Bel Air; reduction in road maintenance and vehicle operating cost; reduction of air noise pollution in the congested areas. Additional benefits could also emanate from easy evacuation of agricultural produce and decrease in transportation cost for sugar cane. The project will be an alternate and a reliable all weather road, as the existing coastal road is cut off for some days during heavy rainfall and cyclone periods.

ANNEX 6 Page 2 of 2

3.3 In terms of negative impacts, different types have been identified and evaluated. These result from location and design (loss of 37.7ha of agricultural land, 7.6ha of forests – none with endemic or endangered species however, uncontrolled land development could result leading to destruction of physical and environmental resources.), construction activities (uncontrolled discharge of wastes, opening of borrow pits, earthworks, operation of an asphalt plant, 41,000 m3 of rock from tunnel, and minor changes in hydraulic regimes of streams), and operation (increased vehicular emissions due to increased traffic volumes, increased waste discharges, and higher noise levels). 4. MITIGATING MEASURES 4.1 Most of the negative impacts could be mitigated through the appropriate design, implementation and follow up of other mitigation measures: (i) removal of rock heaps from adjoining cane fields for the manufacture of rock aggregates will release about 10 ha of land for sugarcane plantation to compensate for loss of agricultural land. Compensation for compulsory acquisition will be according to provisions of legislation in force since 1975. A sum of 50 million rupees has been earmarked for this compensation by the Government.. ii) Good design of the soffit-levels of the bridges at sufficiently higher level than the normal flood level and adequate provision of culvert. iii) A total of UA 0.36 million has been provided for sensitization and monitoring, grass and tree planting of the embankment slopes and verges of earthen shoulders in the project. Also a provision has been made for retaining walls and stone pitching to further protect the slopes. A provision of UA 0.02 million and UA 0.18 million has been made for the installation of fire hydrants and ventilation respectively. The project cost is also inclusive of UA 0.35 million for lighting of the tunnel, roundabouts and sharp bends. iv) Reinstatement of storage and camp sites; borrow pits; back filling; landscaping and regeneration of vegetation; use of appropriate waste disposal system and use of approved dumping sites and reuse of excavated rocks. v) In addition to the four ventilation systems planned, ventilation will be achieved naturally: Since the southern portal of this tunnel is placed at a lower elevation than the north facing portal, the tunnel will to sustain air-draft from the consistent south east Trade Wind. Either wind deflectors would be installed or the tunnel entrance would be slightly re-oriented to capture the wind. This will reduce accumulation of moisture and fumes within the tunnel. vi) Since the road traverses scenic landscape, various environmental enhancement measures will be implemented such as planting of avenue trees, landscaping certain areas, creation of view points, ramps for disabled, etc. have been incorporated. vii) Enforcement and compliance of the relevant laws and public will regulate uncontrolled development. 5.0 ENVIRONMENTAL MANAGEMENT PLAN

5.1 To effectively monitor the mitigation measures and to manage the environmental resources in the project site, an environmental management plan has been prepared. The plan includes institutional reinforcement, environmental mitigation and enhancement works and monitoring. An environmental consultant will be hired for 4 months for the designing and monitoring of mitigation measures and for training of executing agency staff. In addition to cost of the implementation of the mitigation measures which have been included in the construction work, a provision of 0.15 million UA has been made for the monitoring and follow-up of the mitigation measures and in-house training of two executing agency engineers in environmental management. The project also makes provisions for several sensitization campaigns. One environmental officer from the MEUD would assist the executing agency in monitoring the mitigation measures and the implementation of the EIA license conditions. To further safeguard the protection of the environmental resources, special conditions have been included in the bid document, which the successful contractor would have to scrupulously follow. The environmental management plan has been valued at MUR 28.5 million.

ANNEX 7

MAURITIUS SOUTH EASTERN HIGHWAY PROJECT

Mauritius: Bank Group Interventions (UA Million

Title of Project Date

Approved

Date Signed Date

Effective Amount

Approved Resources

Amount Cancelled

Net Amount

Amount Disbursed

% of Cancellation

COMPLETED 1.Line of Credit to DBMI 2.Line of Credit to DBMII 3. Industrial Sector Loan I 4. Line of Credit to DBMIII 5. Port-Louis Highway 6. Emergency Bridge-Road Rehabilitation 7. Grand River North-West Bridge 8. Port Louis Northern-Entrance Road 9. Nouvelle Plaisance Road 10. Port Louis Water Supply I 11. Port Louis Water Supply II (suppl) 12. Port Louis Sewerage 13. Master Plan Deve. Wastewater Facilities

12/16/75 02/25/82 03/25/87 02/23/88 02/10/76 03/27/80

08/24/82 08/22/84 05/19/87 02/18/75 06/08/78 02/23/77 02/23/89

01/05/76 02/18/83 05/11/87 08/02/88 05/05/76 06/25/80

03/18/83 02/25/85 11/12/87 07/02/75 06/20/78 04/29/77 05/30/89

12/31/76 01/09/83 09/24/87 12/31/89

12/31/83 04/07/86 04/04/89

12/31/79 10/29/91

2.00 3.00

30.00 5.00 2.70 3.41

3.30 4.18 6.52 4.00 1.60 5.00 0.91

ADB ADB ADB ADB ADB ADF

NTF ADB ADB ADB ADB ADB ADB

0.04 15.00

1.07

0.01

0.42 0.01 1.87

0.12

2.00 2.96

15.00 3.93 2.70 3.40

2.88 4.17 4.65 4.00 1.60 5.00 0.79

2.00 2.96

15.00 3.93 2.70 3.40

2.88 4.17 4.65 4.00 1.60 5.00 0.79

0.0% 1.3%

50.0% 21.0%

0.0% 0.3%

12.7%

0.2% 28.7%

0.0% 0.0% 0.0%

13.2%

Subtotal 71.62 18.54 53.08 NEWLY COMPLETED 1. Rose-Belle Sugar Rehabilitation 2. Education I

06/17/91 12/25/91 12/25/91

08/02/91 01/12/92 01/12/92

11/06/92 02/22/93 02/22/93

6.30 9.25 0.40

ADB ADB ADF

4.68 6.88 0.33

1.62 2.37 0.07

0.49 2.24 0.07

74.3% 74.4% 82.5%

Subtotal 15.95 11.91 4.04 PRIVATE SECTOR 1. AIG Africa Infrastructure Fund

12/15/98

09/22/99

36.00

36.00

Subtotal 36.00 36.00 CANCELLED PROJECT 1. Northern Plain Irrigation 2. Flour Mill and Grain Storage 3. Line of Credit to DBM IV 4. Regional Hospital and Training Centre 5. Rose Hill Reduit Roundabout 6. Farmers Services Centers 7. Electricity Transmission I 8.Oberoi Balaclavia Hotel Ltd

08/28/79 12/11/81 11/25/91 02/23/94

12/15/94 12/13/93 11/19/97 05/27/94

05/25/80 02/25/82

10/26/94

05/23/95 02/24/95 02/19/99

12/31/83

8.00

10.00 10.00 10.16

11.50

2.00 9.30 3.45

ADB ADB ADB ADB

ADB NTF ADB ADB

8.00 9.95

10.00 10.16

11.50

2.00 9.30 3.45

0.05

0.05

100.0%

99.5% 100.0% 100.0% 100.0%

100.% 100.%

100.0% 100.0%

Subtotal 64.41 64.36 0.05 0.05 Total 187.98* 94.79 93.19 57.04

ANNEX 8

MAURITIUS SOUTH EASTERN HIGHWAY PROJECT

LIST OF ANNEXES IN PROJECT IMPLEMENTATION DOCUMENT (PID)

1. Mauritius at a glance. 2. Project Maps. 3. Detailed Project Costing and Provisional List of Goods and Services. 4. Summary of Project Cost by Component. 5. Summary of Procurement Arrangements. 6. Project Implementation Schedule. 7. Supervision Plan. 8. Main Road Network and Vehicle Fleet. 9. Traffic Demand and Road User Prices. 10. Detailed Economic Analysis. 11. Road Accident Statistics 1990/99. 12. Geometric Design Standards for Roads. 13. Environmental and Social Impacts Assessment.

Annex

THE REPUBLIC OF MAURITIUS

SOUTH EASTERN HIGHWAY PROJECT

CORRIGENDUM TO THE APPRAISAL REPORT

1. INSTITUTIONAL CHANGES 1.1 The Table below presents the list of institutional changes that took place after the ADB Appraisal Mission in June 2000 as a result of the set up of the new government in Mauritius. The changes are to be effected in the Appraisal Report, wherever applicable. OLD NEW Ministry of Public Infrastructure Ministry of Public Infrastructure, Land (MPI) Transport and Shipping(MPILTS) Ministry of Economic Development Ministry of Economic Development Productivity & Regional Development Financial Services & Corporate Affairs (MEDPRD) (MEDFSCA) Ministry of Environment & Urban Ministry of Environment (MOE) Development (MEUD) Ministry of Local Government (MLG) Ministry of Local Government, Rodrigues and Rural & Urban Development (MLGRRUD) Ministry of Lands (MOL) Ministry of Housing and Lands(MHL) Ministry of Land Transport, Shipping & Ports Development(MLTSPD) Merged with MPI, excluding Ports Traffic Management Unit (TMU) Traffic Management & Road Safety Unit (TMRSU) 2. OTHER CHANGES The major issue is the change of the Borrower from the Government of Mauritius (GOM) to the Road Development Authority (RDA) guaranteed by GOM. 2.1 The Project Information Sheet of the Appraisal Report on Pages i & ii should be amended as follows:

2

BORROWER: Road Development Authority (RDA) GUARANTOR: Republic of Mauritius (ROM) EXECUTING AGENCY: Ministry of Public Infrastructure, Land Transport & Shipping (MPILTS) / RDA 4h Floor, New Government Centre Port Louis, Mauritius Tel: (230) 201-3236 Fax: (230) 211-7699 e-mail: Transmau@intnet.mu OTHER FINANCIAL: Nil TOTAL COST: UA 21.15 million i) Foreign Exchange: UA 15.77 million ii) Local Cost: UA 5.38 million 2.2 Page ix Section 1.9 line 2: “GOM recruited a consulting firm” to be replaced by “a Consulting firm was recruited by the Government of India in consultation with GOM” and Section 1.12: Road Development Authority to replace Government of Mauritius as the Borrower in line 2 and, where ever it appears in the text. 2.3 Page 10 Section 4.4: add to the last line 'and to reduce traffic accidents and enhance road safety' 2.4 Page 11 Item iv: Change Grand Port Mountain to' Grand Port Mountain Range'. 2.5 Page 17 Section 4.9.1: First sentence amended to be read as: 'The project cost estimate of UA 21.15 million (net of taxes) is made up of UA 15.77 million (74.6%) in foreign exchange cost and UA 5.38 million (25.4%) in local cost.' instead of ''The project cost estimate of UA 21.15 million (net of taxes) is made up of UA 14.86 million (70.2%) in foreign exchange cost and UA 6.28 million (29.8%) in local cost'. 2.6 Page 18 Section 4.10.1 has been amended as follows by replacing GOM by RDA: The Project will be jointly financed by the African Development Bank (ADB) and Road Development Authority (RDA) and guaranteed by the Republic of Mauritius (ROM). ADB will finance UA 14.87 million and GOM will finance UA 6.28 million. The ADB contribution covers 94.3% foreign costs whereas the RDA’s contribution will cover the total local cost and 5.7% of foreign cost. The RDA’s contribution of UA 6.28 million, represents 29.7% of the total project costs. The RDA will finance the consultancy supervision services for which a consortium of firms has already been appointed. The source of finance is presented in Table 4.2 below.

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Table 4.2

Sources of Finance (In UA Million)

Source Foreign Exchange Local Costs Total Costs % of Total ADB RDA

14.87 0.90*

- 5.38*

14.87 6.28

70.3 29.7

Total 15.77* 5.38* 21.15 100% *Corrected figures 2.7 Pages 26 and 27: to be replaced to read as follows: 8.2 Recommendation and Conditions for Loan Approval and Guarantee Approval It is recommended that an ADB loan not exceeding UA 14.87 million, to be disbursed in Euros equivalent to UA 7.435 million and in Dollars equivalent to UA 7.435 million, be given to the Road Development Authority, guaranteed by the Republic of Mauritius for the South Eastern Highway Project, subject to the loan conditions in the draft Loan Agreement and Guarantee Agreement.

A. Conditions Precedent to the Entry into Force of the Loan Agreement and

Guarantee Agreement

The entry into force of the Loan Agreement and Guarantee Agreement shall be subjected to the conditions of Section 5.01 of the General Conditions Applicable to Loan Agreement and Guarantee Agreement of the Bank.

B. Conditions Precedent to First Disbursement The Borrower shall have:

i) Provided evidence that a sufficient 'Right-of-Way' has been acquired for the construction of the new road links in the Project; (para. 6.3.2)

ii) Transmitted an undertaking of the Guarantor that land owners

affected by the 'Right-of-Way' shall be compensated; (para. 6.3.2) and

iii) Provide evidence of the nomination of a part-time Environmentalist

from the Ministry of Environment responsible for the monitoring of compliance and implementation of environmental mitigation measures, whose qualifications and experience shall be acceptable to the Bank. (para. 4.7.5)

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C. Other Conditions

i) Provide evidence that the axle load control measures are being enforced on the motorways and main road; (para. 3.1.5)

ii) Submit to the Bank traffic counts reports on a regular basis on the

project road and at other important locations in the road network at least once every six months; (para. 3.1.6)

iii) On a timely basis, forward to the Bank reports prepared by the

consultant supervising the civil works; (para. 5.4.3)and

iv) Provide evidence of the fact that it has become the Executing Agency. (para. 5.1.1)

GUARANTEE AGREEMENT

Without limitation or restriction upon any of its other obligations under

the Guarantee Agreement, the Government of Mauritius, the Guarantor shall: i) Provide an undertaking, for transmittal by the Borrower to the Bank,

that it shall compensate the land owners affected by the 'Right-of-Way';

ii) Compensate landowners affected by the 'Right-of-Way' and transmit

evidence thereof;

iii) Nominate a part-time Environmentalist from the Ministry of Environment responsible for the monitoring of compliance and implementation of environmental mitigation measures, whose qualifications and experience shall be acceptable to the Bank; and

iv) Transfer the Executing Agency from the Ministry of Infrastructure,

Land Transport and Shipping.