Istanbul Conference on Somalia Infrastructure: Considerations and Needs May 2012

Part 1: Delivering infrastructure in fragile/insecure contexts: considerations and pre-conditions

1. In any country, investments in core national infrastructure underpin economic development, increasing connectivity and growth and creating access to basic services, serving to strengthen the relations between state institutions and citizens. In fragile and conflict-affected countries, infrastructure can play an even more important role: providing the economic basis for a sustainable transition to peace and allowing key stakeholders to have a stake in stability. As the 2006 Somalia Reconstruction and Development Program (RDP) noted: Rehabilitation of infrastructureprovides opportunities for enhancing the dialogue and cooperation between communities around improving common infrastructure assets, as part of peace building efforts. 2. Getting infrastructure investments right is complex and requires some minimum operating conditions to be in place on the ground. In large parts of Somalia, these conditions have not existed during the RDP period and, as a result, important investments have not been able to progress. A careful assessment of whether these conditions now exist will be necessary before moving ahead. 3. At a minimum, infrastructure development requires the maintenance of a peaceful political and security environment, law and order, and a basic institutional framework. Where these conditions are absent, it will be difficult to attract the substantial financing and private sector participation that infrastructure can absorb. Worse, infrastructure investments can also exacerbate conflict, especially where different actors contest land and resources and an injection of investment could provide a focus for spoiler activity, community-based conflict or a sudden increase in corruption. 4. Institutional strength is therefore the key factor behind successful investments in infrastructure. From informal land management and consultative processes and decision-making bodies within communities to the wider national institutions tasked to plan, execute, regulate and manage infrastructure as well as arbitrate in disputes, institutions at both the national and local level will determine the outcomes of infrastructure investments. 5. Part 1 of this note briefly assesses the main basic minimum standards that would be necessary to facilitate investments in substantial infrastructure projects in a context like Somalia. Given Somalias highly heterogeneous regional context, the considerations may help decisionmakers prioritize and sequence investments according to their feasibility. Stability, security and the rule of law 6. A critical precondition for infrastructure is the exercise of credible, sustainable control over a project area by legitimate and recognized authorities. Infrastructure projects require yearround access to project sites by contractors, overseers and government partners as well as by supervisory agents. Rebuilding a road or a power plant before areas are under the control of the authorities (who also will need to have de-mined the areas) risks playing into the hands of spoilers who will be able to divert revenues through roadblocks or otherwise capture rents. 7. Moreover, stability needs to be sustained. Contractors and financiers need confidence that governance in an area will not be contested for the project duration. Most fragile states with weak institutions and legal frameworks lack the ability to enforce contracts, undermining investor and business confidence and leading to a situation where only politically connected business-people can operate. In the south-central region of Somalia, this will present a particular challenge as the

security and political situation remains fluid and area governance is often contested as different actors lay claim to authority. 8. Many fragile and post conflict situations also face the challenge of establishing clear land title, resolving disputes over land and establishing the policy and mechanisms for community consultation, restitution and potentially resettlement. Land grabbing, unclear or missing title deeds, the absence of a cadastral history and a weak judicial system can block greenfield infrastructure unless government land is available. Community consultation is central to any infrastructure planning process given the key role clan elders play in the resolution of inter-clan disputes, including related to land tenure. 9. In contexts where basic security conditions do not apply, community-based models of infrastructure delivery are the best option and can be delivered as a component of a wider peacebuilding approach. Labor-intensive works and community consultation and contracting are a useful means of generating employment as well as consensus-building within contested areas. This approach limits the range of infrastructures that can be provided. Public sector institutional capacity 10. For projects larger than community-based infrastructure, public sector capacity to oversee, manage and maintain investments is critical. Larger infrastructure investments require institutional oversight throughout the project cycle from the development of master-plans and feasibility studies, through procurement, project oversight and contract management, utility management and finally in operations and maintenance (O&M). Water, power and roads also require sectoral regulatory capacity to set generic and appropriate standards for civil works (road width for example), to facilitate the negotiation of public-private partnerships and to regulate utility pricing. While not best practice in most developing countries, fragile and conflict-affected countries rely on program implementation units working within line ministries to support government-led implementation. In Somalia, such units can engage in the first phase of basic institutional capacity building and should be strongly encouraged as part of program design. 11. Public-sector management of infrastructure projects in fragile contexts is often complicated by unclear or overlapping mandates within and between line ministries. The establishment of roads funds for O&M and other specialized regulatory agencies are a good idea but can become beholden to political and institutional rivalries. De facto decentralization can also lead to confusion over regulatory mandates and oversight and can delay important decisions about different regulatory models (federal/central etc). In addition, sound regulation requires functioning legislative capacity for the regulation, management and maintenance of key infrastructure such as water and power. 12. Within the broad area of public sector capacity, public procurement capacity is one of the most common bottlenecks in infrastructure programs. Weak procurement capacity can lead to delays and corruption. Ideally the public sector manages the tender processes itself, but when state capacity is especially weak and the involvement of high-level political officials in procurement is widespread, a foreign company can be retained to administer the entire procurement process from project identification to design, tendering, and contract management. The major concern with this approach is to integrate capacity-building in the medium term to ensure the state is not bypassed or undermined. 13. The RDP set out a comprehensive plan for Somalias public sector and institutional capacity-building for infrastructure. Even at that time, the authorities in Somaliland and Puntland had been able to put in place some basic legislation and institutions to manage infrastructure: for example the Somaliland Roads Authority and the Puntland Highway Authority which both provide a basis to build on. Despite this start, further strengthening of the legal framework and institutional capacity will be critical. In Somalia, the powerful and politically-integrated business community presents both an opportunity and a risk. For significant investments in infrastructure in all regions in Somalia, a procurement agent and a financial management agent located within institutional structures would make sense.

Private sector depth and capacity 14. The presence of a local contracting industry with some capacity and depth able to participate in tenders and to deliver on contracts is a key condition for success. In most postconflict environments, the lack of investment, a brain-drain effect and poor standards/investment in higher/vocational education leads to a dearth of local firms with the capacity to win big contracts. New firms face an unattractive enabling environment and very weak or absent financial markets. This situation typically creates a vicious circle in which international firms win tenders and local firms remain sub-contractors unless donors and the authorities proactively manage procurement criteria. On the other hand, if well handled, a public investment program in infrastructure can trigger an increase in the supply and capacity of local private contractors, and in turn can generate employment. 15. Somalia has a strong business community with good access to funding from the diaspora. In fact, unlike in many fragile contexts where the business community is marginalized and lacks capacity, in Somalia, the business community is powerful and has continued to pursue investments. Prolonged peace in Somaliland has encouraged the return and establishment of significant business interests in Hargeisa and other urban centers, focusing mostly on the delivery of services such as power, telecommunications, domestic water supply and urban waste disposal. The links between business and politics is particularly strong: the political economy of procurement is complex and outside actors may need to make extra efforts to ensure a level and transparent playing field, including carrying out some political analysis. 16. The policy and regulatory framework around contracting will need to be developed. The aim would be to build and establish the culture of transparency and accountability, as well as the guidelines, procedures and arrangements for monitoring. Utilizing local contractors for small to medium repair works will prove invaluable for the future development of a sound civil workscontracting base in Somalia. Furthermore, it will ensure that the benefits of investments in road infrastructure will be as widely distributed as possible from a regional point of view. Infrastructure financing, timelines and programs 17. Project cycles for infrastructure development are longer than in other sectors and, in uncertain and insecure contexts, contract modifications and project restructurings are often partand-parcel of implementation. Moreover, infrastructure investments require large up-front payments and have a lumpy spend profile overall. The short-term and flexible aid frameworks and strategies that most donors use to guide their engagements in contexts like Somalia do not make for appropriate frameworks for infrastructure financing. This is certainly the case in Somalia where most donors focus on short-term quick impact or emergency recovery/humanitarian work. Donors will need to think imaginatively in order to create a more attractive environment for large infrastructure projects, starting with longer timeframes. 18. Trust fund arrangements can help, by allowing for multi-year budgeting, planning and expenditure, and for longer project cycles. Pooling funds means they can reach a scale necessary for bulky contracts requiring large disbursements upfront. In addition, donors and counterparts do well to consider projects or investments within a broader sector-wide strategy where possible. Guarantee facilities are also an important component of securing investments in fragile contexts. 19. Finally, budgeting for O&M is often forgotten during infrastructure planning work, especially in fragile and conflict affected countries where the priorities are to get visible work started on rehabilitation/reconstruction, where projects are poorly coordinated with governments and where fiscal space is tight. O&M for investments constructed directly by donor-financed projects fall outside of the governments budget purview, meaning no allocations are made for their upkeep and investments are not sustained. Coordinated and pooled programming with funds allocated towards upkeep offer one way of avoiding this pitfall.

Part 2: Assessment of Somalias infrastructure and needs

20. This section of the note presents an assessment of the condition of Somalias infrastructure (based on field work completed in 2006), priority needs for reconstruction and development, and the practical requirements for achieving these improvements. Basic infrastructureparticularly in the water, transport, and energy sectors which are the focus of this notewould support the productive sectors in restoring economic growth, the social sectors in improving well-being and livelihoods, and communities in building peace and achieving reconciliation. 21. As noted in Part 1, prospects for infrastructure rehabilitation and development depend enormously on maintaining a peaceful political environment, law and order, sound economic and social policies, and the proper functioning of the facilities and services later. 22. The 2006 assessment of the state of infrastructure in Somalia found that all infrastructure facilities had suffered from lack of maintenance and rehabilitation, war damage and vandalism, and years of neglect. As there are limited inventories and condition records, it remains a priority to get more comprehensive data on the true state of the infrastructure, its institutional functions, as well as needs, design and costs together with its implementation modalities. 23. While the civil war has had a devastating effect on infrastructure in all regions, Somaliland and Puntland by 2006 had made some recovery as a result of their relative peace and stability, including in putting in place legislation and institutions to manage some of their infrastructure. In particular, the transport sector institutions benefited from support under the Sub-Saharan Africa Transport Program (SSATP) and donor-financed projects. That said, both regions were still seeking to establish full institutional capacities for planning, implementing and maintaining a viable infrastructure reconstruction and development program. 24. In assessing needs and recommending a way forward, private sector involvement in infrastructure offers some opportunities, though elements of government control, regulation and enforcement must also be present. To date, the private sector has been involved in managing various infrastructure facilities such as roads, airports/airstrips, urban infrastructure (including water supply and sanitation), power generation and supply, and in providing infrastructure services such as road and air transport, shipping, fishing, power and water distribution and provision of sanitation services in towns. 25. One critical issue of concern to infrastructure works relates to landmines. Most road, airport, port and major power rehabilitation work will require initial mine-clearing operations. In this context, it will also be essential to establish, in consultation with the various local stakeholders, the location of landmines and unexploded ordinances (Axis), and develop a clear strategy and plan for minimizing the potential dangers posed by them. Actions in this regard will require collaboration of organizations such as the Halo Trust and DDG, present in the region. Key Reconstruction and Development Objectives 26. Short-term (two years). Short-term infrastructure reconstruction and development priority actions would aim to address the most urgent needs of Somalia. Proposals would include initiating the reconstruction of essential infrastructure, including major trunk roads (US$47,000 per km) and bridges, major power generating and distribution systems, and major urban water supply (US$1 million to rehabilitate/extend a system for city of 500,000 people and/or US$50,000 to $100,000 per borehole) and sanitation. Efforts should be made to create employment through labor-based works using approaches such as community contracting where possible. 27. Medium-term (three to five years). Over the medium term, the objective would be to build on the community-level interventions and consolidate gains, complete feasibility and engineering designs and contract documentation, and then to implement major infrastructure

rehabilitation and reconstruction work, along with institutional development and capacity building. The following activities could be pursued: Select projects for implementation based on technical and economic feasibility studies, regional equity, funding, security and peace-building impacts. Complete feasibility studies, engineering designs, and procurement procedures, and plan and implement de-mining activities for road and other large infrastructure investments; Start or continue implementation of works on major national and inter-regional roads and other infrastructure; Complete studies to identify key regulations and institutional frameworks needed for the proper functioning of infrastructure and related services, and take action to ensure effective enforcement of regulations; Implement training and capacity-building for staff in public sector institutions identified for training; Identify and categorize capabilities of nationally-owned private consulting firms and contracting companies and implement program of training and capacity building; and Prepare and implement a long-term national strategy for development, maintenance and financing of critical infrastructure.

28. Leaving aside security, limited institutional and human capacity will be a major constraint to preparing and implementing infrastructure recovery and development plans. The ability to address capacity constraints depends in part on how firmly public sector institutional arrangements and frameworks have been established, and how clearly the expected public sector objectives and institutional responsibilities have been laid out. In this connection, there are four major areas of focus: Extensive consultation with key stakeholders to define a viable institutional framework, setting out the public/private sector institutional objectives, functions, structures and roles, as well as human resource needs; For each of the proposed areas of investment, implementation of a built-in program of capacity-building and training for persons involved and managed through a framework agreement with international agencies or consulting firms; Recruitment and mobilization of interested qualified and experienced Somali expatriates of appropriate professional and technical skills to help restore some of the institutional capacity to manage infrastructure development, train others and support management and implementation of the program Recruitment of private international consultants individuals and firms/NGOsas independent technical assistance to carry out various assignments, or as in-line staff of public institutions charged with responsibility for managing and implementing the programs.

Proposed Sub-Cluster Programs 29. In line with the broad objectives and principles set above, the 2006 report set out infrastructure cluster interventions, as summarized in the attached Results Matrix, showing intended outcomes, baseline situation, constraints to achieving the outcomes by the end of the 5year medium-term period now set for 2017, as well as the key actions and intermediate outcomes. In addition, the arrangements for monitoring the results are also attached to this report in separate Monitoring Matrix. The next section presents the status and context, institutional framework and expected outcomes for each sub cluster, viz. Transport; Energy; and Water Supply and Sanitation. TRANSPORTATION INFRASTRUCTURE 30. As of 2006, transport infrastructure in Somalia comprised about 22,000 km of roads, four major ports, and fifteen major airfields (of which four had paved runways). There are no railways, pipelines or inland waterways, and there has been no major investment in developing or

maintaining road infrastructure since the 1980s. The provision of transport services declined steadily due to limited investment, aging equipment and insecurity. Animal transport camels and donkeyscontinue as the most important means of transport for many people. With insecurity and a poor road network, air transport has also played an important role. Despite a coastline of about 3,300 km, coastal shipping has had limited development, particularly as piracy has increased, although it has much potential. (A) Roads and Bridges

31. By 1990, Somalias road network totaled about 21,830 km, classified as primary (2,559 km), secondary (4,850 km) and rural/feeder roads (14,421 km). The primary road network, which was largely paved, served population centers like Kismayo, Mogadishu, Hargeisa, Berbera, Garowe and Bosasso. The secondary road network connects settlements of local significance to one another and to the primary road network, and is predominantly earth roads or tracks. Rural/feeder roads are mostly low-traffic earth roads, which serve as access to the primary and secondary road systems; no reliable inventory exists covering these roads. The extent of the road network in 1990 was barely adequate to meet the transport needs of the economy. Some of the more productive regions did not have all-weather roads crossing them, and this hindered the access to markets for farmers products in Middle Juba from Jilib, over Buaale to Saakow and continuously along the Juba River to Bardhere in Gedo region. 32. Over the last 20 years, the condition and quality of the road network has deteriorated sharply due to a lack of investment and maintenance. Today, less than 600 km of roads are still paved and in a good condition. In general, paved roads that where constructed on the predominantly good, well-drained soils of south-central Somalia have remained in decent condition, whereas roads in the valleys of the Shebelli and Juba rivers, where soil conditions are difficult, are in poor condition. Historically, a paved two-lane road between Mogadishu and Berbera on the Gulf of Aden, via Belet Uen, Galkaio, Garowe and Burao (about 1,400 km), formed the north-south backbone of the road system. This road now extends 25 km south of Borama in the Awdal region of Northern Somalia. The other most important roads are the coastal road from Mogadishu to Kismayo (about 475 km) and the road from Mogadishu to Dolo, on the Ethiopian border, via Afgoi and Baidoa (about 600 km), which also branches north-west to Bardhere. In addition, the road from the northeastern coastal town of Bosasso connects the northsouth road at Garowe, and was in relatively good condition (though it is now past the end of its design life), while a paved two-lane road connects the port city of Berbera to Hargeisa and another paved two-lane road connects Hargeisa to Dila (25 km south of Borama). 33. Until 1991, the Ministry of Public Works and Housing (MPWH), through its Directorate of Highways (formerly Civil Engineering Department), was responsible for planning, constructing and maintaining roads throughout Somalia. The Ministry of Land and Air Transport (MLAT) was responsible for vehicle registration and Ministry of National Planning (MNP) responsible for general planning of the sector and for monitoring project implementation. By 1988, Government of Somalia (GoS) introduced major innovations in the management of road maintenance. Notably: (a) an autonomous self-budgeting Directorate of Highways (DoH) was established under MPWH; and (b) DoH gained direct control over all road maintenance activities in seven newly-defined Highway Maintenance Areas throughout the country1, and they retained the services of several trained Somali engineers who formed the backbone of the technical capacity of the Directorate. MPWH also established a Road Maintenance Fund (RMF), which generated revenues through a fuel tax. Somaliland and Puntland, with support from the European Union (EU), by 2006 had adopted the institutional models promoted under the RMI of the SSATP. 34. At present, the TFG has a Ministry of Transport (MoT) with very limited capacity. The institutional and legal framework under which it functions is not fully defined and so the TFG should consider membership, representation and support from the SSATP in defining its
1

Areas 6-7 now correspond roughly to the regions of Somaliland and Puntland.

institutional and legal framework for the transport sector. In the case of Somaliland, many government institutions and private sector organizations have been the beneficiaries of restructuring and capacity building support by international donor organizations. The EU helped to establish the Somaliland Road Authority (SRA) and Road Fund Administration, though the SRA still lacks technical, institutional and financial capacity to manage Somalilands road network adequately. Puntland has established a Puntland Highway Authority (PHA), whose main objective is to formulate and implement roadway and airport rehabilitation programs and to secure transport sector funding from a fuel levy and from international and national stakeholders donations. The SRA and PHA have successfully implemented routine maintenance work on their networks, but both need technical and financial assistance. South-central Somalia does not appear to have any fully functioning institutional arrangements in place to manage the road network. The issue of how the road network is managed will need to be resolved before major investments can realistically flow into the sector. 35. Lack of investment and progressive deterioration of the road network over the last 20 years means that reconstruction and development needs are large. Taking into account the high costs of rehabilitating/reconstructing road infrastructure, prioritizing and sequencing investments is essential. Rehabilitating and reconstructing a primary road (e.g., the road from Kismayo to Mogadishu to Hargeisa) to paved surface standard costs US$1-2 million per kilometer, depending on gradients, soil conditions, drainage needs, and the design solutions adopted. Regional interconnectivity is important for Somalia as a whole, and Somaliland in particular, where the Berbera Corridor road provides an important link between the Berbera Port and Ethiopia. Other major potential economic corridors include Borama to Djibouti, Bosasso-Garowe-Galkayo, Mogadishu-Baidoa- Dolow (on the Ethiopian border), and Bardhere-Jilib-Kismayo. Somalia will need to explore links beyond Kismayo to northwestern Kenya as the program moves from the short-term to medium-term implementation. 36. Beyond the priority list of needs and investments, technical and economic feasibility studies and extensive peace-building consultations will be required to quantify the prioritized actions, and confirm economic trends and regional interconnectivity needs. Roads to be rehabilitated will need to be under legitimate government control; roads under militia control will need to be avoided, as they would otherwise provide revenue opportunities to the militia. This remains a significant impediment in south-central Somalia. In more stable Somaliland and Puntland, more could be done, including: (i) expanding the technical and managerial capabilities of the SRA and PHA; (ii) rehabilitating to a minimum all-weather standard small stretches of the NorthSouth primary road; and (iii) constructing gravel feeder roads from coastal towns to inland population centers or to the primary and secondary road networks. Many potential projects in the north and northeastern regions have had feasibility studies that were financing-ready. Priorities could be taken from this list for the medium-term program, depending on the level funding available, and above all an adequate capacity and a peaceful environment. 37. Short-term (two year) plans: In light of the low traffic volumes, long preparation times (at least 18 months) required for survey and design, contract processing and award, and also the lack of capacity to implement major road works, the reconstruction and rehabilitation of major roads during the first two years is not anticipated. Hence, the short-term focus should be to: Develop institutional capacity in south-central Somalia as well as in SRA and PHA; and Undertake detailed technical and economic feasibility and engineering design studies of major roads linking major productive centers such as key ports, urban areas, farming communities, livestock hubs, and fishery processing centers, including intially: o Developing the Berbera corridor to provide Ethiopia with access to the port of Berbera, starting with the unpaved 20 km Wajale- Kalabyadh section and then the Kalabyadh-Hargeisa section, which requires widening and resurfacing to accommodate truck traffic; o Rehabilitating part of the 235 km Galkayo-to-Garowe portion of the NorthSouth primary road; and o Preparing Phase II (engineering design) of Borama to Lowyado portion of the North-

South primary road. 38. A significant portion of investments in the first two years will be required to develop institutional capacity, with most capacity building efforts running concurrently with actual physical improvements of the basic transport infrastructure. This will include developing guidelines for procurement, tendering and contract administration as a basis for implementing works. For south-central and Puntland, an improved security, human rights, and law and order record will be necessary, or else only very limited and localized road reconstruction and development works can be implemented. The short-term (two year) actions for developing the road sector should also aim to create employment opportunities through labor-based works using approaches such as community contracting with food-for-work where requirede.g., for building or opening up drainage structures. 39. Medium-term plan (five years): This would seek to build on the community-level interventions, complete feasibility and engineering design studies and implement major road rehabilitation and reconstruction work, along with institutional development and capacity building. Project selection and prioritisation will need to take into account the strategic peacebuilding importance that infrastructure rehabilitation can have. Criteria can be developed through wide consultation with relevant stakeholders and authorities. The priorities would include the reconstruction of and rehabilitation of important secondary roads. The following work could take place in the medium term reconstruction phase: Select projects to be implemented based on technical and economic feasibility studies, regional and social equity and available funding, which could include: o Arterial urban roads, including in Mogadishu, when firmly under government control; o Sections of the North-South trunk road, including between Garowe and Bosasso; o Portions of the North-South trunk road between Mogadishu and Belet Uen (322 km), starting with the section from Mogadishu to Jowhar (100 km); Establish the design standards, procurement guidelines and tender procedures that would facilitate building on the lessons learned under the short-term program, and for implementation as part of the medium-term program implementation; Complete engineering designs, and contract award procedures for roads with the completed feasibility studies, along with plans for de-mining as required at critical identified locations of various infrastructure facilities; Identify and categorize capabilities of nationally owned contracting companies; and Formulate and implement a strategy for development and maintenance of critical infrastructure.

40. In light of the limited overall implementation capacity, both the short- and medium-term road reconstruction and development programs will require the creation of a simple but effective implementation framework. The Somaliland and Puntland road authorities can serve as a model for the management of the road infrastructure in south-central Somalia. A federal model could also be considered, if the situation allows: this would mean establishing a federal roads authority, which would be responsible mainly for national sector policy and for managing the primary road network, while regional road authorities are responsible for the secondary and feeder road networks within their respective regions. The TFG, with assistance from its partners, and in close consultation with regional authorities, will need to address the issue of road infrastructure management to enable proper implementation, coordination and monitoring of any road reconstruction and development effort. 41. The implementation of the road infrastructure program will require an effective public sector program management as well as capable and willing private sector enterprises and NGOs (domestic and international) to participate in the tenders and execute the works. All the tendering processes must of necessity be undertaken according to strictly laid down procedures and guidelines. This would require that the existing tendering and operating guidelines be reviewed for setting the basis for program implementation using private entrepreneurs. One of the important aspects of tendering is everyones equal access to the possibility to compete, with the whole

process taking into account equity, and ensuring transparency and non-discrimination. This would mean that all the tendering notifications would have to be announced in all the relevant regions/districts. The exact procedures need to be established during the short-term program to ensure replication and extension during the medium-term. 42. ILO has developed Community Contracting and its Employment-intensive infrastructure Program (EIIP) as approaches to addressing the poverty and unemployment existing in rural or unplanned urban settlements and has implemented small-scale pilot programs in Somalia using both. Recruitment principles must minimize potential sources of conflicts by ensuring that various communities and minorities including women and other disadvantaged tribal groupings would have sufficient or equal opportunity for involvement and employment. 43. In parts of Somalia, especially Somaliland, contractors have been conducting road maintenance work for the SRA and have been able to build up some experience. Some of the contracts performed by these companies include bituminous pavement patching and sealing, new culvert construction, and rehabilitating and repairing of existing bridges and culverts. In collaboration with ongoing efforts, it will be beneficial to prepare a database of Somali engineers and technicians. This should lead to the establishment of a professional organization and facilitate mentoring, training etc., with some overseas, regional engineers associations. 44. The following are some indicative estimate costs for investments that have been compiled from past development partner feasibility studies: Table 1: Upgrading road transportation in Somalia Operation Upgrading to bitumen standard (medium strength) from scratch, including earthworks and drainage Reconstruction of a paved road (medium strength) in poor condition Regravelling of an unpaved road with gravel within 7 km haulage distance Construction of an unpaved road Cost US$ per km 1,300,000 900,000 46,800 85,000

(B)

Air Transport/Civil Aviation

45. Somalia has four major airports in Mogadishu, Berbera, Hargeisa and Kismayo. The airports in Mogadishu and Berbera, when operational, could accommodate major cargo and passenger planes. Almost all other major urban centers in Somalia also now maintain at least one airstrip capable of handling small aircraft. Since 1995, insecurity has closed Mogadishus main international airport, and it would now require major reconstruction before becoming operational again, but several unpaved privately-owned airstrips have opened around Mogadishu to compensate. The overall number of airports/airstrips in Somalia is believed to exceed 60. With stability in Somaliland, the authorities have carried out some infrastructure rehabilitation at Hargeisa airport, including the construction of a departure terminal built with donor assistance. 46. Airport infrastructure is the most critical piece of infrastructure for trade with neighboring Kenya and Ethiopia. Without adequate airport infrastructure, it would not be possible to expedite high-value economic commodities for export and supply around Somalia. This means that the socio-economic consequences of potential high value commodities need consideration when selecting, rehabilitating and reconstructing airport infrastructure. 47. The Civil Aviation Caretaker Authority for Somalia (CACAS) was formed in 1996 to ensure the safety of air transport operations in the absence of a functioning government. CACAS is jointly managed by UNDP and ICAO. It operates from a facility in Nairobi, Kenya, and field stations in Somalia. The main objectives of CACAS are to: (i) to provide the safe operation and maintenance of essential facilities, equipment and services for all air transport operations in

Somalia; and (ii) to assist in the rehabilitation and development of aviation (airport and air navigation) infrastructure in Somalia. 48. Somaliland maintains its own civil aviation ministry responsible for the management of day-to-day operations of Hargeisa and other regional airports. Hargeisa airport may now be the busiest in the country (it had 1,750 landings, 5,600 passengers and 2,300 tons of cargo in 2002), and it has regular international flights to Kenya, Ethiopia and Dubai. Other major airports in Somaliland include Berbera (with a 4,140 meter paved runway that is by far the longest runway in Somalia) which can accommodate any wide-body plane, but, despite its good condition, it is hardly used as it is not convenient to any major population. 49. The high economic value of airports has made them a major source of conflict in Somalia, as warlords through their control of airports can extort large amounts of revenue through landing fees and import taxes, including on khat. The secure opening of any major airport to international traffic will therefore depend on a comprehensive political settlement between the various factions competing over its control. The owners of Mogadishus three private secondary airports have an obvious interest in keeping Mogadishu airport closed and would need to be consulted and perhaps compensated if the main airport were to be reopened. Moreover, the capabilities of local contractors to undertake airport rehabilitation work are yet to be tested. Developing the technical and managerial capacities of local contractors is essential to allow the preliminary rehabilitation works to start on some of the airport infrastructure. Overall, a priority actions will be the need to confirm the inventory of existing airports, their number, condition and needs, as data are poor. 50. Implementing any improvements to airport and air navigation infrastructure will require policy coordination and support. This should build on the strengths of the working institutional arrangements in Somaliland and Puntland. In addition, CACAS could play an important coordination and management role in continuing to assist Somalias needs to meet the requirements for international passenger and air cargo services with neighboring countries and the outside world. All interventions regarding air transport in general would need to be made under the overall oversight, management and policy framework of the ICAO. 51. Short- and medium-term plans: In light of the low traffic volumes, long preparation times (at least 18 months) required for survey and design, contract processing and award, and also the lack of capacity to implement airport reconstruction, the short-term focus should be to rehabilitate basic airport infrastructure at Hargeisa, Garowe, Mogadishu and Kismayo. As in the case of road works, a significant portion of investments in the first two years will be required to develop institutional capacity, with most capacity building efforts running concurrently with actual physical improvements of the basic transport infrastructure. In the medium-term work would seek to complete feasibility and engineering design studies and implement major road rehabilitation and reconstruction, along with institutional development and capacity building. Among the activities to be completed could be resurfacing the Hargeisa runway and rehabilitating other airports. (C) Ports and Shipping

52. Somalia has over 3,000 km of coastline, but only four major ports, at Mogadishu, Kismayo, Berbera and Bosasso. Two others, Merca and Las Qorey, are essentially jetties. Each of the major ports is a deepwater facility. In 1988, Mogadishu was the largest and handled about 817,000 tons of cargo, representing 73% of export/import traffic, while Berbera handled 20% (of which 94% was livestock export) and Kismayo 4% (of which 75% was export of bananas). Mogasdishu and Kismayo have ceased regular operations for the last 20 years. Most of the cargo for Mogadishu and environs has now shifted to a privately-owned natural small deep-water port in El maan, north of Mogadishu. The relative security in the north has made the ports of Berbera and Bosasso the main focus of maritime activity in Somalia, with Berbera port (which was rehabilitated and modernized with EU assistance) potentially serving as an alternative port for the Ethiopian hinterland.

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53. The development of coastal shipping has been limited mainly because there has been little inter-regional trade suitable for such shipping. Individual operators with small boats of up to 300 dwt carry some passenger and freight traffic along the northern coast between Seyla and Bereda. The development of commercial fishing could stimulate coastal shipping, though increased piracy along the Gulf coast has seriously disrupted commercial shipping. 54. In 1989, the Ministry of Fisheries and Marine Transport (MFMT) through the Somali Port Authority (SPA), was responsible for port operations, and, through the Somali Shipping Agency and Line (SSAL), was responsible for marine transport. Until 1990, the ports were managed by the Somali Ports Authority (SPA). Berbera Port Authority now manages the Berbera port and requires institutional strengthening. Diverting some of Ethiopias imports from other regional ports to Berbera will have a tremendous economic benefit for Somaliland and Ethiopia and in the long term will contribute to regional stability and dialogue. Estimates are that Berbera at present could handle up to 300,000 mt of cargo per year. To this end, the Berbera Corridor Board was established in 2005 to develop, manage and coordinate activities related to the use of the Berbera Port by the Ethiopian business community. The Port is also a viable transit hub for responding to humanitarian needs throughout the Horn of Africa. The location of the port along the Red Sea, its proximity to Ethiopia and the fact there is an all weather road network from Berbera to Ethiopia, makes it possible for cross-border transit activities to increase dramatically in a few years. 55. Implementing any improvements to the ports sub-sector along with the development of coastal shipping requires policy coordination and support from TFGs ministerial setup, under a Ministry of Transport, or the equivalent of the Ministry of Fisheries and Marine Transport (MFMT) that previously existed. These arrangements should build on the strengths of the working ports authorities in Somaliland and Puntland. In addition, all international issues relating to ports operations and shipping need addressing within the framework of the International Maritime Organization (IMO). 56. Short- and medium-term plans: In the short term, investments in improving Berberas operations equipment (e.g., by acquiring a mobile crane) and training its personnel could reap strong returns; in the medium term, action will be required to dredge the navigation channel, which is increasingly affected by wind-blown siltation. The rehabilitation of the ports of Mogadishu and Kismayo would be possible only once those facilities were firmly in the hands of a legitimate government. ENERGY GENERATION, TRANSMISSION AND DISTRIBUTION 57. Modern energy accounts for about 2% of the total energy use in Somalia, and is used mainly for the residential, commercial and industrial sectors, as well as to run most borehole pumps. Somalia primarily uses charcoal and firewood as the main source of domestic energy: 87% of the countrys energy consumption is estimated to be biomass fuel and 11% petroleum products (excluding diesel fuel used to generate electricity). Most electricity in urban and rural areas is derived from diesel generators owned and run by private enterprises or NGOs. For some private generators, the primary objective is to supply their own premises (telephone companies, hotels, small industry, etc.) and the spare capacity is sold over a very rudimentary isolated network to supply consumers in the immediate locality. 58. Other potential sources of energy in Somalia are solar, wind, coal and hydroelectricity. These are mostly untapped. In Siad Barres time, a major hydroelectric scheme at Bardhere was planned, but its construction came to a halt in 1989, in part due to serious environmental concerns (since it would put tracts of land under water and possibly change the fragile balance of the ecosystem around the Juba River). 59. The TFG, Somaliland and Puntland have energy directorates or authorities. They form the focal point for data collection and policy setting and need empowerment to implement the policies. Government electricity supply agencies or authorities operate in regional centers of Somaliland and Puntland. These agencies operate existing publicly-owned power plants and/or

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distribution networks. Puntland Electric Energy Authority, which owns the Bosasso, Ghardo and Garowe power stations, around 2005-6 signed a private enterprise to manage the power stations and distribution network. It is not know whether the terms of the agreement were finalized and implemented. While private companies can provide electricity at the local level, there is no legal framework, and even the authority of the local government agencies is weak to enforce basic standards or safety criteria. When connecting customers to private generators, private connection is provided without any legal basis for quality, reliability and safety; the private operators collect revenue from their customers and a percentage is paid to the authorities as a concession and for use of the streets to install overhead lines. 60. The energy portfolio covers several ministries, both at the TFG level and the regional government levels. A federal National Energy Authority should be given the overall responsibility for managing the short-term and medium-term reconstruction and development program. Implementation will be best achieved if the responsibility is devolved at the regional level. 61. Electricity generation: It is difficult to estimate the total installed generation capacity because of the existence of private unregistered generation. Somaliland is believed to have about 5,750 kW of installed generation owned by the Somaliland Electricity Agency; Puntland about 910 kW owned by the Nugal Electricity Cooperative (in Garowe) and 2,100 kW owned by SomaliTech (in Bosasso and Gardho). Installed capacity in south-central Somalia is unknown. In 1988, the GoS reported that the total installed capacity in Somalia was 55,300 kW, of which 38,000 kW (69%) was in Mogadishu. In any case, actual output is certainly well below installed capacity. Most of the generators that existed in the early 1990s have been either looted, damaged or had parts removed to replace in other machines, or are otherwise out-of-service due to lack of parts. Some generators have been replaced with second-hand generators by the local authorities. 62. Electricity transmission and distribution: There is no electrical grid in Somalia (a grid connects major load centers to more than one power source). Some 15kV transmission lines exist in major regional centers, transmitting power from a single power station to the load areas with step-down transformers 15kV/380V. Most of the distribution is over low voltage (380/220 volts) lines from a single generator source to the load area, with no interconnection of various generator sources. Thus, generators form a radial rather than an interconnected system, and they have low reliability, are costly, and are mostly under-utilized at the time of low loads and cannot share the loads at peak times. A large pool of generators could form a power station, which could be interconnected through a grid to other power stations, but to run a generator in parallel with other generators on the network, a synchronization facility is required on each generator. Running many generators in parallel requires a system stability study. 63. The 380V distribution networks are very rudimentary. Most of the distribution lines are built by stringing single core or twin PVC insulated cables on very thin poles that also carry communication wires. Generally, the distribution network is unsafe and underrated to provide a quality of supply. Consumers are connected by running a suitable/available wire from the point of attachment on the premises to the nearest pole in the street. In some instances, the connection is made to the neighbors point of attachment if a power pole is not in the vicinity. The consumer installation is frequently not tested and mostly does not have adequate earthling safety feature. Consumer connections made to the grid run by the government agency are more likely to be formally connected and recorded. 64. Short-term plans: Expanded electricity supply can be achieved relatively quickly, and would have a strong economic multiplier effect, acting as an immediate catalyst for commercial and industrial development and also improving the standard of living of a large part of the population relatively quickly. Work should focus on: Improving the electricity transmission and distribution network by planning a network and using the right cabling to reduce losses, add revenue to suppliers, and improve quality of supply; Expanding generation capacity by improving the state of the existing large power stations and interlinking and synchronizing existing generators in key regional centers and by

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studying the potential of re-commissioning the Fenola hydropower scheme (possibly under a lease agreement with a private company); and Expanding the numbers and skill levels of energy sector personnel, to cater for the expanded network and proper operation and maintenance of the system, including: o Engaging a planning team to develop area and regional plans for electricity infrastructure; o Establishing an independent installation inspectorate to ensure the quality and safety of energy generation, transmission, distribution and customer installation; o Establishing a regulatory body to oversee commercial arrangements, public tariffs and easement issues (inter alia).

65. The following are some indicative estimate costs for investments that have been compiled from past development partner feasibility studies: Table 2: Short-term (1-2 year) interventions in the energy sector in Somalia Development of transmission and distribution network
(locations: Mogadishu, Benadir; Kismayo, Lower Jubba; Garowe, Nugaal; Bosasso, Bari; Hargeisa, Woqooyi, Galbeed; Barbera; Galkaio, Mudug; Jowhar, Middle Shabelle; Baidoa, Bay; Beletweyne, Hiraan)

Units 15kV Line (km) 380/220 Line (km) 15kV/380V Transformers (units) Total cost 234 704 234

Unit cost ($/unit) 16,500 6,000 4,000

Total cost ($m) 3.9 4.2 0.9 9.0

Development of power stations

(locations: Mogadishu, Benadir; Kismayo, Lower Jubba; Garowe, Nugaal; Bosasso, Bari; Hargeisa, Woqooyi, Galbeed; Barbera; Galkaio, Mudug; Jowhar, Middle Shabelle; Baidoa, Bay; Beletweyne, Hiraan)

Unit cost ($m/unit) Total cost ($m) Generation units (MW) 70 1.5 105.0 Other priority interventions Training and skills development 7.0 Establishment of a planning team 2.5 Establishment of a regulatory body for public-private partnership 1.0 Establishment of Electrical Installation Inspectorate 1.0 Short-term priority interventions total cost 125.5 66. Medium-term plans: In the short-term the planning team should initiate studies on further improving network capacity and rationalizing electricity generation. This will require the preparation of detailed technical and preliminary engineering studies to prioritize investments in electricity generation and distribution. Inter-regional grids would be more economical in the southern parts of the country as the population density is higher in the area (in the north, population density is only 8 per sq. km while in the south it is 20). Three projects that could start in the medium term, after verification by the system study are: Interconnection of Jilib, Jamama, Kismayo and Fenola; Re-commissioning of the power plant in Fenola; and Initiation of studies of the possibility of developing the Bardhere Hydroelectric Scheme.

Units

67. Future investments should carefully assess the inclusion of other possible sources of energy such as wind and solar. All renewable sources of energy have good potential in Somalia. This will require an in-depth study of their viability and costs. Thus, the recommendation is for initiating technical studies immediately to enable these sources to be exploited in the medium term. The applications of solar energy include heating water with rooftop and electric power where grid energy is not. For wind, existing out-of-service wind turbines on the east coast could be rehabilitated, and wind pumps could prove to be the right energy source for borehole pumps in

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rural areas. Under an improved security situation, the assessment of Somalias oil and gasproducing potential should also be undertaken. 68. The following are some indicative estimate costs for investments that have been compiled from past development partner feasibility studies: Table 3: Medium-term (3.5 year) interventions in the energy sector in Somalia Development of transmission and distribution network
(locations as above)

Units 15kV Line (km) 380/220 Line (km) 15kV/380V Transformers (units) Total cost Units 115 350 115

Unit cost ($/unit) 16,500 6,000 4,000

Total cost ($m) 1.9 2.1 0.5 4.5

Development of power stations

(locations as above)

Unit cost ($m/unit) Total cost ($m) Generation units (MW) 50 1.5 Other priority interventions Interconnection of Mogadishu, Jowhar and Fenola Rural electrification Re-commissioning of Fenola power plant Commencement of the Bardhere Hydroelectric Scheme Realignment of regulatory body Short-term priority interventions total cost

75.0 16.5 15.5 3.0 4.5 1.5 120.0

WATER SUPPLY 69. Clean water is a critical resources in all urban areas in Somaliland, Puntland and southcentral Somalia, especially for the vulnerable groups (IDPs, urban poor, women-headed households, etc.). As of 2006, it was estimated that less than 30% of the total population in Somalia has access to a clean, sustainable water source, and even fewer has access to basic sanitation facilities. Most people in Somalia obtain water from natural resources such as boreholes and shallow wells, and the latter are often located within settlements, leading to poor quality of the water (due to pollution from surrounding latrines) and frequent outbreaks of waterrelated diseases such as cholera and diarrhea. Most urban water infrastructure is in urgent need of rehabilitation, as it is either damaged or has been poorly maintained. Only in Somaliland and Puntland have basic investments been made to improve water supply, mainly by the international community. 70. Prior to 1991, urban water supply in Somalia was managed by the public sector, but even before then, the water sector was facing financial difficulties and water supply systems in many cities were inadequate. For example, Mogadishu relied on German and Chinese Government assistance to maintain the water supply system. Since then, facing a mounting water supply crisis, both Somaliland and Puntland have attempted to re-organize the urban water sector and have established water agencies to manage water sector development. This has enabled the flow of some investments into basic water infrastructure expansion. Nonetheless, responsibilities between various water authorities in Somaliland and Puntland remain unclear and their power to enforce decisions and control activities is often non-existent. In south-central Somalia, there are no welldefined local or central government institutional structures to develop and maintain water supply systems. Private companies have developed functional services in some cities in the region. 71. The current water supply situation in Somaliland is inadequate due to a variety of factors including an arid climate. As of 2006, it was estimated that 45% of the urban population is served by either piped water or water kiosks/trucks, while 45% of rural people use water catchments; and

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that the water requirement of Hargeisa city was then between 12,000-20,000m3 per day (depending on the source of the information), while the output capacity was only 6,000-8,000m3. At the time, four companies were treating public water supplied through piped connection and are selling and even exporting it as mineral water. In Hargeisa, the water charge was $1.20/m3 for private customers with piped connection; $4/m3 for donkey cart deliverers and $10/m3 for water kiosks and trucks. Responsibility for urban water supply as shared between various ministries and agencies, with the president of Somaliland appointing the general managers of Hargeisa, Berbera and Burao. At the time, all major cities in Somaliland had their own water authorities, which were semi-autonomous and self-accounting. A National Water Policy for Somaliland had been approved by the Council of Ministers in 2003 and a Water Act and Regulation were completed in 2005. There was also some good PPP practices in urban water infrastructure, particularly in Boroma, which provided a model that could be applied to other cities in Somaliland and beyond. 72. Like Somaliland, Puntland suffers from major water shortages. Safe drinking water shortage is a recurring problem throughout Puntland. For example, in Bosasso 60% of the population gets water from approximately 500 shallow wells within the urban area with questionable water quality, and only about 40 % is served by the water supply network (as of 2006). Basic water sector institutions, division of responsibilities and regulations exist in Puntland. The main body is the Puntland State Agency for Water, Energy and Natural Resources (PSAWEN). Ministries and the private sector are also involved in the urban water supply. 73. In light of the continuing strife in large parts of south-central Somalia, there has been very little investment in rehabilitating and developing water supply infrastructure, although the international community carried out projects to rehabilitate or develop fundamental urban water supply infrastructures (drilling of boreholes, mini water supply systems) in relatively safe urban areas. The absence of a functioning central and local government structures further complicated the investment in the water sector management. The private sector plays a significant role in the urban water supply. At the central government level, the TFG has established a Ministry of Water and Natural Resources, but no agencies or urban water legislations appear to exist. That said, good PPP practices exist in some urban areas, e.g., the Farjanno water company in Jowhar. 74. The provision of water supply in Mogadishu in 2006 was dominated by default by the private sector. At the time, about 400-500 private water supply companies operated in and around Mogadishu without central or municipal government regulation. Water quality varied between vendors from good to unacceptable/toxic. Existing private sector structures in the water supply in Mogadishu give a basis for the system expansion based on best local practices, while the emerging municipal water institutions should focus on the development of regulatory and planning frameworks for the capital region. 75. Short-and medium-term plans: In the short term, these would include: completing a geo-hydrological survey of water in Somaliland and Puntland; investing in additional urban water infrastructure (boreholes and pipelines) in cities with good municipal water sector management (Hargeisa, Boroma, Burao, Erigavo, Bosasso, Gardho, Galkayo); establishing a multisectoral water and sanitation committee for each regional capital to coordinate the water sector regulatory framework and water service development, and build committee capacities; supporting the creation of public-private partnerships and private utilities for municipal water supply; and developing a national water policy (and further develop and enforce the Somaliland Water Policy) and municipal revenue collection policy, clarifying the role of the TFG. In the medium term, the rehabilitation and extension of urban water supply could be significantly scaled up. 76. Investments in the urban water sector will face numerous challenges ranging from a lack of capacity in parts of the country, and overall funding constraints. Furthermore, the strong presence of the private sector in the provision of water supply will require careful management to avoid exacerbating local tensions. To this end, the various public and private parties currently involved in water supply should retain ownership in the development projects and their management during implementation to ensure local capacity developmentwithin a clearly

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defined regulatory framework. In addition, rehabilitation projects in Somaliland and Puntland should take place under existing ministerial and public agency oversight. In the medium term, the TFG can lay the foundation for water sector institutions and prepare legislations at the federal level. Technical implementation of all the urban water development projects should be undertaken by international organizations with experience and knowledge of the current water situation in Somalia.

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