AFRICAN DEVELOPMENT FUND

LESOTHO
KHAMANE OXBOW ROAD PROJECT
PROJECT COMPLETION REPORT

COUNTRY DEPARTMENT
SOUTH REGION

OCDS
JULY 1998

TABLE OF CONTENTS

Executive Summary
Project Basic Data
Project Log-frame

Page
ii - iii
iv - vi
vii

1.

INTRODUCTION

2.

PROJECT OBJECTIVE AND FORMULATION

2.1
2.2

2
2

3.

4.

5.

Project Objectives
Project Components and Design

PROJECT EXECUTION

3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9

2
2
3
3
4
4
5
6
6

Effectiveness and Start-up

Modifications
Implementation Schedule
Procurement
Reporting
Project Costs and Financing Sources
Disbursements
Performance of the Contractor and Consultant
Performance of the Executing Agency

PROJECT PERFORMANCE

4.1
4.2
4.3
4.4
4.5

7
7
8
9
9

Overall Assessment
Operating Performance Results
Management and organisation Effectiveness
Staff Recruitment, Training and Development
Economic Performance

SOCIAL AND ENVIRONMENTAL RESULTS

11

5.1
5.2

11
11

Social Impact
Environmental Impact

6.

SUSTAINBILITY

11

7.

PERFORMANCE OF THE BANK AND THE BORROWER

12

7.1 Performance of the Bank

7.2 Performance of the Borrower

12
12

8.

CONCLUSIONS AND LESSONS AND RECOMMENDATIONS

13

8.1 Conclusions
8.2 Lessons learnt
8.3 Recommendations

13
13
14

LIST OF ANNEXES
Annex No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Title

No. of Pages

Projects Financed by the Bank Group in Transport Sector

Project Location Map
List of Documents Consulted
Loan Conditions
Implementation Schedule Appraisal versus Actual
Details of Disbursements
Performance Rating Scale
Organisation Chart of Roads Branch, Ministry of Works
Vehicle Operating Costs and Updated Traffic Forecast
Re-calculation of Economic Internal Rate of Return

1
1
1
1
1
1
1
1
1
1

_________________________________________________________________
This report was prepared by Messrs. K.S.H.Rao, Transport Economist (ext.4379) and
S.B.Turay, Transport Engineer (ext.5979), OCDS.4 following their mission to Lesotho
from 27th April 12th May 1998.
The Division Manager in charge is: Mr. G.Giorgis, Manager, OCDS.4 (ext.4121).

i
CURRENCY EQUIVALENTS
1UA
1UA
1UA

=
=
=

2.71293 Maloti
2.61434 Maloti
3.79831 Maloti

4th Quarter 1985 (Appraisal)

3rd Quarter 1987 (Commencement of Works)
3rd Quarter 1991 (Completion of Works)

WEIGHTS AND MEASURES

1 metric ton (t)
1 kilogram (kg)
1 metre (m)
1 foot (ft)
1 kilometre (km)
1 mile
1 square km (km2)
1 hectare (ha)
FINANCIAL YEAR

=
=
=
=
=
=
=
=
:

2,205 lbs
2.205 lbs
3.281 ft
0.305 m
0.621 mile
1.609 km
0.386 square mile
0.01 km2

1st April 31st March

ABBREVIATIONS

AB
ADB
ADF
ADT
BADEA
CRE
CWS
DCF
EIRR
GDP
GOL
ICB
IDA
LCU
LNTS
MHA
MOF
MOTC
MOW
OPEC
PIA
PMMS
RB
RF
RRMP
VOC
VPD

=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=

Architect Branch
African Development Bank
African Development Fund
Average Daily Traffic
Arab Bank for Economic Development in Africa
Chief Roads Engineer
Civil Works Section
Discounted Cash Flow
Economic Internal Rate of Return
Gross Domestic Product
Government of Lesotho
International Competitive Bidding
International Development Association
Labour Construction Unit
Lesotho National Transport Study
Ministry of Home Affairs
Ministry of Finance
Ministry of Transport, Posts and Communications
Ministry of Works
Organisation of Petroleum Exporting Countries
Project Influence Area
Pavement Maintenance and Management System
Roads Branch
Road Fund
Road Rehabilitation and Maintenance Project
Vehicle Operating Cost
Vehicles per Day

ii
LESOTHO
Project Completion Report Khamane-Oxbow Road project
Executive Summary
1.
The main objective of the Khamane-Oxbow Road Project was to upgrade the
existing gravel road to bitumen standard with a view to providing a safe, faster and
all-weather road from one end of the foothills (i.e. Khamane) to the other end (i.e.
Oxbow) through the Moteng Pass. The project was jointly financed by the African
Development Bank and the Government of Lesotho (GOL). The project consisted of:
a) civil works for upgrading the existing two lane gravel surface road from Khamane
to Oxbow (22 km) to bitumen standard with 5.5 metre wide carriageway and 1.25
metre shoulders on each side including drainage structures and ancillary works; and b)
consultancy services for the supervision of construction works.
2.
The substantial completion for the project was achieved in July 1990, about 17
months behind the appraisal schedule. All environmental protection measures were
undertaken during the implementation of the project. Major delay (about 11 months)
occurred during construction which was mainly attributable to: i) disorganised and
slow mobilisation of the contractor, ii) adverse weather conditions and iii) adoption of
modified pavement design.
3.
At appraisal, the total cost of the project (net of taxes) was estimated at UA
7.139 million, of which ADF was to contribute UA 6.42 million (90%) and the
balance UA 0.719 million (10%) from the GOL. The actual cost of the project at
completion including estimated payments for contractors unresolved claims, was UA
8.661 million, which exceeded the appraisal estimate by about 20%. Of the actual
cost, ADF contribution was 65% and that GOL was 35%. One major reason for the
change in the funding proportions was cancellation of loan balance of UA 0.82
million before the contractors claims could be resolved. In fact, even at the time of
PCR the claims issue is still to be settled. Before resorting to the extreme measure of
cancelling the loan balance, the Bank took all possible steps to facilitate claims
settlement.
4.
The procurement of supervision consultant and contractor was as per the
Banks rules and procedures. Submission of monthly and quarterly progress reports
was regular.
5.
The only deviation from the original project formulation i.e. adoption of
modified pavement design, was found to be appropriate. Taking into account factors
such as time and cost, compliance with contract conditions, adequacy of supervision
and reporting, the overall project performance has been assessed as satisfactory on a
rating scale ranging from highly satisfactory to highly unsatisfactory. While the
performances of the borrower, executing agency, contractor and the Bank have been
rated satisfactory, that of the supervision consultant was found to be unsatisfactory.
6.
The Khamane-Oxbow road section, as a whole, has behaved reasonably well
without major problems even 7 years after completion of works. Annual road
maintenance operations are being undertaken on a regular basis since the road is
opened to traffic. The actual traffic materialisation was, however, about 20% of the

iii
appraisal expectations. The appraisal estimates turned out to be too optimistic. Main
reasons underlying such a low traffic materialisation are: a) observed traffic growth
of 4% per year was much below the projected rates of 7% and 10% and b) the
developments anticipated in the project influence area have not fully materialised.
7.
Taking into account the actual project costs and revised project benefits in line
with the updated traffic forecasts, the economic internal rate of return (EIRR) for the
project has been worked out as 6.20%, which is much lower than the appraisal EIRR
of 16.97%. This situation is mainly attributable to rather highly optimistic traffic
growth scenario envisaged at appraisal. In other words, the investment is not justified
based on the quantifiable economic benefits. Notwithstanding this, the developmental
nature and social desirability of the project need not be overemphasised. Further, the
traffic level is expected to increase when the contiguous Oxbow-Mokhotlong road is
fully open to traffic. In such a case, the present EIRR of 6.20% is likely to improve.
8.

Lessons learnt from the project execution are as under:

The original pavement design was not suitable for the roads, like the
project road, traversing the mountainous region where wet conditions are
prevalent due to heavy rainfall and snowfall. This is also evident from the
on-going Oxbow-Mokhotlong Road project. The key lesson emanating this
is that for future projects care should be taken by the consultant to
formulate pavement design taking into account the physical features and
specific requirements of the project area.

A major problem encountered along the project road is unstable cut slopes,
particularly along the Moteng Pass. This has resulted in constant slips and
rock falls. Although a permanent maintenance crew is in place at the
foothills of the pass to clear the rock falls; it is recommended that a study
be undertaken by the Government of Lesotho to find a way of stabilising
the slopes. This experience would be useful for future projects in similar
mountainous areas.

The appraisal traffic forecasts turned out to be too optimistic in terms of

base year traffic estimates as well as growth rates. In fact, the level of
actual traffic on the project road is about 20% of the appraisal estimate.
This low level of traffic materialisation brought down the appraisal EIRR
from 16.97% to 6.20%. To obviate such a situation, the appraisal mission
should undertake a comprehensive review of the existing and anticipated
traffic levels and prepare traffic projections under three scenarios viz.
pessimistic, moderate and optimistic. The project appraisal should,
however, be based on moderate traffic scenario.

iv

BASIC PROJECT DATA

1.
2.
3.
4.
5.
6.

Country
Project
Loan number
Borrower
Beneficiary
Executing Agency

:
:
:
:
:
:

A.

Loan details

1.
2.
3.
4.
5.
6.
7.
8.
9.

ADF Loan Amount(UA)

Interest Rate
Service Charge
Repayment Period
Grace Period
Loan Negotiation Date
Loan Approval Date
Loan Signature Date
Date of Entry into Force

B.

Project Data
1. Project Cost

:
:
:
:
:
:
:
:
:

Item of Cost
Foreign Exchange Component
Local Cost Component
Total Cost

Lesotho
Khamane-Oxbow Road Project
CS/LES/TR/86/18
Government of Lesotho
Government of Lesotho
Ministry of Works, Roads Branch
Appraisal

Actual

6.42 million
Nil
0.75%
40 years
10 years
March 1986
April 1986
July 1986
August 1986

5.60 million
Nil
0.75%
40 years
10 years
April 1986
18-06-1986
16-07-1986
07-04-1987

UA in million
Appraisal Estimate
5.711
1.428
7.139

Actual
5.600
3.061
8.661

2. Source of Finance
Source of
Finance
ADF
GOL
Total

3.
4.
5.
6.
C.

UA in million
F.E.
5.711
5.711

Appraisal Estimate
L.C.
Total
0.714
6.425
0.714
0.714
1.428
7.139

%
90
10
100

Effective Date of First Disbursement :

Effective date of Last Disbursement :
Commencement of Project
:
Completion of Project
:

Actual
L.C.
Total
5.600
3.061
3.061
3.061
8.661

F.E.
5.600
5.600

Appraisal
30-06-1987
31-12-1991
Feb.1987
Feb.1989

%
65
35
100

Actual
25-06-1987
31-12-1994
15-08-1987
09-07-1990

Performance Indicators:
1.
2.

Cost Overrun
Time Overrun
Slippage on Effectiveness (%)
Slippage on Completion Date (%)
Slippage on Last Disbursement (%)
Number of Extensions of Loan Validity Period

:
:
:
:
:
:

UA 1.522 million
17 months
30%
46%
39%
One, by 30 months

3.

Project Implementation Status

4.

List of Verifiable Indicators and Levels of Achievement

Evaluation Criterion
1.
2.
3.
4.
5.

Time Overrun
Cost Overrun
Adherence to Contractual Conditions
Adequacy of Supervision and Reports
Operational Performance
Total Score

Implementation Performance
Institutional Performance
Contractors Performance
Consultants performance

D.

1.Identification
2.Preparation
3.Appraisal
4.Follow up/Launching
6.Supervision (3)
7.PCR/Supervision

E.

12 5 = 2.4 (Satisfactory)
Satisfactory
Satisfactory
Not satisfactory

:
:
:
:

:
:

16.97%
6.20%

Number of
Persons

Composition

Mandays

n/a
n/a
2
1
1
2

n/a
n/a
Tpt. Economist and Civil Engineer
Loans Officer
Transport Engineer
Tpt. Economist and Tpt. Engineer

n/a
n/a
28
15
42
30

ADF Loan Bank Disbursements (UA Million)

Item/Year
1987
1988
1989
1990
1991
1992
1993
1994
Total Disbursed
Undisbursed Balance
Amount Cancelled

F.

Score
Maximum
Actual
4
2
4
3
4
3
4
1
4
3
20
12

5. Economic Internal Rate of Return (EIRR)

Appraisal
Actual
Missions
Type

Completed

Appraisal Estimate
3.109
3.109
0.207

6.425

Contractor
1.
Name
:
2.
Date of Signature of Contract :
3.
Responsibility
:
4.
Date of Commencement
:

Actual
0.537
1.678
0.879
2.114
0.337
0.012
0.000
0.043
5.600
0.825
0.825

%
17.20
53.75
418.57

87.16

Stirling Intl./Skanska (Joint venture)

29-07-1987
Execution of Construction Works
15-08-1987

vi
5.
6.
7.

Date of Completion
Duration of Contract
Amount of Contract

:
:
:

09-07-1990
35 months
M 17,591,735 (including a provision of M
2,000,000 for settling contractors claims)

G.

Consultants
1.
Name
:
2.
Date of Signature of Contract :
3.
Contract Description
:
4.
Date Contract Terminated
:
5.
Contract Duration
:
6.
Contract Amount
:

Roughton & Partners (UK)

27-04-1987
Pre-contract & Supervision Services
Dec. 1991
56 months
M 366,415 and 398,793

vii

LESOTHO: Khamane-Oxbow Road Project - Retrospective MPDE Matrix

PCR Team: K.S.H. Rao / S.B.Turay, OCDS.4
Narrative Summary (NS)

Verifiable Indicators (VI)

Means of Verification
(MOV)

Goal:

Important
Assumptions
(Goal to Supergoal)

1. To improve the road network in the

major industrial and commercial centres
in western low lands and to provide
adequate road links to and in the eastern
mountains to stimulate further economic
development in the former and to fully
exploit the potential of the latter.

1.1 Increase in the total length of

rehabilitated/ bituminized rural roads in
the country.

1.1 Annual
road
construction
statistics from Roads Branch, MOW.
1.2 Annual traffic data.

1.2 Overall growth in traffic.

1.3 National Income Statistics
1.3 Improved socio-economic welfare
in the project area.
(Project
Goal)

Project Objective:
1. To upgrade the existing gravel road
between Khamane and Oxbow to
bitumen standard in order to provide
safer and less costly transport services.

1.1 Reduction in VOC when the road

was open to traffic in 1990.
1.2 Growth in traffic
1.3 Maintenance Budgets.

1.1 Updated EIRR indicates a rate of

6.20.%.
1.2 Traffic: ADT in 1991 was 71;
18% of appraisal estimate

1.1 Actual length of completed road.

1.1 Progress Reports from the

Borrower and ADB supervision
missions.

Outputs:
1. Completely rehabilitated road
between Khamane and Oxbow (22km)

1.2 Project Completion Reports

(PCR).

Activities/Components:

Inputs/ Resources:

consultancy
review and

1.2 Procurement of contractor

carrying out road upgrading works.

for

1.3
Actual upgrading of the project
road.

Category
F.E L.C.
Works
4.13 0.77
Supervision 0.25 0.05
Contingency 1.33 0.61
Total
5.71 1.43

Objective

Total
4.90
0.30
1.94
7. 14

1.1 Project completed with

cost over run (UA 1.51
million) and time over run
(17 months. Further, claims
dispute with contractor to be
resolved.
1.2 Budget for the project
and maintenance provided.

Appraisal Financing Plan

(UA million)
Source
F.E. L.C. Total
ADF
5.71
0.71 6.42
GOL
0.72
0.72
Total
5.71 1.43
7.14

Actual Project Costs

(UA million)
Category
Works
Supervision
Total

F.E L.C.
5.11 2.95
0.49 0.11
5.60 3.06

Total
8.06
0.60
8.66

to

1.1 Ability of GOL to

provide adequate financial
resources for carrying out
maintenance
works
effectively.
1.2 Availability of technical
and managerial staff.
(Output
to
Project
Objective)

(Activity to Output)

Appraisal Cost Estimates

(UA million)
1.1 Procurement
of
services for design
supervision.

1.1 Adequate Government

Commitment.

Loan balance of UA 0.82

million cancelled.

Actual Financing Plan

(UA million)
Source
F.E. L.C. Total
ADF
5.60
5.60
GOL
3.06
3.06
Total
5.60 3.06
8.66

Note: Any inconsistencies in the above matrix may be explained by the fact that the original project design was not based on the MPDE
Matrix approach, and the matrix has been formulated in retrospect.

1
1.

INTRODUCTION

1.1
The Kingdom of Lesotho is a landlocked country surrounded by the Republic
of South Africa (RSA). The land area of the country is about 30,350 km2. The eastern part of
the country is largely mountainous comprising about 75% of the total land area where peaks
can be as high as 3,480 metres above the sea level. Lesotho has a temperate type of climate.
Snowfall occurs in some of the high mountains during winter. Rainfall is fairly well
distributed through out the country, most of it during the summer i.e. from October to April.
1.2
Of the countrys total estimated population of 1.9 million (1996 estimate), nearly 70%
live in the lowlands around Maseru, the capital city. The major constituents of Lesothos
national income basket are agriculture, light manufacturing and remittances from Basotho
workers in South Africa; the share of these remittance in the domestic income being as high
as 45%. In recent years, the Gross Domestic Product (GDP) has registered an impressive
average growth of 13.5% per year.
1.3
In the decade that followed Lesothos independence in 1965, the major thrust of the
Governments transport strategy was on providing adequate road network linking the main
population and production centres situated along the north-south lowland corridor on the
western border. Besides continuing with this policy, the Government of Lesotho (GOL)
began to extend the road network to eastern mountainous areas with a view to fully develop
its economic potential as well as to facilitate its social and political integration with the rest of
the country.
1.4 Since the first loan approved in 1975, the Banks total commitments in the transport
sector in Lesotho have aggregated to UA 77.12 million, spanning over twelve operations
comprising ten projects and two studies (Annex 1). Except for Oxbow-Mokhotlong Road
construction and the Institutional Support to the Transport Sector, all the other operations
have been completed. The Oxbow-Mokhotlong road project is being co-financed with Kuwait
Fund, BADEA and OPEC fund.
1.5 This project was identified in the Lesotho Transportation Study, 1980, as a section of the
Leribe-Khamane-Mokhotlong Road and was recommended for construction in three phases.
The first two phases, financed by African Development Bank (ADB) covered the
construction to bitumen standard of Leribe-Butha Buthe-Joels Drift-Khamane sections.
These have been successfully completed. The Khamane-Oxbow road formed the third phase.
1.6
The Khamane-Oxbow Road forms a vital link in the northern perimeter trunk road
connecting Maseru, the capital city, with Mokhotlong in the east. The current project extends
the countrys primary northern trunk road network to Oxbow beyond Moteng Pass, by far the
most hazardous section of the road network in the country. Though the project road falls in
Butha Buthe district, its area of influence extends much beyond up to Mokhotlong as shown
in Annex 2.
1.7 Based on the recommendations of the economic viability and detailed engineering studies
financed by the ADB under technical assistance fund (T.A.F), the GOL approached the Bank
for assistance to implement the project. Subsequent to the Banks appraisal in January 1986
and loan negotiations with the Government of Lesotho in April 1986, an African
Development Fund (ADF) loan of UA 6.42 million was approved in June 1986.

2
1.8
This Project Completion Report (PCR) is based on the data and information collected
by a mission which visited Lesotho in April-May 1998. The sources of information and
documents referred are listed in Annex 3.
2.

PROJECT OBJECTIVE AND FORMULATION

2.1

Project Objective

The objective of the sector was to improve and upgrade the primary road network that
traverses the extremely difficult terrain regions of the north-eastern part of the country. The
objective of the present project was to upgrade Khamane-Oxbow road section to bitumen
standard to provide safe, serviceable all weather access from one end of the foothills (i.e.
Khamane) to the other end (i.e. Oxbow) through the Moteng Pass section.
2.2

Project Components and Design

The project as designed and implemented consisted of: a) upgrading of the existing
two lane gravel surface road from Khamane to Oxbow, a distance of about 22 km to bitumen
standard with 5.5 metre wide carriageway and 1.25 metre shoulders on each side including
drainage structures and ancillary works through the Moteng Pass; and b) consultancy services
for the supervision of construction works.
3.

PROJECT EXECUTION
3.1

Effectiveness and Start-up

After approval of the loan in June 1986, it took nearly nine months for the GOL to
fulfil all the five conditions precedent to entry into force and the loan was declared effective
in April 1987. These conditions are given in Annex 4. The main reason for the delay was
slow communications between the concerned ministries of the GOL, which, as per the
executing agency, was difficult to improve.
3.2

Modifications

3.2.1 Though there was no change in the project scope per se, the project design, especially
the pavement design, had to be changed during implementation for most part of the road
section due to practical constraints. The design in the appraisal report specified two types of
pavement: Type A consists of selected sub-grade (SSG), natural gravel stone sub-base and
crushed stone base course; and Type B consists of SSG, crushed stone sub-base and crushed
stone base course. The latter type pavement was designed for those areas where frost
penetration was expected to be the worst. However, due to incessant rainfall from km 4.00
up to the end of the project road the SSG and sub-base were replaced by a 500 mm crushed
stone blanket. The contractor suggested this change of design and the consultant accepted and
guaranteed its effectiveness and safety.
3.2.2 The changes outlined above are of technical nature and were effected through
variation orders in accordance with provisions existing in the contract. The main items that
contributed to the cost increase were: use of crushed stone blanket, claims for delays with
costs and failure to get suitable natural construction material within a reasonable free haul
distance.

3
3.3

Implementation Schedule

3.3.1 The project start up was six months behind the schedule as envisaged at appraisal.
This delay could not be made up during the procurement of supervision consultant and civil
works contractor. However, the major delay in the project implementation was during the
construction phase that spanned over 35 months compared to 24 months estimated at
appraisal. The one-year defect liability period was from July 1990 to July 1991. Major factors
that contributed to the delay during construction were:
a)

Prolonged consultations with the selected contractor and consultant

before the award of the contracts;

b)

Disorganised and slow mobilisation of the contractor;

c)

Adverse weather conditions (abnormal rainfall); and

d)

Adoption of modified pavement design.

3.3.2 The consultancy contract was for construction supervision and post contract services
covering rectification of defects during the maintenance period as well as preparation of final
accounts and reports. The consultancy contract ended in December 1991 compared to the
appraisal estimate of February 1990. The overall time overrun in the implementation of the
project was 17 months.
3.3.3 The appraisal and actual implementation schedules for the project are as under and
also depicted in Annex 5.
Activity

Appraisal Timing

Actual Timing

Consultant Appointed
Contractor Pre-qualified
Tenders Evaluated
Contract Awarded
Works Commenced
Works Completed
Maintenance Completed
Supervision Completed

September 1986
July 1986
December 1986
January 1987
February 1987
February 1989
February 1990
February 1990

April 1987
November 1987
April 1987
July 1987
August 1987
July 1990
July 1991
December 1991

3.3.4 The total time overrun of 17 months in the project implementation was made up of: 4
months at start-up/launching stage including procurement of supervision consultancy; 2
months during the tender evaluation/procurement approval process for the contractor; and 11
months during the actual construction phase.
3.4

Procurement

The goods and services required for the project were procured in accordance with the
Banks Rules. The works contract was procured on the basis of International Competitive
Bidding (ICB) following pre-qualification of contractors. The consultant was selected
through a short-list of selected firms, in accordance with the ADB/ADF Guidelines for the
use of Consultants. The contract award process for different components was as under:
i)
Construction Supervision Consultant: After short-listing, request for
proposal (RFP) was issued in June 1986. The responses to the proposals were
received from six firms in August 1986. These were evaluated in September
1986 and ADF approval obtained in December 1986. Negotiations were held

4
with the lowest evaluated bidder in January 1987 and contract awarded to the
lowest evaluated bidder, namely M/s Roughton & Partners in April 1987.
Though the contract was formally awarded in April 1987, the consultant
actually started working from January 1987 so as to enable the consultant to
perform pre-construction services.
ii)
Construction Contractor: Subsequent to pre-qualification, call for
tenders was issued in November 1986. Tenders were opened in February 1987
and evaluation report prepared in March 1987. After obtaining ADBs
approval in April 1987, the contract was awarded to the lowest evaluated
bidder, namely Stirling International/Skanska (Joint Venture) in July 1987.
3.5

Reporting

3.5.1 As required in the general conditions of the Loan Agreement, the GOL prepared and
submitted quarterly progress reports. Their content in terms of keeping the Bank continually
informed of the progress on the project was satisfactory.
3.5.2 The GOL has not submitted annual audit reports for this project. This has been a
common deficiency in the past affecting many Bank funded road projects in Lesotho. This
problem is being addressed by the inclusion of an audit component on new projects where
considered necessary.
3.6

Project Costs and Financing Sources

3.6.1 At appraisal, the total cost of the project (net of taxes) was estimated at UA 7.139
million. The project was financed by ADF and GOL. The actual cost of the project at
completion including estimated payments for contractors unresolved claims, was UA 8.661
million, which exceeded the appraisal estimate by about 20%. More specifically, the cost of
supervision consultancy has increased from the contract price of 289,803 and Maloti
236,869 to 398,793.05 and Maloti 366,415.42 at the time of completion. As against the
contract price of Maloti 12,995,000, the cost of civil works, depending on the settlement of
the contractors claims, would range between M 15,591,735 and M 17,591,735. Various
factors that contributed to the increase in project cost are listed in para 3.2.2.
3.6.2 As per the financing plan at appraisal, the ADF was to contribute UA 6.42 million
representing 90% of project cost consisting of 100% of the foreign exchange costs and 50%
of local currency costs. The GOL was to provide the balance funds constituting 10% of the
project cost or 50% of local costs. Of the actual project cost, ADF component was UA 5.60
million and the GOLs contribution was UA 3.061million, which included a cost overrun of
UA 1.522 million. As a result, the GOL funded 35% of the actual project cost as against the
appraisal estimate of 10%.
3.6.3 One major factor which contributed to this change in funding proportions was
cancellation of loan balance of UA 0.82 million before the contractors claims could be
resolved. Before resorting to the extreme measure of cancelling of loan balance, the Bank
took all possible steps to facilitate claims settlement. To this end, during August 1994 the
Bank extended the deadline for last disbursement from 16-07-1993 to 31-12-1995. Further,
the issue of cancellation of loan balance was discussed with the GOL during Lesotho Country
Portfolio Review meeting held on 08-12-1994. During this meeting, the GOL agreed to
submit the final claims by 31-03-1995 after which the outstanding balance would be

5
cancelled. The GOL, however, could not resolve the issue even by November 1995, in spite
of guidance and regular follow up from the Bank. In the light of the above, a 3-month
cancellation notice was issued to the GOL in November 1995 and the balance was cancelled
after the expiry of the notice period. Table 3.1 gives the project cost estimates as at appraisal
versus the actual. A comparison of actual financing and that anticipated at appraisal is
presented in Table 3.2. Actual disbursements by ADF and GOL are given in Annex 6.
Table 3.1: Summary of Project Costs (Appraisal vs. Actual)
(UA million)

1.
2.
3.

Category

F.E.

Construction
Supervision
Contingencies
Total

4.137
0.248
1.326
5.711

Appraisal Estimate
L.C.
Total
0.776
0.046
0.606
1.428

4.913
0.294
1.932
7.139

F.E.

Actual
L.C.

Total

5.105
0.495
5.600

2.948
0.113
3.061

8.053
0.608
8.661

Table 3.2: Sources of Finance (Appraisal vs. Actual)

(UA million)
Source

3.7

F.E.

Appraisal Estimate
L.C.
Total

1. ADF
2. GOL

5.711
-

0.714
0.714

6.425
0.714

Share
(%)
90
10

Total

5.711

1.428

7.139

100

Actual
Total

F.E.

L.C.

5.600
-

3.061

5.600
3.061

Share
(%)
65
35

5.600

3.061

8.661

100

Disbursements

The slippage in actual disbursement is broadly in line with the delay in project
implementation. The ADF loan amount, as at appraisal, was to be fully disbursed during 1987
1989. However, the actual disbursements were spread over eight years (1987 1994). A
comparison of anticipated and actual disbursements is presented in Table 3.3. Though the
actual disbursements are spread over 8 years, more than 80% was disbursed within the first
four years.
Table 3.3: Loan Disbursement Profile
Disbursement (UA million)

Year

As at Appraisal
Amount

1987
1988
1989
1990
1991
1992
1993
1994
Total

3.109
3.109
0.207

Cum.
%
48.39
96.78
100.00

6.425

100.00

Actual
Amount
Disbursed
0.537
1.727
0.830
2.114
0.337
0.012
0.043
5.600

Cum. % of Actual
Disbursement to
Net
Loan
9.59
40.43
55.25
93.00
99.02
99.23
99.23
100.00
100.00

Loan at
Appraisal
8.36
35.27
48.20
81.13
86.38
86.57
86.57
87.24
87.24

3.8

6
Performance of the Contractor and Consultant

Contractor
3.8.1 The performance of the contractor was satisfactory during the construction period.
However, due to abnormal weather conditions (i.e., heavy rainfall) which retarded progress of
the crucial phase of construction (i.e., bulk earthworks), completion of works was delayed by
about one year. Because of wet conditions that were initially encountered, the contractor
could not work on the selected sub-grade (SSG) material. An alternative design suggested by
the contractor and approved by the consultant was adopted (refer para 3.2.1). The contractor,
however, sought claims for the new design as well as the initial delays experienced with the
original design. The PCR mission inspected the road with the modified design and found it in
a reasonably good condition.
3.8.2 According to the Borrower and a visit by the Banks mission, the contractor
performed well on the project, and the quality of work met the requirements of the
specification. The road construction and the finished pavement were good and the road is still
in a good condition, seven years after construction. Contact between the contractor and the
executing agency i.e. Roads Branch (RB) of the Ministry of Works (MOW) was, however,
not that frequent except for monthly site meetings. Towards the end of project
implementation, the contractor and the RB adopted a confrontational attitude towards each
other on the resolution of outstanding claims which are yet to be resolved. On the whole, the
contractor can be judged as having performed the civil works satisfactorily.
Consultant
3.8.3 The consultant was responsible for pre-contract services and supervising the
construction works. His performance was not considered satisfactory due to the following
reasons. First, the consultant could not come up with an alternative design when heavy rains
caused a serious problem. The contractor instead came up with a solution and hence
submitted excessive claims to the project. Secondly, the specified variable cut slopes for the
project road proved to be too steep and this has led to a number of land-slips and rock falls,
which are prevalent even today. Clearing of fallen rocks and landslips is at present a major
maintenance effort on and around the Moteng Pass and has to be carried out frequently
during the rainy season.
3.8.4 The relationship between the consultant and the contractor left much to be desired and
could have been responsible for most of the claims brought up by the contractor. The project
not only attracted delays but also ended up with substantial claims, some of which could have
been amicably resolved or avoided during the life of the project. The consultants overall
performance can therefore be judged as unsatisfactory.
3.9

Performance of the Executing Agency

The RB as the Executing Agency (EA) was responsible for i) ensuring fulfilment of
loan conditions by the Government, ii) overseeing the implementation of the project, iii)
disbursement of funds for payment of contractor and consultant, iv) progress reporting to the
GOL and the Bank, and v) liaison with the Bank on technical issues concerning the project.
The performance of the EA in accomplishing the above tasks was satisfactory. This was
made possible because the EA assigned a senior engineer as the project co-ordinator.

7
Generally, timely submission for payment of certificates was made to the Bank through the
Ministry of Finance. At times, inadequate documentary evidence of expenditure caused
problems. Efforts were however made by the executing agency to minimise such delays. The
EAs relationship with the Bank, consultant and contractor was good.
4.

PROJECT PERFORMANCE
4.1

Overall Assessment

4.1.1 The project objective of upgrading the gravel road between Khamane and Oxbow to
bitumen standard was successfully achieved. Because of this improvement the once
formidable climb from Khamane to Oxbow through Moteng Pass is now relatively easy to
make. The gradients of this road are still one of the highest in the country. However, nothing
short of a tunnel could reduce these gradients any further. To show the success of this project,
three years after completion of this project, a contract for the construction of the road from
Oxbow to Mokhotlong was awarded. This contract is scheduled for completion towards the
middle of 1998. However, the road is already open to traffic. Travel time between Khamane
Oxbow Mokhotlong that used to be 5 hours is now reduced to 3 hours. A close inspection
of the road by the PCR mission revealed that the road is still in a very good condition after 7
years since construction. The road is now due for an overlay during the fiscal year 1998/99 in
order to further increase its design life. However, the actual realisation of the project benefits
will depend on the extent of traffic materialisation during the design life of the project (see
section 4.2).
4.1.2 Taking into consideration such factors as project start-up, implementation time, actual
cost, timely compliance with contractual conditions, adequacy and effectiveness of
supervision and reporting, the project implementation has been assessed as satisfactory, on a
rating scale ranging from highly satisfactory to highly unsatisfactory (Annex 7).
4.2

Operating Performance Results

4.2.1 The design as modified during the implementation phase so as to overcome the
adverse weather conditions, was able to meet the project objective of providing a safe, faster
and all weather bitumen road between Khamane and Oxbow. The actual traffic levels since
opening of the upgraded road in juxtaposition with the appraisal expectations are as under.
4.2.2 The Roads Branch of the Ministry of Works carries out bi-annual traffic counts for a
period of one week each time at about 100 selected locations. The traffic is normally divided
into five categories, namely light vehicles, mini-buses, buses, 2 axle trucks (MGV) and 3 axle
trucks (HGV). The project road was opened to traffic in 1990. The road forms a part of the
annual traffic counts by the RB. A comparison of the actual and projected traffic on the
project road is given in Table 4.1.

8
Table 4.1 Actual and Projected Traffic on the Project Road
(Vehicles/Day)
Year

Estimated at
Appraisal (1)

Actual*
(2)

(2) as a
percentage
of (1)

185
57
31
1985
200
48
24
1986
219
64
29
1988
328
150
46
1989
357
42
12
1990
389
71
18
1991
426
62
15
1992
469
53
11
1993
516
92
18
1994
564
141
25
1995
744
116
16
1998
* Details for 1987, 1996 and 1997 are not available
Source: Appraisal Report, March 1986, and Roads Branch Annual Traffic
Counts

4.2.3 All through the comparison period (1985 to 1998), the actual traffic was, on the
average, 20% of the appraisal projections; the range being 11% (1993) to 46% (1989). The
appraisal expectations turned out to be too optimistic. In fact, the estimated traffic levels as
per the consultants Economic Analysis Report (August 1985) were 57 vehicles per day (vpd)
in 1985 and expected to increase to 106 vpd in 1990; 210 vpd in 1995; 274 vpd in 2000 and
441 in 2005. These anticipations are more close to the actual traffic. The major difference
between the appraisal traffic estimates and the ones given in the consultants report is the
base year (1985) traffic figures. In the appraisal report, the base year traffic was taken as 185
vpd, whereas the consultants estimate was 57 vpd. While the consultants estimate was
based on 7-day traffic survey conducted in February 1985, the source of the appraisal
estimate is not clear. The base year traffic figure of 57 vpd seems realistic and is also
corroborated by the traffic estimates on the contiguous sections of Oxbow-Mokhotlong Road
(an ADF funded project approved in January 1988). Two more factors that contributed to
lower level of actual traffic on the project road could be: (a) the observed traffic growth was
much below the projected rates of 7% and 10% and (b) the developments anticipated in the
PIA have not fully materialised. Even though the actual traffic profile reveals an increasing
time trend - about 4% per year based on overall average annual increase - a definite growth
pattern is not discernible due to wide year-to-year fluctuations.
4.3

Management and Organisation Effectiveness

4.3.1 The Ministry of Works (MOW) through the Roads Branch was responsible for
implementation of the project. All the financial and budgetary matters related to the project
were handled by and through the accounts section of the Ministry of Works. The MOW has
four divisions: Architect Branch (AB), Roads Branch (RB), Labour Construction Unit (LCU)
and more recently Civil Works Section (CWS) that used to be under the Ministry of Home
Affairs (MHA).
4.3.2 The RB is headed by Chief Roads Engineer (CRE). The organisational structure of
both the implementing and the monitoring units has not changed radically from the time of
appraisal in 1986. The only change with MOW is that it has now taken over the CWS, which

9
is responsible for village feeder roads. The organisation chart for the Roads Branch, MOW is
attached as Annex 8.
4.3.3 One significant development that has taken place since the appraisal is the installation
of a Pavement Maintenance and Management System (PMMS) in RB. The PMMS is being
funded by International Development Association (IDA) and acts as a management and
planning tool for the upkeep of GOLs road network. The GOL has also signed an agreement
with the IDA under the Road Rehabilitation and Maintenance Project (RRMP). Under this
project, the GOL has set aside each year enough funds to achieve an acceptable level of
maintenance for the road network. The minimum amount of funding is determined through
the PMMS. This agreement runs up to 2003. Beyond this period, funding for road
maintenance will come from the Road Fund (RF) which has been recently commissioned
specifically for road maintenance and rehabilitation.
4.4

Staff Recruitment, Training and Development

In 1997, RB has an establishment for about 34 professional staff, of which 14

positions were not filled. In sub-professional category, there were 482 establishment posts of
which there were 18 vacancies. At present, the RB is strengthened through Technical
Assistance (TA) funded by donors. The ADF also provided two engineers under the on-going
Oxbow-Mokhotlong Road project approved in 1988. Various donors have financed
fellowships and in-country training at both the undergraduate and graduate levels. However,
many trained engineers eventually leave RB to join the private sector both in Lesotho and
South Africa. The loss of trained and qualified staff to the private sector will continue to
affect the sustainability of road projects until the outflow is restrained. In order to encourage
the training of Basotho personnel, a senior engineer from the office of the Chief Roads
Engineer was assigned to the project as a project co-ordinator.
4.5

Economic Performance

Overview
4.5.1 The project road is located in the north eastern part of Lesotho starting from Khamane
and running towards east to Oxbow a distance of 22 km, passing through a very difficult
section of Moteng Pass of approximately 10 km. The Khamane-Oxbow Road forms a vital
link in the northern perimeter trunk road that connects Maseru, the capital city, with
Mokhotlong in the east through the western agricultural lowlands and the main centres of
population of Leribe and Butha Buthe districts. Though the project road falls in Butha Buthe
district, its area of influence extends much beyond up to Mokhotlong.
Appraisal Expectations
4.5.2 The volume and composition of the traffic that is expected to patronise the improved
road during its economic life (i.e. 1989 to 2009) formed the basis for its economic
justification. Based on the traffic surveys and analysis carried out during 1985, the base year
traffic was estimated as 185 vehicles/day comprising 7.5 % cars, 54 % LGVs and 38.4 %
trucks & buses. Commencing from 1989 when the road was expected to be open to traffic,
the generated and diverted traffic components were estimated as 16 ADT and 71 ADT,
respectively.

10
4.5.3
Future traffic volumes that are likely to use the road during its economic life span
(1989 to 2009) were derived by applying annual growth rates of 7 % for cars and 10 % for
other vehicles. Further, the anticipated developments in the PIA like (i) Hydro-electric
scheme at Oxbow, (ii) Mining operations at Kao and at Latseng, and (iii) Tourism and
agricultural developments; were expected to generate additional traffic. Because of the
upgrading, some traffic was also assumed to divert to the project road. The economic cost of
the project comprised the cost of construction, supervision and physical contingencies as well
as maintenance cost. All these costs were considered net of taxes and price escalation. The
major quantifiable economic benefits for project were lower vehicle operating costs (VOC)
and travel time, avoidance of maintenance cost and salvage value of the initial investment.
4.5.4 The streams of economic costs and benefits spanning over the design life of 20 years
were calculated and the Economic Internal Rate of Return (EIRR) worked out using
Discounted Cash Flow (DCF) technique. This yielded an EIRR of 16.97% indicating that the
project was viable. Sensitivity analyses covering two variants viz. a) 25% increase in project
cost and b) 25% decline in project benefits indicated EIRR of 14% and 13% respectively.
With these rates, the project could still be considered as viable.
Recalculation of Economic Internal Rate of Return (EIRR)
4.5.5 At appraisal, the economic cost of the project comprised construction and supervision
costs and allowances for contingencies but net of taxes, duties and price escalation during the
construction phase. The economic cost of routine and periodic maintenance that was
necessary to keep the road in serviceable condition during its design life also formed a
component of the project cost. The project economic benefits included savings in vehicle
operating cost (VOC), travel time savings and reduction in maintenance cost. For
recalculation of EIRR, the economic costs have been revised in the light of the actual
construction costs. The economic benefits have been updated keeping in view the trends in
traffic growth since the completion of the project.
4.5.6 Since the past traffic data on the project road did not indicate a logical growth pattern
as mentioned in paragraph 4.2.4, the appraisal traffic forecasts have been updated in line with
anticipated macro-economic developments. Based on the analysis of Gross National Product
(GNP) and traffic growth, Lesotho National Transport Study (1995) has suggested annual
growth rate of 4% for light vehicles, 3.5% for buses and 3% for trucks for periods beyond
1997 for roads like the project road. These growth rates are also in line with ones adopted
for traffic projections in the recently completed Feasibility Study of Trans-Maluti Highway
(November 1997). For recalculating the EIRR, the traffic forecasts have been updated using
the foregoing vehicle specific growth rates. Based on this, the revised traffic would grow
from 116 vpd in 1998 to 167 vpd in 2009 (Annex 9).
4.5.7 The actual construction and supervision costs (net of taxes and price escalation) as
well as the benefits emanating from the revised traffic forecasts formed the basis for
reworking the EIRR. The major quantifiable benefits include savings in VOC, travel time and
maintenance cost. The recalculated EIRR is 6.20% (Annex 10). This is much lower than
16.97% calculated at appraisal. The situation is mainly attributable to rather highly optimistic
traffic growth scenario envisaged at appraisal. In other words, the investment could not
generate enough returns and is not worthwhile based on quantifiable economic benefits.
Notwithstanding this aspect, the developmental nature and social desirability of the project
insofar as it provided a safer and less costly all-weather access through the difficult Moteng
Pass and opened up remote rural areas, need not be overemphasised. Further, the project road

11
is a small, but very difficult, section of the trunk road connecting Maseru with Mokhotlong.
While the sections from Maseru to Oxbow are already of bitumen standard, the improvement
of Oxbow-Mokhotlong road section to bitumen standard is nearing completion. When this
road is fully open to traffic, the level of traffic on the project road is expected to increase. In
such a case, the present EIRR of 6.20% is likely to improve.
5.

SOCIAL AND ENVIRONMENTAL RESULTS

5.1

Social Impact

5.1.1 Apart from the direct economic benefits of the project that have been discussed in the
preceding sections of the report, the Khamane-Oxbow road has had positive social impact in
the area. The first related to direct and indirect employment for the local population during
the project construction phase. This employment helped generate additional household
income, which, in turn, raised the demand for consumer and durable goods in the project
influence area. Secondly, the road has improved mobility and access to public services
especially for the rural dwellers living in the project influence area. Access to public facilities
such as health, education, commercial and administrative centres has also improved.
5.2

Environmental Impact

5.2.1 As the road is passing through hilly terrain, the upgrading works did not entail any
major alignment changes. In turn no loss or damage to archaeological or paleontological
features occurred. Soil erosion was a major problem and necessary mitigating measures like
lining of drainage channels were employed during construction.
5.2.2 Although there were no covenants in the loan conditions requiring specific measures
during construction with regard to environment, some improvements in environment are
evident after completion of the project. The most obvious aspect is the disappearance of the
heavy dust and clouds associated with deteriorated and damaged gravel roads during dry
season, thus providing healthier lives for people, livestock and plants adjacent to the road.
5.2.3 The PCR mission visited the project area and established that mitigating measures had
been taken during the construction phase to reduce, as far as possible, the negative
environmental effects normally associated with road upgrading works. The measures carried
out included lining of drainage channels, reinstatement of borrow pits, re-vegetation of the
abandoned sections of the old road, and grassing of road reserve slopes and verges. It was
also noted that the drainage system of the new road was well designed and was performing
satisfactorily. No erosion or flooding was evident. One major problem experienced during
and after construction period was unstable cut slopes along the section close to Moteng Pass.
This has resulted in constant land slips and rock-falls. A permanent maintenance crew has
had to be placed at the foothill of the pass in order to clear the rock-falls. The Government of
Lesotho is planning to commission a study to find out a way of stabilising these slopes.
Notwithstanding this, it can be safely concluded that the project has had a net positive
environmental impact on the area.
6.

SUSTAINABILITY

6.1
The modified pavement design adopted for the project road is found to be appropriate.
This can be seen from the fact that Khamae-Oxbow section, as a whole, behaved reasonably
well without any major problems even 7 years after completion. Annual routine maintenance

12
operations are being undertaken on a regular basis since the road is opened to traffic. Further,
a permanent crew is posted near Moteng Pass to clear the rock falls. Scheduled periodic
maintenance in the form of overlays or resealing, which is normally done seven years after
completion, is due this year. The project section is a candidate for relay/resealing under
RRMP during next year. At present, allocations for road maintenance are from governments
consolidated budget. The necessary funds are raised through customs duties and sales tax on
vehicles, fuel, lubricants, spare parts as well as payments for vehicle licensing and
registration fees. Other sources of funds for road maintenance are tollgate fee, license fee and
permit fee. These funds are generally adequate to maintain the road network in a satisfactory
condition.
6.2
However, given the growing size of the road programme and other urgent demands,
the budget allocations may not be adequate for the purpose. In order to sustain the road
maintenance activities, the Government has established in 1996 an independent source of
financing through an autonomous Road Fund (RF) which started functioning from January
1998. In the initial stages, the RF will concentrate on routine maintenance due to the limited
funds that are collected on the basis of existing tariffs. Once the system is fully operational
and continuous flow of funds is ensured, the RF will gradually extend its scope to cover
periodic maintenance and rehabilitation works. It can thus be concluded that the Government
has adopted appropriate policy and fiscal measures to raise resources sufficient to maintain
road network, including the project road, in serviceable condition.
7.

PERFORMANCE OF THE BANK AND THE BORROWER

7.1

Performance of the Bank

7.1.1 At the time of project appraisal, the Banks performance could not be termed as
satisfactory inasmuch as the envisaged traffic scenario base year as well as future estimates
was highly optimistic. For no logical reason, a more realistic set of estimates provided in
the Consultants report was not adopted. This is the main reason for low EIRR at project
completion. However, there were no deficiencies in the Banks performance noted during the
project implementation. The project was considered one of the priority projects by the
Government and was well received by the Bank. The loan for this project was timely and
high on the development agenda of the countrys requirements.
7.1.2 Since the inception of the project, the executing agency received fairly regular
monitoring and supervision visits (at least once a year) from the Bank. These missions were
of assistance to both the project and the executing agency and to the Bank in successful
implementation of the project. The borrower and executing agency were provided with all the
necessary guidance and advice to ensure procurement of works, goods and services in the
implementation of the project, as per Banks rules and procedures for procurement. To sum
up, the overall performance of the Bank during the implementation of the project can be
termed as satisfactory.
7.2

Performance of the Borrower

7.2.1 The GOL was represented by the Roads Branch (RB) of the Ministry of Works as the
Executing Agency (EA). The EA was responsible for all the technical, management and
disbursement relating to the project execution and also co-ordinated with the Bank on all
relevant issues. The RB also contributed to project supervision by providing a whole time coordinator in compliance with the conditions precedent to loan effectiveness.

13
7.2.2 During the implementation of the project, submission of monthly progress reports was
regular. The GOL, however, could not resolve the issue of contractors claims even four
years after completion of project, during which period the Banks loan was active. Even now
this issue remains unresolved mainly due to contractors indifference. On the whole, the
borrowers performance can be rated as satisfactory.
8.

CONCLUSIONS, LESSONS LEARNT AND RECOMMENDATIONS

8.1

Conclusions

8.1.1 Achievement of Objectives: The objective of the project was to upgrade the existing
road linking Khamane and Oxbow in support of GOLs transportation strategy of improving
the road network that traverses the extremely difficult terrain regions of the north-eastern part
of the country to bitumen standard to provide safe, serviceable all weather access along the
periphery of Lesotho. This link provides faster movement of goods and passenger traffic from
one end of the foothills (i.e. Khamane) to the other end (i.e. Oxbow) through the Moteng Pass
section. The project was also expected to improve road connection and reduce the cost of
movement of goods and passengers between the foothills of Khamane, Oxbow and
Mokhotlong. It was also to link the rural areas in the eastern mountains so as to foster better
integration of people of this area into the mainstream of the economic and social life of the
country.
8.1.2 The upgrading of the road has been completed successfully, and it has helped in
connecting Maseru with important centres in the highly difficult hilly terrain in the northeastern part of the country. Further, the condition of the road has improved and has
contributed to the reduction in the backlog of maintenance, travel time and VOC on the main
road network in Lesotho, thereby consolidating the preservation of scarce capital.
8.1.3 Despite following the Banks rules, cancellation of loan balance without the executing
agency resolving the claims issue has imposed an additional financial burden on the GOL.
8.2

Lessons Learnt

8.2.1 The original pavement design was not suitable for the roads, like the project road,
traversing the mountainous region where wet conditions are prevalent due to heavy rainfall
and snowfall. This is also evident from the on-going Oxbow-Mokhotlong Road project. The
key lesson is that for future projects care should be taken by the Consultant to formulate
appropriate pavement design taking due account of the physical features and specific
requirements of the project area.
8.2.2 A major problem encountered along the project road is unstable cut slopes,
particularly along the Moteng Pass. This has resulted in constant slips and rock falls.
Although a permanent maintenance crew is in place at the foothills of the pass to clear the
rock falls; it is recommended that a study be undertaken by the GOL to find a way of
stabilising the slopes. This experience would be useful for future projects in similar
mountainous areas.
8.2.3 The appraisal traffic forecasts turned out to be too optimistic in terms of base year
traffic estimates as well as growth rates. In fact, the level of actual traffic on the project road
is about 20% of the appraisal estimate. This low level of traffic materialisation brought down
the appraisal EIRR from 16.97% to 6.20%. To obviate such a situation, the appraisal mission

14
should undertake a comprehensive review of the existing and anticipated traffic levels and
prepare traffic projections under three scenarios viz. pessimistic, moderate and optimistic.
The project appraisal should, however, be based on moderate traffic scenario.
8.3

Recommendations

8.3.1 For future projects, the Borrower should ensure that Consultants pavement design
takes due account of the physical features and specific requirements of the project area.
8.3.2 The GOL may consider financing a study to find a way of stabilising the slopes. This
experience would be useful for future projects in similar mountainous areas.
8.3.3 The project viability analysis should not be based on highly optimistic traffic
scenario, but rather reflect a moderate situation.

Annex 1
LESOTHO

Project Completion Report: Khamane-Oxbow Road Project

The Bank Group Financed Transport Sector Projects

Name of the Project

Date of
Date
Appro
Signed
val

Source/Loan Amount
(UA mil.)
ADB
ADF
TAF

Status

1.

Leribe-Oxbow/Roma
Semongkong Roads Study

25/03/75

07/05/75

0.83

Completed

2.

Leribe-Butha Buthe Joels

Drift Road

20/01/77

15/11/77

6.17

Completed

3.

New Maseru Airport I

28/08/79

08/10/79

8.00

Completed

4.

Joels Drift-Khamane Road

28/02/80

13/06/80

5.62

Completed

5.

Road Maintenance Project

21/01/84

13/03/84

8.06

Completed

6.

Feeder Roads Study (TAF)

14/03/84

09/05/84

0.90

Completed

7.

MasinokengMafeteng/Roma Roads
Rehabilitation

15/11/84

11/12/84

6.45

Completed

8.

New Maseru Airport

(Suppl.)

14/12/84

13/01/85

12.04

Completed

9.

Khamane-Oxbow Road

18/06/86

16/07/86

6.42

Completed

10. Oxbow-Mokhotlong Road

18/01/88

30/05/89

17.17

On-going

11. Institutional Support to the

Transport Sector

22/05/89

30/05/89

2.60

On-going

12. Oxbow-Mokhotlong Road

(Suppl.)

01/12/92

13/05/93

2.86

On-going

20.04

55.35

1.73

Total

ANNEX 2
LESOTHO: KHAMANE-OXBOW ROAD: PROJECT COMPLETION REPORT
PROJECT LOCATION MAP

Libono

Khamane
Project Road

Butha-Buthe

Oxbow

Leribe

RSA

Maputsoe
Peka

LERIBE

BUTHABUTHE

Pitseng

Teyateyaneng

MOKHOTLONG

Mapoteng

BEREA
Ilokoeng

Mokhotlong

Maseru
Mazenod
Likafaneng

Roma

MASERU
Thaba-Tseka
Monja

THABA-TSEKA

Matsieng

Sehonghong

MAFETENG

G
Mafeteng

RSA

Semonkong
Sehlabatheba

MOHALES HOEK

Sekake

QACHAS NEK

Qachas Nek

RSA

Mohales Hoek

Mount Moetosi

QUTHING
Quthing

International boundary
District boundary
National capital
District capital
Railroad
Road

Kilometers

Miles

This map has been drawn by the African Development Bank Group 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 3

LESOTHO
Khamane-Oxbow Road: Project Completion Report
List of Documents Consulted
1.

Appraisal Report Khamane Oxbow Road Project (LESB/PTR/86/01), March

1986.

2.

Minutes of Loan Negotiations

3.

Loan Agreement (No. CS/LES/TR/86/18) dated 16-07-1986 between the Government

of the Kingdom of Lesotho and the African Development Bank.

4.

Borrowers Project Completion Report.

5.

Consultants Final Completion Report, July 1990.

6.

Monthly and Quarterly Progress Reports for the Project.

7.

Pavement Maintenance and Management System (PMMS) VOC Calibration for

Lesotho, October 1994.

8.

National Transport Study, 1995.

9.

Redesign Study of Khamane Oxbow Road Economic Analysis Report (Final

Report), August 1985.

10.

Feasibility Study of Trans-Maluti Highway, November 1997.

11.

Road Rehabilitation and Maintenance Project (RRMP) World Bank Staff Appraisal
Report, April 1996.

12.

Organisation Charts of Ministry of Works and Roads Branch.

13.

Archives of Financial Data and Correspondences available in the Bank. Disbursement

data, Back-to-Office Reports, Internal memoranda, Correspondence exchanged with
the Borrower and the Executing Agency, etc.

14.

Correspondence Archives and Available Financial and other documents at the

Ministry of Works.

Annex 4

LESOTHO
Project Completion Report: Khamane-Oxbow Road Project
Loan Conditions
1.
The conditions precedent to first disbursement given in Section 6.01 of the
loan agreement required the Borrower to:
(a)
have indicated to the Fund and obtained its approval of the procedure which the Borrower proposes
to follow for international competitive bidding under Section 6.03 of this article.
(b)

have submitted to the Fund the list of goods and services to be acquired with the loan resources.

(c)
have given an undertaking to the Fund that it will assume responsibility to meet all cost overruns of
the Project.
(d)
have given an undertaking to the Fund that it will make adequate budgetary allocations to meet its
share of the Project Cost and tax element.
(e)
have given an undertaking to draw up and submit to the Fund each year, a satisfactory annual
programme for the rehabilitation, the routine and periodic maintenance of the classified road network. The said
programme shall define the roads to be covered and shall contain detailed information showing in particular i)
the individual categories of work to be performed and the agencies responsible for carrying out such work and
ii) an itemised budget for all work to be performed under each annual programme and an indication of the
sources of finance required for the implementation of the entire programme.
(f)
have assigned a Senior Officer from the Chief Engineers Office of the Roads Branch, to be the
Project Co-ordinator.

(g)

have given an undertaking to the Fund monthly and quarterly reports on the progress of works
performed by the construction contractor.

1.1
The GOL fulfilled all the above conditions, though it took about 9 months
from the date of loan signature.
2.
Two other conditions falling under Section 6.02 of the loan agreement, which
were to be fulfilled during the project implementation, stipulated that:
(a) The Borrower shall ensure that no local taxes, customs duties or levies of any kind whatsoever are
financed out of the proceeds of the Loan.
(b) The Borrower shall make adequate budgetary allocations for proper and timely maintenance of the
project road upon completion of construction works.

2.1
The GOL fulfilled condition (a) above during the implementation phase inasmuch as
local taxes and customs duties or levies were not financed out of ADF loan funds. In
fulfilment of condition (b) above, the borrower has allocated funds, as part of the annual road
maintenance budget, to maintain the project road in a reasonably good serviceable condition
as well as posted a permanent crew near Moteng Pass to clear the rock-falls. Further, the
project road is a candidate for resealing during 1999 under Road Rehabilitation and
Maintenance Project (RRMP).

Annex 5
LESOTHO
KHAMANE-OXBOW ROAD PROJECT COMPLETION REPORT
PROJECT IMPLEMENTATION SCHEDULE : APPRAISAL Vs. ACTUAL
Year
1986
Activity

Board Presentation (Appraisal)

Board Presentation (Actual)
Appointment of Consultant (Appraisal)
Appointment of Consultant (Actual)
Consultant Service Period (Appraisal)
Consultant Service Period (Actual)
Appointment of Contractor (Appraisal)
Appointment of Contractor (Actual)
Construction Period (Appraisal)
Construction Period (Actual)
Maintenance Period (Appraisal)
Maintenance Period (Actual)

1987

1988

1989

1990

1991

1st. 2nd 3rd 4th 1st. 2nd 3rd 4th 1st. 2nd 3rd 4th 1st. 2nd 3rd 4th 1st. 2nd 3rd 4th 1st. 2nd 3rd 4th
Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr.

Annex 6
LESOTHO
Project Completion Report: Khamane-Oxbow Road Project
Details of Annual Disbursements
(UA million)
Amount Disbursed
ADF
GOL

Year

Total

1987
1988
1989
1990
1991
1992
1993
1994

0.537
1.727
0.830
2.114
0.337
0.012
0.000
0.043

0.538
0.735
0.817
0.376
0.185
0.000
0.000
0.410*

1.075
2.462
1.647
2.490
0.522
0.012
0.000
0.453

Total

5.600

3.061

8.661

Estimated contractors claims.

________________________________________________________
Source:
Ministry of Works, Lesotho and ADB PCR Mission, April-May
1998.

Annex 7

LESOTHO
Project Completion Report: Khamane-Oxbow Road Project
Performance Rating Scale and Evaluation Criteria
1.

Rating Scale
X3

Highly satisfactory

2X3

Satisfactory

1X2

Unsatisfactory

X1

Highly unsatisfactory

Where X is the value assigned to a performance variable.

Classification: Implementation performance is considered satisfactory if the average
value of X 2.
2.

Evaluation Results

Score

Performance Indicators
1.
2.
3.
4.
5.

Time Overrun
Cost Overrun
Adherence to Contractual Conditions
Adequacy of Supervision and Reports
Operational Performance
Total
Implementation Performance

Maximum
4
4
4
4
4
20

Actual
2
3
3
1
3
12

12 5 = 2.4 (Satisfactory)

Annex 8

Lesotho: Khamane-Oxbow Road : Project Completion Report

Roads Branch - Organization Chart
Chief Roads Engineer

Principal Roads Engineer

Finance

Maintenance &
Administration

Design &
Materials

Projects &
Planning

Controller

SRE - (M&A)

SRE - Design

SRE - P & P

Accountants/Staff

Mechanical

Admn.

RE South

RE Central

RE North
Region (NR)

RE RCU

RE (Twin)

RE (Twin)

RE (Twin)

PTO RCU

Similar to NR

Similar to NR

RE Exec.

Carpentry

Registry, etc.

Precasting

Personnel

Signs

Training

RE Material

Project Engineers
(Three)

Planning Engineer

Assistant Staff

RIU

ARE Material

PTOs

Security

Stores

Yard Section

Radio Ops.

PTO

Exec. Officer

Staff

Manager

Material Staff
Leribe Depot

Mechanical

STO

TO Mech.

Staff

Operators/Drivers

Materials Lab. Staff

Three Depots
similar to Leribe

Regional Clerk

Office Manager

Stores

Design Staff
Site Clerks

Registry, etc.

Office and
Ancillary Staff

Survey Satff
Planning Manager
----------------------Technicians

Site Staff
and Labour

Annex 9
LESOTHO
Project Completion Report: Khamane-Oxbow Road Project
Vehicle Operating Costs (VOC)
(Economic)
Vehicle Class

1985 Scenario
Car
LGV
Truck
Bus

1997
Scenario
Car
LGV
Truck MGV
- HGV
Bus

VOC (Maloti/km)
Existing Road
Proposed Road

VOC savings
per
vehicle
(Maloti/year)

0.55
0.74
1.52
1.28

0.05
0.08
0.39
0.28

4015
5300
9074
8391

0.76
1.92
2.46
4.20
3.26

0.31
0.98
1.25
1.61
1.70

3614
7548
9716
20798
12527

Source: Ministry of Works, PCR Mission 1998, and Appraisal Report, 1986.
Updated Traffic Forecasts (ADT)
Year

Cars &
LGV

Trucks

Buses

Total

1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009

14
44
38
15
12
46
43
40
38
40
42
43
44
46
48
50
52
54
56
58

26
20
19
56
76
92
84
76
67
69
71
73
75
78
80
82
85
87
90
93

2
7
5
4
4
3
6
9
11
11
12
12
13
13
14
14
14
15
16
16

42
71
62
75
92
141
133
125
116
120
125
128
132
137
142
146
151
156
162
167

____________________________________________________ ___
Source: Ministry of Works and ADB PCR Mission April-May 1998.

Annex 10
LESOTHO
Khamane-Oxbow Road: Project Completion Report

Year

1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009

Recalculation Economic Internal Rate of Return (EIRR)

(In 000 Maloti)
Construction
VOC
Savings
Time
Total
Cost (1)
Savings
in Maint. Savings
Savings
2390.85
5477.21
3663.25
5539.69
2195.65

(7706.66) (2)

317.91
128.00
445.15
141.00
349.39
154.00
594.15
170.00
804.25
186.50
1091.01
205.50
997.38
160.50
903.75
249.00
810.12
274.00
810.26
301.00
836.41
331.50
955.72
364.50
986.84
401.00
1018.99
414.00
1052.21
501.00
1086.53
534.00
1121.98
587.00
1158.61
646.00
1196.46
710.50
1235.56
771.50
EIRR (%)

Source: PCR Mission, April-May 1998

(1)

Construction and Supervision Costs

(2)

Salvage Value

117.86
381.62
323.68
160.68
134.22
356.23
365.50
385.92
421.89
438.96
461.30
478.91
501.26
521.59
543.26
590.04
650.28
717.10
717.10
717.10

563.77
967.77
827.07
924.83
1124.97
1652.73
1523.38
1538.67
1506.01
1550.23
1629.21
1799.13
1889.10
1954.59
2096.47
2210.57
2359.26
2521.71
2624.05
2724.15

Net
Benefits
(2390.85)
(5477.21)
(3663.25)
(4975.92)
(1227.88)
827.07
924.83
1124.97
1652.73
1523.38
1538.67
1506.01
1550.23
1629.21
1799.13
1889.10
1954.59
2096.47
2210.57
2359.26
2521.71
2624.05
10430.81
6.20