Document of The World Bank FILE COPY FOR OFFICIAL USE ONSLY Report No.P-2703-LBR REPORT AND RECONMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTICN AND DEVELOPMENT TO THE EXECUTIVE DIRECTOR', ON A PROPOSED LOAN TO THE REPUBLIC OF LIBERIA FOR A PETROLEUM EXPLORATION PROMOTION PROJECT September 18, 1980 This document has a restricted distribution and may be used by recipients only in the perforrance of their ofdicial duties. Its contents may not otherwise be disclosed without World Bank authoriktIon. CURRENCY EQUIVALENTS US$1.00 = Lib. $1.00 The official monetary unit is the Liberian dollar, with par value equal to that of the US dollar. Apart from the Liberian dollar, the US dollar is a legal tender in Liberia. GOVERNMENT OF LIBERIA - FISCAL YEAR July 1 - June 30 GLOSSARY OF ABBREVIATIONS bb - barrel (159 liters) b/d - barrel per day JCF - J. C. Ferrand and Associates LEC - Liberia Electricity Corporation LPRC - Liberia Petroleum Refining Company FOR OFFICIAL USE ONLY LIBERIA PETROLEUM EXPLORATION PROMOTION PROJECT LOAN AND PROJECT SUMMARY Borrower: Republic of Liberia. Amount: US$5.0 million equivalert. Terms: 20 years, including 5 years of grace, at 9.25 percent interest per annum. Prolect Description: The project aims at attracting oil companies to take oil exploration permits in Liberia, where no exploration has taken place since 1972. Studies conducted recently have concluded that Liberia's petroleum potential remains to be established; both seismic studies and the analysis of the samples of the four wells that were drilled indi- cate the possibility of finding hydrocarbons. The project consists of (i) a new seismic survey of Liberia's offshore, the computer processing, interpretation and integration of the new data; (ii) consulting services for the promotion, auction and negotiation of new exploration permits; (iii) technical assistance for energy planning; and (iv) technical assistance to the Bureau of Hydrocarbon of the Ministry of Lands and Mines. The project dDes not face any major risks. The financial exposure of the G',vernment is likely to be greatly diminished through the sale of a report on Liberia's offshore prospects to oil compaaies. There is already a significant industry interest in the report. This document hu a restricted distribution and may be used by recipients only in the performance of their omcial duties. Its contents may not otherwise be discDsed without World Bank authorization. - ii - Estimated Cost: 1/ In Thousand US$ Local Foreign Total A. Project Preparation Financed under PPF 900 900 B. Seismic Survey, Interpretation and Report Preparation Data Acquisition - 1,510 1,510 Data Processing and Interpretation Geology and Geophysics - 1,484 1,484 Other - 180 180 Subtotal: - 3,174 3,174 C. Promotion, Auction and Negotiations of Bids 427 427 D. Technical Assistance 100 875 875 Total Base Cost 100 5,376 5,476 Contingencies Physical - 337 337 Price 10 177 187 Subtotal: 10 514 524 TOTAL PROJECT COST 110 5,890 6,000 1/ Excluding any custom duties and taxes from which the project is exempted. - iii - Financing Plan: Expenditures (US$ Million) Local Foreign Total Government 0.1 0.9 1.0 IBRD 5.0 5.0 Total 0.1 5.9 6.0 Estimated Disbursements: (US$ Million) FY81 FY82 FY83 Bank Loan Annual 4,200 600 200 Cumulative 4,200 4,800 5,000 HAP: (IBRD 14877). No separate Staff Appraisal Report has been prepared. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF LIBERIA FOR A PETROLEUM EXPLORATION PROMOIION PROJECT 1. I submit the following report and recommendation on a proposed loan for the equivalent of US$5.0 million to the Republic of Liberia to help finance a petroleum exploration promotion project.. The loan would have a term of 20 years, including 5 years of grace, with interest at 9.25 percent per annum. PART I - THE ECONOMY 2. A basic economic mission visited Liber:xa in March 1973. Its report, "Current Economic Position and Prospects of Liberia" (426a-LBR), was distributed to the Executive Directors. An updating report, entitled "Liberia: Current Economic Situation and Prospects" (No. 2662-LBR), was also distributed to the Executive Directors on December 28, 1979. An economic mission visited Liberia in July 1980 to review the current economic situation and its principal findings are included in the following paragraphs. Structural Characteristics 3. The growth of Liberia's economy remains heavily dependent on the performance of the enclave sector consisting mainly of: (a) iron ore mines, (b) rubber plantations, and (c) forestry concessions. These enclaves are the main source of export earnings. Iron ore mining is by far the largest single activity in the enclave sector, accounting for about one-third of gross domestic product at factor cost. There are only limited linkages between the enclaves and the rest of the economy; as a result, the benefits of economic growth have been unevenly distributed. 4. Another dimension of structural imbalaace is the disparity between traditional agriculture and the (monetized) modern sector. Traditional agri- culture has minimal inter-action with the rest of the economy; however, it supports the majority of the population - as much as 60 percent - who live at or near subsistence level. With a population of about 1.7 million, average per capita GNP in 1979 is estimated at US$500. While the enclave sector yields a per capita GNP of about US$1,620 compared to US$780 for the rest of the monetized economy, the great majority of the population who live in the traditional non-monetized sector have a per capita income of about US$160 per annum. -2- Development Plan and General Economic Policy 5. Liberia-s First Four-Year Development Plan, covered the period July I' 1976 to June 30, 1980. The Plan was prepared with the assis- tance of a planning team financed jointly by the Bank, the United Nations Development Program (UNDP), the United States Agency for International Development (USAID) and the Government (Reference: President's Memorandum to the Executive Directors, No. R74-61 dated March 25, 1974). The Plan was intended as first of a series of multi-year investment programs aimed at meeting the basic, long-term objectives of Liberia-s socio-economic develop- ment which were stated as: (a) diversification of production; (b) dispersion of sustainable socio-economic activities throughout the country; (c) greater involvement of Liberians in development activities; and (d) equitable dis- tribution of the benefits of economic growth. The average annual growth of real GDP during the Plan period was envisaged at around 6.8 percent. However, because of delays in the implementation of expected investments in iron ore mining and slackening in demand for the country's main exports, and diversion of plan allocations towards non-productive projects, real growth during the four-year period is unlikely to exceed 1-2 percent. 6. Liberia has already embarked on three important agricultural development projects in the Bong, Lofa and Nimba counties which are being assisted by the Bank Group. USAID and the German Government. Other projects in forestry and rubber are under way which will lead to greater participa- tion of Liberians in the development of the country's principal agricultural resources. At the same time, water supply and electric power utilities are being expanded in both the urban and rural areas and there are plans further to improve the road network the inadequacy of which presently constitutes a constraint to growth. However, the shortage of trained manpower at all levels and the lack of adequate domestic resources are major constraints to efforts to develop and diversify the economy. The shortage of skilled, experienced and trained manpower has become more acute in recent months following the changes in government as a result of migration abroad, and many senior officials being held in detention. 7. Total development expenditure in the original plan was projected at US$415 million, of which US$251 million was to have been financed from foreign sources and US$164 million domestically. The Plan was revised in early 1978 to take account of developments during the first two years. The revised expenditure target was raised to $585 million to reflect increased costs and to include additional projects. Preliminary estimates of the actual expendi- ture indicate that although the revised target of $585 million has been achieved the composition of investment has deviated significantly from the planned allocations. Only 23 percent has gone to the productive sectors (agriculture and manufacturing), about 30 percent to infrastructure, about 15 percent to social services and remaining 32 percent to general services and miscellaneous projects. One-fourth of the total plan expenditure was allo- cated to facilities and buildings for the OAU conference which took place in July 1979. 8. Preparation of the second development plan, covering the period 1980-84, was at an advanced stage when the previous Government was overthrown. The new government will require more time to finalize the Plan which is now scheduled for completion in July 1981. The general economic policy statement issued by the Government of the Peoples Redemption Council on June 5, 1980, however, sets out the broad objectives of the new regime. The main thrust of the economic policy, according to the statement, is to expand the country-s productive capacity, especially in agriculture, and to ensure that benefits from economic growth and development are enjoyed by a large and increasing number of Liberians. To achieve this end the Govern- ment intends to encourage local and foreign private investment and give priority to labor intensive investments. The other significant measures taken by the new Government since its assumption of office include deci- sions: (a) to retain the Liberian dollar at par with the US dollar, which remains legal tender in Liberia; (b) to honor all existing contractual agreements with foreign private investors and tc change such agreements only through negotiations with all parties concerned; (c) to withdraw all currency restrictions temporarily imposed and pErmit free flow of capital, goods and services; and (d) to regulate labor relations by full protection of rights of both workers and management. Recent Economic Developments 9. During 1973-75 Liberia, like most other developing countries was hit by higher import prices and international inflation. While strong world demand for Liberia's major export, iron ore, brought large gains in export prices in 1974, subsequent recession in the industrialized countries significantly reduced the demand for the countr7Ks most important export commodities -- iron ore, rubber and timber -- in the 1975-78 period. With growth performance continuing to be largely a function of enclave activities, growth of real GDP -- which averaged about 6.3 ]?ercent a year in the 1967-70 period and 4.2 percent a year in the 1970-74 pe-riod has slowed down signifi- cantly and is estimated to be about 0.7 percent between 1974 and 1978. 10. During the 1970-74 period, merchandise exports grew by 14 percent and imports by about 18 percent annually in current prices. Thereafter, during 1974-78, mostly reflecting accelerated international inflation, imports rose by 14 percent annually, exceeding the 5 percent annual export growth. Oil imports increased from US$15 million in 1973 to US$84 million in 1978. Between 1975 and 1977 the decline in exports was partly offset by favorable movement in the terms of trade but the trade surplus declined from US$110 million in 1974 to a deficit of US$16 million in 1977, while the current account deficit, reflecting substantial remittances of capital and other factor income from enclave operations, increased to about US$100 million in 1978 as compared with US$30 million in 1974. The rising current account deficits were financed mostly by private capital transactions, but in the last two years, official capital inflows have risen substantially. The situation improved in 1979 notwithstanding the large increase in oil imports which reached $100 million. The higher prices of Liberia's major exports --iron ore and rubber--have helped in achieving a small trade surplus of US$10.6 million. The growth in impcrts was relatively lower this year primarily due to termination of OAU Conference related activities. The increase in aggregate exports, in value terms, was about 10 percent compared to 1978. The current account deficit is also down to $53.7 million in 1979. - 4 - 11. Liberia has had a long history of sound fiscal management, and public sector resources did not come under undue pressure until the mid- 1970-s. A satisfactory growth in government revenues averaging about 13.5 percent per year from 1970-75 enabled the Government to finance in- creasing expenditures. Recurrent expenditures during this period grew by about 10 percent while development expenditures increased nearly fourfold. However, public sector finances have come under increased pressure since 1974, and the Government has been facing a growing budgetary deficit. The deficit in 1975 was only about US$4.0 million, but in FY1979 was US$161 million, or 79 percent of government revenues. 12. The strain on public sector finances intensified in the fiscal year 1979-80 and assumed serious proportions in the aftermath of April 12 coup. The decline in public revenues coupled with a decision to increase the salaries of low-paid military personnel from $100 to $250 per month and the payment of pending bills from the OAU Conference increased the overall budgetary deficit from an estimated $56 million to $95 million (9 percent of GDP) by the end of the fiscal year. The shortfall in revenues was caused largely by lower import duty collection in the last quarter. The deficit was mainly financed from IMF resources (about $48 million) under the existing standby, Compensatory Financing Facility (CFF), Trust Fund arrangements and heavy short-term internal borrowing. The Government was faced with a serious liquidity crisis when it approached the IMF in May for further assistance. Relations with the IMF 13. In March 1979, the previous Government had concluded a standby arrangement with the IMF in the first credit tranche in an amount equivalent to SDR 9.25 million. The supporting program included restraint in public expenditure and restrictive credit expansion and external debt policies. The targets in the program pertaining to revenue performance and the limits on new public indebtedness were observed. However, the central objective of moderating the rate of increase in government expenditures was not achieved. 14. The new Government, after consultation with the IMF, in July 1980, introduced a stabilization program to support a request for a standby arrangement for a two-year period in the amount of SDR 65 million (about US$85 million). In addition, following completion of preparation of a new development plan, the Government may consider requesting Fund support from the Extended Fund Facility to supersede the standby arrangement. Major elements in the stabilization program include: (a) tighter fiscal policies and stricter control of the financial operations of the public corporations; (b) import surcharge and other new import duties; (c) sale of Government- owned Boeing 737; (d) pass on of all future crude oil price increases to consumers; (e) increase in the excise tax on petroleum products. (f) upward revision of income tax and excise duty rates; (g) no further wage and salary increases in 1980/81 beyond the increase for lower paid civil servants introduced on July 1., 1980; (h) reduced recurrent expenditures; (i) postpone- ment of a number of development projects; and (k) ban on extra-budgetary expenditures. Limits would be placed on new borrowings with a maturity of one to twelve years and on credit to the Government and public sector from the banking system. The IMF Board is scheduled to consider this program in mid September. In the meantime a consortium of U.S. commercial banks has agreed to provide bridge financing to enable th.s country to tide over its immediate cash flow problems; the Government has also negotiated a roll-over in short-term credit availability amounting to $75 million for oil imports during 1980-81. Creditworthiness 15. Liberia's external public debt outsta,nding and disbursed was estimated at about US$454 million as of December 1979. The Bank Group share of the public debt outstanding and disbursed is presently about 16 percent and is expected to increase to about 25 percent by 1984. As a proportion of public debt servicing liability, the Bank Group share is expected to increase from 14 percent to 18 percent over this period. Debt service payments as a proportion of exports of goods and non-factor services were estimated at about 10 percent in 1979 as compared to 5.7 and 7.7 percent for 1974 and 1972 respectively. Public debt service payments as a percentage of Government revenues (a more meaningful indicator for Liberia which uses the US dollar as a medium of exchange) declined from about 24 percent in 1972 and 21 percent in 1974 to 16.5 percent in 1978, but have again gone up to 23 percent in 1980. This upsurge in debt servicing ratio has occured primarily due to some short-maturity loans contracted by Liberia in the last few years for financing OAU-related expenditure and meeting the growing budgetary deficits. In the short run, this increase in debt ser- vicing liability has created severe pressures on Liberia's public finances. The Government plans therefore to seek the assi3tance of the Paris Club to obtain debt rescheduling of US$20 million during the current fiscal year. If this is granted the debt service as a ratio of budgetary revenue would decline to 15 percent in 1980/81. 16. Assuming a continuation of the recent low rate of growth in public revenues and exports (7 percent and 5 percent per annum, respectively) Liberia's debt service ratios are estimated to Increase to about 25 percent of public revenues and 12 percent of exports by 1985; whilst high, this debt service burden would remain manageable. However, there should be an improve- ment in the country s economic prospects over the next few years. The growth in export earnings should be higher than in the immediate past as a result of the recent strengthening in the demand for iron ore and an increase in iron ore prices. Also the forecasts for natural rubber prices indicate a consistently upward movement and Liberia may also expect higher yields from the recently replanted acreage and new plantings of rubber. Other on-going agriculture projects (particularly for coffee, cocoa, palm oil) and success- ful exploration and development of other mining resources, including gold and barite, will help diversify the economy and should result in an accelera- tion in the rate of growth of exports during the next three to four years. Public revenues will benefit from these increased export earnings and new taxation measures currently under consideration by the Government. At the same time, a reduction in the size of the Government budget deficit, re- straints on new commercial borrowings, and increased mobilization of Govern- ment revenues, may be expected as a result of implementation of the new -6- stabilization program. Thus, although Liberia has acute short-term liqui- dity problems, the country's improved export and public finance prospects, justify continued Bank lending combined with assistance from IDA. PART II - BANK GROUP OPERATIONS IN LIBERIA 17. The Bank has made 19 loans (including one Third Window loan) for projects in Liberia totalling US$130.7 million; there have been 8 IDA credits totalling US$44 million and one technical assistance grant of US$200,000 for development planning. IFC has made two equity investments totalling US$550,000 in the share capital of the Liberian Bank for Develop- ment and Investment (LBDI). The Bank Group assistance has been for roads, agriculture, rural development, power, education, water supply, DFC and ports. Annex II contains a summary statement of Bank loans, IDA credits and IFC investments as of June 30, 1980 and notes on the execution of ongoing projects. Many of the on-going Bank Group-financed projects were adversely affected in various ways by the disruption which followed the overthrow of the previous Government; however, there has been some improvement in the situation more recently. 18. The objectives of Bank Group operations are: (a) to help Liberians take greater initiative in developing their own resources for the benefit of their own people; (b) to support policies and programs leading to a broader distribution of the benefits of economic growth; (c) to help the Government in broadening the economic base and in overcoming infrastructural constraints to growth; and (d) to assist the Government in mobilizing devel- opment resources from other external agencies. In furthering these objec- tives particular attention is being paid to (a) the need to expand the supply of trained manpower so as to relieve this constraint to development; and (b) measures to strengthen and improve the operations and finances of the public corporations in Liberia. 19. In support of the objectives of raising the standard of living of lower income groups and broadening the productive base, the Bank Group lending program is giving increasing emphasis to agricultural and rural development. The Bank Group is co-financing with USAID two agricultural projects currently under implementation in Bong and Lofa Counties. These projects are designed to assist subsistence farmers to diversify their production base and to increase their productivity and income through the provision of support services and infrastructure and to help diversify the country's export and revenue base. A rubber project, which is being implemented with assistance from the Bank Group and Commonwealth Development Corporation (CDC), will lead to expanded exports, increased productivity and incomes for small and medium size farmers through strengthening credit and extension services and promotion of greater Liberian participation in the development of this subsector. The ongoing forestry project will strengthen the Government's forest service, initiate an industrial plantation program and help Liberia to better manage and exploit its forestry resources. The oil palm project, approved in October 1979, will help expand and diversify the country's export and revenue base, provide employment, increase the income level of rural families, and strengthen the institutional capability of the country for oil palm development. Further Bank Group assistance to the sector being considered would include a second phase of the Lofa County project and a rural development project in the southeastern region of Liberia which would help increase agricultural production, improve physical and social infrastructure in selected low income rural areas and strengthen the local capability for planning and implementai:ion of rural development projects. 20. In addition to its support for agriculture, the Bank Group is also assisting the Government in its diversification efforts through exist- ing lines of credit to the Liberia Bank for Deve'Lopment and Investment (LBDI) for the manufacturing sector. Further assistance to the sector is being considered and a project for a proposed liine of crelit and technical assistance for development of medium- and smali-scale industries will be submitted to the Executive Directors shortly. A mining project is under preparation involving the rehabilitation of the Mano River mine operated by the National Iron Ore Company (NIOC) which is 50 percent owned by the Govern- ment of Liberia. The preparation of this project is being financed under the Project Preparation Facility. The proposed petrDleum exploration promotion project aims at attracting oil companies to take oil exploration permits in Liberia, where no exploration has taken place since 1972, with a view to establishing Liberia's hydrocarbon potential. 21. In infrastructure, a water supply project was approved in December 1978 which is designed to he'n rehab4litate and expand the Monrovia water supply system, extend water distribution to lower income groups in the metropolitan areas, and strengthen the manaLgement, staffing, and finances of the Liberian Water and Sewer Corp'oration. The feeder roads project, ap- proved in February 1979, is desigtned to open up the agricultural hinterland of Liberia in support of the ongoing and proposed agricultural and rural de- velopment Drograms. A fifth highway project Is under consideration to improve the country's road maintenance capability and reconstruct sections of maiii roads in the agricultural interior. In the power sector, a fourth power project was approved in June 1978 which would expand the Liberia Electricity Corporation's thermal power generating facilities to meet demand until a new hydro-electricity generacing facility has been constructed and made operational around 1985. The project also includes management and training assistance to LEC and service connecticns to about 5,000 urban poor households in Monrovia. 22. In the social sectors, three educationL projects have been financed by the Bank Group. The first two projects aimed at improving secondary education, education planning and management, a< well as extending the educational system to rural areas through the provision of secondary schools and 100 village community schools. The third project emphasizes vocational and technical training. The Bank has recently Lndertaken a study of the country's education, training and manpower planning needs and ways in which to augment the supply of trained manpower. The results of this study will form the basis for preparing a proposed fourth education project which, in addition to improving facilities for improved manpower training, will also aim to upgrade primary and secondary education in the rural areas. Also in the social sectors, an urban development project: is under preparation which -8- will upgrade low-income shelter in the Monrovia area through improved infrastructure facilities and strengthen local institutions for urban management. PART III - THE ENERGY SECTOR Energy Resources and Consumption 23. The only significant indigenous energy resource of Liberia is presently hydroelectric power. Installed hydroelectric generating capacity amounts to 68 MW, or about 24% of the total generating capacity in Liberia; the firm hydroelectric generating capacity is very low because of lack of storage. Substantial hydroelectric potential remains to be developed; the ultimate firm generating capacity was estimated recently at 750 MW and at 7,400 GWh average annual production capability. Various studies are now underway for future hydro developments. 24. The installed electricity generating capacity of 280 MW is shared about equally by the mining companies and the Liberia Electricity Corpora- tion, in charge of public supply. Total power generation in 1976 amounted to 1,004 GWh, of which 71% was for industrial uses (mostly iron ore mining) and 29% for public supply. There are approximately 15,000 domestic connec- tions, practically all in the large urban centers along the coast. Under the Bank's Fourth Power Project (Loan 1600-LBR), efforts are being made to improve the access of the urban poor to electricity. 25. Liberia is also well endowed in forestry resources; about half of the land is covered by forests. Wood and charcoal are therefore important sources of energy, both in urban and rural areas. Practically no data have so far been gathered in Liberia on quantities, prices, environmental impact, specific uses, etc. of wood used for domestic consumption. The Forestry Development Authority, which is the beneficiary of a FY1979 IDA Credit (Credit 839-LBR), is presently involved in the construction of experimental kilns to manufacture charcoal. Charcoal is the preferred source of energy for domestic cooking. 26. Liberia currently imports all its requirements in crude oil; some oil products are also imported. Annual consumption of oil products is presently 4 million barrels (equivalent to 11,000 b/d). The mining compa- nies, which use mostly fuel oil and diesel oil in their operations, account for approximately half of the total consumption, and public power generation (diesel oil) for another 10%. The balance is used mostly for transportation (gasoline, diesel oil and jet fuel). 27. Total consumption of oil products has been increasing in recent years by approximately 3.5% per annum, but is expected to increase at an average of 10% annually over the next three years, particularly because of the contemplated expansion in mining activities. Oil imports, at a level of US$100 million per annum in 1979, account for 20% of total imports. This compares with less than 7% in 1972. Virtually all oil products consumed in - 9 - Liberia are supplied by the Liberia Petroleum Refining Company (LPRC), which is now in the public sector. The refinery has a capacity of 15,000 b/d, and plans to increase the capacity are now under consideration. 28. Because of political and social considerations, the prices of electricity and oil products have been maintained until recently at low levels. In the case of electricity, serious dil'ficulties were also encoun- tered in collecting bills. However, under the Fourth Power Project steps are now being taken to restore the financial viabil:Lty of the Liberia Electricity Corporation (LEC). Because of operational diff:Lculties and low prices, the refinery operated at a loss in 1978/79, but the Government has since permitted the refinery to pass along the increases in the price of crude oil, so that the refinery should operate profitably in 1979/80. In January 1980, prices were US$2.0/gallon for premium gasoline, US$1.6'7/gallon for kerosene, and US$1.67/gallon for diesel oil. Diesel oil is u3ed by the mining companies and for public electricity generation. As part of .he stabilization program being discussed with IMF, the Government intends to p.ss on all future crude oil price increases and increase the excise tax on ?etroleum products. Institutional Aspects 29. The Ministry of Lands and Mines, in collaboration with the National Investment Commission, has broad responsibilitias ranging from the monitoring of the mining companies and the exploration and development of new mining ventures to alluvial (mostly diamond) mining, land surveys, mapping and cartography, environmental and pollution control, geological surveys, etc. Oil exploration comes under the Bureau of Hydrocarbons of that Ministry. 30. Despite its vast responsibilities, the resources of the Ministry of Lands and Mines are very limited - for instance, its recurrent and capital budgets in 1978 amounted to US$2.3 million and US$0.35 million respectively, equivalent to 1.5% and 0.4% of the corresponding total government budgets. The Bureau of Hydrocarbons has altogether a staff of six, including two professionals, with little experience in oil exploration matters. 31. The National Investment Commission (NIC), created by a legislative act in September 1979, is empowered, inter alia, to (a) provide general policy guidance in the formulation of plans for the promotion of investments; (b) receive, evaluate and process investment applications and conclude all investment agreements in collaboration with relevant Ministries and Agencies of Government; and (c) cooperate with all Ministries and Agencies of Govern- ment in the implementation of investment agreenents. 32. The Liberia Petroleum Refining Compary (LPRC) reports to a Board of Directors and operates under a management contract with Resource Development Services, a subsidiary of Combustion Engineering (U.S.). LPRC is managed by a Board made up of the Ministers of Lands and Mires (Chairman), Finance, Commerce, Without Portfolio, the Controller General, Managing Director of LPRC, and a businessman. The full-time staff is composed cf 15 expatriates (under the management contract) and 225 Liberians. - 10 - 33. Public power supply comes under the responsibility of the Li Electricity Corporation (LEC) to which the Bank has made four loans, the last one in 1978. LEC comes under a Board of Directors chaired by the Minister of Public Works. 34. Until recently, there was no single entity in charge of planniy g and coordinating the energy sector as a whole. Aware of the need for a mechanism to formulate energy policy, the Government established in October 1979 an Energy Committee, chaired by the Minister of Lands and Mines. While the increasing cost of oil products has had a growing impact on the economy in recent years, no coordinated efforts have been made to collect basic data on other energy sources (particularly wood which is plentiful in Liberia) and evaluate the economic feasibility of increasing their use. Further, policies aimed at containing the growth of consumption of oil products, other than price increases, have yet to be introduced. The Government has recently requested the Bank to assist in the formulation or policies in the energy field (para. 45, item(d)(iv)). Hydrocarbon-related Geology and Status of Exploration 35. Almost all of the onshore area of Liberia is covered by basement rocks consisting of a pre-Cambrian crystalline shield with intrusions of younger basaltic flows. Only two small onshore areas, designated the Roberts and Bassa Basins, have a sedimentary section of sufficient thickness to have any petroleum potential (see Map IBRD 14877). No wells have been drilled in this area. Outcrops of sediments in this basin consist of a pre-Jurassic age sand and shale sequence overlain in some localities by a Jurassic age diabase. Above these formations are sediments of Cretaceo us and Tertiary age composed primarily of shales, siltstones and sands, with occasional stringers of limestone. Gravity and seismic surveys demonstrate that this sedimentary basin continues offshore and increases in thickness onto the continental shelf. Four wells drilled in the offshore area co-nfirm that the sedimentary sequence there is similar to the sequence found onshore. Seismic work also indicates a sedimentary section continuing and thickening off the continental slope into the deep waters of the Atlantic. The entire shelf area covers approximately 24,000 sq. km. Including the deep waters, this area would be more than doubled. 36. Active exploration for petroleum began in Liberia in the late 1960-s. An aeromagnetic survey was conducted in 1967. The following year a reconnaissance reflection seismic survey was conducted offshore. In April 1969, the Liberian Government established a Petroleum Code and shortly thereafter divided the offshore into four concession blocks which were awarded to oil companies for exploration. From 1969 through 1972 an active seismic program was undertaken by the companies. In 1971, four wells were drilled in the concession areas. All were drilled on large structures revealed by seismic surveys. Two of the wells were drilled by Union Carbide, one by Chevron and one by Frontier. All four wells failed to show commercial poten- tial and the concessions were relinquished by the companies in 1972, although three wells indicated the presence of hydrocarbons. 37. The results of these four wells and the seismic work confirmed the presence of a relatively thick sedimentary section offshore (up to 15,000 ft). - 11 - Two of the wells also revealed the presence of basalt flows intermixed with the sediments, although the other two wells did not encounter any volcanics. All of the wells had shows of hydrocarbons throughout the Lower Cretaceous, and scattered shows in both older and younger sediments. 38. The oil companies which carried out exploration programs in Liberia, and drilled the four wells, were primarily interested in finding large structures, since under economic conditions prevailing at that time, with oil selling below US$3/bbl, smaller deposit:s could not be commercially developed. They therefore decided to abandon their efforts in Liberia (and several other countries along the West African coast), and concentrate their efforts elsewhere. No exploration activity has taken place in Liberia since 1972. In the course of the preparation of this project (para. 39), past exploration data were gathered and reinterpreted, and, while the prospects for discovering large structures appear dim, application of the latest techniques in geology, geophysics and geochemist:ry suggest that Liberia's hydrocarbon potential deserves to be reexamined. 39. Despite lack of commercial success in the four wells drilled, certain positive elements have been established by the exploration which has been done. These positive elements are: (a) A reasonably thick sedimentary section exists at least in some areas offshore Liberia, as proved from the seismic and the four wells drilled. (b) It appears from the studies currently underway that the wells drilled in the past, with the objective of finding large deposits, were intentionally located on what appeared at the time to be large possible structures. However, there are other locations where smaller accumulations which could be commercial under current economic conditions are more likely, as the sedimentary sequence where the wells were drilled shows less thickness in those areas. (c) Structural and stratigraphic traps exist in other areas, as mapped from seismic surveys. Though their size will probably be smaller compared to the structures drilled in the past, these traps are better located for the development of good reservoirs within thicker sedimentary formations. (d) Reservoir sands do exist offshore Liberia as proven in the four wells that were drilled. (e) Source rocks capable of generating hydrocarbons exist in the form of shales with a high organic carbon content. This type of organic material would appear to be more prone to generation of gas than oil, but some oil has been formed. (f) Sufficient heat has been present, in the past to have converted the organic carbon in the shales to hydrccarbons, both oil and gas. Based upon the above factors, it would seem that a hydrocarbon potential does exist offshore Liberia. On the shelf area itsElf, it is unlikely that large - 12 - fields (over 100 million barrels) will be found because of the limited size of the basins, the limited number and size of the structural traps, and the inconsistent quality of the reservoir rocks. Smaller fields of less than 50 million barrels could very well exist, however, in the structural and stratigraphic traps present within the basins. Some fields of comparable size have been discovered in the past few years in neighbouring countries (Ivory Coast, Ghana, Benin) in a generally similar set of geologic environ- mental conditions. On the continental slope in the deeper waters, the potential is completely unknown since no drilling has ever been done in this part of Africa. It is known from the few existing seismic lines that a sedimentary section is present in these areas. If large structures are present here, as they are in the deeper waters in many other parts of the world, it is possible that large accumulations of oil could be present. Taking into account the high costs and technical constraints of exploration in the deep waters, exploration is most likely to resume initially in the continental shelf. 40. Over the past three years, several companies have expressed interest in taking exploration permits in Liberia; the conditions they offered were deemed unattractive by the Government since they committed themselves to seismic surveys with only an option to drill. Some companies were, in effect, brokers or promoters who expected to farm out their exploration rights for a percentage of future production. As a result, the Government approached the Bank in early 1978, and the preparation of the project was initiated in February 1979, following the approval by the Board of the new policy regarding the acceleration of petroleum exploration in developing countries. PART IV - THE PROJECT Introduction 41. The proposed project was identified by the Government, prepared by consultants, and appraised in January 1980. Negotiations were held in Washington on March 24, 1980, and the Liberian delegation was led by Honorable Minister Cletus S. Wotorson, the then Minister of Lands and Mines. Key events and special conditions are presented in Annex III. No Staff Appraisal Report has been prepared. Project Objectives 42. The main objective of the proposed project is to attract foreign investments in petroleum exploration offshore Liberia under conditions which would ensure maximum work commitment and early commencement of drill- ing and would be equitable from the point of view of the evaluation of the potential and prevailing worldwide contractual terms. This would be achieved by (i) generating new data in the hope of demonstrating prospects for commer- cial production offshore Liberia under current economic conditions and (ii) setting up a competitive bidding process among oil companies for further concessions. Another objective is to provide Liberia, through technical assistance, adequate means of negotiating exploration agreements, monitoring the activity of oil companies and maintaining an exploration data bank which - 13 - would integrate past and future data and enable -he Government to continuously reevaluate the petroleum potential of the Liberian offshore and adjust its exploration policy accordingly. Since explorati3n is a continuous process, the proposed project should be seen as the first step towards the evaluation of the ultimate recoverable hydrocarbon potential of Liberia. Project Preparation 43. Recent exploration in countries with conditions similar to Liberia has demonstrated that, despite the lack of success in the first round of exploration, a potential for smaller accumulations than those originally sought, exists. Therefore, the first step in preparing the project was to assess with modern technology whether the results of past exploration could be acquired, reprocessed, and reinterpreted to assess the presence of exploration leads that had not been detected by the oil companies or which could not be identified with the technology available in the early 1970s. On the advice of the Bank, the Government decidEd to appoint a consultant who would: (i) collect and assemble all data orL past exploration campaigns; (ii) reprocess selected seismic tapes 1/; (iii) integrate and interpret the information; (iv) review to what extent the existing legal and contractual framework reflects Liberia-s prospects and current international practice; and (v) on the basis of the evaluation of the prospects, recommend a strategy for Liberia to follow. In accordance with Bank procedures, the Government sought offers from consulting firms, based on terms of reference satisfactory to the Bank, and J. C. Ferrand and Associates (JCF), a U.S. consulting firm, was appointed in June 1979 to carry out the above studies. JCF's services were financed under a US$900,000 advance under the Project Preparation Facility (PPF). 44. Difficulties were encountered initially in the collection of the data, particularly because much of the data provided by the oil companies to the Government had not been properly stored. Subsequently JCF obtained directly from the oil companies essential documents, seismic tapes and samples from the wells. In January 1980, JCF presented its main conclusions which were: (i) the analysis of past exploration data indicates that the possibility of hydrocarbon accumulation exists; (ii) in view of the small magnitude of past exploration efforts (only four wells have been drilled), Liberia's hydrocarbon potential remains to be established; (iii) in order to attract oil companies, the best course of acticn for Liberia to follow would be to carry out a seismic survey of its offshore, using the latest techniques in data gathering and processing to integrate the seismic surveys which were carried out in the early 70's by five different companies, and confirm the presence of exploration leads that had been identified by the reprocessing; and (iv) the legal and contractural framework Ehould be updated, not only to reflect Liberia's prospects, but also to reflect current fiscal arrange- ments governing oil exploration. The Bank concurs with these conclusions. 1/ Seismic surveys are an essential step in the oil exploration cycle as they enable the identificaton of structures where accumulations of hydrocarbons could exist. After the data have been collected, they are processed in computers. Considerable progress has been made in these techniques over the past 10 years. The tapes reprocessed in Liberia were of data gathered over 1970-1972. - 14 - Project Description 45. The proposed project would contain the following components: (a) Evaluation of Hydrocarbon Potential and Formulation of Exploration Strategy The preparation of the project involved consulting services to (i) collect and analyze past exploration data; (ii) integrate and interpret these data; (iii) review the contractual/legal framework; and (iv) recommend a strategy for Liberia to follow. The advance under the PPF would be refinanced under the proposed loan. (b) Seismic Survey, Interpretation and Report Preparation The project would include a 2,500 km seismic survey of Liberia-s offshore, aimed particularly at areas where prospects appear likely, and where insufficient data are presently available. It would cover mostly the continental shelf (up to 200 m depth), but certain lines would be aimed at the deeper offshore (up to 1,000 m). The data obtained through the survey would be computer-processed, interpreted, and inte- grated with the rest of the available data. The results would be set out in two reports, one of a general nature given on request, and the other containing the detailed results, to be sold to oil companies. (c) Promotion, Auction and Negotiation of Bids Once the reports mentioned above have been prepared, it is proposed, following industry practice, to set up promo- tional seminars in the U.S. and Europe, where the oil companies will be informed of the nature and scope of the efforts that have been made in the past, and where explanations will be given on Liberia-s prospects. Simultaneously, the petroleum code will be amended as required, model contracts will be prepared, and oil companies will be asked to submit bids for exploration permits on Liberia's offshore. Finally, the Govern- ment would be assisted in its direct negotiations with oil compa- nies by the provision of technical and legal expertise financed under the loan. (d) Technical Assistance It is proposed to provide technical assistance for: (i) Monitoring of oil companies: this involves two man-years for a resident petroleum geologist to help supervise and monitor the activities of oil companies, after exploration permits have been awarded, together with ten man-months of specialists (geophysics, drilling, interpretation, finance) who would visit Liberia as required. A condition of disbursement -15 - for this item would be that at least one oil company has been awarded an exploration permit (draft Loan Agreement; Schedule I, para. 4); (ii) Equipment: this involves the setting up of a library and the acquisition of micro-film facilities to store the data collected during project preparation and future data submited by oil companies, so that sufficient data will be available in Monrovia to assess, at any time, the hydrocarbon potential of a particular area (this is not: the case at present); (iii) Training: it is proposed to finance 5 man-years of training in geology, geophysics and petroleurm economics, both at universi- ties and with the industry. This; is considered reasonable taking into account the anticipated requirements of Liberia, and the availability of suitable candidates 1/; and (iv) Assistance in Energy Planning; iD. is proposed to finance an energy specialist, on a two-year contract, to assist the Government in all aspects of ener-gy planning including: (i) establishing a data base on energy and the development of an energy balance sheet; (ii) formuLating policies in the energy field including policies in pricing, conservation, energy efficiency, the potential for energy substitution; and (iii) assisting in their implementation including the selection and review of pilot projects, feasibility studies and other domestic research. The Government gives high priority to rational energy planning, and suggested its inclusion in this project. Project Costs and Financing 46. The total cost of the Project, including project preparation financed by an advance under the PPF, is estimated at US$6.0 million, excluding duties and taxes from which the Project is exempted. The for- eign cost is estimated at US$5.9 million. Details of project costs for each component and the financing plan are given in the Loan and Project Summary. The cost estimate is based on mid-1980 prices. With respect to the seismic survey, and computer processing, costs are based on quotations from the industry. The rest of the project involves the following consulting ser- vices: 6 man-months for the supervision of the seismic survey (including data processing); 34 man-months for the interpretation of the data and the preparation of reports; 16 man-months for the preparation, auction and negotiation of offshore permits (excluding the legal assistance which is based on a lump-sum); and 58 man-months for the technical assistance compo- nent. The average man-month cost (including salary, fees, international travel and subsistence) is expected to be US$l(,000 (at mid-1980 prices). The apparent high cost estimate can be explained by the high caliber of the 1/ Training was already initiated at the pro;ject preparation phase - a Liberian has been added to JCF-s team, aLnd is now associated with the interpretation of geological and geophysical data. - 16 - staff required for the different assignments, the high level of salaries in the oil industry, and the relatively large number of experts to be employed on short assignments (from two to six weeks). This estimate was initially prepared by JCF, and subsequently confirmed through Bank Staff knowledge of fees charged by several other firms for this type of work. Physical contin- gencies of 10 percent are primarily expected to cover additional seismic testing which cannot be estimated precisely at this time. Since the bulk of the project will be completed by mid-1981, provisions for price contingen- cies are relatively small and involve mainly the technical assistance components. A 10 percent per annum escalation factor has been applied, and is considered sufficient. 47. The proposed Bank loan of US$5.0 million would finance 83.3% of the total project cost. This amount would include US$900,000 to reimburse an advance under the PPF to cover the cost of consulting services for project preparation. The US$1.0 million balance of the project-s cost would be financed by the Government. Project Implementation 48. Project implementation would start in the fourth quarter of 1980, and it is expected that oil companies would be awarded the first exploration permits by mid-1981. The Project should be substantially completed by mid-1983. The entity in charge of project implementation would be the Ministry of Lands and Mines, Bureau of Hydrocarbons. In view of the technical complexity of the project and the large number of experts required, it is proposed to employ a petroleum consulting firm to help project implementation. The consulting firm would be responsible for helping the Government in all activities directly related to oil exploration, i.e. supervision of the seismic survey and of com- puter processing, data integration and interpretation, the bidding of off-shore blocks, the seminars for the oil companies, and the negotiations with oil companies. The petroleum consulting firm would be appointed by October 1980, and the seismic survey, which would be undertaken by a separate specialized firm, would be carried out over November-December 1980. The Government would secure the services of a law firm to review, in collaboration with the petroleum consulting firm, the petroleum code, prepare model contracts and, as necessary, assist in negotiations with oil companies. Regarding the monitoring of the activities of the oil companies, after exploration permits have been awarded, the Government will recruit, on an individual basis, the resident petroleum geologist, and, together with him, make appropriate arrange- ments for the visits of short-term specialists. The energy specialist would also be recruited on an individual basis. Procurement and Disbursement 49. The contract for the seismic survey would be awarded following international competitive bidding in accordance with Bank Group procurement guidelines. Equipment for the library, estimatd to cost about US$100,000 would be procured in accordance with local procedures satisfactory to the Bank. For computer processing, quotations would be obtained from several firms. The contracts will be relatively small, as it is expected that two or - 17 - three firms 1/ will actually perform the reprocess3ing. The selection of consultants would be carried out in accordance with Bank procedures. Dis- bursements would be made against 80% of total expenditures (excluding project preparation financed under the PPF) which would ba fully documented. Accounts and Reports 50. Separate accounts will be maintained for the project, and reports, satisfactory to the Bank, will be submitted on a quarterly basis, giving the progress of the work. Benefits and Risks 51. The proposed project is the result of studies that sought to iden- tify the alternatives open to Liberia, in order to attract oil companies to resume oil exploration. These studies have concluded that there is a possi- bility of discovering hydrocarbons that could be economically developed. A strategy Liberia could have followed would have been to go straight into negotiations with oil companies, without resorting to a seismic survey. After a careful evaluation of the results of the preparation phase of the project, and following contacts with the oil industry, there is little doubt that oil companies will demonstrate a much higher level of interest if new data based on the application of the latest techniques in geology and geophysics are available. This should result in greater work ccmmitments from oil companies, including drilling, which is the key condition fcr an early discovery. 52. The main risk of the project therefore lies in the possibility that, after an expenditure of US$6 million, oil companies would still not take oil exploration permits in Liberia. This is howEver unlikely to happen in view of the higher level of interest oil companies are now showing in the West African coast. The financial exposure of Liberia., in any event, is expected to be considerably reduced through the sale of rEports to oil companies. Similar reports are selling for about US$250,000 each, so that Liberia should be able to recover most, if not all, the funds irLvested in the project. Several companies have already indicated their irLterest in acquiring the report. 53. Assuming that the results of the seism:c survey and subsequent discussions with oil companies are favorable, additional expenditures for the exploration of hydrocarbon resources, as well as the strengthening of the Bureau of Hydrocarbons, would be required after 1981. It was, therefore, agreed that in the use of the proceeds obtained :-rom the sale of the reports mentioned above, due consideration would be given to the need to strengthen the Bureau of Hydrocarbons and to explore Liberia's lhydrocarbon resources (Loan Agreement, Section 3.03). 1/ Computer reprocessing will be done over a 3-month period. The selection of the firms often depends on the availability of computer time, and particular programs, at short notice. - 18 - 54. A resumption of oil exploration in Liberia, followed by a significant discovery, would have a profound and beneficial impact on Liberia-s economy. If no discovery is made, the project would still provide Liberia with valuable data on its hydrocarbon potential, which should be extremely useful in helping Liberia decide on possible further courses of action. A negative outcome of the next round of exploration would not necessarily conclude exploration off- shore, since new leads could be identified through improved technology within the limit of the 200 m water depth, or technology could be developed which would make it possible to explore and hopefully develop the deep offshore. PART V - LEGAL INSTRUMENTS AND AUTHORITY 55. The draft Loan Agreement between the Republic of Liberia and the Bank and the Report of the Committee provided for in Article III, Section 4 (iii), of the Articles of Agreement, are being distributed separately to the Executive Directors. 56. In addition to the features of the Loan Agreement which are referred to in the text and listed in Section III of Annex III, the award of at least one exploration permit to an oil company would be a condition of disbursement for the assistance in monitoring exploration activities (Loan Agreement, Schedule I, 4(b)). 57. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 58. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments . Washington, D.C. September 18, 1980 -19 - ANNEX I Page 1 of 5 pages TABLE 3A LIBERIA - SOCIAL INDICATORS DATA SHEET LIBERIA REFERENCE GROUPS (WEIGITED AVERiGEI LAND AREA (THOUSAND SQ. KM.) - M05T RECENT ESTIMATE) TOTAL 111.4 AGRICULTURAL 6.1 MOST RECENT MIDDLE INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /A AFRICA SOUTH OP SANARA LATIN AMERICA & CARIBBEAN GNP PEN CAPITA (US$) 160.0 250.0 500.0 726.2 1384.1 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 86.0 454.0 395.0 699.4 1055.9 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (MILLIONS) 1.0 1.3 1.7 URBAN POPULATION (PERCENT OF TOTAL) 20.5 26.2 31.6 28.9 63.4 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 3.0 STATIONARY POPULATION (MILLIONS) 9.0 YEAR STATIONARY POPULATION IS REACHED 2130 POPbLATION DENSITY PER SQ. IKM. 9.0 12.0 15.0 61.7 28.1 PER SQ. KM. AGRICULTURAL LAND 163.0 217.0 279.0 126.0 81.7 POPULATION AGE STRUCTURE (PERCENT) 0-14 YES. 44.8 40.7 47.4 45.5 41.4 15-64 YRS. 52.0 56.0 50.2 51.6 54.7 65 YRS. AND ABOVE 3.2 3.3 2.4 2.8 3.9 kPULATION GROWTH RATE (PERCENT) TOTAL 2.8 3.1 3.3 2.7 2.7 URBAN .. 5.6 5.8 4.9 4.1 CRUDE BIRTH RATE (PER ThOUSAND) 51.0 50.0 51.0 46.8 34.8 CRUDE DEATH RATE (PER THOUSAND) 25.0 20.0 18.0 16.4 8.9 GROSS REPRODlUCTION RATE .. 2.6 3.4 3.2 2.5 FAhlEY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. USERS (PERCENT OF MARRIED WOMEN) .. .. POOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71'100) 96.0 100.0 96.0 94.0 106.9 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 95.0 97.0 104.0 92.7 107.4 PROTEINS (GRAMS PER DAY) 38.0 41.0 42.0 53.0 65.6 OF WHICH ANIHAL AND PULSE 9.0 11.0 10.0 15.6 33.7 ChILD (AGES 1-4) hORTALITY RATE 36.0 29.0 23.0 21.3 8.4 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 40.0 45.0 48.0 50.1 63.1 INFANT MORTALITY RATE (PER THOUSAND) .. 159.0 .. .. 66.5 ACCESS TO SAFL WATER (PERCENT OF POPbLATION) TOTAL .. .. 20.0 31.0 65.9 URBAN .. .. 64.0 66.8 80.4 RURAL .. .. 6.0 *- 44.0 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. .. 11.0 .. 62.3 URBAN .. .. 35.0 .. 79.4 RURAL .. .. 6.0 .. 29.6 PuPELATION PER PHYSICIAN 12267.0/c 11381.0 9259.0 14508.2 1849.2 POPULATION PER NURSING PERSON 5610.0/c 9504.0 2904.0 3279.5 1227.5 POPULATION PER HOSPITAL BED TOTAL 712.0 573.0 623.0 1141.5 480.3 URBAN .. .. RURAL .. .. ADMISSIONS PER HOSPITAL BED .. 27.7 NOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL .. .. UREAN .. .. RURAL AVERAGE NLTIBER OF PERSONS PER ROOM TOTAL .. .. URBAN 1.7/d .. RURAL .. .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. URBAN .. .. RURAL .. .. - 20 - ANNEX I TABLE 3A Page 2 of 5 pages LIBERIA - SOCIAL INDICATORS DATA SHEET LIBERIA REFERENCE GROUPS (WEIGHTED AV ES - MOST RECENT ESTIMATE ) MOST RECENT MIDDLE INCOME MIDDLE INCOME 1960 lb 1970 Lb ESTIMATE Lb AFRICA SOUTH OF SAHARA LATIN AMERICA & CARIBBEAN EDUCATION ADJUSTED ENROLLMEN'T RATIOS PRIhARY: TOTAL 31.0 53.0 57.0 61.7 99.7 MALE 45.0 72.0 74.0 69.2 101.0 FEMALE 18.0 35.0 40.0 51.4 99.4 SECONDARY: TOTAL 2.0 9.0 14.0 20.6 34.4 MALE 3.0 13.0 22.0 29.2 33.5 FEMALE 1.0 4.0 7.0 14.7 34.7 VOCATIONAL ENROL. (D OF SECONDARY) .. 5.3 3.0 7.0 38.2 PUPIL-TEACHER RATIO PRIMARY 32.0 36.0 41.0 36.6 30.5 SECONDARY 12.0 17.0 .. 24.3 14.5 ADULT LITERACY RATE (PERCENT) 9.0/e 15.0 73.0 . 76:3 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 1.0 11.0 8.1 38.8 43.0 RADIO RECEIVERS PER THOUSAND POPULATION 80.0 108.0 151.0 83.5 245.3 TV RECEIVERS PER THOUSAND POPULATION 1.5 4.3 5.1 .8 84.2 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 0.8 6.0 7.6 24.2 63.3 CINEMA ANNUAL ATTENDANCE PER CAPITA 0.6 0.6 .. 0.7 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 380.2 480.5 592.3 FEMALE (PERCENT) 33.5 32.5 32.0 38.1 22.2 AGRICULTURE (PERCENT) 80.0 75.6 71.0 54.3 37.1 INDUSTRY (PERCENT) 9.7 11.6 13.0 17.8 23.5 PARTICIPATION RATE (PERCENT) TOTAL 42.3 39.8 38.3 38.8 31.5 hALE 56.6 54.4 52.7 48.4 48.9 FEMALE 28.1 25.6 24.4 29.4 14.0 ECONOhIC DEPENDENCY RATIO 1.2 1.2 1.4 1.3 1.4 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. 61.7/f HIGHEST 20 PERCENT OF HOUSEHOLDS .. 72.6/. LOWEST 20 PERCENT OF HOUSEHOLDS .. 5.3/ LOWEST 40 PERCENT OF HOUSEHOLDS .. 10.9/f POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (Us$ PER CAPITA) URBAN .. RURAL .. .. 75.0 .. 190.8 ESTIMATED RELATIVE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. 137.0 .. 474.0 RURAL .. .. 125.0 .. 332.5 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URbAN .. .. 23.0 RURAL .. .. .. .. .. a Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicatora depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for host Recent Eatimate, between 1974 and 1978. /c 1964; /d City of Monrovia only; /e 1962; Lf Population, higher income calculated as residual; includes expatriates. April, 1980 - 21 - ANNEX I Page 3 of 5 pages DEFINITIONS OP SOCIAL INDICATORS Notes: Although the data ar Iean - ran -ote generlly judged the -ut authri-taino and reliable, at sho,Al also beotd that they .anno be Inte- Th refeenc troupe are Illho sane toostro grrupt h olo or and -Il 2 uno-ro ,rn-p ,u,h so-h-t high-e oorat Ott-n than the -outry graP of te sa IntM ..ne.. Iloo at o 'tT II.aptlhrpoI tpoes graph'r-'tddle In-s tNrth Afrira and tiddIe ta-e Os th-s hb-sn f -r-ng-r s....-. lintel ftfi-it-e .In th. roerettop data hI: -anoeale ate pua at.an nighted a-othanCcl sears for eIth i,dioto and. .tat nh only then at le-s hail of the oote tea teesy has doa toeta ofoo lt the,111t,d~I. oueo otmcolc mn h ndtte Jepe--ion ey Fnial teo of nn Illonoras tie aong thensty u e trn I gIeno-t-ps-.h LAT hotRA (thousan.d elk.-) ,taaunfroo a -npw-. I ....n at-goc hysneu reaeon Pry- ttl-Tuto1 -faeto -eo oprto,,g laud a"c 001Oc ln aters, i.....an . if .- o -edo- oak i-an .t ---ttrs tyl-e lot neops, pannes mate od ki-the- gard-n or uo liealw 11- 771 dot.- ea and !e-al go-duatenIrnes, pl-tn,a nnees Fn taeen uee 2N __Pt. ______ suton orhaG,Paol tatt.lt drondodI- thoit respe tinn -e of hocpneal bedl tatlbyaae -ooec hnsend on -itul Itoh Atlas 111)6971 basis); 1960, onoilable in ahl-a ond prtno~ t, 0e-ea al opeIiolte_ hoeptaj and re- J'~~~ D,atId I978"d.I:-`i ~~~~~~~hohlinaioni -entr-. O1-nyltot on estelisbhe-te peecoecetjy enffed tyneeaan non phystoton E-abtinbt-ect ptodiet princiPallyteete 001500YCONStttPTtIO PER CAPITA - hnA-1I. t -enpeti of toosertio enegy tool tor at o elld orShslas oene nld cthed meltrat trilef o kloras f toolI oqi-1-e per -Ptors; 196C, 1911, -nd 1975 os,ttwt n.)IiSofri-atr aoendo oadprid Iota. l~~~~~~~~~~~~imieed -ange of sedital _ttnire Poe _etlsit i 1p-rpect scu bepS- PfPlLhtIAl aoll VITAL ~~~~~~ tat, i-tls.f 1yOn pri-ypol gete.o. I a entlo hee ion -ta, end es-e POPUATIO AN VITLnSATISTICSa hnto lt.nrslhnPitnnooeentootnnnent entrs Total Ptulatin, Ill-lar (elitons) hef Jsle I; l9bO, 1970, and 1971 _Ahds-lcunnyIlyr.ettl e - nTo] Itao.n at adeo-eon- noo di-tharg- late, trot~~~~~~~~~~~~~~~- ntsp:tal dtnladc bo the -btt of bete. dftfscen.t defr-ott.- of7 seba areac say atnndponip f ta 9IthISt an 0 Iliatees 1960, 1910, and 191dt.Ieaale tooeoiOenn e oetl)-tel ro,tdoel Pop. aio I-ot Iio... A houehl n ole o grIn7t of ind -nias who cha.. TII g -oeet- Pepaatto Snyear200 ... Caren pnpslatloo prjoin eehnd 1980 adterelnec. A hoarder ne lge so o y no h ieolIded ie toal poalannenby ageao s In and ehel ourtoly an fern1iltr ranr- the houshold fno nenet -a up--es P"jeIl peaeee foeg'. ltattoliey cote oaptie of sheet 1et-san I- Aorjg oee Ifpen prro ~-ett_Irbat,. ede-ars1 - A-u.n nn lo lre iaenan et ' . bit u oigt it a .... ut0 I per -ita intone bet of pe--n perrotl i~ arhanbA, ond -srn -noupiedoI.....tif.cnl leve, seafemle If eut!tano e'tohOlng t- 0. nor.The p.e-d..ing. reptetli, . owellf,,gee-tlslen -n-perenec sts osed naee top geretinty rat als hban three Ie-1. -i,snO declIne in nnopt_ apate fertelity oo-oding tn innec -ne Ilp-en lonel planoiut perfesonte. A.-ee no tEl-rlityjrr_ en ofdnlogl-nte1, -rha, 0,1 tri1 tath r-antry in th- osig-nd one of Iheaentet-n-hi-ationsf -d1rtolt on,in ollnetn ltent oino sOCla St.,fer ilitn tel-lcr,oln- io P-p-en tnoltOe gdaadellgrsptiey Itesoe oelnonot Atsnlo...y yopollenn oh~ eoa n genothcao the bueArat is eq-al to the deweh --n, oud also the ag ..r..tIIer- - tOEICATItO4 niosd nna.This i-ahlend .uty afeo tr- ie rannrdnlse t d annoy lEolfneee R-tIos ouleti-d o the hasis of the peujroted chua-teriotii- ~f the P,opala_i_on.1 penenln- ge pouatoa ,h nloioldnoidcogd no te nar 111 andeheeut otdenine f Ortlttyaeo o rplna- er hsn adjustd fnt dft -tern lengthe of prtmncyeda-ttn; foe nent lenel. onsetTro-ac-.1i..r pp.,Ii--- tith u-i--Io od-nanion enro1mee otayetred lCt peccant elie hoe renc-thed. tendr crol .- ntoI sale and female - Cnnpet.d a.obe,-;eer..ndary e o . A. -Mftd-yea popleti-n fee, a;aar klcl-noe (iVy heotco) of .redsg er,oondo . styuo..nratingtep scten to py PopuIlaionAeScnue rrei. ChiLldre (0-14 y-aos, uoog-an Ily- lollen -la. nsetn,.r.he.roos abrI op-cte toder- 6l yeea ,ao retired (65 neoc and 0cr) at Pere-eag-sn, mid-near. p.p- de_elY' te- depor_eron or e-ro-d uninstlnoIons. lotIon; 19h0, 1970, and 1978 data. P---etoreoroor.adoeodr-otle,fnt cntd in cotalatto Icownhlane (ocoese) - utul - Ausel Icont renneof e-n1 std- rmr e eod -lenl divnidd by -unher of reaoheeelI the year pealc-i.nt fee i950-60, 1960-70. and 191078P.noesndolel. P2eulotnOoehOt (ecno eu - A-noa groethI1 taco ntnbut pOpo- Adul lteao anIrern) teateae lhetore ndwie lotions for 1950-60, 1960-7l, aol 1970-It. esaprn oa ftntidl Loilaltto agdI th,(l rat. al.. odven. eupi`lonion; 1960, 1970, .ca 19 70 aLt. otnft Ctade Death l6o- (tret hea..ell - Ae..aol d-ohn per thou.on. ofl a id-yearS FiO . popalato.- 1960, 0970, end 1970 deta. Puegolr.e hnodpnltit osne astnos o ... b-l f d-gh-. ~~~~~ilnesbseae-sf, les thu-eiht paron, _10a0ae onhobonn-e. he-ee-an he-ool mrdoin refo if so en latec prsn an-soo... f.t- tdi- neeanopj ,,nh asod Ioslat-ne- AIO types orII eoc lu rdt nu,t ten ans _anlly tine-n at-onroge esdleg,in 1:961, 170), -nd 1977. -lrdtcsegnrapoItertaalofoaano;ucdsul- Pamilo louotntteecs lerceet f nortld eunee-Pet -bnu r of s-pon-dt- i- IInatirseaadniteh-d linefwing. aomno ihld-heacieg ag(15-4l yI.cel who as fthie---Ie d-..ta ta TO----tme pee Ithoood poli- o) V'tcine.frheaoaet allmoelegsomn f sae ee goup one-r-l pht eeion IInnle; rise anlieesdIT cctto notalo asna d)whic see etude on. d cnoeocee .g.dote I Ona t in-eena h-tedp,,e-ier toelt-dre,Tea -Ie oth II eab ir-of teaoreeonadel .Aggregate prodnot,on of.eat t.....o Ishtd nrtiekno cr0: dar-e the ye-c. inoludiegadIteso deie-n cioe n-tiuna.. eagep_ndace petocueighte; 1961-65, 1970. 001 1970 loat. adcht'ie enegy euie Io f -et food sPyletnialeIn -osr Pee capita 'A10R OPC per lan. Anlwi uplo oprise do-ett pednotie,' tepoo ... s .. Total LaborPte- nonnn - coosnO enir pe.c... ~Incl,di,o eoyei- Iao rh-ngee In s-o. see ca.ppiec eaclol -nleo feed, -eda. arrtnctn nmloo a nldn osele.soee,ec untisefi.t fod bpr-nebstegd an pyiujses In -ditnFhet-tlo. Fqlt-IIntiouoatotottn or -o op-rbl, 1960, 1970 and household 1-n1; 1961-65, 1970,rd197 data.?icluI(tt-)-Lb II- ~alI,f-r, It - 7 d ~ ~~~~~~~~fishiel,o ereeg f ntotl Iebr f-ene; 1960, 1970 .an 1976 data. net uppl nffonoperday.Setaeppy o fool to dePOne ataton. Re- Lblt- I a,llowance of 10 g .an ofi ..no p.ntei pee by USnd p-d. len fala o 9Vad17 oa eiepr-ten, oJ hirh I0 trans eh,nId he to,lna petin,. h Tbnewod atilyan e ooo sn l,sl,adfolelbrfrea urda oe _n_e thao th-n n 7 g IeoFII_I _ponnad 23 ar_a ulconafco tnt1, n1Io ted tenel poys,atnon cf all ga eso-rctsl,_ S anneal~~~~.i- Proteton ne a Ianag for the oor1d, p-rP-se hy FAD no the Thied 196t, 1970, and 1975 dana. These are ILO's part:loipoti-o t cne -eflecnteg Wlo1d Pool Sc-ny; 1961-65, 1970 aud 1977 data. tI- h ..-.,.d I, ..Af .i ecoannope 1eec - tod ocea ad l- - P'ooae nOfod o ag -se stccnnt of the pouato,on-og ie en-- e e elne tes ainai an poaeein frow pe da-, 1961nO 0970 and 19Pdn. tcst ned7o an - tatIin oP 0onlooo owle - sd ho Iando Itlid tooau 1-4) sorroofen tete Item nSualoudf - AtnotI adtspnt,cn 0 n the tot1elab-n goIIe agegroP 1-4 yees tohildo- in this I, go;; , _o t detl;tg ca-- ones. Idata delned fron liIf taylen; 19 60, 19070 end 1977 dat. INCOMI Il5TtIBtITIO HEAI.ff iet-ag-lprne IIcono (hoth On -aeh and kind) R- tetod hy cichec -b- ~~f y ... a f Ilof -o..ehids anf~ b,urth: i960, loot and 1970 deto. Intact eornalctt Oate Irer etoutand) A--A1n dtethw of -f--t nod-t one y-rt FPtthTY TAOIT IVOUPS ofag 1er -onad line IOow f ie AonurPnrn ooeInl100nccpt)-aro n aa Attoweto" Vfe laeecf recre-nt-- 0 osonnI-rnl,oht n ua Ethoclt k, troto O-ltoc cTel I-oto noeitlhen tc nfo -eterwpply (i-Inoden Itreated suet eOeee- or -ntreatd 1st anr-n wonrd nntanu1 dVteditpo-s-t l o-odc ornssi o woner such s that feonyrnneteal hrebolel, spin, atd lue"iinryell as s -nand te otlne P-toen IInIs tel fS erroew ebnod ua peroentagon o ttheitrespattin popolenione. n On achon ac P 0 oyitIorolenlaun ponrt,ocnelnr I net Ir of ....ag pc ta Ipita tlintgilttlnctannooilot go- enh of1 tha hs. bene ra eelihdutetnchoo oto ling In d_hn aref eeasnoteocessocl toic hatetehuoenne O nehP..of.SeIonIhIfo urIanePo-iattoYtloAh blstpnet nn, n tene Ioe hent-ur1 dot iho t po inrocaowepr fthe a ntnho th tloro--enn o,I I f hppltotlra If aeI woae~hsl or -elly' 5 toter needs. pooa eo nlaetec_in. godt onspowal,' out tIooo 0_ -rann,toon aPlyIcadPoenns ept hdhcnto-totsa....toane Pyae-nnrtsohnedsyootnsrn . phi,l rr -nod nnsi1-o,o-tallaiono. -22- ANNEX1 Page 4 of 5 pages ECONOMIC INDICATORS - LIBERIA GROSS NATIONAL PRODUCT IN 1978 AhNNAL RATE OF GROWTH (Z 1977 CONSTANT PRICES) US$ Mln. Z 1974-77 1978 GNP at Market Prices 807.8 100.0 2.3 6.7 Gross Domestic Investment 253.0 31.3 13.7 6.8 Gross National Saving 101.7 12.6 -3.9 -9.2 Current Account Balance -100.1 12.4 Exports of Goods, NFS 500.1 61.9 -6.6 8.0 Imports of Goods, NFS 544.6 67.4 4.3 9.9 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1978 Value Added Labor Force-/ V. A. Per Worker US$ Mln. . 1000 % us$ /t AgricultuEe 283.7 35.0 482.2 70.5 588.3 49.6 Industry2~ 168.8 20.8 30.8 4.5 5,480.5 462.8 Services 358.5 44.2 73.8 10.8 4,857.7 410.2 Unallocated 92.2 14.2 Total/Average 810.0 100.0 68.0 100.0 1,184.2 100.0 G=OVERNMENT FINANCE General Government Central Government ( Mln.) % of GDP (US$ Mln.) % Of GDP 197 197 196 -7 1979-80-4/ 97O-?90/ 1975-78 Current Receipts .. .. .. 197.0 22.1 21.8 Current Expenditure .174.2 196 14.1 Current Surplus .. .. .. 22.8 2.5 7.7 Capital Expenditure .. .. .. 142.5 16.0 5.6 External Assistance (net) .. .. .. 52.6 5.9 2.3 MONEY, CREDIT AND PRICES 1974 1975 1976 1977 1978 (Million USS outstanding end period) Money and Quasi Money Bank Credit to Public Sector 4.0 2.Z 0.9 4.7 9.4 Bank Credit to Private Sector 72.7 76.8 83.1 109,2 132.1 (Percentages or Index Numbers) Money and Quasi Money as Z of GDP * General Price Index (1963) = 100)- Annual Percentage Changes in: General Price Index 19.5 13.6 6.0 5.8 8.6 Bank Credit to Public Sector .. -45.0 -59.1 422.2 100.0 Bank Credit to Private Sector .. 5.6 8.2 31.4 20.9 NOTE? All conversions to dollars in this table are at the average exchange rate prevailing during the period covered. 1/ Total labor force; unemployed are allocated to sector of their normal occupation. "Unallocated" consists mainly of unemployed workers seeking their first job. 2/ Over 80% is accounted for by iron ore. 3/ Consumer Price Index (Sept., Nov. 1964 - 100). 4/ 1979-80 revised estimates (preliminary) 5/ GDP estimates for 1979 are preliminary and subject to change. not available. not applicable. 23 - ANNEX I Page 5 of 5 pages TRADE PAYMENTS AND CAPITAL FLOWS BALANCE OF PAYMENTS MERCH NDISE EXPORTS (AVERAGE 1976-78) 1976 1977 1978 US$ Mln. % (Millions US$) Exports of Goods, NFS 467.1 458.0 500.1 Iron Ore 292.2 62.8 Imports of Goods, NFS -443.5 -490.1 -544.6 Rubber 60.5 13.0 Resource Gap (deficit = -) 31.0 -32.1 -44.5 Diamonds 22.7 4.9 Logs or Lumber 29.5 6.3 Interest Payments (net) -4.7 -6.7 -10.1 Coffee 25.0 5.3 Workers' Remittances -25.0 -27.5 -30.3 Palm Products 3.7 0.8 Other Factor Payments (net) -80.3 -68.0 -48.0 Cocoa 8.2 1.8 Net Transfers 32.9 30.8 32.8 All Other Comodities 13.1 2.8 Balance on Current Account -45.7 -104.5 -100.1 T otal 464.9 100.0 Direct Foreign Investment 57.3 8.1 -10.5 EXTERIIAL DEBT, DECEMBER 31, 1979 Net MLT Borrowing 19.4 38.3 58.3 Disbursements 35.4 50.0 70.0 US$ Mln. Amortization -14.0 -13.7 -11.7 Sub-Total 52.4 -19.8 -41.8 Public Debt, Incl. Guaranteed 454.3 Capital Grants .. .. .. Non-Guiaranteed Private Debt 454_3 other Capital (net) -25.2 -35.3 33.7 Total Outstanding and Disbursed 454.3 Other Items n.e.i. 1.5 51.1 5.8 Increase in Reserves (+) -28.7 4.0 2.3 DEBT SERVICE RATIO FOR 1979-/ Gross Reserves (end year) .. ._._ Net Reserves (end year) . . . publi,: Debt, Incl. Guaranteed 10.3 Fuel and Related Materials 59.5 68.8 84.6 Non-Gu^aranteed Private Debt Imports Total Outstanding and Disbursed 10.3 of which: Petroleum Exports IBRD/IDA LENDING, (DECEMBER 31, 1979) (MILLION US$): of which: Petroleum RATE OF EXCHANGE Outstanding andd Disbursed -53,,6 18.0 Through - 1971 Since Undis')ursed 66.3 25.9 US$1.00 = 1.00 US$1.00 = 1.00 0utstanding Incl. Undisbursed 119.9 43.9 1.00 US$ 1.00 = US$ 1/ Ratio of Debt Service to Exports of Goods and Non-Factor Services. not available not applicable September 1980 - 24 - ANNEX II Page 1 of 7 Pages THE STATUS OF BANK GROUP OPERATIONS IN LIBERIA A. STATEMENT OF BANK LOANS AND IDA CREDITS (as of June 30, 1980) Loan or Amount (US$ Million) Credit less cancellation Number Year Borrower Purpose Bank IDA/a Undisbursed Eight loans and three credits fully disbursed 26.67 10.96 1055 1974 Liberian Bank for Second Development Dev. and Investment Finance 4.0 0.24 577 1975 Rep. of Liberia Agriculture 6.0 2.38 700 1977 Rep. of Liberia Agriculture 7.0 4.61 786 1978 Rep. of Liberia Rubber Development 6.0 5.42 839 1978 Rep. of Liberia Forestry 6.0 5.20 Development 859 1978 Rep. of Liberia Monrovia Water 8.0 6.03 Supply 1150 1975 Liberia Electric Third Power 1.8 0.41 Corporation ].156 1975 Rep. of Liberia Third Road 27.5 6.60 1266T 1976 Rep. of Liberia Second Education 4.0 1.16 1323 1976 Liberian Bank for Dev. and Investment Third Development 7.0 4.47 Finance 1417 1977 Rep. of Liberia Education 6.3 4.68 1544 1978 Rep. of Liberia Rubber Development 7.0 7.00 1573 1978 Rep. of Liberia Fourth Highway 13.8 9.26 1600 1978 Liberian Electric Fourth Power 10.0 1.46 Corporation 1644 1979 Rep. of Liberia Feeder Roads 10.7 10.16 1765/b 1979 Rep. of Liberia Decoris Oil Palm 12.0 12.00 Total 130.77 43.96 81.08 of which has been repaid 12.30 - Total now outstanding 118.47 43.96 Amounts sold 0.41 of which repaid 0.41 0.0 Total held by Bank and IDA 118.47 43.96 Total undisbursed 57.44 23.64 81.08 /at Prior to exchange adjustments. /b Not effective. Annex II - 25 - rage 2 uf 7 Va6es B. STATEMENT OF IFC INVESTMENTS (as of June 30, 1980) Fiscal Year Obligor Type of Business Loan Equity Total 1966 Liberian Bank for Development Development and Finance Investment Company 0.250 0.250 1977 Liberian Bank for Development Development and Finance Investment Company 0.306 0.306 0.556 0.556 Less Sold 0.001 0.001 Now Held 0.555 0.555 - 26 - Annex II Page 3 of 7 pages C. PROJECTS IN EXECUTION 1/ Loan No. 1266T-LBR Second Education Project: US$4.0 Million Third Window Loan of June 7, 1976; Effective Date: July 8, 1976; Closing Date: October 31, 1980 Recent political events have had no adverse impact on project implementation. Most project elements have been completed after initial delays in civil works due primarily to shortages of construction materials and unusually long rainy seasons. The extension of the Zorzor Rural Teacher Training Institute has been completed on schedule and within appraisal cost estimates. Eighty-five of the 100 planned community school units have also been completed; the remaining fifteen units may not be constructed due to costs which are higher than anticipated. The technical assistance program has been completed and most of the fellowships have been awarded. The overall project is expected to be completed about two years behind the original completion date but within appraisal cost estimates. Loan No. 1417-LBR Third Education Project: US$6.3 Million Loan of May 26, 1977; Effective Date: July 13, 1977: Closing Date: December 31, 1981 Recent political events have had no adverse impact on project implementation. Overall implementation continues to improve but is about one year behind schedule due to,the failure of one civil works contractor to perform satisfactorily and delays in placing fellows. The Vocational Training Center/Agricultural and Industrial Training Board, the Forestry Training Institute and 3 of the 4 Science and Technology Centers will begin operation at the start of the next school year in March 1981. The construc- tion of the fourth Science and Tchnology Center will begin soon after one year delay due to site problems. The technical assistance program is being implemented as planned. The fellowship program for the Vocational Training Center is being implemented satisfactorily but the remainder of the fellow- ship program is about two years behind schedule. The project is expected to be completed about one year behind the original completion date but within appraisal cost estimates. 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered and the action being taken to remedy them. They should be read in this sense, and with the under- standing that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution. - 27 - Annex II Page 4 of 7 pages Credit No. 577-LBR Agricultural Development (Lofa) Project: US$6 Million Credit of August 1, 1975; Effective Date: May 26, 1976; Closing Date: December 31, 1981 The Project is being managed satisfactcorily by Liberian managers. In 1979 the Project surpassed its swamp rice target (150%) attained 88% of its upland rice target, while cocoa and coffee plantings were well below appraised estimates, (42% and 34% respectively) because of serious shortage of seedlings. The 1980 targets for cocoa and coifee have been reduced because of a likely recurrence of poor seedlings supplies, but targets for swamp and upland rice are likely to be reached. Substantial progress has been achieved by Voinjama cooperative, while the remaining three coopera- tives are in need of improvement. The Project has surpassed its well construction target by more than 60%. Feeder roads construction is however behind schedule. Credit No. 700-LBR Agricultural Development (3ong) Project: US$7 Million Credit of December 29, 1977; Effective Date: March 15, 1978; Closing Date: December 31, 1983 Project implementation under the new Project Manager has improved. The construction of the training center and workshop has been completed. The Schistosomiasis laboratory has been completed and is now in use. Construction of the office building is behind schedule mainly because of shortage of building materials. Three agricultural service centers has been constructed in the project area. Feeder road upland rice and coffee targets, 85% of the cocoa and some 33% upland rice targets. Supply of rice seeds and cocoa and coffee seedlings is still a constraint. The project is now establishing its own nurseries for cocoa and coffee seedlings. Equipment for farm access tracks has already arrived and york on these tracks has started. The village wells-program is underway and 30 wells are projected to be constructed this fiscal year. A total of 85 Cooperative Service Units have been established. Project operations were severely hampered by the recent political upheaval, which was accompaniec. by industrial unrest. The situation is gradually returning to normal. Loan No. 1544-LBR Rubber Development Project: US$7 Million Loan and US$6 Million Credit, both of April 21, 1978; Effective Date: October 3, 1978; CLosing Date: June 30, 1984 Project performance continues to be poor. By end July 1980 only 2,240 acres of rubber would have been rehabilitated compared to appraisal targets of 8,500 acres; about 800 acres of moribund rubber would have been replanted compared to targets of 6,000 acres. construction of headquarters buildings, staff housing, the training center, ;arages and warehouses is one year behind schedule. Only 80 people have been trained compared to appraisal targets of over 2,000. Reasons for the project's poor performance include: low quality senior expatriate management, failure on the part of the project to recruit participants, failure to organize an effective training program, difficulties on the part of farmers in attracting and keeping tapping labor, problems in smallholder marketing and processing of rubber and increases in - 28 - Annex II Page 5 of 7 pages labor and equipment costs which combine to reduce the returns to farmers below a profitable level, inadequate processing capacity in the project area, unattractive factory-gate prices offered by the processors, inadequate farm access roads for evacuation of project output. The last review mission (June 1980) has resulted in a revision of the Project including rehabilita- tion of 40,240 acres mature rubber (an upward revision) and replanting or new planting of 25,800 acres (downward revision), reorganization and expan- sion of LRDU, organization of a project-run collection service, construction of a rubber processing plant with an initial capacity of 5,000 mt per annum, incorporation of a Land Survey and Roads Unit into LRDU, provision of funds for consultant services for redesigning the training program, for assistance to ACDB, and for a follow-up project. Credit No. 839-LBR Forestry Project: US$6 Million Credit of July 28, 1978; Effective Date: December 20, 1978; Closing Date: June 30, 1984 The project includes strengthening the Forestry Development Authority, establishing a 1,600 ha industrial plantation and technical assistance, studies and training. Following the April change of government, the Liberian Project Manager was removed and has not yet been replaced. In the meantime, the project-financed FAO advisory team is managing the project and plantation development is proceeding satisfactorily. Loan No. 1765-LBR Special Action Credit No. 35-LBR Decoris Oil Palm Project: US$12.0 Million Loan and US$2.0 Million EEC Credit, both of December 21. 1979; Effective Date: ; Closing Date: December 31, 1987 Progress in meeting conditions of effectiveness has been delayed due to change in government. The acquisition and leasing of the initial 8,350 ha from Government to Decoris Oil Palm Co. (DOPC) has been signed by all parties involved and is now awaiting approval by the President. A DOPC account has been opened with the Agricultural and Cooperative Development Bank and the amount of $900,000 deposited in this account by Government. The subsidiary financing agreement between Government and DOPC is expected to be concluded soon. A management firm has been selected and the Agreement is nearly complete. Loan No. 1156-LBR Third Highway Project: US$27.5 Million Loan of August 28, 1975; Effective Date: October 14, 1975; Closing Date: June 30, 1981 The construction of a major bridge and an urban main road (5.4 mi) in Monrovia was completed in 1979, and the completion of a main trunk road (83 mi) is now expected in early 1981 after delays due to bad weather, difficulties in the supply of materials and disturbances associated with the recent change in government (the Bank funded portion totalling 42 miles has been completed). The feasibility studies of about 98 miles of main roads - 29 - Annex II Page 6 of 7 pages and an urban transport study in Monrovia have been completed. The Lofa County Feeder Road Unit, which became operatonal in January 1977, has been transferred to the Feeder Road Project, (1664-LBR) after completion of the three-year construction program. Technical assistance in building up the Planning and Programming Division of the Ministry of Public Works is proving fairly effective. Loan 1573-LBR Fourth Highway Project: US$13.8 Million Loan of June 2, 1978; Effective Date: September 11, 1978; Closing Date: December 31, 1982 The project includes reconstruction and improvement of the Paynes- ville-Totota and Paynesville-Robertsfield road, technical assistance of road maintenance and preinvestment studies. Reconstruction of the Paynesville- Robertsfield road financed by the Kuwait fund is expected to be substan- tially completed by October 1980. Rehabilitaticn of the Paynesville-Totoa road started in October 1979, but was disrupted by the departure of consul- tants following the change of Government. Detailed engineering of the Ganta-Sanniquellie and Ganta-Tapeta roads was also delayed temporarily but is now expected to be completed by December 198(1. The full personnel complement of the road maintenance advisory services is in the field. Technical assistance positions have been filled. A project cost overrun of about US$4.0 million is now expected due to implementation delays and higher than expected construction costs. Consequently,, the Government may propose reducing the size of the project. Loan No. 1664-LBR Feeder Roads Project: US,;10.7 Million Loan of April 4, 1979; Effective Date: April 30, 1979; Closing Date: December 3., 1984 The project provides for the construction or improvement and main- tenance of about 700 miles of feeder roads and 1or the maintenance of a further 200 miles of feeder roads. The work will be undertaken by three bri- gades operated by the Ministry of Public Works assisted by local contractors. All contracts for procurement of equipment have been signed. Part of first equipment tranche has been delivered and mobilized on site, the remaining equipment delivery to be completed by October 1980. Design of roads to be constructed by local contractors is in progress. A technical assistance team for planning and execution of works and a technical expert to provide assist- ance to the domestic contractors have been recruited. Loan No. 1055-LBR Second Development Finance Company (LBDI) Project: US$4 Million Loan of December 3, 1974; Effective Date: January 3, 1975; Closing Date: December 31,1980; and Loan No. 1323-LBR Third Development Finance Company (LBDI) Project: US$7 Million Loan of October 7, 1976; Effective Date: December 17, 1976; Closing Date: December 31, 1982; Loan 1055-LBR is 98 percent committed and should be completed shortly. Commitment of Loan 1323-LBR has been slower than anticipated Annex II -30- Page 7 of 7 pages (by February 1980, 49 percent of the loan had been committed) owing to slackening economic activity in Liberia and a downturn in business invest- ment. Following the recent political changes, LBDI remains financially and structurally sound and is concentrating its efforts on project follow-up and loan recovery. Loan No. 1150-LBR Third Power Project: US$1.8 Million Loan of August 1, 1975; Effective Date: October 20, 1975; Closing Date: June 30, 1981 The project finances technical assistance for establishing a long-range development plan and detailed investment program as well as for strengthening the management of the Liberia Electricity Corporation (LEC) and training of its staff. LEC's management continues to need external support and the training program needs to be expanded to include practical training for middle-level staff, all of which is being addressed under the Fourth Power Project's Management Improvement Program. The LEC consultants, Chas. T. Main (USA), have completed the pre-feasibility study of the hydro- electric development of St. Paul River. Loan No. 1600-LBR Fourth Power Project: US$10.0 Million Loan of July 7, 1978; Effective Date: December 11, 1978; Closing Date; June 30, 1982 The project consists of expansion of thermal generating facilities by 26 MW to meet demand up to 1985, power distribution to urban poor, rural transmission studies and technical assistance for management and training. Construction of the power plant is complete, the two diesel units are in operation. LEC's financial performance has been severely affected by low operating efficiency. A five-man managment support team started work at LEC in July 1978 as a part of the Management Improvement Program instituted under this Loan. Progress of this team is satisfactory. Credit No. 859-LBR Water Supply Project: US$8 Million Credit of January 8, 1979; Effective Date: April 2, 1979; Closing Date: December 31, 1982 The project is designed to assist the Liberia Water and Sewer Corporation in expanding Monrovia's water supply and distribution capacity, increasing access to service for the urban poor, and improving LWSC's man- agerial efficiency, planning capacity and financial viability. The project provides for a sector study as a basis for a sector development plan and strategy, and provides training opportunities and facilities for LWSC's Liberian staff. Except for the technical trainer, the other management training personnel are on post, and Liberian counterparts have been assigned to understudy them. A draft report on the management improvement programme has been completed and reviewed and the finalized version is expected soon. - 31 - ANNEX III REPUBLIC OF LIBERIA PETROLEUM EXPLORATION PROMOTI]ON PROJECT Supplemental Project Data Sheet Section I: Timetable of Key Events (a) Time taken to prepare project: 18 months (b) Agency which prepared project: Ministry of Lands and Mines, Bureau of Hydrocarbons, with assistance of consultants (c) Date of first Bank mission to February 1979 consider the project: (d) Appraisal: January 1980 (e) Negotiations completed: March 24, 1980 (f) Planned date of effectiveness: December 31, 1980 Section II: Special Bank Implementation Action None Section III: Special Conditions 1. Due consideration to be given to the needs of the Bureau of Hydrocarbons and oil exploration in allocating the proceeds from the sale of reports (para. 53). 2. The award of at least one exploration perinit to an oil company would be a condition of disbursement for the assistance in monitoring explo- ration activities (para. 45(d)(i)). IBRD 14877 *00 / / ~~~~~~~~~~~~~~~~~~ 9~~~~~~OO ~~~~~FEBRUARY1980 ~~~~' ~~~~~~LIBERIA LIBERIA *: PETROLEUM EXPLORATION PROMOTION PROJECT S I E~~~~ ~~~~~~ G~eo,o 10 Boer-En
World Bank Group · President's Report
Liberia - Petroleum Exploration Promotion Project
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