Tunisia - Third Urban Development Project

Document of The World Bank FL A FOR OFFICIAL USE ONLY Report No. P-3421-TUN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN THE AMOUNT EQUIVALENT TO US$25 MILLION TO THE REPUBLIC OF TUNISIA FOR A THIRD URBAN DEVELOPMENT PROJECT November 24, 1982 This decument has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit - Tunisian Dinar (TD) The exchange rate of the Tunisian Dinar is floating. The rate used in the Staff Appraisal Report, which approximates the current rate, is: US$1 = TD 0.5 IDI = US$2 FISCAL YEAR January 1 - December 31 ACRONYMS AND ABBREVIATIONS AFH Land Development Agency (Agence Fonciere d'Habitation) ARRU Urban Upgrading and Renewal Agency (Agence pour la Rehabilitation et la Renovation Urbaine) BDET Economic Development Bank of Tunisia (Banque de Developpement Economique de Tunisie) CNEL National Housing and Savings Fund (Caisse Nationale d'Epargne-Logement) CPSCL Local Communities Support Fund (Caisse de Prgts et de Soutien des Collectivit6s Locales) FOPROLOS Workers' Housing Fund (Fonds Social pour la Promotion du Logement des Salaries) IERR Internal Economic Rate of Return MOE Ministry of Equipment MOH Ministry of Housing MOINT Ministry of Interior MOPF Ministry of Planning and Finance ONAS National Sewerage Authority (Office National d'Assainissement) SONEDE National Water Production and Distribution Company (Societe Nationale d'Exploitation et de Distribution des Eaux) STEG Public Electricity and Gas Company (Societe Tunisienne de I'Electricit4 et du Gaz)  REPUBLIC OF TUNISIA FOR OFFICIAL USE ONLY THIRD URBAN DEVELOPMENT PROJECT Loan and Project Summary Borrower: Republic of Tunisia. Beneficiaries: The Municipalities of Tunis, La Goulette, Jendouba, Le Kef and the District of Tunis; and the Local Communities Support Fund (CPSCL). Amount: US$25.0 million equivalent, including a capitalized front-end fee. Terms: Repayable in 20 years, including three years of grace, at the standard variable interest rate. Relending Terms: The Government would onlend $6.4 million to CPSCL at an interest rate of 11.43 percent per annum, repayable in 20 years including three years of grace. CPSCL would relend these amounts at cost, for 20 years including two years of grace. The Government would bear the foreign exchange risk. Project Description: The project would provide improved shelter and urban services to low-income population groups; strengthen and coordinate the activities of the urban sector's technical and financial institutions; contribute to the elaboration of urban and housing development planning and policies; and introduce new schemes to mobilize private savings for the financing of housing. It would consist of: (i) comprehensive upgrading in four settlements; (ii) a sites and services/housing credit scbeme in three of these settlements; (iii) a pilot program of upgrading and reconstruction of the Hafsia neigbborhood in the Medina of Tunis; and (iv) technical assistance for project implementation, institution building and pre-investment studies. Benefits: About 77,000 people would benefit directly or indirectly from the project, of wbicb about 26 percent are below the absolute poverty level. The project would meet 21 percent of the urban poor new demand for shelter in the project sites between 1983 and 1988. It would build up a well coordinated technical, financial, and institutional framework that would allow more effective management and control of the urbanization process, and would associate the private sector in an innovative approach to the upgrading of old traditional Arab towns that could be replicated in Tunisia and in other countries. This document has a restricted distribution and may be used by recipients only in the performance off their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Risks-, The risk that the relative inexperience of key executing agencies could affect project implenentation is reduced by technical assistance to fill present gaps and gradually train Tunisian staff to take over operations. Difficulties which could arise from the complexity of project components would be minimized by intensive Bank supervision, and, at the local level, by a public relations program and other incentives to encourage community participation; and, for the Medina pilot scheme, by its flexible implementation through small, easily manageable operations. Finally, the risk that land acquisition would delay the sites and services component is minimized by the powers given to the Urban Upgrading and Renewal Agency (ARRU) to expropriate land under emergency procedures. Estimated Costs: Local Foreign Total