Tunisia - Third Port Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 9052 PROJECT COMPLETION REPORT REPUBLIC OF TUNISIA THIRD PORTS PROJECT (LOAN 1797-TUN) OCTOBER 10, 1990 Infrastructure Operations Division Country Department II Europe, Middle East and North Africa Region This document 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.  "EPUBLIC OF TU ISIA CURRENCY EOUIVALENTS Appraisal Year Average US$1 - TD 0.40 Intervening Year Average US$1 - TD 0.73 Completion Year Average US$1 - TD 0.92 GLOSSARY OF ACRONYMS FTP - Centre de Formation de Travailleurs Portuaires (Port Worker Training Center) 'I - Centre National d'Informatique (National Center for Computer Science) 3M - Commission Superieure des Marches (National Procurement Board) rN - Compagnie Tunisienne de Navigation (Tunisian Shipping Company) ZR - Economic Rate of Return cc - Gabbs Chimie Transport (Gabes Chemical Transport Company) rF - Information, Technology, and Facilities Department of the World Bank ?NT - Office des Ports Nationaux Tunisiens (Tunisian National Ports Authority) CAM - Societe Tunisienne d'Acconage et de Hanutention (Tunisian Stevedoring and Cargo-Handling Company) iCTAD - United Nations Conference on Trade and Development FISCAL YEAR January 1 - December 31  FOR OMCIAL USE ONLY THE WOtLD JIANK Washinglon. DC 204 3 3 USA OEmc. nE Di,Kctar.CAW&I October 10, 1990 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Republic of Tunisia Third Ports Prolect (Loan 1797-TUN) Attached,.for information, is a copy of a report entitled "Project Completion Report on Republic of Tunisia Third Ports Project (Loan 1797-TUN)", prepared by the Europe, Middle East and North Africa Regional Office. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment This document hu a rtricted distribution and may be used by recipients only in the performance of their official dutie. Its contents may not otherwise be discosed without World Bank authorization.  FOR OFFICAL USE ONLY REPUBLIC OF TUNISIA THIRD PORT PROJECT (LOAN 1797-UN) TABLE OF CONTENTS PREFACE . . . . . . . . . . . . . . . . . . . . . . . . . . . EVALUATION SUMMARY . . . . . . . . . . . . . . . . . . . . . . ii PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE . . . . . . . . . . 1 I. PROJECT IDENTITY . . . . . . . . . . . . . . . . . . . . . . . . 3 II. BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 III. PROJECT OBJECTIVES AND DESCRIPTION . . . . . . . . . . . . . . . 4 IV. PROJECT DESIGN AND ORGANIZATION . . . . . . . . . . . . . . . . 6 V. PROJECT IMPLEMENTATION .... . . . . . . . . . . . . . . . . . 7 Loan Effectiveness .... . . . . . . . . . . . . . . . . . . 7 Project Startup . . . . . . . . . . . . . . . . . . . . . . . 7 Implementation Schedule . . . . . . . . . . . . . . . . . . . 7 Procurement . . . . . . . . . . . . . . . . . . . . . . . . . 9 Project Costs . . . . . . . . . . . . . . . . . . . . . . . . 10 Disbursement . . . . . . . . . . . . . . . . . . . . . . . . . 10 VI. PROJECT RESULTS . . . . . . . . . . . . . . . . . . . . . 1. Achievement of Project Objectives . . . . . . . . . . . . . . 10 Achievement of Physical Targets . . . . . . . . . . . . . . . 10 Financial Performance .11 Economic Reevaluation . . . . . . . . . . . . . . . . . . . . 11 VII. PROJECT SUSTAINABILITY .... . . . . . . . . . . . . . . . . . 12 VIII. BANK PERFORMANCE .... . . . . . . . . . . . . . . . . . . . . 13 IX. BORROWER PERFORMANCE .13 X. BANK-BORROWER RELATIONSHIP ... . . . . . . . . . . . . . . . . 13 XI. CONSUETING SERVICES .................... . 14 XII. PROJECT DOCUMENTATION AND DATA . . . . . . . . . . . . . . . . . 14 PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE . . . . . . . . 15 This document 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.  REPUBLIC OF TUNISIA THIRD PORT PROJECT (Loan 1797-TUN) Table of Contents (continued) PART III: STATISTICAL INFORMATION . . . . . . . . . . . . . . . . . . . . 21 Table 1: Related Bank Loans . . . . . . . a . . . . . . . 23 Table 2: Project Timetable . . . . . . . . . . . . . . . 23 Table 3: Loan Disbursements . . . . . . . . . . . . .. 24 Table 4: Project Costs . . . . . . . . . . . . . . . . 25 Table 5: Project Financing . . . . . . . . . . . . . . . 25 Table 6: Direct and Indirect Benefits . . . . . . . . . . 26 Table 7: Economic Impact . . . . . . . . . . . .. 26 Table 8: Project Study . . . . . . . . . ....... 26 Table 9: Status of Covenants . . . . . . . . . . . . . . 27 Table 10: Staff Inputs . . . . . . . . . . . . . . . 28 Table 11: Missions , . . . . . . . . . . . . . . . 2q ANNEXES 9 , * * . .*. . . . . . . . . . . . . . . . 30 1. List of Equipment Procured under the Project * . . * * * . . * 30 2. Comparison of Actual and Forecast General Cargo Traffic . . . 31 3. OPNT's Audited Financial Statements (1978-1988) * . . * * * * 32 4. OPNT's Projected Investment and Financing Plan (1990-95) . * * 35 5. OPNT's Projected Financial Statements (1990-95) . * * * * * * 36 6. Cost/Benefit Analysis . .*. . . . . * . * 37 MAP IBRD 14530R - Tunisia: The Ports Subsector  PROJECT COMPLETION REPORT REPUBLIC OF TUNISIA THIRD PORTS PROJECT (LOAN 1'97-TUN) PREFACE This is the Project Completion Report (PCR) for the Third Ports Project in Tunisia, for which Loan 1797-TUN in the amount of US$42.5 million was approved on February 8, 1980. The loan was closed on December 31, 1988, three and a half years behind schedule. The last disbursement was on April 13, 1989 and an amount of US$7.8 million was cancelled. The PCR was jointly prepared by the Infrastructure Operations Division, Country Department II, of the Europe, Middle East and North Africa Regional Office (Preface, Evaluation Summary, Parts I and III) and the Tunisian National Ports Authority (Part II). Preparation of this PCR was started during the Bank's final supervision mission of the project in March 1990 and is based, inter alia, on the Staff Appraisal Report; the Loan Agreement, supervision reports; correspondence between the Bank and the Borrower; and internal Bank memoranda.  - iii - PROJECT COMPLETION REPORT REPUBLIC OF TUNISIA THIRD PORTS PROJECT (LOAN 1797-TUN) EVALUATION SUMKARY Introduction and Background 1. At independence in 1956, Tunisia inherited a relatively well developed transport system, which was adequate to support economic development through the 1960s. In the 1970s, the country's economic performance, aided by oil exports, was strong. The Fourth Development Plan (1973-76) recognized that the transport network needed to be expanded to facilitate the handling of increasing traffic volumes and avoid a major infrastructure bottleneck to future economic growth. The next Plan (1977-81) concentrated on improving the existing transport infrastructure, especially through modernization and rehabilitation works. Objectives 2. The Third Ports Project was conceived through long-term port planning, which began with the preparation of a Master Plan, partially financed by the Bank through the proceeds of the Second Port Project (Loan 573-TUN). The Master Plan took into account the fact that changing technology in sea transport in the Mediterranean, particularly the advent of Ro-Ro (i.e., roll-on, roll- off) vessels, could substantially reduce transport costs. The main objectives of the project were, therefore, to enable the country's two major ports, Tunis/La Goulette and Sfax, to cope with changes in shipping technology, while increasing their operational efficiency and cargo-handling capacity. Implementation Experience 3. The project was implemented by the Borrower, the Tunisian National Ports Authority (OPNT). Civil works followed the original project design. Due to limited possibilities at La Goulette, it was necessary to undertake port expansion at Rades, a location midway between La Goulette and the smaller port of Tunis. The existing channel was deepened and widened, a new deep-water basin dredged, and land reclaimed from dredged materials. Operational and storage areas, transit sheds, and maintenance facilities were included at both Rades and Sfax project sites. A first tranche of cargo-handling equipment was financed through a Netherlands export credit and a second tranche from the Bank loan. In compliance with the Loan Agreement, this equipment was subsequently leased to the Tunisian Stevedoring and Cargo-Handling Company (STAM). During project implementation, the Loan Agreement was amended to provide for the acquisition of a comprehensive management information system, which was installed in 1989 and now incorporates port operations, budgeting, and payroll. To complement  - iv - the physical components, the project also included technical assistance needed to improve operations and train port staff. Two parts of a three-part study on the reorganization of workshops were completed but the third part, which would consist of specific recommendations, was never commissioned since full responsibility for cargo-handling operations and equipment maintenance was assigned to STAM, a public enterprise with a monopoly at Tunis/LaGoulette. Participation in the TRAINMAR program, developed and delivered by the United Nations Conference on Trade and Comme;. e (UNCTAD), enabled OPNT to attain self- sufficiency in the training of port workers. Results 4. The estimated cost was US$104.2 million, with about US$62.9 million in foreign costs. The actual cost was US$104.7 million, with US$42.6 million in foreign costs, as a strong US dollar in the early 1980s contributed to substantial savings in the foreign exchange cost of civil works and lower borrowing needs, leaving a sizeable surplus in the loan account. Part of this was used for the purchase of a second tranche of cargo-handling equipment, and the remainder was cancelled. 5. The project encountered lengthy implementation delays, which had only a marginal impact on the achievement of project objectives. Despite these delays and a slowdown in overall general cargo traffic growth during the 1980s, the rapid penetration of this traffic by Ro-Ro technology brought savings in cargo-handling costs, ships' service time, and ships' waiting time. Based on actual costs and revised benefit calculations, an economic rate of return of 14% has been obtained on investments at the Tunis/La Goulette/Rades port complex and 12.5% on those at Sfax (as compared with 16.5% for both ports at appraisal). 6. Facilities at the new port of Rades, which was commissioned in December 1986, are perfectly well suited for Ro-Ro traffic and can also accommodate container vessels. Moreover, they have eased conventional and car- ferry congestion at the ports of Tunis and La Goulette. The port complex handled 1.4 million tons of general cargo in 1989, 63X of which was unitized, primarily in Ro-Ro form. The new land developed under the project will facilitate future port expansion at a relatively low cost. In the meantime, part of the land is being leased for commercial and industrial use. At Sfax, new port facilities were developed in the area and adjacent to the existing port basin, facilitating further expansion, when required. The port of Sfax handled 351,443 tons of general cargo in 1989, 121 of which was unitized. 7. Recent trends and present forecasts in traffic growth do not indicate the need for any major port investments in the foreseeable future. However, the main requirement could be to provide equipment to encourage containerization, which is still at a relatively low level in Tunisia (less than 101 of general cargo). The proposed First Transport Sector Loan, scheduled for FY92, is expected to have a ports component aimed at promoting increased productivity and modernization of port management through, inter alia, further containerization at the port of Rades.  -v - Sustainabilitv 8. OPNT is institutionally strong in the areas of engineering, financial management, and training. It also has the capacity to evaluate the technical and economic viability of port investments. Provided tariffs continue to be reviewed periodically and rationally restructured, and if private stevedoring companies are permitted and encouraged to compete at La Goulette and Rades, as envisaged, there is reasonable expectation that project benefits will be sustained. In this regard, it is also critical that the groundwork be laid for strategic planning in the port subsector (para 11). Findings and Lessons 9. The PPAR on the Second Ports Project (Loan 573-TUN) commented on the lack of improvement in port operations and concluded that the Bank did not take the opportunity to assist in increasing overall efficiency in Tunisian ports through improved cargo-handling organization and methods. As a condition of negotiating the Third Project, OPNT prepared a plan of action to set in motion feasible and practical improvements in cargo handling, but the plan could not be carried out effectively because of the tenuous relationship between OPNT and STAM. This relationship, exacerbated by STAM's serious financial situation, led to considerable delays and postponements in the purchase of cargo-handling equipment. As a consequence, the ports of Tunis, La Goulette, and Rades continue to operate below their potentiality; the project, thus, did not fully meet its institution-building and operational efficiency objectives. 10. Plans are now underway to open up cargo-handling operations at the three ports to competition from private stevedoring companies and to restructure STAM, an action long overdue. Clearly, the Bank should have intensified efforts to overcome this institutional bottleneck in port operations together with an earlier, more systematic assessment of equipment needs. In its continuing dialogue with the transport sector, highest priority will have to be assigned to this set of issues. 11. During the course of project implementation, there was frequent turnover at the Chief Executive officer level; several recent CEOs had tenures of less than two years. Such turnover seriously hampered OPNT's corporate planning function, as well as the strategic planning process for the port subsector as a whole. Otherwise, OPNT is a well managed enterprise. Good cooperation between the supervision consultants and OPNT engineering staff led to a satisfactory achievement of physical targets in the face of difficult technical conditions. OPNT's financial management functioned well given an outdated tariff structure over which it had no control. The need for tariff restructuring had been foreseen during negotiations and carried out by December 31, 1982 in compliance with the Loan Agreement. Several -ears hence, however, the downturn in traffic rendered new tariffs obsolete; the tariff structure was only updated after ONPT experienced a negative cash flow in 1987, which led to a tariff increase and permitted OPNT to achieve good financial results thereafter. 12. What is significant is that OPNT's declining revenue base relative to its debt service requirements and operating expenses occurred during a four-  - vi - year period (1983-86) when audit reports were not being made available until two to three years after the due dates. Herein lies the importance of timely compliance with the audit requirement. If, in the mid-1980s, the Bank and the Government had had access to annual audit reports, OPNT could have used these results to strengthen the case for tariff increases. 13. Clearly, lack of continuity during supervision, compounded by the Bank reorganization, weakened the Bank"s effectiveness in dealing with the above institutional and financial matters. For instance, the Bank could have used delays and general indecision concerning the acquisition of equipment as leverage in seeking an early solution to the issue involving the working relationship between OPNT and STAM. On the other hand, Bank intervention into the design and implementation of the training component helpad OPNT improve its overall human resource capacity. Implementation of the TRAINMAP program was indeed a success notvithstandirig earlier plans for a joint OPNT-STAM training effort, which never got .if the ground.  - I - PROJECT COMPLETION REPORT REPUBUC OF TUNISIA THIRD PORTS PROJECT (LOAN 1797-TUN) PART 1: PRJECT REIEW FRIM HE BANICS PERSP %. 'N  REPUBLIC OF TUNISIA THIRD PORTS PROJECT (LOAN 1797-TUN) PROJECT COMPLETION REPORT I. PROJECT IDENTITY Name Third Ports Project Loan Number 1797-TUN RVP Unit EMENA Country Tunisia Sector : Transportation Subsector Ports II. BACKGROUND 2.01 At independence in 1956, Tunisia inherited a relatively well developed transport system, which was adequate to support economic development through the 1960s. In the 1970s, the country's economic performance, aided by oil exports, was strong. The Fourth Development Plan (1973-76) recognized that the condition of the transport network needed to be improved to facilitate the handl4.ng of increasing traffic volumes and avoid a major bottleneck to future economic growth. The Fifth Development Plan (1977-81) had the following objectives for the transport sector: (a) improve the existing infrastzucture, especially through modernization and rehabilitation works; (b) promote rural development by improving feeder roads; (c) increase Tunisia's share of international traffic; and (d) reorganize regional transport companies. To achieve the first objective, the Third Port Project would assist the Government in the modernization of berth facilities at the main ports of Tunis/La Goulette and Sfax and in providing support facilities for improved port operations. 2.02 In 1978, when the project was appraised, Tunisia's five major commercial ports (Tunis/La Goulette, Sfax, Bizerte, Sousse, and Gabes) handled almost 11 million tons of cargo, of which 9.3 million tons, or 85X, was international traffic. Coastal traffic amounting to 1.6 million tons consisted mainly of the movement of petroleum products from Bizerte to Sfax and La Goulette. Liquid bulk cargo totalled 4.1 million tons; dry bulk, 4.3 million tons (including grain, 978,000 tons) and general cargo, 2.6 million tons. Eighty-four percent of the international trade was short-distance traffic with Europe and North Africa, 121 with the Americas, and 41 with Asia. 2.03 Bank assistance through the Third Port Project supported the Tunisian National Ports Authority (OPNT) investmenz in the new port of Rades, which is  situated across the channel from La Goulette, and in the expansion and modernization of port facilities at Sfax. New facilities were built at both ports to accommodate Ro-Ro, as well as container traffic. The project also included a comprehensive port worker training program with assistance from the United Nations Conference on Trade and Commerce (UNCTAD). This project completed the Government's port investment program, as evidenced in the Seventh and Eighth Five-Year Plans (1987-91, 1992-96), which do not envisage any new large investments except for the petroleum berth at Bizerte. 2.04 The country's main port facilities are owned and operated by OPNT, which was established in 1965 and falls under the jurisdiction of the Ministry of Transport. Cargo handling is the responsibility of several companies, including one public enterprise, the Tunisian Stevedoring and Cargo-Handling Company (STAM), which is by far the largest. The portion of international traffic carried by Tunisian shipping lines constitutes about lOX and is the responsibility of two companies: the Tunisian Shipping Company (CTN) and the Gabes Chemical Transport Company (GCT). 2.05 The focus of future investments will be on the rehabilitation and maintenance of existing port facilities. The Bank could probably finance these actions, while continuing to promote increased productivity and modernization of port management. The proposed First Transport Sector Loan may be a good vehicle to accomplish this objective. Other actions that have been recommended include further containerization, which would reduce cargo-handling costs considerably, and the restructuring of STAM. The latter would address a serious operational, as well as institutional, bottleneck involving the lack of coordination and overall poor working relationship between OPNT and STAM. This stems not only from STAM's weak financial position, marked by a continually high annual deficit, but also its monopoly over cargo-handling operations at Tunis, La Goulette, and Rades. Where it does not have a monopoly (e.g., at Sfax, where five private companies compete with STAM), STAM is far more efficient. In its ongoing dialogue with the port subsector, the Bank will inevitably assign priority to this set of issues. III. PROJECT OBJECTIVES AND DESCRIPTION 3.01 Changing technology in sea transport in the Mediterranean has considerably reduced total transport costs from origin to destination; the advent of Ro-Ro vessels, in particular, has had a significant impact. The main objectives of the project were, therefore, to enable the country's two main ports to cope with the changes in shipping technology and to increase operational efficiency and capacity at the project ports. These objectives would be accomplished by providing: (a) specialized facilities to accommodate Ro-P.o vessels; and (b) additional port facilities with appropriate operational and storage areas, transit shed, and maintenance facilities. To complement the physical components, the project also included technical assistince needed to improve operations and train port staff.  02 The project consisted of: (a) Civil Works at La Goulette: dredging of an access channel and south port basin to a depth of lOm; land reclamation with the dredged material at the new port area to replace soft layers with suitable material; improving soil conditions at the new port area; constructing about 350 m of quays, and of jetties capable of handling general cargo liners, Ro-Ro vessels, and container ships; constructing about 30,000 m2 of transit and customs sheds; paving open storage areas and constructing the port access road; constructing port administration and other ancillary buildings; providing port utilities, inter alia, water supply, electricity, drainage; and constructing a shallow-water berth and related back-up area to handle dangerous materials. at Sfax: constructing quays about 515 m long and 11 m deep, capable of handling general cargo liners and Ro-Ro vessels; constructing the port access road; filling, grading, and paving open storage and parking areas; constructing transit and customs' sheds and ancillary buildings; and providing port utilities such as, inter alia, water supply, electricity, drainage; (b) EguiRment and materials at La Goulette and Sfax: cargo-handling and workshop equipment; and timber for the manufacture of about 20,000 pallets; and  (c) Technical Assistance: consulting services for supervision of civil works construction; consulting services to assist OPNT and STAM in reorganizing repair and maintqnance services; and technical assistance to develop and implement training programs for port workers. IV. PROJECT DESIGN AND ORGANIZATION 4.01 The project was designed on the basis of the recommendations of a Port Master Plan, partially financed by the Bank under the Second Port Project (Loan 573-TUN). Upon completion of preliminary engineering for the expansion of the ports of La Goulette and Sfax, OPNT requested that the Bank appraise these projects to determine their suitability for Bank financing. The appraisal mission, which took place in September/October 1978, concluded that the project was technically justified and appropriately prepared after assessing the following aspects: (a) physical constraints in expanding existing port facilities to cope with forecast traffic; (b) suitability of proposed ports expansion in accordance with types of cargoes and shipping patterns; (c) availability of reserve areas for future expansion; (d) road network links; (e) environmental effects of the project; and (f) the selected port layouts and development schemes corresponding to least-cost solution when compared with alternative schemes analyzed during the preparation of the Master Plan studies. From an institutional standpoint, the appraisal mission recognized that OPNT's organization and management functioned well and that its financial management was particularly strong. Cash flow projections indicated that OPNT would have sufficient internally generated funds to finance local investment costs while maintaining satisfactory operating ratios and would be able to cover its debt service requirements. Frcm an economic standpoint, the mission supported the Government's and OPNT's determination to curb port congestion, which, within the next four years, would result in excessive ships' waiting time. 4.02 Negotiations took place in December 1979. It was agreed that the Bank would finance neither equipment procured under the project nor civil works for the Sfax subproject. Since the Bank loan, however, would finance technical assistance for construction supervision at both sites, it was stressed that the Bank would supervise all aspects of the project. A tentative equipment list was discussed and agreed with OPNT and STAM at negotiations with the understanding that it would be revised as required by changes in operational techniques. All equipment would be procured by OPNT and then leased, according to the Loan Agreement, to cargo-handling companies on terms and conditions acceptable to the Bank. It was also agreed that as a condition of loan effectiveness, OPNT would obtain export credits amounting to US$20.3 million to finance the foreign exchange cost of the civil works at the port of Sfax as well as the acquisition of equipment.  V. PROJECT IMPLEMENTATION Loan Effectiveness 5.01 The deadline for meeting conditions of loan effectiveness was changed from May 8, 1980 to July 31, 1980 to allow OPNT adequate time to obtain the financing needed for the Sfax subproject and export credit for the financing of cargo-handling equipment. However, it was pointed out that funding for civil works at Sfax would be available locally. It was also recognized that cargo- handling equipment to be financed through export credits would be needed only near completion of the civil works and not immediately, as originally assumed. The Loan Agreement was amended in June 1980 to require that OPNT seek export credit financing for an amount of US$7.0 million, instead of US$20.3 million, to procure equipment, part of which was for its own use and the other part to be leased to cargo-handling companies, including STAM. Project Startup 5.02 Site works at Rad6s did not commence until October 1980, four months later than forecast at appraisal. This was due to delays in agreeing on an acceptable site for depositing material to be dredged from the project area. Agreement between OPNT and local agencies was finally reached in September 1980 after six months of discussions. Construction startup at Sfax commenced in March 1981, nine months later than forecast at appraisal. Delays were due to the need to remove ship repair facilities, which were still in operation in the project site area, and to Bank concern over the qualifications and experience of a local consultant hired to supervise construction. Implementation Schedule 5.03 Construction of the Port of Rades. The new port facilities, originally scheduled for completion by April 1984, were completed in mid-1986. The main causes of delays in implementing civil works at Rades were: (a) unusually adverse weather conditions, consisting of heavy rain, floods, and strong winds; (b) the change in the site allocated for dumping dredged materials from a location at the southern inner lake to the sea shore outside the port breakwater; (c) delay in issuance of an import license for water pipes; (d) inadequate personnel and equipment provided by the local contractor to remove about one million cubic meter of sand (7 m high) of surcharge to ensure final settlement of reclaimed areas; (e) OPNT acceptance of the contractor's proposal to change the design of paving of open storage areas, more than one year after submission of the proposal; and (f) difficulty in obtaining an adequate number of trucks for delivery of materials to the site, a problem that affected many other branches of industry. 5.04 Operation of the Port of Rades. The Port of Rades was commissioned in December 1986. However, it could not be fully utilized for Ro-Ro and containerized traffic until mid-1989 because of delays in procuring the second tranche of equipment and in improving the link between the port area and the road network along a 10-mile section of MC33, which had been inadequately assessed during appraisal. The Bank agreed to finance the latter component under the Fourth Highway Project (Loan 1841-TUN). Now that the equipment has  - 8 - been delivered and put into operation and improvement of the access road has been completed, the new port of Rades is fully operational under a separate directorate within OPNT. 5.05 Expansion of the Port of Sfax. Expansion of port facilities, originally scheduled to be completed by April 1983, was not completed until mid- 1985 representing a delay of 20 months. The main reasons for delays were: (a) unusually adverse weather conditions consisting of heavy rain and floods; (b) unsatisfactory performance of the contractor responsible for superstructure works; and (c) difficulty in obtaining an adequate numbjqr of trucks for delivery of materials to the site (para. 5.03). 5.06 Reorganization of Maintenance WorkshoRs. The study was to have been executed in three phases. Phase I covered the analysis of systems and procedures in use. The report, completed in June 1983, presented four options: (a) improvements within the existing systems and equipment; (b) rehabilitation of workshops and renewal of equipment; (c) creation of an autonomous enterprise to maintain equipment, which it would own and rent to STAM and OPNT; or (d) joint STAM and OPNT ownership of equipment. The last option was retained and the consultants prepared Phase II of the study, which involved defining the detailed organization, including training needs and equipment. Phase II was completed in January 1985. A third and final phase of the study, which would have made detailed recommendations for implementing the establishment of the new agency, was never commissioned mainly because of OPNT's preference for private sector involvement and its opposition to what it perceived as becoming a cumbersome, inefficient bureaucracy. After reviewing alternative arrangements for the operation of the port facilities at Rades, the Government decided in April 1986 that cargo handling, including equipment maintenance, should be undertaken entirely by STAM. 5.07 Training. It was initially agreed that OPNT and STAM would coordinate the training programs for stevedores and shed personnel at appropriate levels. In early 1982, the Port Worker Training Center (CFTP) was established for their joint use. A director and four instructors, two each from OPNT and STAN, were appointed and received training in Tunis in accordance with a contract between OPNT and UNCTAD signed in August 1982. The contract specifically called for the application of the TRAINMAR methodology developed by UNCTAD. This methodology relies on the support given to course developers, whose role is to adapt training activities to the specific needs of the local sector through basic courses centrally developed by UNCTAD, or in other countries where TRAINMAR is already applied. Under the TRAINMAR program, CFTP developed four courses. The first dealt with port operations addressing the needs of dock labor force supervisors, the second with the commercial aspects of the Tunisian maritime law, the third with warehousing and storage, and the fourth, developed in collaboration with a TRAINMAR-affiliated training center in Mexico, with maintenance planning. By mid-1984, CFTP faced serious institutional problems. Although it was jointly owned by OPNT and STAN, the entire cost was being borne by OPNT. Other issues that surfaced were related to CFTP's fiscal autonomy, the possibility of deducting amounts allocated to CFTP from taxes paid by STAN and OPNT to the National Labor Training Program, and the easing of restrictions placed by the Government on the use of CFTP's facilities for non-port training. Because these issues persisted, in early 1988 the Training Directorate of OPNT  - 9 - was established to replace CFTP and cater only to the training needs of OPNT staff. Implementation of the TRAINMAR program was successful notwithstanding earlier plans for a joint OPNT-STAM training effort. Procurement 5.08 Civil Works. Bids for construction of civil works at Rades were received in June 1979, but the contract was not awarded until March 1980. The contract for civil works at Sfax was awarded in October 1980 to two local contractors: one for infrastructure including mainly general cargo and Ro-Ro berths and the port access road; the other for superstructure, consisting mainly of transit sheds, ancillary buildings, and port utilities. 5.09 Timber for the manufacture of pallets. The project included timber for the manufacture of 20,000 pallets needed by STAM. Since these would not be financed under the Bank loan, it was agreed that the timber would be procured directly by STAM. 5.10 Cargo-handling equipment. In 1984, OPNT negotiated export credits from the Netherlands for a total amount of US$10.3 million to procure four tug boats and two pneumatic cranes for handling containers and heavy lifts. Having exceeded the provision of US$7.0 million referred to in the amended Loan Agreement, OPNT decided to request the Bank to make available part of the anticipated surplus in the loan account to finance a second tranche consisting of land-based equipment (Annex 1), to which the Bank agreed. In mid-1987, international competitive bidding was completed. However, subsequent political changes in the country and the nomination of a new CEO for OPNT delayed considerably the finalizing of contracts with the selected suppliers, who in the meantime raised their prices. The National Procurement Board (CSM) advised OPNT to reject those suppliers and solicit new bids. Even though the previous bids were no longer valid, there was inadequate time to retender except for the smallest items. In the meantime, OPNT renegotiated with the suppliers of the Ro-Ro trucks and the 32-ton forklift trucks who indicated their willingness to maintain the prices of their original tenders. The equipment list was modified to suit the needs of both OPNT and STAM keeping in mind that contract awards, delivery, and disbursement would have to take place within six months of the fourth and final closing date, December 31, 1989. Six four-ton forklift trucks on the list were not financed from the Bank Loan because of OPNT's decision to award the contract to the lowest bidder following a second round of tendering, which did not conform with Bank procurement guidelines. 5.11 Management Information System. In December 1984, OPNT asked the Bank to finance a management information system to replace an existing outdated computer. This replacement was needed to remedy the frequent disruptions in the flow of financial information, which was partly responsible for the late submission of audited financial statements beginning in 1983 (para. 9.02). OPNT reviewed its needs for a computerized management information system and decided that it should cater to a broad range of activities from the control of traffic, accounting, workshops, and stock. A consultant's report covering the proposed system was reviewed by Bank ITF staff who confirmed the system's general viability. The timetable for acquiring this equipment required careful monitoring as the equipment tender documents had to be approved by the National  - 10 - Center for Computer Science (CNI) as well as by the Bank. The system was installed in 1989 and now incorporates port operations, budgeting, and payroll. It has already markedly improved OPNT's managerial and operational efficiency. Proiect Costs 5.12 Actual project costs, totalling US$104.7 million were marginally higher than appraisal estimates (Part III, Table 4), the major component, civil works, being within US$200,000. By subproject, however, there was some variation; the cost of constructing the new port of Raees was 4% higher, while that of expanding the port of Sfax was 11% lower. A combination of factors contributed to keeping the overall cost at almost the same level. The Tunisian dinar depreciated two-fold in relation to the US dollar from 0.43 in 1978 to 0.86 in 1985 at an average rate of 15% p.a. This took place when about 95% of all project expenditures were incurred. But this was also a period of high local and foreign inflation, which was averaging 10% p.a. Contract prices for civil works were considerably lower than expected, and the Sfax port expansion was financed entirely through local sources, thereby helping offset price escalation. In fact, actual foreign exchange costs without changes in physical implementation amounted to t4o-thirds of appraisal estimates due to the strength of the US dollar in the early 1980s and the financing of civil works at Sfax entirely through local sources. This situation permitted Bank financing of additional items, i.e., cargo-handling and computer equipment, and resulted in the cancellation of US$7.3 million from the loan account. Disbursement 5.13 During the first three years of project implementation, actual disbursements averaged two to three times appraisal estimates (Part III, Table 3). After the third year, they remained below estimated levels, as the loan surplus mounted and redirected allocations for the acquisition remained undisbursed. VI. PROJECT RESULTS Achievement of Project Objectives 6.01 Both project ports have adapted to the changes in shipping technology. Berths accommodating unitized cargo at Rades, in particular, have eased conventional and car-ferry congestion at Tunis and La Goulette and increased overall port efficiency. Achievement of Phvsical Targets 6.02 The physical targets of the project were achieved substantially as planned, but with delays, in the face of difficult technical conditions. New facilities are perfectly well suited for Ro-Ro traffic and can also accommodate container vessels. At Rades, the new land developed under the project will facilitate future port expansion at a relatively low cost. In the meantime, part of the land is being leased for commercial and industrial use. At Sfax, new port facilities were developed in the area at the south and adjacent to the existing port basin, facilitating further expansion, when required.  - 11 - Financial Performance 6.03 OPNT's financial statements show that performance indicators for some years were significantly higher than estimated at appraisal and for others significantly lower (Annex 3). The principal factors underlying such differences were: (a) the slower pace at which civil works were being implemented (i.e., about two years behind schedule); and (b) the need for additional tariff increases, particularly since traffic levels were significantly below appraisal estimates. The former situation caused a surge in the rate of return on net (non-revalued) fixed assets in use from 16.61 in 1981 to 26.61 in 1983; 15.8% had been projected for the latter year based, mainly on the assumption that by then civil works would have been completed and new assets put into operation. OPNT had no difficulty complying with the covenanted 71 return on net fixed assets in use until 1987, when inadequate tariffs in the face of an overall traffic slowdown culminated in a negative cash flow of serious proportions. This situation was compounded, not only by the steady decline of the Tunisian dinar in relation to hard currencies, which increased debt service requirements twofold in 1986 alone, but also by the commissioning of Radis, which added substantially to net fixed assets in use. In the latter instance, as net fixed assets in use rose from TD 37,577 in 1986 to TD 117,146 in 1987, there was, as to be expected, a temporary overcapacity of port facilities. Tariff increases in 1988 had an immediate decisive impact on the enterprise's financial position. Not only did revenues nearly double in 1988, but net fixed assets in use yielded a satisfactory rate of return of 7.5X, as compared with -2.11 for the previous year. 6.04 OPNT's financial outlook for the 1990s is promising. Its projected investment and financing plan for 1990-95 (Annex 4) shows a declining debt service requirement and an investment plan (TD 38.5 millon) that can be increasingly financed through internally generated funds. However, there is expected to be financing gap of US$4.0 million for the period 1990-92. This could be covered through bridge loans from local banks. For the period 1993- 95, the operating surplus may well surpass US$60 million. Part of this could be used for early repayment of loans .r for rehabilitation and maintenance. On the basis of balance sheet and income statement projections for 1990-1995 (Annex 5), investment targets can be attained while at the same time raising performance indicators. For example, if revenues under the present tariff structure increase commensurately with a 41 p.a. growth rate in general cargo traffic, as predicted by OPNT, the debt service coverage ratio should reach 3.0 by the end of 1995. The rate of return on net fixed assets in use should stabilize at about 11-12X in the early 1990s. Economic Reevaluation 6.05 Project economic appraisal was based on the assumptions that: (a) general cargo traffic would increase, on average, at 41 p.a. at both Tunis/La Goulette and Sfax with a gradual shift from conventional cargo to unitized cargo at Tunis/La Goulette from 301 ,n 1978 to 701 in 1992, and at Sfax from 301 in 1978 to 701 by 1992; and (b) conversion to the faster and more operationally efficient Ro-Ro technology would result in significant savings in cargo-handling costs, ships' service time, ship's waiting time, and avoidable diversion costs  - 12 - arising from having to reroute cargo through other ports. An additional benefit for La Goulette would be the value of reclaimed land. 6.06 Actual general cargo traffic at Tunis/La Goulette/Rad6s in 1989 (1.4 millioni tons) was slightly below the 1978 level, indicating a net decrease during the project period. In fact, general cargo traffic in 1989 at both Tuni;/La Goulette/Rades and Sfax (351,443 tons) showed decreases of 25% and Z0%, respectively, over appraisal estimates for that year. In effect, general cargo traffic at all major ports in Tunisia declined throughout the early 1980s and has risen only slightly since 1985. This situation was due to the worldwide recession, declining agricultural exports to the European Community, and import restrictions imposed by the Government in response to the trade deficit. Despite low overall growth, the pattern of traffic at Tunis/La Goulette showed a marked shift to Ro-Ro cargo. These structural changes took place much faster than anticipated. As early as 1983, Ro-Ro traffic was 58% the total general cargo traffic and containerized traffic 9%. Thus, the virtual stagnation in traffic was substantially offset by the rapid conversion to Ro-Ro and container technology made possible by the new facilities and equipment. 6.07 The method used for economic appraisal and reevaluation was a cost/benefit analysis based on "with project" and "without project" scenarios. At appraisal, it had been expected that the greatest stream of benefits accruing both directly and indirectly to the Tunisian economy would be the reduction in ships' waiting time. In the end, however, actual benefits derived from reduced ships' service time became the more significant benefit owing to both the unforeseen stagnation in maritime traffic which automatically reduced ships' waiting time, and the fast pace of adapting to technological advance. Without the project, general cargo handling throughputs would probably have increased only marginally from a level of about 466 tons per ship-day in 1978 to about 55G tons per ship-day in 1989. But with the conversion to Ro-Ro and container technology, including improved operational methods, general cargo throughputs have actually increased to a level of 1,580 tons per ship-day: roughly 500 tons per ship-day for conventional vessels and 2,000 tons per ship-day for unitized cargo. Typical ship-day costs have been used to estimate ship time: US$4,500 per day for coniventional vessels, US$6,000 for Ro-Ro vessels, and US$5,000 for container vessels. The appraisal ERRs for both subprojects were 16.5%, assuming an 4% p.a. growth in general cargo traffic. Assuming that traffic will grow beyond 1990 at 4% p.a., the reevaluation shows an ERR of 14% for Tunis/La Goulette/Rades and 12.5t for Sfax. VII. PROJECT SUSTAINABILITY 7.01 OPNT is institutionally strong in the areas of engineering, financial management, and training. It also has the capacity to evaluate the technical and economic viability of port investments. Provided tariffs continue to be reviewed periodically and rationally restructured, and if private stevedoring companies are permitted and encouraged to compete at La Goulette and Rades, as envisaged, there is reasonable expectation that project benefits will be sustained. In this regard, it is also critical that groundwork be laid for strategic planning in the ports subsector (para. 9.01).  - 13 - VIII. BANK PERFORMANCE 8.01 The Bank's major contribution lies in its technical advice to OPNT. At an early project implementation phase, commitment to training demonstrated through close liaison with UNCTAD and continual follow-up contributed measurably to the success and sustainability of the training component. In the last phase, advice on pzocurement of the second tranche of cargo-handling equipment increased OPNT's capacity in this area. 8.02 The Bank's major shortcoming concerns the lack of continuity in supervision, particularly during the readjustment period in the aftermath of Bank reorganization in 1987. First, more careful attention to financial indicators by supervision missions in the mid-1980s might have led to a new tariff structure in time to keep OPNT on a sound financial track. Second, the Bank, at various stages of project implementation, could have used the delays in equipment procurement as leverage for addressing the institutional issue involving the working relation between OPNT and STAM, which is still unresolved. IX. BORROWER PERFORMANCE 9.01 During the course of project implementation, there was frequent turnover at the Chief Executive officer level; several recent CEOs had tenures of less than two years. Such turnover seriously hampered OPNT's corporate planning function, as well as the strategic planning process for the port subsector as a whole. Otherwise, OPNT is a well managed enterprise. Good cooperation between the supervision consultants and OPNT engineering staff led to a satisfactory achievement of physical targets in the face of difficult technical conditions. OPNT's financial management functioned well given an outdated tariff structure over which it had no control. The need for tariff restructuring had been foreseen during negotiations and carried out by December 31, 1982 in compliance with the loan agreement. Several years hence, however, the downturn in traffic rendered new tariffs obsolete; the tariff structure was only updated after ONPT experienced a negative cash flow in 1987, which led to a tariff increase and permitted OPNT to achieve good financial results thereafter. 9.02 What is significant is that OPNT's declining revenue base relative to its debt service requirements and operating expenses occurred during a four- year period (1983-86) when audit reports were not being made available until two to three years after the due dates. Herein lies the importance of timely compliance with the audit requirement. If, in the mid-1980s, the Bank and the Government had had access to annual audit reports, OPNT could have used these results to strengthen the case for tariff increases. X. BANK-BORROWER RELATIONSHIP 10.01 The relationship was smooth and fruitful to both parties. However, the lack of continuity in management from both sides resulted in less attention being given to institutional issues.  - 14 - XI. CONSULTING SERVICES 11.01 Construction supervision at Rad6s was the responsibility of a joint venture of three firms. At Sfax, this was handled by a local agency assisted by a foreign firm for soil investigation. Performance of supervision consultants as well as that of OPNT's engineering department staff were satisfactory. Performance of consultants who executed the first two parts of the study on the reorganization of workshops was also satisfactory. Technical assistance provided by UNCTAD staff and consultants, together with Bank participation in the training effort, was well received by OPNT and helped the enterprise achieve a large measure of training self-sufficiency. XII. PROJECT DQCUNENTATION AND DATA 12.01 Most aspects related to the project were well documented in the Division and Regional files. Supervision reports during most of the implementation period contained in-depth, ongoing analyses of port traffic and operations although operational coefficients were incomplete and inconsistently presented. This made it difficult to reconstruct the data base needed for the economic reevaluation of the two subprojects. Moreover, audit reports for the early 1980s whose receipt by the Bank had been acknowledged were missing from the files. 12.02 OPNT provided the Bank supervision and completion missions with adequate information on its operations, including requested statistical data (e.g., the evolution of maritime traffic and rates of productivity) and documentation relating to, inter alia, its in-house training program, its convention with STAM, and its projected investment and financing plan (1990- 95). In anticipation of PCR preparation, OPNT submitted lengthy ex-post engineering reports for both the Rades and Sfax subprojects. All of this documentation will be helpful in preparing the proposed First Transport Sector Loan (scheduled for FY92).  --Is - PROJECT COMPLETION REPORT REPUBIJC OF TUNISL THIRD PORTS PROJECT (LOAN 1797-TUN) PART II: PRQUECT REV FROM THE BORROWER'S PERSP  - 17 - PROJECT COMPLETION REPORT REPUBLIC OF TUNISIA THIRD PORTS PROJECT (LOAN 1797-TUN) I. SUMMARY OF BANK ACTIONS DURING PROJECT DEVELOPMENT AND IMPLEMENTATION - Preparation of feasibility studies and negotiations gave rise to major delays from project conception to loan signature with the result that additional costs for both subprojects were incurred. - Quarterly progress reports for the two subprojects were submitted for Bank approval. Since no comments were made, the Borrower is unaware of the reports' impact on decisions taken by the Bank. It would have been desireable if the Bank had sent to the Borrower, at least once a year, its comments on the various technical and financial aspects, and, in particular, its opinion concerning any variations that might have existed between initially planned and completed works. II. SUMMARY OF OPNT ACTIONS DURING PROJECT DEVELOPMENT AND IMPLEMENTATION * The OPNT took all necessary actions for the establishment of an appropriate organizational chart for the supervision of works of the two subprojects. - The implementation of the two subprojects provided an opportunity for OPNT technicians to increase their knowledge, i.e., they took full advantage of comprehensive training in the field. - The consultants who followed up the project had good practical experience in maritime construction works. - OPNT was obliged several times to modify specifications for the acquisition of port equipment, such as forklift and Ro-Ro trucks. - The target for cargo-handling efficiency included in the workshop reorganization study did not materialize, since the program to reorganize STAM' s cargo-handling operations, recommended by the Bank, was not followed through. - On the financial level, and to the extent that OPNT has strictly adhered to procedures and documents set forth by the Bank for all transactions such as withdrawal of loan proceeds and reimbursement, project performance was positive.  - 18 - However, some organizationa' difficulties occurred during project implementation; the submission by OPNT of audited financial statements for 1983 to 1986 was delayed because of difficulties with obsolete computer equipment. III. GENERAL ASSESSMENT In general, the two subprojects have reached their intended objectives: the variati.ns between estimated and actual values are acceptable and the economic rates of return have been confirmud. Port of Sfax The expansion has been worthwhile, in particular when the old port evinced numerous deficiencies in the quays (opening of joints, settling, retaining walls). Traffic has been diverted to the new port, thus alleviating the old infrastructure, and enabling OPNT to program its port maintenance works without interference. Fifteen ha of pavement and 18,000 ml of hangars provide considerable support for general cargo traffic. tort of Radis * Complies with the needs of Ro-Ro traffic despite insufficient container-handling equipment. * Reclaimed land located outside the port of Rades, once developed, will have an important impact on the Tuiiisian economy (in particular, the creation of customs areas and industries connected with the port). For the two subDrojects * With the exception of certain modifications necessary for greater efficiency in port operations, the overall project has been implemented as originally defined. * All works have been completed in coordination with enterprises, consultants, and OPNT. We also note that the Tunisian and foreign enterprises that were selected completed their work, which was satisfactory and of good quality. They were competent in training and supervision, and maintained good relations with construction sites.  - 19 - The choice of the two sites has been propitious: free flow of road traffic, reduction of traffic congestion in urban areas, reduction of air pollution in the city center, lower land transport costs, elimination of costs incurred from traffic detours.  - 21 - PROJECT COMPLEflON REPORT REPUBWC OF TUNISIA THIRD PORTS PROJECT (LOAN 1797-TUN) PART III: STATtSTICAL INFORHMATN  - 23 - Table 1: jelated Bank Loans Loan Number and Title Purpose FY Status Loan 380-TUN To provide initial 64 Completed in 1968; First Port infrastructure for Project the modern port of La Goulette and to establish OPNT as a viable ports authority. Loan 573-TUN To continue and expane 69 Completed in 1973; Second Port the first project, PPAR No. 1049 Project including dredging at Feb. 26, 1976 Bizerte, Sfax, and La Goulette; to reconstruct a breakwater at Bizerte; provide cargo-handling equipment Table 2: Proiect Timetable Planned Revised Actual Identification 12/77 Preparation Beginning 4/78 5/78 Preparation End 8/78 8/78 Appraisal Mission 9/78 9/78 Loan Negotiations 3/79 9/79 12/79 11/79 Board Approval 5/79 1/11/80 Loan Signature 2/8/80 Loan Effectiveness 5/08/80 6/25/80 Loan Closing 6/30/86 6/30/87 12/31/88 6/30/88 Project Completion 6/30/84 6/30/87 8/31/89 12/31/88 6/30/89  - 24 - Table 3: Loan Disbursements Quarter Original Actual FY81 1 6.5 2 2.0 6.5 325X 3 4.0 9.5 328X 4 6.0 13.2 220X FY82 1 8.1 17.6 217X 2 10.2 20.5 2011 3 12.3 22.8 1851 4 14.6 24.6 168X FY83 1 17.2 26.1 152X 2 20.1 27.0 1341 3 23.0 28.0 1221 4 26.4 28.3 107% FY84 1 29.5 28.8 981 2 32.8 29.3 891 3 35.4 29.9 841 4 37.9 30.1 791 FY85 1 39.9 30.3 761 2 41.5 30.5 731 3 42.0 30.8 73X 4 42.5 30.8 721 FY86 1 42.5 32.0 751 2 42.5 32.0 75X 3 42.5 32.5 76X 4 42.5 32.6 77X FY87 1 42.5 32.9 771 2 42.5 33.5 791 3 42.5 33.6 791 4 42.5 33.7 791 FY88 1 42.5 33.7 791 2 42.5 33.7 791 3 42.5 33.7 791 4 42.5 33.7 791 FY89 1 42.5 33.7 791 2 42.5 33.9 801 3 42.5 33.9 801 4 42.5 34.3 811 FY90 1 42.5 34.7 821  - 25 - Table 4: Proiect Casts Appraisal Estimates Actual Local Local Item Costs F.E. Total Coats F.E. Total Variation (US$ million) Civil Works Radla 28.85 40.07 68.92 41.80 29.69 71.49 2.57 4S Sfax 10.33 11.74 22.07 19.68 19.68 (2.39) -llS Subtotal 39.18 51.81 90.99 61.48 29.69 91.17 0.18 0O Eauiument Cargo Handling 1.14 9.10 10.24 0.02 11.28 11.30 1.06 10S MIS 0.17 0.17 0.17 1001 Subtotal 1.14 9.10 10.24 0.02 11.45 11.47 1.23 121 Technical Assistance Construction Supervision at Radia 0.79 0.91 1.70 0.38 0.72 1.10 (0.60) -35S at Sfax 0.24 0.29 0.53 0.12 0.23 0.35 (0.18) -341 Workshop Reorganization 0.00 0.04 0.40 0.00 0.13 0.13 0.09 233Z Training 0.00 0.73 0.73 0.08 0.42 0.50 (0.23) -32Z Subtotal 1.03 1.97 3.00 0.58 1.50 2.08 (0.92) -311 TO01L 41.35 62.68 104.23 6a.08 42.64 104.72 0.4S Ox Table 5: Project Financing Original Actual Ezport Export IBiD Credit OPT IBIRD Credit OPDS (US$ mifLion) Civil Works Radla 40.50 28.42 31.87 39.62 Sfax 7.20 14.87 19.68 Subtotal 40.50 7.20 43.29 31.87 59.30 EouiEumnt Cargo-Handlin 9.10 1.14 0.90 10.40 MIS 0.17 Subtotal 9.10 1.14 1.07 10.40 Tschnical Assistance Construction Supervision 1.23 1.00 1.25 0.20 Workshop Study 0.04 0.13 Training 0.73 0.42 0.08 Subtotal 2.00 1.00 1.80 0.26 TOTAL 42.50 16.30 45.43 34.74 10.40 50.56  - 26 - Table 6: Direct and Indirect Benefits A. Direct and Indirect Benefits a/ Closing Date Full ODeration Estimated Actual _/ Estimated Actual _/ (1989) (1992) Tunis/La Goulette/Rad&s Annual Savings in Cargo-Handling Costs 669 1,386 2072 790 1,653 2092 Annual Savings in Ships' Service Time 1,278 3,414 2672 1,278 15933 1252S Annual Savings in Ships' Waiting Ti.. 41,488 11,385 272 41.488 13,485 332 Annual Savings in Land Transport na. 289 na. 329 Value of Reclaimed Land 19,756 19,756 100l na. n.a. Savings in Avoidable Diversion Costs - - 342 1,278 3732 Subtotal 63,191 36,230 572 43,898 32,738 752 Sfar Annual Savings in Cargo-Handling Costs 311 67 222 358 188 522 Annual Savings in Ships' Service Time 3,899 136 32 4,504 2,255 502 Annual Savings in Ships' Waiting Time 5,334 1,831 342 11,406 2,010 182 Savings in Avoidable Diversion Costs - - - - Subtotal 9,544 2,034 212 16,269 4,453 272 TOTAL 72,735 38,264 53Z 60,167 37,192 62X j/ All figures in 1989 constant prices k/ Annex 1 shows a comparison between estimated and actual traffic and Annex 2 shows actual cost and benefit stramss. Table 7: Economic Imiact Original Estimate Reevaluated Economic Rate of Return Tunis/La Goulette/Radla 16.52 14.02 Sfax 16.52 12.52 Projoect Life 30 years 40 years Table 8: Proiect Stdv Purpose as Defined at Impact of Appraisal Status Study Workshop To assist OPT anO Two out of three The third part of the study Reorganisation and STA in parts of the study which would consist of specific reorganising repair completed. recomendations, was nver and maintenance comissioned becauue of policy services, and institutional ehanges in responsibility for cargo- handling operations and euipment mlantenance.  - 27 - Table 9: Status of Covenants Loan Agreement Reference Description Status 3.02(a) Employment of consultants Complied with. 3.06 & SL 3 Cargo-handling equipment to be leased on terms and Complied with. conditions satisfactory to the Bank. 5.02 Audited accounts to be Complied with, except submitted within six for the period 1983-86. months of the end of the fiscal year. 5.05 Until project completion, The investment program investments not to exceed for cargo-handing US$2.5 million p.a. and as equipment and for port agreed in the investment rehabilitation exceeded plan for 1984. the original forecast but the Bank considered the expenditure to be justified and offered no objection. 5.06 Review tariff structure Complied with. by December 31, 1982. 5.07(a) Rate of return of not less In default in 1987; than 7X on net fixed assets; complied with in 1988 assets to be revalued by after a substantial December 1980. tariff increase. 5.08(a) OPNT to maintain a debt In default in 1987 and service coverage ratio of 1988. Positive impact at least 1.5. of the tariff increase on this ratio require- ment will be noted in 1991.  - 28 - Table 10: Staff Ingur& (Staff - Weeks) Prc- Loan Appraisal Appraisal Negociations Processing Supervision PCR Total FY79/80 31.5 72.1 5.1 12.0 3.5 125.1 FY81 21.5 21.5 FY82 24.1 24.1 FY63 6.6 6.6 FY84 1.1 1.1 FY65 2.1 16.7 18.8 FY86 2.8 12.1 14.9 FY87 0.8 15.6 16.4 FY68 10.8 10.8 FY89 3.5 3.5 FY90 0.2 16.1 4.2 TOTAL 31.5 72.1 5.1 u.S 115.3 16.1 250.3  - 29 - Table 11: Missions Specializa- Stage of month/ No. of Days in tions mature of Project Cycle Year Staff Field Rapresanted I/Ratirns Problem Through Appraisal 12/77 2 3 Deputy Chief Financial Analyst Port Engineer 05/7S 4 8 Deputy Chief finhncist Analyst Port Engineer Appraisat through 10/78 5 21 Deputy Chief Board Approval Financial Analyst Economist Port Eginoeer Port Specialist 07/79 4 10 Finacial Analyst Economist Port Enginer Loan Officer Supervision 09/80 2 12 Financial nalyst 2 Technical Port Engineer 05/81 3 10 Financial Analyst 2 Technicel Port Engineer Port Specialist 12/81 2 11 FinanciaL Analyst 1 Technical Port Engineer 07/82 2 11 Financial Analyst 2 Technical Port Enginser Financist 06/03 1 7 Finwcial Analyst I Technical 07/84 2 7 Financale Analyst 2 Technicat Port Enginer 03/85 1 4 Port Engineer 2 TechnicaL 06/86 1 7 Trainfng Specialist 2 Nanagerial 07/86 2 12 Port Engineer 2 anagerial Procurement Engineer 02/37 2 9 Deputy Chief 2 Financial Port Engineer anagerial Proceurant Engineer 01/88 1 a Opwration Analyst 2 FinanciaL >Mawnariet 06/88 1 2 Port Engineer 2 Financial Minugriot 05/89 1 6 Port Enginer 2 Finwncial Managerial Cooptetion 03/90 1 8 Operations Anetyst Total uSter of doas in fletd * 156  - 3n. - Annex 1 List of EguiRment Procured under the Project Netherlands IBRD Export Credit Loan (US$) First Tranche 2 32-ton mobile container-handling cranes 1,280,000 4 tugboats 9,100,000 Second Tranche 2 32-ton Forklift (32-ton) 405,924 1 Spreader 5 RoRo Tractors (200 hp) 337,256 2 Forklift Trucks (10 ton) 158,412 6 Forklift Trucks (4 ton) TOTAL 10!380,000 901,441  - 31 - Annex 2 Comparison of Actual and Forecast General Cargo Traffic Tunis/La Goutette/Rades Sfax Appri sat Appraisal Estimates Actual X Estimtes Actual X (tons) 1978 1,450,000 1,393,961 96X 558,000 485,899 87X 1979 1,3U8,500 1,253,322 90X 448,835 375,625 84X 1980 1,327,000 1,244,560 94X 339,669 443,73 1311 1981 1.382,058 1,244,560 921 356,653 410,769 115X 1982 1,439,401 1,275,988 96X 374,486 358,460 96X 1983 1,509,500 1,378,205 851 436,000 434,065 100X 1984 1,561,000 1,317,867 871 457,800 404,m 581 1985 1,625,767 1,236,283 791 485,800 391,245 811 1986 1,693,221 1,191,525 731 509,250 298,260 59X 1987 1,763,474 1,159,378 651 534,713 326,361 611 0988 1,834,013 1,153,754 751 561,448 376,297 67X 1989 1,907,373 1,375,016 751 589,521 351,443 601  - 32- Annex3 Page 1 of 3 OPNT's Audited Financial Statements 197 1979 1979 1980 190 1981 1981 ACT APR ACT APR ACT APR ACT (TD 000) NALAbCE SNEET Current Assets 2,126 3,468 4,677 3,291 4,740 2,908 4,904 Gross Fixed Assets 42,871. 44,875 44,729 48,195 53,348 49,295 55,293 Less Depreciation 15,763 17,363 16,912 19.063 18,712 20,913 20,488 Net Fixed Assets in Use 27,108 27,512 27,817 29,132 34,636 28,382 34,805 Other Assets 3,219 3,866 7,068 Work-in-Progress/ New Investments 8,625 8,795 7,151 14,715 12,167 24,935 25,747 Total Assets 37,859 39,775 42,864 47,138 55.409 56,225 72,523 Current LiabiLities 0 0 3,157 8,203 7,883 Long-Term Debt 10,376 9,609 9,896 13,410 15,137 18,935 30,574 Equity 27,483 29,654 29,809 33,728 32,070 37,290 34,066 Total Liabilities 37,859 39,263 42,864 47,138 55,409 56,225 72,523 INCO"E STATERWE Revenues 6,268 7,850 8,577 10,370 10,127 10,890 11,364 operating Expenses 3,181 3,382 4,551 3,860 5,957 4,270 6,426 Depreciation 1,367 1,600 1,149 1,700 1,801 1,850 1,776 Operating Surplus 1, 720 2,868 2,878 4,810 2,369 4,770 3,162 Interest 507 440 481 738 468 1.073 489 Net Surplus 1,213 2,428 2,396 4,072 1,901 3,697 2,673 Non-Operating Expw es 144 125 70 130 714 135 (201) Not Revenues 1,069 2,303 2,326 3,942 1,188 3,562 2,874 Gross Cash Flow 2,436 3,903 3,474 5,642 2,968 5,412 4,649 KEY RATIO9I1WICT31 Debt/Equity Ratio 27/73 24/76 25/75 28/72 32/68 34/66 47/53 Operating Ratio 735 632 66X 54X 772 56X 722 Debt Service coverag I/ 3.3 5.6 5.1 5.6 5.5 4.4 6.0 Return on Averag Met FIxed Assts 5.8X 10.5X 10.5X 17.02 7.6X 16.6X 9.1X I/ calculated on the basis of: (Gross Cash Flow + Depreciation)/(Int*rest Expeneo + Repayment of Principal); actual repayment of principal, which is not shown in the above financial atatements is as follows: 1979, TD 303,045; 1980, TD 294,000; 1981, TD 328,215.  - 33 - Annex 3 Page 2 of 3 OPNT's Audited Financial Statements APIt ACT APUC ACT APR ACT (TD 000) UIIAAICE SIE Current Assets 2,641 7,385 1,1S1 11,538 3.136 8,230 Gross Fixed Assets 51,805 56,560 6S,685 56,760 102,475 57,192 Le DOpreciation 22,913 22,187 25,113 24,076 27,768 25,918 Not Fixed Assets in Use 28,892 34,373 40,572 32,684 74.707 31,275 Other Assets 9,811 13,346 15,498 Work-in-Progress/ New Invest"ents 44,047 40,134 34,930 55,363 5,220 72,018 Total Assets 75,580 91,702 76,653 112,932 83.063 127,021 Current Liabilities 0 11,276 16,314 0 19,821 Long-Term Debt 40,310 39,802 43,6U 51,687 47,257 59,172 Equity Total Liabilities 66,318 91,702 76,653 112.932 83,063 127,021 1 - n^T Revenes 11.440 16,266 13,010 19.805 13,800 19,473 Operating Expeses 4,774 8,344 5,310 9.003 5,970 10,730 Depreciation 2.000 1,699 2,200 18'9 2,655 1,842 Operating Surplus 4,666 6,223 5,500 8,913 5.175 6,902 Interest 1.506 501 2,012 531 2,416 536 Net Surplus 3,160 5,722 3,488 8,382 3,759 6,366 Mon-operating Expees 140 (210) 150 416 150 282 Net Revene 3,020 5,931 3,338 7,966 3,609 6,084 Gross Caah Flow 5,020 7,631 5,538 9,855 6,264 7,926 Ku RATIOmImI Debt/Equity tatio 39/61 51/49 43/57 47/53 43/57 45/55 Oprating Ratio 59X 62X 58X 5S5 63X 65X Debt Service coverage w 3.4 9.1 2.4 5.2 2.1 3.0 Return on averae let fixed asts 16.31 18.01 15.8x 26.6 10.71 21.6 j/ calculated an the basis of: (Gross Cash Flow + DepreciationM)Interst Zxpemae + _apa t of Principal); actual repa ment of principal. wbich is not hbon In the bowe fiamoteal statments is a follows: 1982, TD 371,971; 1983. TD 1.533,349; 1984, TD 2,382.419.  - 34 - Annex 3 Page 3 of 3 OPNT's Audited Financial Statements 1985 1985 1986 1987 1988 APR ACT ACT ACT ACT (TD 000) ELC OM Current Assets 3,345 17,986 19,840 10,890 13,994 Gross Fixed Assets 103,195 57,539 67,324 151,279 152,639 Less Dproeciation 30,498 27,697 29,747 34,133 38,622 Net Fixed Assets in Use 72,697 29,842 37,577 117,146 114,018 Other Assets 7,213 7,076 17,636 18,209 Work-in-Progress/ New Investments 8,000 94,237 99,278 21,422 21,224 Total Assets 84,042 149,278 163,771 167,094 167,45 Current Liabilities 0 27,360 31,159 36,256 30,777 Long-Term Debt 34,171 60,312 69,909 68,135 73,964 Equity 49,871 61,606 62,703 62,703 62,703 Total Liabilities 84,042 149.278 162,771 167,094 167,U5 INCE STATENET Revemnies 14,590 17,530 18,258 18,142 30,863 Operating Expenses 6,715 11,786 11,781 15,385W 17,704 Depreciation 2,730 1,779 2,051 4,386 4,489 Operating Surplus 5,145 3,965 4,426 (1,629) 8,670 Interest 2,681 538 940 6,322w 6,563 Net Surplus 2,864 3,427 3,487 (7,951) 2,107 Nan-Operating Expenses 150 993 2,390 2,497 2,302 Net RevemieS 2,714 2,434 1,097 (10,448) (195) Gross Cash Flow 5,4U 4.213 3,147 (6,062) 4,293 KEY 3ATICSSIWDICATQ*S Debt/Equity Ratio 41/59 49/51 53/47 52/48 54/46 Operating Ratio 65X 77X 761 109X 721 Debt Service coverag J/ 1.7 1.2 1.0 0.2 0.7 Return an averag Met fixed assts 7.5X 13.01 13.11 -2.11 7.5% A/ increase in 1987 with respect to 1986 due mostly to mortization of engineering studies and interest during construction, which was previously capitaUeld. b/ increase in 1987 with respect to 1986 due mostly to change in interest on loans that financed the project to interest charges, which were previously capitalized (a.o u/). S/ calculated on the basis of: (Gross Cash Flow + Deprecistion)/(Interest Expenso + Repayment of Principal); repayment of principal, which is not shown in the above financial itatements is as follows: 1985. TD 4,061,151 1986, TD 5.414.417; 1987, TD 5.999.662; 1088, TD 11,361,398.  - 35. - Annex 4 OPNT's Projected Investment and Financing Plan 1990 1991 19 t9 1994 1995 (TD 000) Civil Works at Rados 1,055 Civil Works at Sfax 380 Contairer-handling equipment 210 Dredging 2,661 Petroletv Berth at Bizerte 5,000 6,000 4,000 Expwnsion of the Port of Sousse 2,000 4,000 Port modermization 4,991 3,000 1,600 1,600 1,000 1,000 Loan Reiwbursement 16,004 9,144 7,904 7,211 6,737 5,220 Tax Credit Reimbursement 605 605 454 Total Uss 25,906 19,749 19,958 12.811 7,737 6.220 Cash Flou 16,780 17,827 17,239 12,637 7,610 6,220 Best Bank Credit (dredging) 316 Italian Public Credit 2,345 Repeyment from STAN 174 174 174 174 127 Medium-Term Government Credit 4,549 1,513 560 Other Local Financing 1,742 235 1,965 Totat Sources 25,906 19.749 19.958 12.811 7,737 6,220 Source: OPNT, March 1990  - 36 - Annex 5 OPNT's Proiected Financial Statements 990 1991 1 19 1994 t9 (TD 000) MALAIi NEJET Current Assets 12,252 12,017 10,032 18,053 31,224 45,676 Gross Fixed Assets 200,101 212,074 224,544 238,383 246,105 249,228 Less Depreciation 44,360 47,036 49,505 51,744 53,867 55,989 Net Fixed Assets in Use 155,742 165,039 175,039 186,639 192,239 193,239 Work-in-Progress/ New Investments 9,297 10,000 11,600 5,600 1,000 1,000 Totat Assets 177,291 187,066 196,671 210,292 22,463 239,915 Current Liabilities 32,519 30,456 28,915 27,838 27,333 26,965 Long-Term Debt 64,565 56,329 48,531 41,320 34,583 29,363 Equity 80,206 100,270 119,225 141,133 162,646 183,586 Totat Liabitities 177,2D1 187,056 196,671 210,292 226,463 234,915 INIVE STATEIIT Revenues 40,213 41,822 43,495 45,235 47,044 48,926 Operating Expenses 17,704 18,998 21,949 20,910 23,194 25,648 Depreciation 2,936 2,761 2,591 2,416 2,337 2,337 Operating Surplus 19,573 20,064 18,954 21,909 21,512 20,940 Interest 5,729 4,998 4,306 3,667 3,069 2,606 Net Revenues 13,844 15,066 14,648 18,242 18,444 18,335 Gross Cash Flow 16,780 17,827 17,239 20,658 20,781 20,672 EY RATIOS/IWCATORS Debt/Equity Ratio 45/55 36/64 29/71 23/M 18/82 14/86 Operating Ratio 51X 52X 56X 52X 54X 571 Debt Service Coverage * 1.0 1.6 1.8 2.2 2.4 3.0 Return on Average Net Fixed Assets 12.6o 12.51 11.11 12.11 11.41 10.9X p/ calculated on the basis of: (Gross Cash Flow + Depreclation)/(Interest Ezpase + Repayment of Principal); repayment of principal, sboam n Annex 2.  - 37 - Annex 6 Page 1 of 2 Cost/Benefit Analysis Ports of Tunis/La Goulette/Rades Benefits Reduced Ship Ship Savings in cargo- service waiting Land Avoidable Value of handling time- tim- Transport Diversion Reclaimed Costs costs savings savings Savings Costs Lwnd (US$ 000) 1980 3,058 1981 58,314 1982 24.373 1983 19.128 1984 14,728 1985 30,382 1986 5,415 1967 126 1,086 3,324 10,204 243 19,756 1988 323 1,218 3,726 10,362 252 1989 77m 1,386 3,414 11,385 289 1990 1,590 15,378 12,967 305 1991 1,653 15,993 13,485 329 1992 1,653 15,993 13,485 329 1993 1,653 15,993 13.485 329 2,971 1994 1,653 15,993 13,485 329 4,732 1995 9,500 1,653 15,993 13,485 329 6,563 1996 1,653 15,993 13,485 329 8,468 1997 1,653 15,993 13,485 329 16,092 1998 1,653 15,993 13,485 329 19,264 1999 1,653 15,993 13,485 329 22,563 2000 1,653 15,993 13,485 329 22,563 2001 9,500 1,6S3 15,993 13,485 329 22,563 2002 1,653 15,993 13,485 329 22,563 2003 1,653 15,993 13,485 329 22,563 2004 1,653 15,993 13,48 329 22,563 2005 1,653 15,993 13,485 329 22,563 2006 1,653 15,993 13,485 329 22,563 2007 9,500 1,653 15,993 13,485 329 22,563 2008 1,653 15,993 13,485 329 22,563 2009 1,653 15,993 13,485 329 22,563 2010 1,653 15,993 13,485 329 22,563 2011 1,653 15,993 13,485 329 22,563 2012 1,653 15,993 13,485 329 22,563 2013 9,500 1,653 15,993 13,485 329 22,563 2014 1,653 15,993 13,485 329 22,563 2015 1,653 15,993 13,485 329 22,563 2016 1,653 15,993 13,485 329 22,563 2017 1,653 15,993 13,485 329 22,563 2018 1,653 15,993 13,485 329 22,563 2019 9,500 1,653 15,993 13,485 329 22,S63  - 38 Annex 6 Page 2 of 2 Cost/Benefit Analysis Port of Sfax lanef i ts Reduced Ship Ship Savings in Cargo- Service Waiting Avoidable Handling Tine- Time- Diversion Costs Costs Savings Savirgs Costs (USS 000) 1980 5 1981 38 1982 5,883 1983 8,117 1984 5.965 1965 2,065 75 97 2,244 1986 112 57 80 2,088 1987 17 62 102 1,931 1988 72 34 1,686 1989 67 136 1,831 1990 70 2,255 2,065 1991 6,717 181 2,273 2,029 1992 188 2,255 2,010 1993 196 2.295 2,049 1994 204 2.478 2,202 1995 212 2.582 2,304 1996 220 2,669 2,380 1997 229 2,758 2,459 1998 6,717 238 2,872 2,560 14 1990 238 2,872 2,560 34 2000 238 2,872 2,560 55 2010 238 2,872 2,560 77 2011 238 2,872 2.560 99 2012 238 2,872 2,560 123 2013 238 2,872 2,560 147 2014 6,717 238 2,672 2,560 172 2015 238 2,872 2,560 199 2016 238 2,872 2.560 226 2017 238 2,872 2,560 255 2018 238 2,872 2,560 284 2019 238 2,872 2,560 315 2010 238 2.872 2,560 315 2011 6,717 238 2,872 2,560 315 2012 238 2,872 2.560 315 2013 238 2,672 2,560 315 2014 238 2,872 2,560 315 2015 238 2,872 2,560 315 2016 238 2,872 2,S60 315 2017 238 2,872 2,560 315 2018 236 2,871 2,S60 315 2019 6,717 238 2,871 2,S60 315  TUNISIA THE PORTS SUBSECTOR MLLkANf Si A GENERAL LOCATION . - , - ' N T Hommdov fl n b-t-d a v < tToa ' CAP BON d> Projel Ports Buug. lebouo b Seei; e' Rivers Dm.a. ~~-'fo, det - Rivers fo Av,,b A,v DroCno Bee g M.d.:2v