Mali - Biomass Alcohol and Energy Efficiency Project

Document of TheWorld Bank FOR OFFICIALUSE ONLY Repart No. 1 2 1 1 5 PROJECT COMPLETION REPORT MALI BIOHASS ALCOHOL AND ENERGY EFFICIENCY PROJECT (CREDIT 1403-KLI) Industry and E n e r g y D i v i s i o n S a h e l i a n D e p a r t m e n t Africa R e g i o n a l O f f i c e This document has a restricted distribution and may be used by recipients only in tbe performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS US$1 = 300 CFAF FISCAL YEAR 1 May - 30 April  FOR OFFICIAL USE ONLY M E WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation June 30, 1993 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND TRE PRESIDENT SUBJECT: Project Completion Report on Mali Biomass Alcohol and Energy Efficiency Project (Credit 1403-MLI) Attached is the "Project Completion Report on Mali - Biomass Alcohol and Energy Efficiency Project (Credit 1403-MLI)" prepared by the Africa Regional Office, with Part I1 contributed by the Borrower. The project, approved in 1983, was restructured in 1987, following an IDA- supported management reorganization of the State owned sugar enterprise. Project emphasis was shifted from producing anhydrous alcohol (a gasoline substitute) from molasses, to increasing sugar output by rehabilitating the plantation and importing operational inputs (e.g. fertilizers). The alcohol production facility was a financial failure; it was mothballed as uneconomic iunnediately after it was connnissioned. Physical production targets for increasing sugar output were met, but at a cost substantially above the current open market sugar price in Mali. The new management has greatly increased efficiency, but competitiveness has been further eroded by the Government's continued pressure to increase employment and wages. The borrower has stockpiled its sugar output, rather than selling at the current market price, financing this increase in inventories through short-term borrowing. The Bank's ongoing dialogue has been made more difficult by the Government's inability to provide audited financial statements as covenanted. The Project Completion Report identifies all of the major project accomplishments and problems. However, the methodology used for the analysis of economic benefits is less than satisfactory, (it attributes the entire plantation output to the investments made during project implementation, and fails to consider the difference between expected results without the project's investments and expected results with the project's investments), and the pricing assumptions appear to be overly optimistic, given current conditions in world sugar markets. On balance, the outcome is rated as unsatisfactory. Given the current financial distress of the sugar enterprise and the low probability that it can obtain financial stability without protective tariffs, its sustainability is rated as unlikely. However, institutional development, in tenns of project management over the lifetime of the project, is rated as substantial. No audit is planned. A I This docunent has e restricted distribution and m y be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without Vor1.d Bank authorization.   FOR OFFICIAL USE ONLY MACI BIOMASS ALCOHOL AND ENERGY EFFICIENCY PROJECT lt 1403-MLQ TABLE OF CONTENTS PREFACE .................................................... i EVALUATIONSUMMARY ......................................... ii PART I PROJECT REVIEW FROM THE BANK'S PERSPECTIVE . ............... 1 A. Project Identity .......................................... 1 B. Background ............................................ 1 C. Project Objectives and Description .............................. 2 D. Project Design and Organization ............................... 2 E. Project Implementation ..................................... 3 F. Project Results .......................................... 4 G . ProjectSustainability ...................................... 5 H . Bank Performance ........................................ 6 I. Borrower Performance ..................................... 6 J. Bank/BorrowerRelationship .................................. 7 K. Consulting Services ....................................... 7 L. Project Documentation and Data ............................... 8 PART I1. PROJECT REVIEW FROM BORROWER'S PERSPECTIVE ............. 9 Introduction ............................................ 9 Project Objectives and Design ................................ 9 Preparation and Organization of the Project ........................ 10 Execution of the Project .................................... 11 Results ............................................... 12 Supervisionof the Project ................................... 16 Evaluation of Borrower's Performance ........................... 16 Evaluation of World Bank's Performance ..........................17 Bank-Borrower Relations ................................... 17 Recommendations ........................................ 17 Conclusions ............................................ 18 This document has a restricted distribution and may be used by recipients only in the performance of their omcial duties.Its contents may not otherwise be disclosed without World Bank authorization.  PART In STATISTICALINFORMATION ............................... 21 . A Related Bank Loans and/or Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 . B. ProjectTimetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 C . Loantcredit Disbursement ................................... 22 D Project Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 E. Project Costs and Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 a Project Costs (US$ million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 b Project Financing (US$ million) . ............................. 24 F . Project Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Direct Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Economic and Financial Impact ............................. 24 Studies ............................................. 24 G. Status of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 H . Use of Bank Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 StaffInputs .......................................... 27 Missions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Attachment Economic and Financial Rates of Return . ......................... 29  MALI BIOMASS ALCOHOL AND ENERGY EFFICIENCY PROJECT {Credit 1403-MLI) PROJECT COMPLETION REPORT PREFACE 1. This is the Project Completion Report (PCR) for the Biomass Alcohol and Energy Efficiency project in Mali, for which Credit 1403-MLI in the amount of SDR 7.1 million was approved on July 19, 1983. In April 1987the Development Credit Agreement was amended when the beneficiary was changed fiom the Office du Niger to SUKALA. The credit closed on June 30, 1992, four and a half years behind the original schedule. An undisbursed amount of SDR 69,166.74 was cancelled. 2. The PCR was prepared jointly by the Industry and Energy Division of the Sahel Department (Preface, Evaluation Summary, Parts I and 111) and the Borrower (Part 11). 3. The preparation of the PCR was started just before the Bank's last supervision mission in April 1992. The PCR is based, inter alia, on the Staff Appraisal Report, the Credit and Project Agreements, supervision reports, correspondence between the Bank and the Borrower, and internal Bank memoranda.   MALI C T {Credit 1403-M1.I) 1 EVALUATION SUMMARY 1. Dbiectives. The project's original objective was to produce anhydrous alcohol (99%) in Mali for use in a gasoline-alcohol blend that would help reduce the country's dependenceon imported gasoline. The project was to upgrade and expand existing distilleries at sugar mills then producing only industrial alcohol (95%) from molasses. The project anhydrous alcohol production would represent about 3%of Mali's gasoline consumption. 2. When the project was amended in 1987, its objectives were broadened considerably, to incorporate steps to improve the sugar enterprise. These included improving the compositionof fuel consumption at the two sugar mills by reducing the use of imported gas oil and increasing the use of bagasse, rehabilitating and improving the sugarcane fields to increase yield and production, concentrating the production of anhydrous alcohol at the newer of the two mills at Siribala, and improving management systems to make the enterprise better suited for future policy reforms and investments. 3. Im~lementationEx~erience.The project's gods were largely met, and its preparation and implementation were carried out well but were very drawn out. The delays were due to many causes, including slow responses by the Government; the change in beneficiary from the Office du Niger to SUKALA; SUKALA's objections to the original master plan, which unduly emphasized the production of anhydrous alcohol; and the special care taken by the SUKALA project management team to fulfill the terms of the credit, especially regarding procurement (paras. 1.14- 1.16). 4. SUKALA was created soon after the project began from the personnel and physical assets that were involved in sugar operations for the Office du Niger. One of SUKALA's first acts was to enter into a comanagement agreement with an experienced Chinese firm, CLETC, which sent a team of technicians and managers to support operations at the two sugar mills and in the cane fields and to improve overall management. The Chinese management team played a large role in developing the amendments to the project and to its objectives, which were agreed to by the Bank. 5. An important part of the project was the marketing and distribution of anhydrous alcohol after it was mixed with gasoline. It was agreed that this would be performed by Mobil -one of the main importers of petroleum products into Mali - with facilities to be built by the Government at the Mobil tank farm in Bamako. Just before project completion, in June 1992, the blending facilities were still to be completed. The lack of a distribution system, the drop in gasoline prices, and SUKALA's good sales of industrial alcohol are among the reasons that  anhydrous alcohol is not produced and that the plant has been closed since its satisfactory trial runs. 6. m.The financial support from the Bank, the technical support from the Chinese team, and the autonomy of SUKALA's management have together enabled SUKALA to achieve remarkably high and economically sustainable production. The economic rate of return of the investments in June 1992was 24%, one percentage point less than that projected when the project was amended. Although the anhydrous alcohol plan has been shut down, the basic production of sugar and industrial alcohol is running well, the plantations are producing sufficient sugarcane and improving their yields, and the management is able to manage the existing production and plan for future developments (paras. 1.17-1.18). 7. &stainability. Whether the project is sustainabledepends mainly on world sugar prices and Mali's trade regime. Calculationsshow that SUKALA is economically competitive at a long- range equilibrium world sugar price of US$O.14to US$O.18 a pound, as it is well developed and efficiently run (para. 1.21). World sugar prices have tended to be below the long-range equilibrium level throughout the execution of the project. This did not affect SUKALA when sugar imports were strictly controlled. But sincethe recent liberalization of Mali's trade regime, unrestricted imports of sugar are flowing into the country at the low world prices. These prices, in the range of US$.008 to US$O.10a pound at the time this PCR was being written, are below the production costs of SUKALA and many other efficient producers, and SUKALA is suffering severe financial difficulties. SUKALA is urging the Government to tax sugar imports, as permitted under the structural adjustment operations, so that SUKALA can sell sugar without making a loss. 8. SUKALA sells almost all of its production of industrial alcohol -mostly for pharmaceutical uses - at prices well above what it could get for anhydrous alcohol for blending with gasoline. The revenue from alcohol sales is nevertheless quite small -- only about 6%of SUKALA's revenue from sugar. 9. Findiw and Lessons Learned. The main lesson to be learned from this project is that a project must be restructured once it becomes apparent that the underlying conditionshave changed. A project's original objectives and emphases must be altered to fit changing circumstances. Producing anhydrous alcohol and using it to reduce Mali's dependence on imported gasoline was the simple objective of this project as originally designed. But because of changes in the external environment, it turned out that improving the production of sugar and industrial alcohol was a more valuable use of the credit. 10. The project yielded other lessons too. SUKALA's financial difficulties would be less severe if Mali's real exchange rate were in equilibrium. Delays are to be expected in a project when there are over lapping levels of management, but these delays are acceptable if a sound operation results. And Bank supervision works best when it is flexible and can deal with a project's changing circumstances.  MALI BIOMASS ALCOHOL AND ENERGY EFFICIENCY PROJECT [Credit 1403-MLI) PROJECT COMPLETION REPORT PART I. PROJECT REVIEW FROM THE BANK'S PERSPECTIVE A. Project Identity Project name: Biomass Alcohol and Energy Efficiency Credit no.: 1403-MLI RVP unit: Africa Regional Office Country: Mali Sector: Industry and Energy Effectiveness date : May 6, 1984 Approved: July 19, 1983 Disbursed: December 10, 1992 (99%) B. Background 1.01 The idea for this project originated in the wake of the global oil crises of the 1970s. Because Mali has to import all its petroleum products, it is vulnerable to price fluctuationson the world market. One way to reduce the country's dependency on this market would be to substitute anhydrous alcohol for some of its imports of gasoline; anhydrous alcohol (99.6%) could be produced by the existing sugar, molasses, and alcohol operations of the Malian parastatal organization, the Office du Niger. At the request of the Malian Government, the Bank designed a project along these lines, and a credit was approved. 1.02 Later, in 1986, SUKALA was created from the sugar division of the Office du Niger, and it entered a broad comanagement arrangement for the project with the experienced Chinese firm CLETC. One of the first acts of the new management was to broaden the project scope to include all measures that would improve the industrial and agricultural operations of the enterprise. The original credit arrangements of 1983 were amended accordingly. The project was reappraised in 1986and approved by the IDA Board of Directors. An amended Credit Agreement was signed in 1987, and the revised project got under way. By June 1992, when the credit was closed, the project had achieved all its goals. 1.03 Ironically, the production of anhydrous alcohol has become one of the least important goals of SUKALA, as it is doing very well by concentratingon improving the production and sales of sugar and industrial alcohol (95%). SUKALA's total potential output of anhydrous alcohol would in any case represent only 3% of Mali's gasoline consumption.  C. Proiect Obiectives and Description 1.04 The main objectives of the project were originally threefold: (1) to reduce Mali's imports of petroleum by producing anhydrous alcohol using molasses, which had gone unused, as the feedstock; (2) to improve energy efficiency in the two existing sugar plants at Dougabougou and Siribala by increasing the proportion of bagasse used as fuel; and (3) to develop a coherent program of policy reforms and investments to rehabilitate the Office du Niger. 1.05 The project consisted of (1) establishingfacilitiesfor expanded industrial alcohol production, storage, handling, and for producing anhydrous alcohol; (2) improving energy efficiency; (3) establishing alcohol and gasolineblending and distributionfacilities; (4) providing technical assistance and training; (5) preparing a biomass energy study; and (6) providing technical assistance to an Office du Niger Rehabilitation Task Force. 1.06 After the 1987 amendments, another component was added: terracing and draining the sugarcane fields. Two components, the biomass energy study and the technical assistance to the Rehabilitation Task Force, were dropped. 1.07 The amended project had three main parts: Industrial facilities. These consisted of increased molasses fermentation capacity, increased industrial alcohol distillation capacity, a new anhydrous alcohol plant, and new alcohol storage tanks -all at the Siribala sugar mill; an alcohol storage tank and alcohol and gasoline blending facilities at the Mobil Oil tank farm in Bamako; and process improvements throughout the Siribala and Dougabougou mills - especially to improve energy efficiency. A-6. These included increased use of pesticides and fertilizer and improved preparation of fields through better and more frequent attention to terracing and drainage. a Manaeement and organizational im~rovements. The main improvements were computerization of the accounting systems, upgrading of telecommunications facilities, and training. Thus, the project was comprehensive, thoroughly scrutinized, revised along the way when necessary, and based on a clear conceptual foundation. D. Proiect Desim and Oreanization 1.08 A preliminary project outline was drawn up based on a pre-identification mission in February 1980. In July 1981, the Atkins consulting firm prepared a feasibility study under a Project Preparation Facility (PPF). In October 1981, a Bank appraisal mission confirmed the findings of the feasibility study, and a Staff Appraisal Report was prepared in May 1983. The project was reappraised in 1986 following the changes in its concept, and a Reappraisal Report was issued in April 1987.  1.09 The Malian parties involved in the project included the Government, the Office du Niger (later replaced by SUKALA), Mobil, and four other oil companies operating in Mali that were members of the Mali Confederation of Oil Distributors (COD). There were clear agreements between the Government and the project beneficiary, which greatly assisted project preparation and implementation. But there was only a loose commitment by the COD; this was partly to blame for the delays in organizing the distributionof anhydrous alcohol. 1.10 The project's design was based on established knowledge. Although the production of anhydrous alcohol is new to Mali, the techniques are well-known elsewhere. The proposed product, a gasohol blend with about 3% alcohol is also well-known. And the new anhydrous alcohol plant is a copy of one operating successfully in Beijing, which formed the basis for the training of Malian staff in China. The improvementof the existing production of sugar, molasses, and industrial alcohol could not be considered innovative, as this production had been ongoing in Mali some 20 years before the project. The project was designed so that the total production of molasses would be used, thus eliminatingthe need to dispose of it-inthe surrounding bush, and environmentally unsatisfactory method. A special Bank mission examined sugarcane production in June 1982 and recommended measures to ensure an adequate supply. These included increasing the use of fertilizers and insecticides, and improving field preparation. 1.11 The project was originally scheduled to start in late 1983, with the alcohol plant to be commissioned in mid-1985. But because of the change in beneficiary from the Office du Niger to SUKALA, and the change in the project's scope, the original closing date was postponed from 1987to 1989. 1.12 The management of the project was originally divided among three parties. The Ministry of State for Equipment was to be responsible for gasohol blending and the biomass energy study. The Office du Niger was to be responsible for alcohol production, storage, and handling, energy efficiency, technical assistance and training, and the Rehabilitation Task Force. And the COD was to be responsible for marketing and distributingthe gasohol. 1.13 After SUKALA was established, the responsibilities were reassigned. The Ministry of Agriculture and Livestock took over the responsibilitiesof the Ministry of Equipment, and SUKALA assumed those of the Office du Niger. SUKALA also eventually assumed responsibility for constructionof the gasohol blending facilities when the interministerial committee appointed by the Government for that purpose proved inadequate for the task. E. Proiect Im~lementation 1.14 There are no major differences between the 1987plan, revised to take into account the project's expanded scope and the amendment to the Credit Agreement, and the physical project components that were actually implemented. Nearly all the new industrial and agricultural equipment is in place and performing at or above expectations. The two exceptions are the alcohol blending facilities in Bamako, whose completionhas been held up by a contract dispute, and the new anhydrous alcohol plant. The plant has been installed and satisfactorily tested but is not in use because of uncertainties about its economics and about blending and distribution. Another departure from the 1987plan is that SUKALA was able to buy more earth-moving equipment than originally proposed because of considerable savings in the cost of the alcohol plant. The equipment is being used for terracing and drainage of the sugarcane fields, which,  together with increased use of pesticides and fertilizers, is having very beneficial results for sugarcane yields and output. 1.15 There were considerable differences between planned and actual completion dates, however. The revised project was completed about three years late, and the closing date had to be extended three times. But in view of the project's successful completion and SUKALA's inherent viability, these delays are not serious. 1.16 There were two main causes of the delay. The Government and the Bank were slow to respond when approvals were needed, and SUKALA took great care to fulfill all the terms of the credit, especially those concerning procurement. F. Proiect Results 1.17 At the time of the last supervision mission in April 1992, the project was nearly complete. All that remained were the finishing touches for three components: the alcohol blending and storage facilities in Bamako; the computerizationof SUKALA's accounting system; and training. Some of the components exceeded the original goals: Sugarcaneoperations have improved. Cane production, which had dropped below 100,000tons a year in the early 1980s, is now close to 300,000 tons per year, and cane yields have risen from less than 50 to about 75 tons per hectare. Improvements in energy efficiency have reduced the consumption of imported fuels to only occasional use of gas oil and fuel wood, and maximized the use of bagasse, and of industrial alcohol by the trucks transporting cane. Sugar and alcohol production has increased. Sugar production is nearly 30,000 tons per year, up from a low of 6,000 tons per year, and alcohol production is approaching 2 million liters a year, up from a low of less than 100,000liters a year. The liquid effluent from the Siribala alcohol plant is now treated in adequately designed and operated settling and evaporation ponds, rather than simply discharged in the bush, as was done before the project. The expansion of the alcohol facilities went very smoothly due in part to the project management assistanceprovided by the Italian firm SAIS. The staff training, under direction of the French company SOFRECO, is much wider and more comprehensivethan originally envisaged, and a training center that had not been planned is being build. The introduction of the computerized management information system by the Malian firm SOGIC has proceeded faster and further than expected. 1.18 The shutdown of the anhydrous alcohol plant is unfortunate but not a major problem. The investment in the plant represents about 20% of the credit and an even smaller part (6%)of SUKALA's overall investment projects since 1985. And the plant is maintained in good  condition. There is little financial incentive for the COD to accept the alcohol at the present time because of the low oil prices and the new liberal import system for petroleum and other products. A depreciation of the real exchange rate would reduce the financial disincentiveto substitute anhydrous alcohol for imported gasoline. But introducing gasohol in Mali would require testing engines using the fuel under local conditions. This the COD and SUKALA are reluctant to do for little or no gain. Moreover, SUKALA finds a ready market at good prices for its industrial alcohol. G. Proiect SustainabiliQ 1.19 The project is quite sustainable technically and economically, but it is financially vulnerable to fluctuations in world sugar prices. The plants are well operated and maintained. And the management and staff have proven their ability to consistently increase production of sugar and alcohol each season. Further improvements are likely with only maintenance investments. 1.20 The key to SUKALA's economic and financial viability is its efficient production of sugar. Alcohol, sold for industrial and pharmaceutical uses at the going price of about 200 CFAF a liter, represents only about 6% of SUKALA's sales revenue. Anhydrous alcohol would be even more insignificant - and a lossmaker - if it were sold as a gasoline substitute at the current untaxed price of about 100 CFAF a liter. 1.21 SUKALA is economically competitive at a sugar price of US$0.16 per pound CIF Abidjan. This finding is based on a calculation that values all inputs at long-range equilibrium prices -- thus, physical inputs are valued at 90%, and personnel at 40%, of their market values. But, throughout the project period, world sugar prices have been in the range of US$0.06 to US$O.10 a pound. These prices, well below the long-range marginal production cost of US$O. 14 to US$O. 18 a pound, are low because of the excess world production, much of which is subsidized. 1.22 Net sugar importers that, like Mali, are also efficient producers, have had to devise methods to cope with the low-cost imports. Earlier, Mali applied import controls and duties, and SUKALA did well financially. But under the terms of recent structural adjustment operations, the Government has adopted a very liberal trade regime. Although it is permitted to apply modest import duties to protect efficient producers, it has recently chosen not to tax sugar imports. The country is now flooded with cheap imports with which SUKALA can not compete, and it is stockpiling a large part of its output. This is causing SUKALA severe financial difficulties, as it has little cash income and must borrow at high interest rates to finance its inventories. Its position would not be so severe if the distortions in the relative prices of tradables and non- tradables could be eliminated. 1.23 Compounding SUKALA's financial problems, the Government has pressured the entity--for social reasons-- to raise the wages of its overly large and inefficient labor force, employed largely to cut and load cane. SUKALA would prefer to invest in more efficient and cost-effective mechanical harvesting and loading systems and to dispense with the burden of dealing with some 4,000 seasonal laborers.  H. Bank Performance 1.24 The Government of Mali first approached the Bank on this project on September 25, 1979, and the credit was closed in June 1992. For a relatively small and uncomplicated project, this is a very extended period from concept to implementation. Closer, more consistent supervision might have shortenedthe period if not for the major changes in the project's scope and objectives introduced between 1984 and 1986, especially the arrival of the Chinese managers and technicians, and the de-emphasis on gasohol production after the precipitous drop in global oil prices. 1.25 The Bank adapted well to these and other changes in the project. It carried out nine supervision missions, which gave a good picture of the project's progress. The 1989 mission showed that SUKALA is economically competitive and an efficient producer, and shifted the focus of the project to SUKALA's sugar operations. The shift in focus away from the alcohol operationswas merited because the concept of using anhydrous alcohol as a gasoline substitute was no longer valid and alcohol production is only a small part of SUKALA's operations. 1.26 During project preparation, appraisal, and reappraisal, more attention should perhaps have been given to alternativeuses for the abundant supply of molasses. The possibility of distributingmolasses as a supplementary feed for animals, particularly ruminants, was mentioned but treated lightly. This concept is still germane. There is still a surplus of molasses and it continuesto pose an ecological risk because of the way it is discarded in the surrounding bush. Plans are in hand for SUKALA to expand its livestock activities, however. 1.27 Despite the somewhat difficult start of the project and the stress caused by the change in beneficiary, the Bank maintained excellent relations with the present SUKALA management and project staff. I. Borrower Performance 1.28 The borrower was the Republic of Mali, but the day-today business relating to the credit was initially conducted by the Office du Niger and later by SUKALA as its successor. This arrangement was initially a source of weakness in the project because the Office du Niger, which dealt with all activities along the Niger River, was unable to give sufficient attention to the project. For example, during project preparation, the review of the consultant's report was considerably delayed. 1.29 The management of the project improved considerablyonce SUKALA became a separate, autonomous entity and the comanagement agreement with the Chinese firm CLETC came into effect. This agreement included the complete rehabilitation of the two sugar and alcohol plants, giving the project a much broader scope, and was a valuable asset. All aspects of the project's management proved to be satisfactory, if a little slow and ponderous, and there were no serious problems. There were generally good results in production, financial control, human resources, and liaison with the Government. 1.30 SUKALA assumed much of the responsibility for managing the parts of the project that fell under the Government's purview. The interministerial committee appointed to perform the Government's management responsibilitiesfunctioned poorly, and SUKALA had to oversee  constructionof the facility for blending the anhydrous alcohol with gasoline. SUKALA is to be particularly commended for its attention to detail in meeting Bank procurement regulations. The project management staff has performed satisfactorily, except for some tardiness in getting audited financial statements to the Bank. Unaudited statements for 1990 and 1991 were received on time and satisfactorily reflected SUKALA's situation, but the audited versions had not been received by the credit closing despite stem warnings from the Bank. Now that the credit is closed, this matter is moot, but it remains under discussion between the Bank and the Government. The comanagement arrangement and the Government's continued involvement caused some overlap of management functions; this delayed procurement and other actions and was the chief cause of the extended project period. 1.31 There may have been some merit to having a contractual agreement between the Government and the gasoline distribution companies to ensure the production of gasohol. As it turned out, of course, gasohol was not a crucial part of the project. But there is nevertheless a lesson to be learned: the Bank should probably have insisted on such a contract being available, to be annulled if not needed. 1.32 The relationshipbetween the Bank and the Borrower was cordial and cooperative. Implementation of the project would have been easier if the ultimate beneficiary had been in place from the start, however, because of the advantages of dealing with a partner that has a clear task to perform that can be readily incorporated into the project's goals. 1.33 The continued good understanding between the Bank and SUKALA and the Government has been a strength of the project. This understanding has been evidenced by the fulfillmentof all the agreements, although sometimes with some delay. 1.34 Another strength of the project has been the good relationshipsbetween the managers and technicians of CLETC and SUKALA despite difficult language barriers. K. Consultine Services 1.35 To prepare the project, the Office du Niger employed a consultant who drew up a master plan. This plan, after amendments introduced by SUKALA were incorporated, was the foundation for the rehabilitation work undertaken by the Malian and Chinese team and may therefore be considered satisfactory. 1.36 In addition, the Bank employed a consultant to study ways to improve the sugarcane fields. This study too was satisfactory. 1.37 Consultantsemployed by SUKALA to manage the project, computerize its accounting system, and provide training also proved to be satisfactory.  L. proiect Documentation and Datq 1.38 The project's legal documents consist of the Development Credit Agreement, dated November 3, 1983, and the Amending Agreement to the Development Credit Agreement, dated April 17, 1987. Both were useful and appropriate. 1.40 In general, the project files are readily available with only few documents missing. The comprehensive documentation of the staff appraisal report and the reappraisal report were particularly useful. Still, despite the ready availability of documentation, it was difficult to reconstruct for this PCR the tortuous path of this project, which involved so many changes in both substance and management style.  MALl BIOMASS ALCOHOL AND ENERGY EFFICIENCY PROJECT /Credit 1403-MLI) PROJECT COMPLETION REPORT PART 11. PROJECT REVIEW FROM BORROWER'S PERSPECTIVE A. Introduction 2.01 This report on the Biomass Alcohol and Energy Efficiency Project has been drawn up in accordance with the new procedures concerning investment and adjustment operations financed by IBRD and IDA. It corresponds mainly to the second part of the new model Project Completion Report (PCR) to be submitted by the Borrower. 2.02 The project was identified and examined by an IDA mission that was sent out to Mali in February 1980. A feasibility study made by a consulting firm resulted in the design of a master plan for the project in April 1985. After approval by the Office du Niger, the initial project beneficiary, this plan was to form the basis for the activities connected with implementation of the project. 2.03 With the instituting of comanagement and the establishment of SUKALA in 1984 and 1985, respectively, the sugar complex was made responsible for the execution of the project and made some adjustments to the configuration by amending the proposed master plan. 2.04 Accordingly, for the execution of the project under the new setup all the rights and obligationsof the Office du Niger deriving from the Credit, Project, and Onlending Agreements were transferred to SUKALA in 1987, following negotiations by its management. B. Project Objectives and Design 2.05 Originally under the aegis of the Office du Niger, the aims of the project (cf. Credit Agreement) were to: Reduce the Borrower's dependence on imported gasoline by producing anhydrous alcohol from molasses for blending with gasoline. Improve the energy efficiency of the sugar mills and the related distilleries at Dougabougou and Siribala. Strengthen the activitiesof the Office du Niger. After the transfer of the project to SUKALA the following changes were made (cf. amendment to Credit Agreement):  Strengtheningof the agricultural activity by procurement of inputs, earth-moving machinery and equipment to improve drainage. Strengtheningof SUKALA's management by means of computerization and staff training. The biomass energy development component was assigned to the Ministry of Industry, Energy and Mining, and improvement of energy efficiencyhas been made a part of the production capacity expansion project to be carried out by consultants. As regards anhydrous alcohol production, contrary to the solution initially proposed, which consisted in adapting the facilities already in place and processing all available molasses into anhydrous alcohol, SUKALA opted to expand the Siribala distillery and add an independent anhydrous alcohol production section. This change has the twofold advantage of reducing investment costs and diversifying our production range (possibility of producing 95" or 99" alcohol) as a means of obviating possible difficulties connected with marketing gasohol. 2.06 This new approach meant that, the industrial plants were left intact following a major overhaul. This is a very important point because it made it possible to achieve savings while avoiding any wastage of resources due to possible changes and consultants' fees. 2.07 This new orientation for the project meant, that instead of focusingprimarily on gasohol production, the emphasis could be placed essentiallyon developing sugar and alcohol production in view of the uncertain market prospects for gasohol, a move that has also served to maintain the return on the investments. C. Pre~arationand Organization of the Proiect 2.08 The project was identified at the Office du Niger by an IDA mission in 1980, after a pre-identification study. This mission recommended that the Government make a feasibility study. The Government used consultantsfor this purpose, who were financed by means of a project preparation facility. The study was completed in July 1981 and then reviewed by the Office du Niger, with IDA assistance. Another IDA mission then appraised the project, and a further mission looked into the arrangements for implementation in 1982. 2.09 The IDA appraisal report was produced in 1983. In April 1985the master plan for the project was prepared. This plan was amended by SUKALA in October 1985, and the configuration of the project was modified. The project as thus amended was then reappraised by IDA, and the reappraisal report was distributed in April 1987. 2.10 The above meant that preparation of execution took longer than originally envisaged, and the closing date for the project had to be set back: the first agreements with the OfCice du Niger were signed in 1983, the amendments with SUKALA in 1987, while actual executionof the project did not start until 1988. For these reasons the closing date was put back from December 1990to 1991and then again to 1992.  2.11 It can accordinglybe affirmed that preparation of the project was undertaken with due thoroughness and that the necessary adjustments were made in good time. 2.12 The structures set up for the organization and operation of the project were the following: A Project Management Unit (PMU) in SUKALA responsible for management of the project. A coordination committee (with representatives of the services and departments involved in execution of the project) chaired by the Ministry of Agriculture representative. This committee is responsible for gasohol distribution and marketing. The Association of Oil Distributors (AOD), a member of the coordination committee and responsible for operating the blending plant at the Mobil Oil depot in Bamako. 2.13 Throughout the preparation of the project these different structures maintained good collaboration while coordinationbetween the State and the oil companies was handled by Mobil. There was an agreement in force between the AOD and the State, which had undertaken to lease its installationsto the oil companies. 2.14 One of the major deficiencies in the preparation of the project was the failure to anticipate and provide for a drop in world oil prices, so that no thought was given to other possible uses of the molasses. D. Execution of the Proiea 2.15 The execution of the project was delayed by the changingof the beneficiary and the renegotiation undertaken by SUKALA after the comanagement system had been introduced. 2.16 The adjustments made by SUKALA during execution of the project were of great value and helped to bring costs down and to lessen the need for foreign consultants. The steps taken accordingly made substantial savings of credit funds possible. 2.17 After consulting with the World Bank, these savings were reallocated so as to permit financing of items not originally envisaged, namely: Procurement of additional rehabilitationequipment and topographic equipment. Construction of a shed for rural engineering's equipment. Procurement of computers and software. Procurement of transportation and communications equipment for the project's requirements.  Construction of a training center and offices at SUKALA. 2.18 In general, it can be stated that the project accomplished most of its objectives and posted satisfactory results without major deficiencies. All the components were executed in full and in accordance with the procurement procedures. At the present time only the gasohol blending and marketing component has not been finalized owing to demand problems. This situation has led to the shutting down of the anhydrous alcohol plant. Steps have, however, been taken to preserve the facilities after production trials that were found to be conclusive. 2.19 The results posted during execution of the project are the outcome of the financing provided in conjunction with the steps taken by the Malian Government and SUKALA to ensure the normal operation of the enterprise. (Establishmentof SUKALA as a comanaged corporation, protection, guaranteed market, clearing of liabilities, etc.). The results presented in the following tables show satisfactory performances followingthe increase in production and the management's efforts. 2.20 It should duly be noted that: The procurement of the earth moving machinery helped to strengthen SUKALA's management autonomy and enabled it to keep abreast of the demands of the crop year better. The quality of the rehabilitation work has improved and the cost is appreciably lower compared with the charges billed by the Office du Niger, which amounted to CFAF 450,000 per hectare compared with CFAF 250,000 at present for SUKALA. The area rehabilitated is between 600 and 700 ha per year. The use of the agricultural inputs has made it possible to increase field yields and to increase the amount and quality of cane production, so that sufficient molasses is available for alcohol production and a very considerable level of sugar production can be achieved, i.e., an increase of nearly 50% in less than three years.Sugarcane production has risen by over 20%. Computerizationof the management system has made it possible to improve financial management and accounting. Moreover, this computerizationhas brought about an improvement in both the speed and the quality of data processing. Construction of the Training Center will make upgrading of SUKALA's staff possible together with continuous and sustained training of its labor. This will have a significant impact on management and production. It should be noted that no training on this scale has been conducted since the establishmentof SUKALA. The procurement of communications equipment (telex and fax) has helped greatly to improve the flow of information and communication with the World  Bank. This has resulted in better and more efficient and quicker processing of information and has facilitated decision-making. Finally, the making of the prefeasibility study for the SUKALA master plan made it possible not only to generate a development policy for sugar in Mali, but also to identify the major actions to be taken to promote the sugar and sugarcane agro-industry. This study will most certainly facilitatethe securing of the financing needed for development work from the donors.    F. Su~ervisionof the Pro& 2.21 Supervisionthroughout the project was done by the IDA supervision missions, on the one hand, and the Project Management Unit in SUKALA and the Coordination Committee at government level. 2.22 The supervision missions came out quite regularly with an average frequency of two missions per year, spending on average seven to ten days in Mali. Despite the rapid turnover in project officers (there were four between 1987 and 1991), considerable efforts were made to give the project the desired momentum. 2.23 The holding of regular monthly meetings of the PMU and quarterly meetings of the Coordination Committee was a decisive factor in the monitoring and management of the project. Lastly, the project suffered from the lack of interest on the part of the localoil distributors and the multiplicity of decision-making organs, particularly in the blending and marketing component. 2.24 In conclusion, the supervision was performed quite satisfactorily and made it possible to ensure that the credit funds were properly used and that the necessary measures were taken for the smooth running of the project. 2.25 The Borrower is the Malian State, but the management of the project was handled mainly at three levels: SUKALA, which took the place of the Office du Niger, took care satisfactorily of the setting up of the anhydrous alcohol production facilities while strengthening its agricultural and industrial production operations and improving its management. At this level, the Sino-Malian comanagement has been a decisive factor in the successful accomplishment of the objectives set. SUKALA's approach has been to implement the project while minimizing the risks connected with the marketing of the alcohol. SUKALA has utilized the project to diversify its alcohol production and apply the bulk of the credit to development of sugarcane, sugar and 95" alcohol production. For the rest, SUKALA handled the management of the project in accordance with standard practices and the procedures laid down by the World Bank. The CoordinationCommittee, made up of government departments and agencies and the oil distributors' association, had to cope with the fall in oil prices and the liberalizationpolicy adopted by the State, so it was unable to oblige the oil companies to market the product. In view of the changes that occurred, the oil distributors' association had no interest in marketing the product and neither consumers nor the State offered any guarantee of buying it.  2.26 The fact of the matter was that with the delay in the execution of the project and the fundamental change in the assumptions on which it was based, the interests of the various partners involved no longer coincided. H. Evaluation of World Bank's Performance 2.27 The World Bank, through its experts, provided sustained and continuous assistance for the different actions. 2.28 Due to the difficulties encountered in marketing the anhydrous alcohol and in completion of the blending operation, the Bank, after study of the situation, felt it necessary to release the Malian Government and SUKALA from the obligationcontained in the agreements to blend the anhydrous alcohol with gasoline. It was recommended to SUKALA that, in conjunction with the oil companies, it should explore the possibilities of other uses for the alcohol and the blending plant. 2.29 In the course of its supervision missions the Bank made an indepth economic evaluation of SUKALA in 1989, which was updated in 1990 and 1991. The results led to SUKALA becoming competitivein economic terms and made sugar and alcohol production profitable. 2.30 In conclusion, the World Bank accordingly intends to explore the possibility of continued Bank Group assistanceto SUKALA even after the closing of the project. The Bank has repeated its support for SUKALA's management with regard to its request to the Government that the TCI tax be systematically applied during periods of low world sugar prices. I. Bank-Borrower Relations 2.3 1 The changes that took place between 1984 and 1987 and the difficulties encountered in the preparation and execution of the project had no adverse effect whatsoever on the relations between the Bank and the Borrower. 2.32 The good relations and cooperation between the Bank's experts and SUKALA's Malian and Chinese specialists were a decisive factor in the accomplishment of the objectives set. 2.33 The obligationslaid down in the Credit and Project Agreements were observed by both parties on the basis of frank discussionsand mutual understanding. 2.34 The experts responsiblefor the supervisionof the project always gave their full support to SUKALA and the results obtained have been considerable. 2.35 SUKALA's long-term viability is closely linked with world sugar price fluctuations and Mali's trade policy.  2.36 In light of the problems encountered during execution of the project, the following recommendations are called for: The World Bank must assist SUKALA in its negotiations with the Malian Government to secure protection for sugar and alcohol production, in accordance with the system of taxation authorized in the context of the structural adjustment operations. This would enable SUKALA to sell its output and to be more competitive. Exploration of other possible uses for anhydrous alcohol would be helpful, now that liberalization is the order of the day. Future actions must focus on finding markets for the alcohol and other uses for the molasses. With the decision to convert SUKALA into a mixed corporation, the World Bank's intervention with its financial affiliates (IDA, IFC) with a view to their participation in the corporation's capital would be greatly appreciated. The Chinese company CLETC has already declared its interest in a possible participationof up to 40%. The seeking of financing for implementationof the master plan for SUKALA's development. K. Conclusions 2.37 It is apparent from the foregoing that, thanks to the competence of its management and its flexibility, SUKALA has been able to adapt the project to the prevailing situation. 2.38 With the change in context, the assumptions on which the project was based no longer applied. To remedy this situation, SUKALA, with the Bank's agreement, channeled the bulk of the investments into sugar and industrial alcohol production. Only 17%of the credit funds were used for anhydrous alcohol production. This solution has proven most profitable and has made it possible to preserve the corporation's profitability.  Position of Disbursements from IDA Credit 1403-MLI as of Mav 18. 1992 Drawin~sbv SUKALA Drawings made by Office du Niger and transferred to SUKALA in the opening balance sheet: - fertilizer CFAF 435,911,003 - Atkins study 26.750.000 Subtotal I Direct drawings by State in favor of Atkins Subtotal I1 - anhydrous alcohol plant equipment - agricultural inputs - rural engineering machinery - studies, consultant services, training: supervision (SAIS) audit (sec Diarra) management assistance (SOGIC) training master plan (CIECC) Computer equipment (SOGIC) Field trip - vehicles, telex, fax Subtotal I11 Tttal disbursements for SUKALA (I+ 11+1111 Remaining for disbursement to SUKALA - balance due to CIECC - balance due to SOFRECO - balance due to SOGIC - reimbursement of SUKALA prefinancing of interest - construction of office Total disbursements made and current commitments  SUKALA drawinesbv categQly QuQlY Pesimatioq Amount (CFAF) 2(c)1 biomass alcohol equipment 547,062,400 2(d) studies, consultant services, training, vehicles, telex, fax 419,102,714 2(e) agricultural inputs and earth moving machinery PPF 1,132,610,526 3 435.9 11-003 Total disbursed 2,534,686,643 Drawings bv the State Office du Niger drawings taken over by State Drawings made by SUKALA for account of State Total State drawings 170,212,975 Balance to be disbursed for account of State in favor of Metal-Soudan Total State disbursements and commitments Probable total commitment (CFAF) - State - SUKALA Total Part disbursed - State - SUKALA Part to be disbursed - State - SUKALA General liauidity rati~ 1987188 1988189 SUKALAdid not contract any other medium- and long-term debts between 1987 and 1992. SUKALA has paid the service charges due to the Caisse Autonome d'Amortissement through October 15, 1991. Those due as of April 15, 1992, will be paid immediately.  MALI BIOMASS ALCOHOL AND ENERGY EFFICIENCY PROJECT (Credit 1403-MLQ PROJECT COMPLETION REPORT PART 111. STATISTICAL INFORMATION A. Related Bank Loans and/or CrediQ Not relevant. B. Proiect Timetable Planned Revis4 Actual Identification Preparation Appraisal mission Credit negotiations Board approval Credit signature Credit effectiveness Credit closing / In April 1987 an amendment to the credit document was made due to the change from the Office du Niger to SUKALA as the project beneficiary. /h The delay was caused by organizational procedures in the Government of Mali.  C. LoanICredit Disbursement '000 uss Estimated Actual as ActuaL % of estimate D. Project Im~lementation Indicators A ~ ~ r a i s a l Bctual at PCR Alcohol production Completed /a Energy efficiency Completed Alcohol blending Installation nearly completed Technical assistance: -- Industry Expected to be completed /h Agriculture Completed /a Installation completed, but shut down. /b By late 1992.   Planned Revised CreditAareement Zl0cai Foreian tocal Foreian Total IDA ON/SUKALA GOM TOTAL F. project Results Direct Benefits Area under cane production Cane production Sugar production (1979/80) Molasses production (1979/80) Alcohol production (1979/80) Economic and Financial Impact Rate of return for proiect consolidated Reap~raisalestimate Estimate at PCR Economic 25 24 Financial n.a 45 Studies Studv Purpose defined at Status Impact A- Master To define overall goals of Done Modified and widened Plan the project the project's scope Energy To save energy by better Done Gave good basis for efficiency utilization of steam, etc. major plant improvements To substitute bagasse for imported fuel.  G. Status of Covenants Develo~mentCredit Agreement sec. 3.03: Mali to ensure that imported goods are adequately insured during transportation, delivery, and installation. Status of Com~liance;In compliance. All imported project-related goods are adequately insured through all phases of implementation. Develo~mentCredit Agreement sec. 3.04 Mali to ensure satisfactorymaintenance of records, to allow IDA access to them and to provide them, on request. Status of Com~liance:In compliance. All records, plans, contracts, and reports have been freely shared with IDA. By October 30, 1987, Mali to arrange for operation and maintenance of blending, storage, and distributionfacilities at Bamako under a 12-year lease yielding at least 13%per annum. Status of Com~liance;Not completely in compliance. Storage and blending facilities have been built at the Mobil tank farm, but not fully completed. Develo~mentCredit Agreement sec. 3.05b: By January 31, 1984, Mali to contract with the Groupement Professio~eldes Pbtroliers du Mali for marketing and distributionof the alcohol produced. Status of Compliance: In compliance. Mobil, acting on behalf of the Groupement Professio~eldes P6troliers du Mali, has entered an agreement with Mali for the marketing and distribution of the alcohol. Develoument Credit Agreement sec. 3 . 0 7 ~By June 30, 1987, Mali to establish a committee to coordinate activities related to the storage facility at Bamako petroleum products depot. Status of Com~liance;In compliance. Committee was set up in June 1987. Development Credit Agreement sec. 3.07b; By December 31, 1987, Mali to prepare a satisfactoryplan to explore opening of SUKALA capital to private participation. of Compliance; Not completely in compliance. Consultants have just been hired to prepare a strategic plan for SUKALA, which will address, among other things, the privatization of the company. Develo~mentCredit Aereement sec. 3.07~;By December 31, 1987, Mali to arrange for availability of technical assistance services needed by SUKALA until December 31, 1990. Status of Comoliance: In compliance. Under a technical cooperation agreement with China, CLETC was retained as a technical partner until July 1990, and a Chinese comanagement team has been in place since 1987. Develo~mentCredit Aereement sec. 2.01b: SUKALA to open and maintain a CFAF Special Account for the purpose of the project. Status of Com~liance;In compliance. Account was opened July 1987.  Develournent Credit Agreement sec. 2.01~:SUKALA to appoint project manager as head of the project management unit for coordinating and supervising project implementation. Status of Com~liance:In compliance. A satisfactory project manager was named in November 1984and has since been supervising implementation. Develoument Credit Agreement sec. 2.02; Same as Development Credit Agreement sec. 3.07 Status of Com~liance: In compliance. Development Credit Agreement sec. 2.04a; Same as Development Credit Agreement 3.03A. Status of Com~liance; In compliance. Develoument Credit Agreement sec. 2.05; Same as Development Credit Agreement 3.04. Status of Com~liance:In compliance. Develoument Credit Agreement sec. 4.02: SUKALA to provide audited accounts (including audits of the Special Accounts) to IDA by October 31 each year and to provide quarterly progress reports covering project implementation. Status of Com~liance:In compliance. Annual audited accounts for 1988, 1989, and 1990 have been received by IDA. Provisional 1991 accounting data was provided to May 1991 supervision mission. Development Credit Agreement sec. 4.03; SUKALA to maintain a debt-equity ratio of better than 60 to 40 and a current ratio of better than 1.5 to 1. StatusIn compliance. Since 1988the debt-equity ratio has consistentlybeen better than the 60 to 40 required and the current ratio better than the 1.5 required. Develo~mentCredit Agreement sec,4.04a: SUKALA not to incur additional debt unless its debt service coverage ratio is better than 1.5. Status of Com~liance;In compliance. No new debt has been incurred since the IDA credit. Meanwhile, the company's debt service coverage ratio has consistently been in the 4 to 7 range (better than 1.5).  H. Use of Bank Resources Staff Inputs Proiect cvcle Planned weeks Staff weeks FY80 Lending operation, preappraisal 6.2 FY81 Lending operation, preappraisal 0.8 FY82 Lending operation, preappraisal 63.7 FY83 Lending operation, negotiation 22.9 FY84 Project supervision 16.1 FY85 Project supervision 11.2 FY86 Project supervision 29.6 FY87 Project supervision 10.9 FY88 Project supervision 6.9 FY89 Project supervision 2.7 FY90 Project supervision 7.0 FY91 Project supervision 4.5 FY92 Project supervision PCR  Missions Persons Days Spec. of performance Problem Activity Reportinq on mission in field people status codes Pre-identification March 1980 n.a. n.a. Preparation mission August 1980 n.a. n.a. Appraisal mission October 1981 n.a. n.a. Supervision mission November 1983 n.a. n.a. Supervision mission January 1984 n.a. M Supporting mission February 1984 n.a. n.a. Supervision mission July 1985 PO-Lo MO Supervision mission December 1985 PO-LO n.a. Re-appraisal mission January 1986 CONS. PO n.a. Re-negotiation/SPN May 1986 PO-LO n.a. supervision mission June 1987 IS n.a. Supervision mission December 1987 IS-PO n. a. Supervision mission December 1989 IS-PO n. a. Supervision mission August 1991 IS-PO n.a. Supervision mission April 1992 IS-CONS none PO = project officer M= Management LO = loan officer 0 = Organization IS = industrial specialist CONS = consultant  ATTACHMENT Page 1 of 4 Economic and Financial Rates of Return 1. SUKALA accounts are used for the period 1986187to 1991192. Projectionsthereafter are based on production of 30,000 tons per year sugar, and 1.8 millilitersper year alcohol. Future revenues are derived by multiplying these quantities by prices (see below); future costs are based on estimates from previous years' costs. 2. Revenue for the economic rate of return is based on: World sugar price of US$O. 16per pound CIF Abidjan, unloading and transport to Bamako of US$10 + US$100 per ton, and US$1 = 300 CFAF. This comes to 140 CFAF per kilogram. The August 10, 1992, Revision of Commodity Price Forecasts of IECIT gives the sugar price as US$210 to US$280 per ton FOB and stowed for greater Caribbean ports for 1992195. This rises to US$406 per ton by 2000. These prices are for bulk shipments. They need to be increased by at least US$25 per ton to get the bagged equivalent, which is the way sugar is imported into Mali. To get to the basis of CIF Abidjan, US$50 per ton should probably be added for shipping and insurance. Adding US$75 per ton to the above prices and converting to U. S. dollars per pound gives US$0.13 for 1992, US$0.16 for 1995, and US$0.22 for 2000. The average of US$O. 16per pound used in the calculation is therefore in agreement with the Bank's commodity group.' Actual prices received and expected for alcohol. Operating costs are calculated by multiplying the accounting data by 0.9 for inputs, 0.4 for personnel, and 0.8 for others as derived in the detailed analysis of November 1989. 3. Revenue for the financial rate of return is based on actual prices received for 1987192and expectations for the future - i.e., somewhat lower sugar prices and higher alcohol prices. Operating costs are as per the accounts for 1987192, and expectations for the future derived from these - i.e., inputs a little higher and personnel somewhat lower. 4. Investment costs are from the accounts. They cease in 1991192. -11 Piece on comparison with Bank's commodity group was added December 1, 1992.  ATTACHMENT Page 2 of 4 Net benefits = revenue operating costs investment costs. - - Net Benefit Streams (CFAF billions) Financial Economic Rate of return 21 This is really quite optimistic, reflecting the prices for sugar that SUKALA used to get.  A ? T A m Page 3 of 4 MALI-Sukala Financial & Economic Prolectione price 199 227 226 243 238 209 209 (fin) CFA/ kg value 3.6 4.7 4.8 5.4 6.9 6.3 6.3 (fin) bCFA price 140 140 140 140 140 140 140 (econ) CFA/ kg value 2.5 2.9 3.0 3.1 4.1 4.2 4.2 (econ) bCFA alcohol 618 1,048 874 867 1,690 1,400 1,800 prod '000 1 price 96 96 96 123 123 214 214 (fin & econ) CFA/ 1 value 59 98 84 107 203 300 385 (fin & econ) mCFA other 164 175 186 169 167 170 170 prods mCFA ..  ATTACXMEWT Page 4 of 4 revenue I total 2.7 3.2 3.3 3.4 4.5 4.7 4.8 econ revenue bCFA I COSTS bCFA I financl 1 prodn 1.8 1.4 1.7 2.1 2.0 1.8 1.9 persnl 1.6 1.6 1.8 1.9 2.2 2.9 2.3 ohds 0.3 0.3 0.4 0.3 0.4 0.5 0.4 - - economc -prodn 1.7 1.2 1.3 1.9 1.8 1.6 1.7 persnl 0.6 0.7 0.7 0.8 0.9 1.2 0.9 ohds 0.2 0.2 0.3 0.2 0.3 0.4 0.3 Invstmt 1.4 0.3 2.3 3.3 0.4 0.6 0 bCFA NET (1.3) 1.4 (1.1) (1.9) 2.3 1.3 2.3 BENEFIT FINANCL NET (1.3) 0.8 (1.3) ( 2 . 8 ) 1.1 0.9 1.9 BENEFIT ECON (a:\malitab)