Restructuring Morocco's port sector

NUMBER 118 * ED Precisi!s9M Operations Evaluation Department June 1996 Restructuring Morocco 's Port Sector The World Bank's first port sector loan the ports, but the agency was highly contradictory signals from different to Morocco helped the newly created inefficient and a drain on the public ministries on key project features. autonomous public corporation, Office budget. As a result the project's scope kept d'Exploitations Portuaires (ODEP), changing right up to appraisal. Sub- turn Casablanca's busy but inefficienit With the new corporation, the gov- sequently, implementation was de- port into a productive facility. The emient sought to improve the man- layed by two years. During the long project's main achievement, however, agement and operational efficiency of delay, certain conditions changed, was in helping ODEP itself develop Morocco's 11 commercial ports, start- requiring adjustments to project into an efficient, financially viable opera- ing with Morocco's busiest port, Casa- components, which once revised tion. The project's success derived mnainly blanca, and the Port of Mohammedia, were successfully implemented. from effective use of technical assistance while helping the corporation itself to and sector studies, which helped the attain financial viability. The World The institutional components corporation adopt a new organizational Bank supported these objectives were on firmer ground, mainly be- structure; establish a modern manage- through the $22 million Port of Casa- cause the government took steps ment information system; and intro- blanca and Mohamnmedia Project, ap- before and during project prepara- duce a tariff structure to cover the cost proved in 1986 and closed in 1993. tion to set the direction for the of port services. A recent OED audit corporation's development. The notes, however, that in one area the The project had two sets of com- government formed ODEP as an project could have been stronger: pro- ponents: (1) physical, which in- autonomous public corporation moting greater competition and a cluded equipment and support for before project appraisal. In parallel, bigger role for the private sector in op- rehabilitating Casablanca's infra- it set two immediate goals for the erating and managing port services. structure, dredging Casablanca and agency: achieving financial viability That task still remains, posing the next Mohammedia's port basins, and re- and establishing a sound organiza- challenge for ODEP's managemenit. pairing their breakwaters and (2) tional structure. Three studies were institutional development, which launched to help ODEP achieve In response to severe budget focused principally on studies, these goals. And, with autonomy, deficits and an acute balance of technical assistance, and training, the agency's management had rela- payments crisis, the government of mainly to enhance ODEP's organi- tive freedom to act quickly on many Morocco in the early 1980s adopted zation, accounting, and manage- of the studies' recommendations. economic reforms to improve the ment systems, and to strengthen the performance of public enterprises Directorate of Ports of Casablanca The organizational study, guided and encourage private, export- and Mohammedia (DPCM), the by a steering committee comprising oriented investment. Restructuring agency responsible for maintaining and strengthening the port sector infrastructure in the two ports. *Performance audit report: "Mo- supported both these efforts. rocco: Port of Casablanca and Implementation Mohammedia Project," by Hernan In restructuring the sector, the Levy, Report No. 15712, June 1996. government's first and key decision The preparation of the project's Performance audit reports are avail- was to replace the public enterprise physical components was marred able to Bank executive directors Regie d'Acconage du Port de Casa- by difficulties. The most critical prob- and staff from the Internal Docu- blanca (RAPC) with ODEP, a new lem, caused by Morocco's severe bud- ments Unit and from Regional In- autonomous public corporation. get deficit, was shortage of counter- formation Services Centers. Precis Until 1984, RAPC, under the Minis- part funds for major port investments. written by Farah Ebrahimi. try of Public Works, had operated This problem was compounded by FILE COPY  representatives from all ODEP de- The studies were accompanied has proven to be an excellent ex- partments, proposed a new organi- by technical assistance, mostly pro- ample of South-to-South transfer of zational structure to reflect the vided through short-term consultants technology through targeted, twin- agency's autonomy and broad re- working to implement efficient traffic ning-type arrangements. sponsibilities. The suggested struc- management practices and training ture was first tested in three of the corporation and DPCM staff The corporation's cash flow (net ports-Casablanca, Safi, Tangiers through two in-country programs. of debt) covered more than 40 per- -and refined during the two-year cent of ODEP's investment program, trial period before being imple- Results a significant contribution to invest- mented across the entire agency. ment from internally generated The project helped improve the funds. By 1994, total revenues amply The 1988 tariff study produced a operational performance of the covered direct operating costs and detailed analysis of port operating Casablanca and Mohammedia Ports. exceeded total costs, including finan- costs and a methodology for updat- During 1986-93, the productivity of cial charges. And the project's reesti- ing tariff adjustments. The aim was cargo handling (tons per gang per mated rate of return, at 20-25 percent, to devise a tariff system based on shift) in Casablanca increased 25 was high, though lower than the 30 cost of services and to eliminate percent, while the time containers percent estimated at appraisal. cross-service subsidies (e.g., cargo remained in port decreased 40 per- handling on ship and land, use of cent. But unloading of containers One area that in hindsight could berth space, warehousing). Even be- is still comparatively inefficient. have been stronger is promotion of fore the study was completed, the Casablanca moves 100 containers in greater private sector involvement. company started making adjust- a 12-hour period, against 300 to 400 At the time of project design it was ments to the tariff structure, based containers in most other large ports. already known that certain services, on recommendations given in earlier such as cargo handling, could be bet- draft reports, followed in 1991 and The rehabilitation and mainte- ter performed by the private sector, 1992 by further adjustments to cover nance works carried out on the yet no attempt was made to assess other services. Since 1984, tariffs breakwaters and the dredging of the possibility of transferring some have increased 25 percent in real port basins allowed both Casa- of these services to the private sector. terms, perhaps excessively given the blanca and Mohammedia to oper- large productivity gains achieved ate without disruptions, adding to Conclusions during the same period. Cross-subsi- productivity gains. But the project's dies, although reduced, have not main achievement was in helping ODEP enjoyed all the elements of a been completely eliminated, how- ODEP establish the major elements successful organization: a clear man- ever, largely because ODEP wants to of an effective port management date and substantial autonomy in car- balance finances across all its ports, framework: sound organizational rying it out; a dedicated and strong including the smaller, financially structure, a new tariff system, and a management team at the helm; sup- weaker ones. But to encourage effi- relatively sophisticated information port of top government officials, with ciency, the tariff structure needs to management system. strong sense of ownership of both the be further adjusted to better reflect project and ODEP's priority goals; the cost of individual services. With the development of the man- and a participatory approach both at agement information system, ODEP the management and technical levels The managemenit information study, was able to closely monitor port per- in evaluating and adopting recom- launched in 1987, introduced a com- formance, even though the project mendations proposed by the sector prehensive management informa- had set no performance targets or studies. With clear, highly focused tion system (SIPOR) covering port indicators. Since then, the corporation objectives, ODEP, with Bank support, traffic and operating efficiency, has developed a comprehensive set was able to identify the right sector cost accounting and billing, man- of targets, with assistance from a later studies and to carry them out early agement of physical assets and per- Bank-supported port project. during project appraisal and imple- sonnel, and maintenance of infra- mentation. And it used technical as- structure and equipment. An ongo- According to ODEP, several sistance effectively to develop a ing port project is working to inte- neighboring countries have entered sound organization, improve the tar- grate the system with client com- into formal agreements with the iff structure, and build a comprehen- puter systems and with databases agency for assistance in installing a sive information management system for port and maritime services. SIPOR-like system. The experience to monitor port performance. OED Precis is produced by the Operations Evaluation Department of the World Bank to help disseminate recent evaluation findings to development professionals within and outside the World Bank. The views here are those of the Operations Evaluation staff and should not be attributed to the World Bank or its affiliated organizations. This and other OED publications can be found on the Internet, at http:/ / www.worldbank.org/html/oed. Please address comments and enquiries to the managing editor, Rachel Weaving, G-7137, World Bank, telephone 473-1719. Internet: rweaving@worldbank.org June 1996