Tunisia - Transport Sector Project

Report No. PIC4064 Project Name Tunisia-Transport Sector Project Region Middle East and North Africa Sector Transportation Project ID TNPA43700 Borrower Government of Tunisia Implementing Agency Ministry of Transport (MT) Contact: Mr. Salem Miladi Directeur General Planification et etudes (MT) Rue Montplaisir Tunis, Tunisia.. Tel. 216.1.795.289 Fax. 216.1.792.219 Date this update prepared June 1996 Project Appraisal date March 1997 Project Board date May 1997 1. Country and sector background. Satisfactory by regional comparison, transport services in Tunisia still leave room for improvement. Tunisia has engaged in the path to faster growth by taking up the challenge of free trade with the European Union within twelve years and moving forcefully on essential reforms to straighten out the macroeconomic and fiscal framework, and on privatization as well. The trade intensity of the economy is bound to increase, putting added pressure on transport capacities. Without upgrading transport services, the accelerated growth ambition can easily derail, especially at modal interfaces. 2. Project Objectives. The proposed project will aim at removing the main institutional bottlenecks to enhanced productivity and international competitiveness in the changing trade environment. The three-pronged approach, derived from the detailed assessment carried out under the recent Transport Strategy Study, would pursue liberalization of markets where sufficient competition exists, reform of the regulatory framework to increase private sector participation in service delivery and reduction of the fiscal burden, promotion of safer transport and of effective logistics organizations for the enhancement of Tunisian firms' competitive capacity. 3. Project description. Along sector lending principles, the proposed project would help implement the action program set forth in a Letter of Sector Development Policy through double- headed financial support to the Ministry of Transport (MT) and transport-related activities. Part A. Financial support to the agreed investment program: the Ninth Plan (1997-2001) for transport will be the reference for Bank monitoring of budgeting and execution of yearly programs. Special  emphasis will be placed on creating efficient interfaces between modes and helping private enterprises to grow in size and productive efficiency. Loan proceeds would go to: priority investments in public infrastructure and equipment: the project will concentrate on ports, railways and urban transport, and help: (a) the MT; and (b) transport parastatals through the MT to rehabilitate and modernize their fixed assets; investments for promotion of public-private partnerships:the substitution of private for public capital will come more slowly in basic infrastructure, and the project will support government financing of its share of projects involving the private sector (e.g. network connections and land preparation for road freight and passenger stations). Part B. Technical assistance to capacity building for implementation of reforms, comprised of: technical assistance for management development: capacity building at the MT in policy formulation, market regulation and monitoring; reorganization of the railways and of port management; institutional development for better coordination of urban transport modes, integrated transport and urban planning and upgrading of traffic management in Tunis; support to the Facilitation Committee created under the Economic Competitiveness Adjustment Loan (ECAL); road safety initiatives: the project will also finance a pilot program centered on strengthening the government's capacity to integrate remedial actions, sensitization and education of the public, and development of road safety management systems. 4. Project financing. Total project cost is currently estimated at US$300 million with a proposed Bank loan of US$120 million which will be used to catalyze cofinancing. 5. Project sustainability. Reorganization/modernization of public management, increased competition and pricing freedom, better targeting of subsidies, and closer participation of private providers and users to sector management will ensure sustainability of project benefits. 6. Environmental category. Category B or C is proposed for the project (the project deals primarily with public sector restructuring and management). Preparation of the urban transport component will include an assessment of pollution by motor vehicles and, if warranted, mitigation measures. 7. Program Objective categories. ME (Economic management), BR (Public enterprise reform), and BP (Private sector development). 8. Contact Point: Public Information Center The World Bank 1818 H Street, NW Washington DC, 20433 - 2-  Telephone: (202) 458-5454 Fax: (202) 522-1500 Note: This is information on an evolving project which is still at a very early stage. Certain components may not necessarily be included in the final project. Processed by the Public Information Center week ending July 19, 1996. - 3 -