Tunisia - Sidi Salem Multipurpose Project

Epy sur Document of The World Bank FOR OFFICIAL USE ONLY R T Report No. P-2074-TUN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF TUNISIA FOR THE SIDI SALEM MULTIPURPOSE PROJECT May 12, 1977 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.  Currency Unit Tunisian Dinar (D) The exchange rate of the Tunisian Dinar is floating. The rate used in the appraisal report, which approximates the current rate, is: US $ 1 D 0.417 D 1 US $ 2.40 D 1,000 US $ 2,400 D 1,000,000 US $ 2,400.000 Fiscal Year January 1 to December 31 Abbreviations: BNT National Bank of Tunisia DEGTH Directorate of Studies and Major Hydraulic Works (Ministry of Agriculture) DGTH Directorate of Major Hydraulic Works (Ministry of Public Works) KfW Kreditanstalt fur WiAederaufbau OPEC Organization of Petroleum Exporting Countries OMvvM Office for the Development of the Lower Medjerda Valley SNCFT Tunisian National Railways Company SONEDE National Company for the Exploitation and Distribution of Potable Water STEG Tunisian Electricity and Gas Company  FOR OFFICIAL USE ONLY INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF TUNISIA FOR THE SIDI SALEM MULTIPURPOSE PROJECT 1. I submit the following report and recommendation on a proposed loan to the Republic of Tunisia, for the equivalent of US$42 million to help finance the Sidi Salem Multipurpose Project. The loan would have a term of 20 years, including 3-1/2 years of grace, with interest at 8.2 percent per annum. Additional loans amounting to $54 million and $15 million respectively for the project have been obtained from the People's Republic of China and Iran; further financing of $28 million and $5 million respectively for the project is expected to be provided by Kreditanstalt fur Wiederaufbau and suppliers. Finally, the Government of Tunisia has reached agreement in prin- ciple for additional financing for the project from Arab and OPEC sources. PART I - THE ECONOMY 1/ 2. A special economic mission visited Tunisia in December 1976 to review the draft Tunisian Fifth Plan, 1977-1981. A special economic report entitled "Economic Position and Prospects of Tunisia, Review of the Fifth Development Plan, 1977-81" (No. 1539-TUN) was issued on May 2, 1977. Country data sheets are attached in Annex 1. 3. Tunisia's development has been hampered by scarcity of natural re- sources. Much of the country is arid or semi-arid, and agriculture is highly dependent on rainfall. Minerals are mostly of low quality and, apart from phosphates, limited in quantity. Relatively small quantities of petroleum were discovered in the mid-1960's and have since become an increasingly valuable source of revenue and export earnings. Industrial development has been handicapped by the small size of the domestic market as well as a lack of skills and experience. Tourism has developed rapidly and workers' remit- tances have become a significant item in the balance of payments. Tunisia has enjoyed a large amount of external aid and used it to expand economic and social infrastructure, bro'aden the industrial base, make available a wide range of social and welfare services to a large part of the population, and increase the rate of growth. Per capita GNP increased by 4.2 percent annually from 1961 to 1975. Like most countries, however, Tunisia has not yet found adequate ways to cope with unemployment and poverty and to achieve a balanced distribution of consumption among income groups, between urban and rural areas, and among regions. 4. Government strategy in the 1960's relied heavily on central plan- ning of investment and resource allocation, with the public sector playing a major role in production as well as providing infrastructure and services. 1/ Substantially identical to Part I of the President's Report (P-1958-TUN, December 13, 1976) for the Second Power Project. This document has a restrkted distibution and may be used by rcapwents only in the performance of their official duties. Its contents may not otherwis be disclosd without World lank authorization.  Foreign exchange shortages and concern with inflation led to recourse to a pervasive system of price determination and controls. An unusually long series of poor crop years due to shortage of rainfall slowed the growth of output. Many investments in public enterprises proved to be uneconomic and private initiative in most sectors except tourism and petroleum was limited. 5. The Government's present development strategy was introduced in the early 1970s. Its principal objectives are: (a) accelerating growth based on export-oriented industries, by encouraging private initiative, reducing direct Government involvement in production and relaxing administrative regulations; (b) creating jobs, primarily in the expanding industrial sector, encouraging worker emigration, reducing population growth and improving education and training; and (c) maintaining internal and external financial stability. The 1973-76 Fourth Plan set a target rate of GDP growth of 7 percent, providing for a 5.4 percent growth rate in per capita private consumption. Investment was projected to increase by 80 percent above the level of the 1969-72 Plan. National savings were to finance three-quarters of investment. Exports of goods and services were projected to grow at 8.8 percent per year at constant prices and imports at 12.2 percent. The Plan foresaw net external capital inflows increasing by 55 percent over 1969-1972 average levels and providing 23.5 percent of total investment. Debt service was to be held to below 20 percent of exports. The original Plan targets were conservative in terms of both growth and savings potential, and have been significantly affected by the impact of the changed petroleum and phosphate prices on the Tunisian economy (paras. 9 and 10). 6. The real growth of GDP has accelerated since 1970, reaching 9.3 percent per annum during 1970-75, compared with 4.6 percent during the pre- vious decade. The acceleration can be attributed to fortuitous factors such as good weather, leading to record cereal and olive crops, to important growth in tourism, petroleum and phosphate revenues and workers' remittances, and to the general reorientation of Government policy since 1970 which re- newed self-confidence and initiative in the private sector. Expansion of manufacturing and phosphate production has been significant. By 1975, per capita GNP reached $760 (1976 Bank Atlas estimate). Investment remained high in relation to GDP, 24 percent in 1970-75 compared with 23 percent during the 1960's. National savings rose sharply from an average of 13.5 percent of GDP at current prices during the 1960's to 21 percent during 1970-75. Con- sequently, the share of external borrowing in financing investment dropped from 44 percent in the 1960's to 11 percent during 1970-75. 7. Because of price controls and Government subsidies of basic consumer goods, and prudent fiscal and monetary policies, Tunisia has maintained rela- tive price stability. Consumer price increases averaged 5.2 percent annually during 1970-75. The official GDP deflator rose at an average annual rate of 8.0 percent and average investment costs increased by 11.6 percent. 8. The balance of payments was in overall surplus from 1967 to 1974 and since late 1973 benefitted greatly from sharply improved terms-of-trade. How- ever, in 1975 the terms of trade began to deteriorate, the demand for Tunisian  exports sharply decreased, and despite substantial disbursements on external borrowing, international reserves declined by 11 percent. At the end of 1976, net reserves amounted to $344 million, equivalent to about 3 months of imports. 9. Despite the terms-of-trade loss in 1975, Tunisia on balance still is a beneficiary of the changes in world market prices since late 1973. Mainly because of sharply higher prices for petroleum, phosphates and olive oil, export earnings rose from $714 million in 1973 to $1,254 million in 1974 and $1,356 million in 1975. On the other hand, increases in import prices, combined with higher domestic demand, caused payments on imports to grow from $782 million in 1973 to $1,242 million in 1974 and to $1,565 million in 1975. In the medium-term, Tunisia's current account balance is likely to be in- fluenced by slower economic growth in Western Europe. Taking into account probable capital inflows through direct investment and external aid, the level of net reserves is projected to remain equivalent to about 3 months of imports during 1976-81. 10. The projected changes in Tunisia's balance of payments position and in Government savings do not call for a substantial revision in development strategy. They suggest rather that Tunisia should continue its efforts to achieve high investment and GDP growth rates. Since workers' emigration to Europe and Libya is now more limited, the effort to increase investment, par- ticularly in labor-intensive industry and agriculture, should be increased. With an adequate savings level and continuing external aid, the Tunisian economy has the financial resources that should enable it to sustain an average annual growth rate of between 7 and 8 percent during 1976-81. The level of future growth would also depend on continuing efforts to stimulate private investment, to increase the international competitiveness of industry, and to improve the planning and implementation of public investments. 11. Tunisia has made impressive social gains. By 1974, primary school enrollment had reached 88 percent, and secondary enrollment, 19 percent, of the relevant age-groups. Public health services have been greatly expanded with many provided free. A family planning program has been introduced. Total social expenditures during 1970-75 increased by about 10 percent per annum and on average accounted for 9 percent of GDP and for 30 percent of total public expenditures. Nonetheless, major social issues remain. Further progress is needed in land reform and in creating employment. The unemploy- ment rate is estimated to have been about 22 percent in the non-agricultural sectors in 1976; underemployment in the rural sector remains high. There has been a growing concentration'of productive activities in a few urban areas, especially in Tunis. 12. So far as can be judged from available data, there has been a gradual improvement in income distribution. Real incomes increased in all sectors during the 1960's, yet by a higher percentage in the modern sector than in the rural sector, due partly to the series of poor harvests. In rural areas substantial income disparities remain, in part as a result of the structure of land tenure. In the modern sector, especially in industry, increases in real incomes in the 1960's exceeded the rise in productivity; the income distribu- tion trend has favored industrial workers. Thanks especially to the income  - 4 - redistribution effects of free social services, the proportion of the total population living in poverty, as defined by the Tunisians (i.e. earning less than D 70 per capita annually at 1975 prices), was substantially reduced during the decade. Most of this group continues to live in rural areas. Since 1970, higher agricultural output, increases in minimum agricultural wages, tax exemptions for low incomes, the inflow of workers' remittances from abroad and the stabilization of basic commodity prices through Government subsidies have improved the absolute, and possibly also the relative, position of the poorest groups. 13. During 1970-75, agriculture provided about half of total employ- ment, 28 percent of merchandise exports and 19 percent of GDP. Food process- ing accounted for another 3 percent of GDP and over a third of value added in manufacturing. During this period agricultural production rose substantially, largely as a result of favorable weather. Large infrastructure investments were made during the last decade. Current policy emphasizes projects that make a rapid and direct contribution to production and recognizes various constraints on agricultural development: absentee ownership, insecurity of tenure, inadequate access to agricultural credit, inadequate extension ser- vices, insufficient agricultural education, and underutilization of irrigation investments. Under the Fourth Plan, about $140 million was allocated to a rural development program which has been executed by the provincial adminis- trations. 14. During the 1960's, manufacturing production in Tunisia increased by 8 percent annually. There has been a remarkable acceleration of growth in the 1970's due in part to record years for the olive oil processing industry and to favorable developments in the textile and chemical industries. The early thrust of industrialization was supplied by large import substitution projects in the social sector. These suffered, however, from the limited domestic market and shortages of experienced staff and management. More emphasis has been put on export-oriented private industries since 1970. Under the Fourth Plan, private manufacturing investment, particularly in food processing, textiles, fertilizers and metals transformation, was ex- pected to average D 25 million per year, compared with D 12 million in 1972, and to account for two-thirds of total investment in manufacturing; these targets have been exceeded. Foreign and domestic private investment is now stimulated by a comprehensive incentive framework, and facilitated by the streamlined approval procedures of the investment promotion agency. Foreign investors are expected to contribute know-how and overseas marketing. A new agreement between Tunisia and the European Community was signed in April 1976. It provides for duty-free entry into the countries of the Community of nearly all Tunisian industrial products. The Government has established a special fund to encourage growth of small industries and industrial decentralization, and has started a program to establish industrial estates. 15. The development of tourism in Tunisia is relatively recent. Foreign- visitor arrivals reached a level of 780,000 in 1972, with an annual rate of growth over the period 1961-1972 of 30 percent -- higher than that of any other Mediterranean country. While 1973 saw a drop in the number of visitor nights, and 1974 registered another overall drop, there was a very strong  - 5 - recovery in 1975, with over one million visitor arrivals. Since 1970, earn- ings from tourism have been a major source of foreign exchange, having reached $300 million in 1975. The rapid development of tourism in Tunisia has unfor- tunately been accompanied by an inadequate development of infrastructure (particularly recreational facilities), shortages of trained manpower and inadequate services. The Government is endeavoring to alleviate these con- straints through a variety of measures, including revised investment in- centives, increased marketing and training efforts, codes to enforce quality standards and more stringent zoning laws. 16. Since the early 1960's Tunisia has obtained relatively large amounts of official aid. A Consultative Group has provided a forum for aid-coordina- tion among major donors (see para. 25). During 1970-75, annual loan commit- ments from public sources averaged $155 million, or about $28 per capita. About 68 percent of these commitments came from bilateral public sources, chiefly from France (15 percent), Canada (13 percent), and the Federal Republic of Germany (10 percent). About 14 percent came from oil-producing countries, whose share rapidly increased from 8 percent in 1970 to 16 percent in 1975. Commitments from the Bank Group during 1970-75 accounted for 29 percent of total public commitments. Most aid has been obtained on concessionary terms: during 1970-75, the average terms of borrowing from bilateral sources were 3.5 percent interest and 23 years to maturity, including 6 years of grace; from multilateral sources, they were 6.0 percent interest and 26 years to maturity, including 5 years of grace. During the same period Tunisia also received annually some $40 million in grants. Loan commitments from private sources averaged $32 million a year. Direct foreign private investment has been com- paratively small, but recently it has picked up momentum following increased activity in the petroleum sector and new incentives offered to foreign in- vestors in manufacturing. Thus, net direct foreign investment increased from $19 million in 1970 to $48 million in 1975. 17. Tunisia's total public debt outstanding (including undisbursed) in- creased from $846 million in 1970 to $1,571 million at the end of 1975. The disbursed portion outstanding at the end of 1975 was $1,071 million, equivalent to 25 percent of GDP, compared with 40 percent in 1970. Debt service payments in 1975 were 7.6 percent of export earnings compared with 19.5 percent in 1970. This significant decline in the debt service ratio was mainly due to the sharp increase in export earnings following the changes in world market prices in 1973 and 1974; it also reflected Government efforts to change the structure of Tunisia's foreign debt. In the future, Tunisia will have to continue to rely heavily on foreign financial assistance in order to reach its development goals. Tunisia is capable of servicing substantial additional debt, and it is projected that, despite a sharp increase, Tunisia would be able to maintain its debt service ratio at a manageable level in the long run. PART II - BANK GROUP OPERATIONS IN TUNISIA 18. Since 1962, Tunisia has received a total of twenty-seven loans and ten credits amounting respectively to $341.4 million and $70.1 million, net of cancellations and refundings. Annex II contains a summary statement of Bank  - 6 - loans, IDA credits and IFC investments as of March 31, 1977, and notes on the execution of ongoing projects. While disbursements of some loans and credits have been slower than foreseen at appraisal, on the whole project execution has been satisfactory. In a number of sectors, important institutional improvements have been achieved and independent agencies have been created or strengthened. 19. The Bank's lending strategy in Tunisia aims at supporting Government efforts to (a) increase employment, (b) encourage more balanced growth and distribution of income among regions and income groups, (c) promote export- oriented policies and investments; and (d) provide selective support for the development of infrastructure and for institution building in key public services. The main supporting feature of this lending strategy is to encourage the Tunisian authorities in timely and well-coordinated preparation of projects, with emphasis on technical assistance. The Bank is also cooperating with the Government in its efforts to increase the mobilization of domestic and foreign resources, in part through encouraging project cofinancing; the latter is par- ticularly important in view of the extent of Tunisia's external resource needs, the large size of many priority projects, and the limited availability of Bank resources relative to the country's needs. 20. Within this broad framework, past Bank Group lending has emphasized support for long-term investments in infrastructure and social development. Lending for urban and social development, including water supply, education, family planning and the Tunis urban planning and public transport project has accounted for 32 percent of Bank/IDA commitments in Tunisia. Lending for transport, power and tourism infrastructure has accounted for a further 35 percent. Agriculture and fisheries have received 12 percent of total commit- ments. Industrial and hotel financing through the Banque de Developpement Economique de Tunisie (BDET) has accounted for 15 percent, and the Gafsa phosphate development project received 6 percent of total commitments. 21. In agriculture, Bank involvement, in several sub-sectors, has met in some cases with success, in others with difficulties. The first agricul- tural project financed by the Bank Group was the 1967 Cooperative Farms Project, completed in 1973 after substantial delays and revisions caused by changes in Government agricultural policy in 1969. The First Agricultural Credit Project (Loan/Credit 779/263-TUN, $8 million, of 1971) and a 1971 IDA-financed Fisheries Project (Credit 270-TUN, $2 million) for development of Tunisia's inshore fisheries, are expected to be fully disbursed in 1977 and 1978 respectively. A loan for an Irrigation Rehabilitation Project (Loan 1068-TUN, $12.2 million) became effective in September 1975. The Bank has also attempted to play a more active role in rural development in Tunisia, but no specific project in this field has as yet materialized. Our experience to date has, however, served to underline the necessity for very close coordina- tion and careful preparation of future projects in this difficult but high priority sphere. 22. Lending in the current fiscal year and in the period ahead emphasizes projects promoting agricultural and industrial production, such as the Second Agricultural Credit Project approved by the Executive Directors in November,  1976, and urban and social development. Complementary to this primary focus, the program would also finance selected priority infrastructure projects. Projects under discussion with the authorities include a second fisheries project, a rural roads project, a seventh development finance company project including a small industries component, a second sewerage project, a project for the development and transmission of Tunisia's off-shore gas resources, and an urban development project. A fourth water supply project is expected to be the final Tunisian project presented to the Executive Directors during the current fiscal year; the project would depend on facilities to be constructed under the project proposed in this report. 23. The Bank Group accounted for about 23 percent of disbursements of official assistance to Tunisia during 1970-75. The Bank Group's shares in total debt outstanding and disbursed at the end of 1975 (including loans from private sources) and in debt service during 1975 were 15 percent and 14 percent respectively. The Bank Group's share in Tunisia's disbursed external debt is expected to decrease by 1980 to about 13 percent, and its share in debt service to about 10 percent. 24. IFC has invested in NPK Engrais (a fertilizer plant), in BDET, in Compagnie Financiere et Touristique (COFITOUR, a company to promote and invest in tourism projects), in Societe Touristique et Hoteliere RYM (a large hotel development) and in Industries Chimiques du Fluor, which will produce aluminium fluoride from local fluorspar for export. IFC's most recent investment, in May 1975, was in the Sousse-Nord integrated tourism development project. IFC's net commitments in Tunisia total $15.8 million. IFC's Board has approved the sale of IFC shares in NPK Engrais to the Tunisian Government. 25. Since 1962 the Bank has chaired a Consultative Group for Tunisia bringing together the principal donor countries and institutions concerned with the country's development. The most recent meeting of the Group, held in Paris in June 1975, welcomed new participants, which included Saudi Arabia, Japan, the Arab Fund for Economic and Social Development and the Commission of the European Communities. This year, in lieu of a meeting of the Con- sultative Group, a development conference is being organized by the Government in Tunis in early July 1977. PART III - THE AGRICULTURAL SECTOR Background 26. Although the agricultural resource base in Tunisia is quite poor, the sector plays an important role in the economy. In 1975, agriculture employed about half of the labor force, contributed about 21 percent of GDP and provided some 20 percent of total merchandise exports. A little over one third of Tunisia's total land area, or about 5.3 million ha, is classified as cultivable; the remainder is range land suitable for extensive sheep-grazing and low-yielding forest, and desert. The cropped area covers about 3 million  - 8 - ha, of which 1.3 million ha under perennial crops. The most important agricul- tural areas in Tunisia are the lower and central Medjerda River Valley and the Cap Bon Peninsula in the North, and the coastal zones near Sousse and Sfax. 27. Agriculture failed to keep pace with the rest of the economy in the 1960's due largely to unusually low rainfall, the departure of large numbers of expatriate farmers, heavy emphasis on infrastructure investments, and parti- cularly irrigation infrastructure, which yield benefits only in the very long term, weaknesses in extension and other supporting services, difficulties in resolving a variety of land tenure issues, and an unsuccessful attempt to organize the entire agricultural sector into viable production cooperatives. When the cooperative experiment was abandoned in late 1969, 4.5 million ha were returned to private ownership. Despite major problems associated with the return to private ownership, agricultural production in 1971 and 1972 increased by 27 and 30 percent respectively in constant prices over the two preceding years. The average annual growth of agricultural production between 1970 and 1975 was 10.5 percent, although crop cycles, particularly in olives, caused erratic yearly fluctuations. Nonetheless, excluding olive production, Tunisia's trade balance in agricultural products was heavily in deficit in the same period. In 1975, agricultural exports, excluding olive oil, represented only about 10 percent of total farm output, while agricultural imports (mainly cereals, dairy products, meat and sugar), having doubled in value between 1973 and 1974, represented an estimated 25 percent of total imports. Thus, one of the major objectives of the Fifth Plan is the achievement of self-sufficiency in food production, defined as meeting expected internal consumption needs in grains, meat and milk (necessitating per annum increases of 6.7, 11 and 17.5 percent respectively) and attaining a balanced foreign trade in other agricul- tural products. Reaching the objective of self-sufficiency in grains appears feasible; reaching the projected level of milk and meat production seems less likely. 28. Rainfed agriculture in Tunisia is hampered by differences in climatic conditions between Northern, Central and Southern Tunisia and, within each re- gion, by wide fluctuations around the average rainfall. Only Northern Tunisia, where average rainfall exceeds 350mm, grows a wide variety of rainfed crops, in particular wheat and barley. Rainfed agriculture is unreliable even in the North. Droughts, or floods, often depress yields; the mountainous parts of the North, as well as soils in the plains, are not uniformly suitable for agriculture. In Central Tunisia, where rainfall averages 200-400mm, rainfed agriculture combines tree crops (mainly olives and almonds), marginal cereal production and low density raising of sheep and goats. In the Southern half of the country, where average rainfall is below 200mm, vegetables and date palms are cultivated in several oases. Outside the oases, the main agricul- tural activities are extensive grazing and olive production. 29. The Ministry of Agriculture has overall responsibility for agricul- tural planning and development, including water resource development. A large number of autonomous and semi-autonomous agencies operate under the jurisdic- tion of the Ministry. Some have responsibility for marketing, and in some cases provision of extension and credit services, for specific products (olive  - 9 - oil, grain, wine, livestock). Others are charged with the development, opera- tion and management of large publicly financed irrigation perimeters such as those to be established in connection with the loan proposed in this report. Certain agricultural agencies provide specialized services, including in particular the use of agricultural machinery and equipment. Finally, there are several input-related agencies, mostly for seeds and fertilizer. The Ministry of Agriculture is also responsible for the overall evaluation of credit needs for the sector. Credit is provided through a variety of govern- ment agencies as well as through the banking system, particularly the govern- ment-controlled National Bank of Tunisia (BNT). Irrigated Agriculture 30. Regional differences in soil quality, rainfall, climate and terrain account partly for the limited portion of Tunisia devoted to agricultural pro- duction, but lack of water is a major constraint to wider and more intensive production. Of the 5.3 million hectares considered cultivable, there are only about 220,000 ha suitable for irrigation; 132,000 ha are presently equipped, 45,000 ha of which are in public irrigation areas. In 1962, the Government initiated a ten-year Minimum Plan aimed at developing about 32,000 ha for irrigated farming in the Medjerda River Valley. By the end of 1975, about 27,000 ha net had been equipped with the main irrigation and drainage facili- ties under the Minimum Plan. 31. Between 1962-72 about 40 percent of public investment in agriculture was devoted to the construction of large hydraulic works, which nearly doubled the irrigable area. It became clear toward the end of the 1960's, however, that potable and industrial water needs were becoming increasingly important and that a more rational strategy for the development of Tunisia's overall water resources was necessary if all water needs were to be met in future. As the bulk of Tunisia's water resources, as well as the majority of the popula- tion, are in the north, the Government decided to prepare a Water Master Plan for Northern Tunisia. At the Government's request, the Bank made a technical assistance grant in 1969, and acted as Executing Agency for the study, which was undertaken by Italconsult with assistance from several other consulting firms. 32. Concurrently with the Water Master Plan study, the Government carried out studies to ascertain the results of the ten-year Minimum Plan for irriga- tion development in the Medjerda Valley. The studies showed that not only had construction targets not been met, but increasing production in the new irrigation areas needed greater effort; improvements were needed in extension services, access of farmers to credit and inputs, management, maintenance of the irrigation and drainage works, and application of the relevant land reform legislation. In 1971, following consultant recommendations that returns on existing investments should be increased before major new works were executed, the Government requested Bank assistance in resolution of these problems. This resulted in the irrigation rehabilitation project (Loan 1068-TUN; December 31, 1974), which covers about 20,000 ha net in the lower Medjerda Valley and 5,000 ha net in Nebhana (near Sousse). The project provides for rehabilita- tion of existing irrigation, drainage and road networks, construction of rural  - 10 - infrastructure, supply of equipment and machinery, and on-farm development through credit. On the whole, project execution is proceeding satisfactorily, though two issues have caused difficulties. Execution of land reform actions by the central government (not by the project authorities) has been delayed due largely to the sensitivity of the early stages of application of legisla- tive provisions that had previously been in abeyance. Nonetheless, under the Fourth Plan about 70 percent of the planned area for application of land reform in public irrigation areas was achieved. The Government's delay in completing according to plans an agricultural credit policy study has delayed disbursement of credit funds under the irrigation rehabilitation project. While the limited access by small farmers to credit remains a difficulty, major progress towards the resolution of credit issues was made in the context of the second agricultural credit project (Loan 1340-TUN, December 17, 1976). The Medjerda sub-project authority, OMVVM, (Office de la Mise en Valeur de la Vallee de la Medjerda), which will also have major responsibility under the loan proposed in this report, is performing well; the Nebhana sub-project authority (OMIVAN), is developing somewhat slower than expected. The Govern- ment is now preparing to execute a new series of major water development projects during the Fifth Plan, including the first stage of works under the Northern Tunisia Water Master Plan. PART IV - THE PROJECT Background and Project Description 33. Following several revisions, the final results of Italconsult's study of the Northern Tunisia Water Master Plan were submitted to the Govern- ment in June, 1974. The Plan represents the most appropriate alternative for meeting the priority Government objectives of increasing agricultural produc- tion and contributing to supplying Northern Tunisia's potable and industrial water requirements. The project proposed in this report would implement the first phase of the Plan. The specific objectives of the project would be to: (i) contribute to supplying the Tunis, Cap Bon and subsequently Sousse areas with sufficient potable and industrial water to meet expected requirements to the year 2000; (ii) raise agricultural output in the central Medjerda Valley and the Cap Bon peninsula by supplying irrigation, drainage and road infra- structure and providing associated land reform and extension services; (iii) safeguard production on existing citrus plantations in the Cap Bon area by providing sufficient irrigation water; (iv) increase agricultural production by providing a better quality and quantity of summer irrigation water in the 1962-1972 Minimum Plan area of the lower Medjerda Valley, (v) control Medjerda River floods, which regularly inundate the lower Valley; and (vi) generate hydroelectric power. 34. The proposed project would include the construction of the Sidi Salem dam and storage reservoir on the Medjerda River, with a 25 MW hydroelectric power plant; a 126 kilometer interconnection canal conveying water from El Aroussia (60 kilometers below the dam) to Tunis and the Cap Bon Peninsula new irrigation, drainage and road infrastructure for some 10,600 ha, now mainly  - 11 - dry-farmed, in the Testour/Medjez el Bab area of the central Medjerda Valley and in the Cap Bon peninsula; and rehabilitation of about 6,000 ha of citrus plantations in Cap Bon. The proposed project would include the relocation of those sections of roads, railroads and potable water supply pipelines that would be submerged by the storage reservoir. Consultants and training would be provided to supplement available engineering services during construction, to assist in hydrological, pollution, water development and policy studies, and to support agricultural extension. The second phase of the Water Master Plan, expected to be implemented in the 1980's, would involve the development of the Ichkeul basin, including the construction of several small dams, a canal to transmit potable water to Bizerte and Tunis, and irrigation infra- structure development on a further 20,000 ha near Tunis. 35. The Sidi Salem project will be a major undertaking for Tunisia, and takes a prominent place in its Fifth Development Plan. The project represents the culmination of Bank and other international assistance over the past decade toward the overall development of Tunisia's limited water resources. While the proposed loan is small in relation to total project cost, the Bank's overall contribution would be substantial. It would assist the Government in mobilizing other sources of finance, continue past efforts at institution building by provision of consultants and training in associa- tion with investment in irrigation development, lead to several years of intensified discussions between the Government and the Bank on water resource development and related policy issues on which collaborative work began during project preparation, and reinforce links with institutions with which the Bank has long-standing relations: the Medjerda development authority, OMVVM; the national water company, SONEDE, the power company, STEG; and the national railways enterprise, SNCFT. 36. The proposed project was prepared with the assistance of consultants and the FAO/IBRD Cooperative Program and was appraised in January-February 1976. Negotiations were held in April, 1977. The Borrower was represented by Mr. Zein Mestiri, Director of Foreign Cooperation, Ministry of Planning. A delegation led by Mr. Claus Gurlitt participated in the negotiations for KfW. A report entitled "Appraisal of the Sidi Salem Multipurpose Project - Tunisia" (Report No. 1215-TUN) dated May 5, 1977 is being distributed separately to the Executive Directors. A loan and project summary is attached as Annex III, and a supplementary project data sheet is at Annex IV; a map of the project area is included at the end of this report. Cost Estimates 37. The total project cost is estimated at about $386 million, including physical and price contingencies and duties but excluding interest during con- struction. The foreign exchange component is estimated at $168 million or 44 percent of the total project cost; the local cost would amount to $218 million. Overall contingencies amount to $98 million million or about 34 percent of the total cost. The cost estimates for the dam and associated works are based on detailed engineering studies and contracts already awarded; for the irrigation development component on preliminary consultants' designs; and for the canal, on consultants' studies and estimates by engineers from the People's Republic of China.  - 12 - Financing Plan 38. The proposed Bank loan of $42 million would finance the foreign ex- change cost of the substructure of the railway relocation, as well as of the road and potable water pipeline relocations, required by the construction of the Sidi Salem Dam; the Testour/Medjez el Bab irrigation infrastructure; the rehabilitation of the Cap Bon citrus plantations; and consultants, studies and training for the staff of OMVVM, the main executing agency for agricultural development, the Directorate of Major Hydraulic Works (DGTH), the executing agency for the major civil works in the Ministry of Public Works, and DEGTH, the directorate in charge of water studies, and operation and maintenance of major hydraulic works, in the Ministry of Agriculture. 39. Several Governments and other agencies would participate with the Bank in financing the project. The Governments of Iran and of the Peoples' Republic of China have lent the Government of Tunisia the ecuivalent of $15 and $54 million respectively, to assist in financing the Sidi Salem Dam and the Medjerda-Cap Bon Canal; these loans are already effective. A Kreditanstalt fur Wiederaufbau (KfW) loan equivalent to about $28 million is expected to cover most of the foreign exchange cost of civil works and hydro-mechanical equipment for the Sidi Salem Dam and civil works for the associated power plant. Suppliers credits would finance the hydro-electrical equipment for the power plant. The Tunisian Government has informed the Bank of the agree- ment in principle of Arab and OPEC sources to participate in financing the project; these sources would finance at least the foreign exchange cost of the new Cap Bon irrigation perimeter, estimated at $19.5 million, leaving a possible foreign exchange gap of $4 million in the project financing plan. While even the local cost of the project will place a considerable burden on the government, the country's financial position (see para 17), and the priority attached by the Government to the project, indicate that the project should not face financial difficulties. Aside from equipment and machinery for on-farm development by OMVVM financed by the Bank, the project's credit and on-farm development requirements would be financed by the Government; during negotiations assurances were received that the medium and short term credit requirements for the project would be provided on terms acceptable to the Bank (draft Loan Agreement, Section 4.06). 40. The Bank has cooperated closely with KfW on the project for an ex- tended period of time, and expects to conclude a lenders' agreement with KfW for the project following the negotiation of the KfW loan. Standard cross effectiveness and cross default clauses with the KfW loan have been included in the Bank's draft Loan Agreement (Sections 6.01(d), 5.01(g)). No direct contacts have been established, or are expected, between the People's Republic of China and the Bank in connection with the project. The inability of the Government to effect withdrawals under either the Iranian or the Chinese loan and the absence of other satisfactory arrangements to ensure payment of project expenditures either was to finance, would be an event of default under the Bank loan (draft Loan Agreement, Section 5.01(h)). The Tunisian Govern- ment intends to organize a meeting of the lenders participating in financing the Sidi Salem Dam and associated works in early July on the occasion of the planned development conference (see para 25).  - 13 - Project Execution 41. Responsibility for the construction, operation and maintenance of the project works would rest with a large number of Government agencies and enterprises. With the agreement of the Bank and KfW, and to prevent the loss of one construction year, the Government awarded the contract for the dam and associated works to a Yugoslav enterprise in March 1977. The construction of the dam, the canal and other major civil works would be the responsibility of the Directorate of Large Hydraulic Works (DGTH) of the Ministry of Public Works; DGTH would also relocate the highways and provide the sub-structure for the relocated railway line. The national railways company, SNCFT, would under- take the necessary railway rehabilitation and super-structure construction. Water supply pipe relocation and supply of potable and industrial water would be the responsibility of the national water supply company, SONEDE. The in- stallation of electrical equipment in the power plant in the Sidi Salem dam, construction of transmission lines, and their operation and maintenance would be the responsibility of the national power company, STEG. The construction, operation and maintenance of the irrigation and drainage network in the Testour/ Medjez and Cap Bon areas would be the responsibility of OMVVM. It would also undertake agricultural development and provide extension and related services. The operation and maintenance of the dam and the interconnection canal would be ensured by the Directorate of Studies and Large Hydraulic Works (DEGTH) of the Ministry of Agriculture, which would also be responsible for execution of the water studies. 42. The Bank has long been associated with the executing agencies, which have the capacity and experience to carry out and operate the project works. The engineering staff of the two most important project authorities, DGTH and OMVVM, would, however, be reinforced. Consultants to support DGTH and OMVVM in final design, preparation of tender documents, evaluation of bids and supervision of construction would be retained on terms and conditions accept- able to the Bank (draft Loan Agreement, Section 3.05, draft Project Agreement, Section 2.02). A team of 50 technicians who worked on construction of the recently completed KfW-financed Bou Heurtma dam is expected to be assigned to Sidi Salem dam construction. OMVVMs directorate for the Cap Bon area would be strengthened, and an additional regional directorate for Testour/Medjez would be established within OMVVM (draft Project Agreement, Section 2.09). The extension staff of OMVVM would be strengthened to meet the needs of the project (draft Project Agreement, Section 2.09). OMVVM would recruit special- ists to support its engineering:, irrigation and extension staff, and to carry out in-service training; it would also select staff members to be sent abroad for courses financed by the Bank (draft Project Agreement, Section 2.08). The operation and maintenance staff of DEGTH would be strengthened to meet project needs (draft Loan Agreement, Section 4.09), and DEGTH would recruit consultants acceptable to the Bank for the hydrological, pollution, water development and policy studies (draft Loan Agreement, Section 3.13(a)). 43. The establishment of a coordination committee for project execution, with terms of reference satisfactory to the Bank and composed of representa- tives of all Government agencies concerned, would be a condition of effective- ness of the proposed Bank loan. The appointment of a project manager by SNCFT  - 14 - would be a further condition of effectiveness. Agreements between the Govern- ment and the autonomous agencies responsible for execution of individual proj- ect components would be concluded before loan effectiveness. The Government would also submit an acceptable construction calendar and satisfactory plans, designs and technical specifications for the Medjerda-Cap Bon Canal to the Bank before loan effectiveness (draft Loan Agreement, Sections 3.06, 6.01). This information is now being prepared by Chinese engineers in Peking following an extended field mission in Tunisia; the Chinese and Tunisian authorities have agreed that the canal should be constructed by a Tunisian national con- struction enterprise, with assistance from Chinese technical personnel. In addition to the Bank's normal arrangements for inspection of construction, OMVVM and the other agencies would submit, through periodic reports, the information necessary for the Bank to measure project implementation against the proposed schedule, and project performance against project benefits fore- seen during appraisal. While this information would not be as detailed in the case of the canal as for the other components, these arrangements would provide the Bank adequate supervision information and authority in regard not merely to those components financed by the Bank, but over the totality of the project. Procurement and Disbursement 44. Each co-financier would establish the procurement rules to be fol- lowed in respect of those contracts that it finances. The civil works and equipment required for the project are expected to be grouped into 28 con- tracts totalling about $245 million. The proposed Bank loan would be expected to finance part of 15 civil works contracts, worth some $57 million, of which 12 with an estimated total cost of $56 million, would be tendered on the basis of international competitive bidding in accordance with the Bank's Procurement Guidelines. As noted above (para. 41) the contract for the Sidi Salem Dam has been let. The other 3 contracts, which are small and not suitable for packaging, would be tendered locally according to normal Government competi- tive bidding procedures which are considered satisfactory; these contracts would not exceed $2 million as a whole. Small equipment items such as motor- cycles and survey equipment would also be purchased through normal Government competitive bidding procedures; the total for all such items would not exceed $100,000 (draft Loan Agreement, Schedule 4, para. B). A 15 percent preference margin, or the prevailing custom duty, whichever is lower, would be extended to local manufacturers in the evaluation of bids for equipment. 45. Disbursements under the proposed Bank loan would be made for: (i) 55 percent of expenditures (representing 100 percent of the estimated foreign exchange component) on civil works for the railroad substructure and 50 per- cent of expenditures on civil works (representing 100 percent of the estimated foreign exchange component) for the road and potable water supply pipe reloca- tion, for the Testour/Medjez el Bab subproject, and for the rehabilitation of the Cap Bon citrus plantations; (ii) 100 percent of the foreign exchange cost of imported equipment and materials or 100 percent of the ex-factory cost of locally produced equipment and materials, for the Testour/Medjez El Bab and citrus plantation subprojects; and (iii) 100 percent of foreign expenditures  - 15 - on consultant services and training under those components financed by the Bank. The Bank loan would finance about $12.5 million in expenditures on the railway relocation under the already concluded contract for the Sidi Salem Dam. Disbursements for the rehabilitation of citrus plantations would be conditioned on commencement of construction of the Medjerda-Cap Bon Canal. Retroactive financing of a maximum of $200,000 in expenditures after January 1, 1976 on consultant services for the railway relocation and the Testour/Medjez el Bab subproject is recommended (draft Loan Agreement, Schedule 1, para. 4). Bank loan disbursements are expected to be completed by June 30, 1984. Water Development Studies and Environmental Impact 46. Under the project the Government would update existing studies or undertake new studies on a number of major water development, water policy, and environmental impact issues. In carrying out an analysis of the water resources of the Medjerda Basin, the Government would update existing hydro- logical data, taking into account developments upstream and downstream from the Sidi Salem Dam; this work is expected to involve updating and extending the mathematical model which formed the basis of the Northern Tunisia Water Master Plan. The Government would carry out a study on the operation of the Sidi Salem Dam, and, by December 31, 1980, establish operating rules for the Dam acceptable to the Bank (draft Loan Agreement, Section 3.13 (b)). The studies program would also include an examination of the pollution factors which could influence the quality of the waters in the Sidi Salem Reservoir; by the end of 1980 the Government would establish a program acceptable to the Bank to monitor pertinent Medjerda water quality parameters (draft Loan Agree- ment, Section 3.13 (d)). An increase in the elevation of water in the Sidi Salem Reservoir could have a damaging effect on water quality by increasing its salinity; before deciding to increase the level from 105 to 110 meters, the Government would submit a report to the Bank and give the Bank a reason- able opportunity to comment on it (draft Loan Agreement, Section 3.13 (e)). In reviewing irrigation infrastructure cost recovery policy, the Government would exchange views with the Bank on, and determine the allocation of project costs among the power company, STEG, the water company, SONEDE, and the irriga- tion areas; this determination would serve as the basis for recovery charges to be levied on STEG and SONEDE (draft Loan Agreement, Sections 3.03, 3.13(c), and 4.05). 47. The Sidi Salem Dam and Reservoir will cover a total area of about 6,000 ha, including a part of the village of Oued Zarga with a population of 3,500 inhabitants. The new location for this village was officially decreed in May 1976; assurances were received during negotiations that the village population would be adequately rehoused or otherwise adequately compensated for any loss incurred as a result of the relocation (draft Loan Agreement, Section 3.11(b)). Agreement was reached with Government on these plans and on an implementation schedule, in January 1977. Satisfactory arrangements would be made by DEGTH for annual inspection of the dam and its appurtenant struc- tures to determine actual or potential defects; DEGTH would take any remedial action required, and would forward a copy of each inspection report to the Bank (draft Loan Agreement, Section 4.04(c)). The project area is free of all  - 16 - environmental and health hazards such as bilharzia and malaria. While rela- tively small, a portion of the Medjerda River waters arises in Algeria. The Tunisian Government has informed the Algerian Government of its intention to implement the project; water supply and pollution problems are being discussed bilaterally. Land Tenure and Cost Recovery 48. Under the project the two new irrigation areas, Testour/Medjez el Bab and Cap Bon, would become public irrigation perimeters, and thus subject to the 1963 and 1971 Tunisian agrarian reform and land consolidation legisla- tion applicable in such areas (draft Loan Agreement, Section 4.02 (c)). Land consolidation would not be needed in either the Cap Bon citrus plantation area, where the existing land tenure (average holding 3 ha) is satisfactory, or on State Farms and Farmers' Cooperatives, which are expected to play an important role in introducing new crops and production techniques. Of the 16,600 hect- ares that would benefit directly from the project, 84 percent are privately owned and 16 percent are in State Farms and Farmers Cooperatives managed by the Office for State Land Management of the Ministry of Agriculture. In exist- ing public irrigation areas in northern Tunisia, the holding ceiling is 64 ha in the Badrouna and Lakhmess perimeters in the upper Medjerda Valley, and 50 ha in the lower Medjerda Valley. Under the proposed project, in the Testour/ Medjez perimeter in the central Medjerda Valley, the ceiling would be set no higher than 15 ha for land categories suitable for very intensive crops and 50 hectares for other categories of land; in the new Cap Bon perimeter the ceiling would be set so as to encourage the optimum use of available irrigation water (draft Loan Agreement, Section 4.02(c)). The vast majority of beneficiaries is expected to be small/medium farmers owning farms of 10 ha or less; they repre- sent 89 percent of holdings in Testour/Medjez and 96 percent in Cap Bon. The necessary land reform measures in the new irrigation areas would be carried out on the basis of a calendar and plan of action acceptable to the Bank (draft Loan Agreement, Section 4.02(d)). This calendar and plan of action were worked out during negotiations. 49. During negotiations, it was agreed that volumetric water charges at a rate of at least D 6 per 1,000 cubic meter in the new subproject irrigation areas, and at least D 12 per 1,000 cubic meters in the citrus plantation area would be applied; these charges would approximately cover operation and maintenance costs. They would be adjusted, in agreement with the Bank, at not more than three-year intervals (draft Loan Agreement, Section 4.03). Betterment taxes, or investment contributions, as the Tunisians use the term, of at least D 100 per hectare, would also be collected (draft Loan Agreement, Section 4.02(c)). The Government agreed to carry out an irrigation infra- structure cost recovery policy study, and to submit its recommendations to the Bank, by December 31, 1978, for the introduction of a system of investment contributions based on the repayment capacity of farmers, and permitting the maximum possible recovery of project investments (draft Loan Agreement, Sections 4.02(a) and (b)). The policy study should be completed in time to be taken into account in determining the final level of the betterment taxes to be applied. The minimum water charges and betterment taxes agreed by the Government would permit the recovery of 20 percent of project costs allocated to irrigation; this is equivalent to 30 percent of project rent, defined as  - 17 - the surplus of incremental farm income resulting from the project above that required to assure an adequate incentive to farmers to participate in the project. If, as a result of the policy study and periodic water charge in- creases, water charges and investment contributions rise to the level necessary to tax away the total project rent accruing to the largest farms, as projected in the Bank's farm models, 52 percent of project costs allocated to irrigation, equal to 77 percent of project rent, would be recovered. Benefits and Risks 50. The proposed project would be of fundamental importance in imple- menting Tunisia's overall water development strategy. The benefits of the water to be made available as a result of the project include increased agricultural output; higher incomes and employment, for both family and hired labor; improvement in Tunisia's balance of payments; increased supply of potable and industrial water to the major urban areas of Northern Tunisia; and an increased supply of electrical energy. The economic return on all project components, excluding power, is about 11 percent over a 50 year project life. 51. The direct economic benefits of the irrigation components of the project would be derived from increased cropping intensity, increases in yields of crops and livestock (including milk), and crop diversification with the introduction of fodder, corn and sugar beet. Only minor changes could be expected in cropping patterns and yields without the project. An additional benefit would be increased cropping intensity and higher output of summer crops on some 32,000 ha in the lower Medjerda Valley, developed under the Minimum Plan, resulting from an increase in water availability and a decrease in irrigation water salinity. By increasing agricultural output and creating jobs the project would have an important impact on the income of poor farmers in the three zones. By 1990, as a result of the project, the average per capita income of the farming population, expressed in constant 1976 prices, would increase from D 81 to D 320 in the new Cap Bon irrigation perimeter, from D 125 to D 614 in Testour/Medjez, and from D 220 to D 465 in the Cap Bon citrus plantation area; per capita GDP in 1976 prices is estimated at about D 680 in 1990. The main beneficiaries of the project would be 8,000 farm families representing some 48,000 people: 2,600 families in the Testour and Cap Bon subproject areas, mostly operating farms of less than 10 ha, who would also benefit indirectly from land reform and land consolidation; 1,650 families with average holdings of 3 ha in the Cap Bon citrus plantation area; and 3,800 farm families in the lower Medjerda Valley. Of these 8,000 farm families, nearly half fall in the target.group population. The project is also expected to create full time agricultural employment for some 5,700 workers, mostly on State farms and production cooperatives in the new Testour/Medjez El Bab and Cap Bon irrigation areas. Balance of payments benefits are expected from increased exports of citrus and off-season fruits and vegetables and reduced imports, mostly of food grains, sugar, milk and meat. No marketing problems are foreseen, either domestic or foreign. The urban populations around Tunis, Cap Bon and Sousse would benefit from an increased potable and industrial water supply, which, together with other identified sources, would assure requirements to the year 2000. Important, although unquantified, benefits of the project would derive from greater flood control in the Medjerda Valley.  - 18 - 52. The major risks of the project lie in the financing arrangements arid in the land reform and cost recovery program. The project would be the first in which both Tunisia and the Bank are associated with the People's Republic of China. The large number of cofinanciers and executing agencies requires particularly close coordination, under the leadership of the Ministry of Planning. On the basis of experience in project preparation and with the project coordinating committee to be established, the Government should have the ability to ensure the necessary coordination. 53. Land reform is a particularly sensitive subject in Tunisia as a result of the turbulent experience with agricultural cooperatives in the late 1960's; following the return of cooperative lands to private ownership, the Government was extremely reluctant, for several years, to take the lead in resolving a variety of land reform issues, including those that affect the returns on public irrigation investments. Under the irrigation rehabilita- tion project, detailed arrangements were made for the necessary land reform action (see para. 32); while there have been some problems in application of the cost recovery arrangements, it is too early to tell whether major diffi- culties will arise. Because of differences in the existing tenure structure in the project zones, the land reform measures required for the Sidi Salem project will, in certain respects, be less sensitive than those for the irriga- tion rehabilitation project. Finally, while the calendar for execution of the land reform program and the cost recovery policy study has been established with a view to allowing sufficient time for the land reform and investment con- tribution measures under the proposed project to take the results of the study into account, unforeseen delays could arise in executing the policy study or in carrying out its recommendations. PART V - LEGAL INSTRUMENTS AND AUTHORITY 54. The draft Loan Agreement between the Republic of Tunisia and the Bank, the draft Project Agreement between the Bank and the Office de la Mise en Valeur de la Vallee de la Medjerda et des Perimetres Publics Irrigues, the Report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement and the text of a draft resolution approving the pro- posed loan are being distributed to the Executive Directors separately. The agreements conform to the normal pattern of loans for irrigation development projects. Features of the loan of particular interest are mentioned in para- graphs 39 through 49 of this report. Special conditions of the project are listed in Section III of Annex IV. The following would be special conditions of effectiveness of the proposed loan: (a) conclusion and ratification of the Project Agreement; (b) conclusion and ratification of agreements concerning the project between the Government and STEG, SNCFT, and SONEDE; (c) estab- lishment of the project coordination committee; (d) appointment of a project manager by SNCFT; (e) submission to the Bank of a construction calendar, and plans, designs and specifications, all acceptable to the Bank, for the Medjerda-Cap Bon Canal; and (f) fulfillment of disbursement conditions of the KfW loan. Disbursement of Bank funds for the Cap Bon citrus plantation component would be conditioned on the beginning of construction of the Medjerda-Cap Bon Canal.  - 19 - 55. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 56. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments May 12, 1977   W Is It- 1~ t4-4 if. ~ ~ ~ ~ O -2::Is -W o - c 4 4 0 a o . .. .4 0 0 0 00 0. . 0 0 0 00 C 00 4 04 0.4. Z * . -*0 4 .0W 4 - 0 P - mmq 4.*- - - 0 *~~~-M - s". * S p~~~f o":%tItI Z- m 7 'wm a m -4-. S~40 -.t li ma 0 O , C I~~~Is a - . .'tI ~t I S:ct c OSt. P d d~~~~~~~~~