Somalia - Fourth Port Project

Document of The World Bank FILE p0py FOR OFFICIAL USE ONLY Report No. 1967-SO STAFF APPRAISAL REPORT SOMALI DEMOCRATIC REPUBLIC FOURTH PORT PROJECT June 20, 1978 Regional Projects Department Eastern Africa Regional Office 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 EQUIVALENTS Currency Unit - Somali Shillings (So.Sh.) US$1.00 = So.Sh. 6.295 So.Sh. 1.00 US$0.1589 WEIGHTS AND MEASURES 1 meter (m) 3.28 feet (ft) 1 kilometer (km) 2 = 0.62 miles (mi) 1 square kilometer (km ) 0.386 square miles (sq. mi.) I hectare (ha) D 2.47 acres 1 kilogram (kg) - 2.2 pounds (lbs) 1 meter ton (ton) = 2,205 pounds (lbs) GLOSSARY OF ABBREVIATIONS SPA Somali Ports Authority dwt = deadweight tons PW Price Waterhouse Associates (Consultants) PPF = Project Preparation Facility NBB National Banana Board FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY STAFF APPRAISAL REPORT SOMALI DEMOCRATIC REPUBLIC FOURTH PORT PROJECT Table of Contents Page No. I. THE TRANSPORT SECTOR ...... ......................... 1 A. General ............................... 1 B. The Transport System ......................... 1 C. Transport Policy, Planning and Coordination ... 3 D. Past Bank Group Involvement .. ................. 5 II. THE SOMALI PORTS AUTHORITY ..... ................ 5 A. Port Facilities ...... ........................ 5 B. Organization, Management and Staff .... ........ 6 C. Training ............ 7 I). Operations ................................................. 9 E. Traffic ............................... 9 F. Port Planning and Development Strategy ........ 13 C. Budgets, Accounts, Audit and Insurance ........ 14 III ThE PROJECT ...................................... 15 A. Background ........ ............................ 15 B. Scope of Proposed Project ................. .... 15 C. Choice of Terminal Type ................... .... 16 D. Details of the Project .................... .... 16 E. Cost Estimates ....... ......................... 17 F. Procurement and Disbursement .............. .... 19 G. Project Execution ................. ............ 19 H. Operational Targets ...... ..................... 20 I. Environmental Impact ...... .................... 20 IV. ECONOMIC EVALUATION ..20 A. Methodology .........20 B. Project Benefits .......... . 21 C. Project Costs .... .. 21 D. Economic Return, Sensitivity and Risk 22 V. FINANCIAL EVALUATION . .22 A. Present Situation ... .. ..... . 22 B. Future Prospects. ...... ...... 25 VI. RECOMMENDATIONS ....29 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.  Table of Contents (Continued) Page No. ANNEXES ANNEX 1 - Past Bank Group Financed Transport Projects ...... 30 ANNEX 2 - Selected Documents and Data Available in Project File ............................................... 31 This report has been prepared by Messrs. H. Agerschou (engineer), P.O. Cheryan (financial analyst), and L. Nordin (economist).  I. THE TRANSPORT SECTOR A. General 1.01 Somalia, with its 630,000 km in the northeastern corner of Africa, consists largely of sparse grazing land and desert. Only about 13% of the land is suitable for cultivation, and this lies for the most part between the Juba and Shebeli rivers in the southern part of the country where irri- gation is possible. Natural resources are scarce and the economy is dependent on the export of livestock (and livestock products) and bananas which accounted for 60% and 20%, respectively, of export earnings in 1976. Budget deficits have been a continuing feature, financed largely by foreign development aid. Per capita income is one of the lowest in the world (US$110 in 1976). 1.02 Somalia's 3,000 km, coastline is one of the longest on the continent but it has very few natural harbors. The population, estimated at just above 3 million, is largely nomadic. The highest concentrations are around Mogadishu (300,000), the capital, commercial center and major port, and in the northern Hargeisa/Berbera area. The arid nature of the country, the low level of economic activity, and the sparseness of the population between distant popu- lation centers combine to make the provision of a transport system adequate to development needs a formidable problem. As a consequence of the settle- ment pattern, transport development has proceeded mainly in the southern and northern areas where economic growth has been most evident. B. The Transport System General 1.03 The exploitation of Somalia's limited resources has been inhibited by the lack of adequate transportation facilities. Somalia's transport infra- structure comprises about 17,700 km of roads, four principal ports and ten airports, but no railways, pipelines, or internal waterways. The density of cargo and passenger traffic is light in all modes. Although some 10,400 motor vehicles operate in the country, camels and donkeys are also an important means of transport. Many of the estimated 2.5 million camels in Somalia are used for this purpose, but no data are available on the type and quantity of goods transported. Camels are capable of carrying 100 kg loads over average distances of 30 km per day. The ability of camels to function effec- tively in areas of limited water and forage makes them well-suited to the vast dry areas of Somalia. Thousands of donkeys haul small loads within cities as well as to and from communities. Highways 1.04 The road network is still limited and comprises about 17,700 km of which some 1,400 km are bituminous surfaced roads and about 1,000 km are gravel roads. Long distances and light traffic densities make road projects diffi- cult to justify economically although they are necessary to ensure national  -2- unity and administrative accessibility. IDA has financed the Afgoi-Baidoa highway, providing a road link from Mogadishu through the center of its hinterland and the Hargeisa-Berbera road, and is currently financing the construction of a paved road from Hargeisa to Borama (113 km) with a link to Tug Wajale (19 km) under the Third Highway Project. A 1,045 km road, financed by the People's Republic of China, is under construction from Belet Uen in the central region, to Burao in the north, and the remaining 275 km of the coastal road between Kismayo and Mogadishu are now being paved under an EDF-financed project. Ports 1.05 The four major ports, Berbera in the north on the Gulf of Aden and Mogadishu, Merca and Kismayo in the south, handle practically all of Somalia's ocean transport. Ports with sheltered deep-water facilities are Berbera, which exports mostly livestock, Mogadishu, which imports most of the country's general cargo and Kismayo, which exports bananas and meat. Merca, which exports bananas is a lighterage port. The new sheltered deep-water port at Mogadishu financed jointly by IDA (Credits 359-SO and 586-SO) and the Euro- pean Development Fund, was inaugurated on October 22, 1977. The relative importance of the four ports is shown in following table: Mogadishu Berbera Merca Kismayo Total Mogadishu