Tunisia - Tourism Infrastructure Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4587 PROJECT COMPLETION REPORT TUNISIA TOURISM INFRASTRUCTURE PROJECT (Loan 858-TUN, Credit 329-TUN) June 24, 1983 Europe, Middle East and North Africa Region Urban Division 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.  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT TUNISIA TOURISM INFRASTRUCTURE PROJECT (LOAN 858-TUN, CREDIT 329-TUN) TABLE OF CONTENTS Page No. Preface ............................... ................ ..... Basic Data Sheet ...............................................ii Highlights .....................................................iii I. INTRODUCTION ........................................1 II. SECTORAL BACKGROUND ................................. 2 III. PROJECT PREPARATION AND APPRAISAL ................... 4 IV. PROJECT IMPLEMENTATION .............................. 7 Effectiveness ....................................... 7 Covenants ......................................... 7 Planned and Actual Implementation ................... . 8 Original and Actual Implementation Schedule .. 10 Project Cost, Procurement and Disbursements . 11 Use and Performance of Contractors, Suppliers and Consultants ................................... 13 Reports and Auditing ................................ 13 V. INSTITUTIONAL ASPECTS ............................. 14 VI. FINANCIAL ASPECTS ................................... 15 VII. HOTEL DEVELOPMENT ................................... 16 VIII. ECONOMIC REEVALUATION .............................. 18 Revenue and Cost Assumptions ........................ 18 Economic Rates of Return ............................ 19 Foreign Exchange Earnings .......................... 21 Employment ......................................... 22 IX. THE BANKS' ROLE .............. o ...................... 22 X. CONCLUSION .......................................... 23 Annexes 1 - 9 Map 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.  TUNISIA. TOURISM INFRASTRUCTURE PROJECT (Loan 858-TUN, Credit 329-TUN) PROJECT COMPLETION REPORT PREFACE Loan 858-TUN and Credit 329-TUN for the Tunisia Tourism Infrastructure Project were signed on September 28, 1972. They amount to US$14 and 10 million, respectively, and were complemented by additipnal external financing of DM 40 million provided by the Kreditanstalt fUr Wiederaufbau of Germany. The IDA Credit was fully disbursed in September 1978; the Bank loan was closed on December 31, 1980, with the last disbursement made on September 15, 1981, leaving an undisbursed balance of US$100,000. The Project Completion Report (PCR) was prepared by the Urban Projects Division of the EMENA Projects Department. The PC9 is based on a review of project files and documents as well as on information collected in Tunisia during a project completion mission carried out in April 1981. The Tunisian officials concerned effectively assisted the completion mission in fulfilling its assignment. In accordance with the revised procedures for project performance audit reporting, this Completion Report was read by the Operations Evaluation Department but was not audited by OED staff. The draft Completion Report was sent to the Borrower; however, no comments were received.  - ii - TUNISIA: TOURISM INFRASTRUCTURE PROJECT (Loan 858-TUN, Credit 329-TUN) PROJECT COMPLETION REPORT KEY PROJECT DATA Appraisal Actual or Item Expectation Current Estimate Total Project Cost (US$million) 55.0 74.1 Underrun or Overrun (%) + 34.7 Loan/Credit Amount (US$ million) '24.0 Disbursed - 23.9 Cancelled - 0.1 Repaid to - 1.5 Outstanding to - 22.5 Date Physical Components Completed 12/76 12/80 aJ Proportion Completed by Above Dates (%) 40 98 Propor. of Time Underrun and Overrun-(%) + 30 Economic Rate of Return (%) 16.3 22.7 Financial Performance - Institutional Performance better OTHER PROJECT DATA Original Actual or Item Plan Revisions Est. Actual First Mention in Files or Timetable March 1969 Government's Application - Negotiations 4/27/72 4/27/72 Board Approval 6/15/72 6/15/72 Loan/Credit Agreement Date 9/28/72 9/28/72 Effectiveness Date 3/1/73 6/29/73 Closing Date 12/31/77 12/31/78 - 6/30/80 12/31/80.b Borrower Republic of Tunisia Executing Agency Office National du Tourisme Tunisien Fiscal Year of Borrower January 1 - December 31 Follow-on Project Name Tunisia: Hotel Training Project Loan/Credit Number Loan 1029-TUN Amount (USt million) 5.6 Loan/Credit Agreement Date 7/17/74 a/ Except for minor infrastructure works under construction. b/ Final Disbursement Date: September 15, 1981. - iii - TUNISIA: TOURISM INFRASTRUCTURE PROJECT (Loan 858-TUN, Credit 329-TUN) PROJECT COMPLETION REPORT MISSION DATA No. of No. of Date of Item Month/Year Weeks Persons Manweeks Reoort Identification 1/69 2 2 4.5 3/69 Preparation I 10.70 1 1 1 11/70 Preparation II 3/71 1 1 1.5 4/71 Prepation III 8/71 1 1 1.5 8/71 Preappraisal - roads 6/71 1 1 1 10/71 - water 7/71 1 1 1 9/71 Appraisal 11/71 2 to 4 11 27.5 5/72 Total 11 38.0 Supervision I 3/73 2 1 2 5/73 Supervision II 9/73 1.5 2 3 10/73 Supervision III 4/74 1 to 2 2 3 5/74 Supervision IV 12/74 1 2 2 1/75 Supervision V 5/75 1 2 2 6/75 Supervision VI 1/76 0.5 to 1 4 3 2/76 Supervision VII 9/76 1.5 2 3 10/76 Supervision VIII 2/77 1 2 2 4/77 Supervision IX 9/77 1.5 1 1.5 10/77 Supervision X 2/78 1 2 2 3/78 Supervision XI 11/78 2 1 2 12/78 Supervision XII 3/79 1.5 1 1.5 4/79 Supervision XIII 12/79 1 to 1.5 2 2.5 1/80 Supervision XIV 10/80 1 2 2 12/80 Completion 4/81 2 2 4 6/81 TOTAL 21..5 35.5 COUNTRY EXCRANGE RATES Name of Currency (Abbreviation) : Dinar (TD) Year: ExchanRe Race Appraisal Year Average : USt1 0.477 Intervening Years Average : US$1 0.418 Completion Year Average : US$1 0.402 - iv - TUNISIA: TOURISM INFRASTRUCTURE PROJECT (Loan 858-TUN, Credit 329-TUN) PROJECT COMPLETION REPORT HIGHLIGHTS 1. Prepared from 1969 to 1970 and appraised in 1971, the Tunisian'Tourism Infrastructure Project was one of the first lending operations of this type by the World Bank Group. The project consisted in the implementation of transport, water, sanitation, power and telecommunication facilities to promote tourism development in six selected coastal areas. The projet also included the fund ng of studies and technical assistance to complete project preparation, train technical personnel, help project management and promote the timely development of hotel investment. 2. Upon initial delays in the preparation of the land-use plans and final engineering, project implementation took momentum in 1976 and was essentially completed in 1980, three years later than originally envisaged. This, combined with unpredictable inflation and exchange rate movements, resulted in a cost overrun of 18% measured in Tunisian liras, or 35% measured in US dollars. The cost overrun would have been substantially larger if the original volume of works had not been reduced by about 30% as a result of a general project revision jointly carried out in 1976 by the Borrower and its lenders. 3. The institutional and economic goals of the project were generally achieved or have good prospects of being achieved. In particular, the results of the project economic reevaluation show an internal rate of return of 22.7% on the total program of investments, considerably higher than the 16.3% calculated at appraisal. Indeed, the negative effects of higher than anticipated infrastructure costs and slower than expected tourism development are offset by delays in the project expenditures and evidence of improved hotel occupancy rates and operating revenues. The last two factors also enhance the contribution of the project towards foreign exchange earnings which, in spite of a 30% reduction of the project size, are estimated at an additional USt276 million annually in 1980 prices and rates of exchange, or only US$11 million less than expected according to the original project. Conversely, the impact of the project on employment generation is estimated to result in 8,700 additicnal jobs or 30% less than originally anticipated. 4. A retrospective analysis of the project experience allows for the following main considerations: - In terms of goals and resource mobilization, the project constituted one of the most original and comprehensive tourism projects ever implemented. It interpreted correctly the Borrower's sector priorities and problems; - v - - Project implementation would have gained if it had been phased over time in order to be more responsive to the unpredictable development of tourism demand. This would have spared revising the project's program of work in 1976; - Initial delays in project implementation could have been avoided by delaying appraisal after the exactment of the land-use plans and the completion of final engineering studies; and - The development of hotel accommodation facilities on the project sites could have been fostered by linking investment promotion, which is carried out by a specialized department of the National Tourism Office (ONTT), to the land sale activity, which is carried out by a separate tourism land agency. TUNISIA. TOURISM INFRASTRUCTURE PROJECT PROJECT COMPLETION REPORT I. INTRODUCTION 1.01 Tourism development in Tunisia started in the early 1960s. It had taken place mainly at certain coastal cities (notably Tunis, Hammamet, Nabeul, Monastir, and Sousse) where infrastructure facilities, such as water supply, and electricity, could be made available by extending the existing urban network. However, this development took place in a disorderly fashion and with great strains on existing infrastructure systems. 1.02 In 1968, the Tunisian government indicated to the Bank its interest in obtaining financial assistance for tourism infrastructure in order to improve the level of infrastructure service to existing -.tels while better planning the development of new facilities. A Bank identification mission, early in 1969, recommended that the Government prepare feasibility and tech- nical studies. In the same year, with Italian bilateral assistance, the Tunisian government started the preparation of a Master Plan for consolidating and developing beach tourism in selected coastal areas. The Master Plan, prepared by ITALCONSULT, was completed in 1971 and provided the basis for a comprehensive infrastructure project for the priority tourism zones of Tunis North, Tunis South, Hammamet/Nabeul, Sousse, Djerba, Zarzis and Kerkennah. The project called for the upgrading and extension of road, water supply, electricity and telecommunication networks as well as the provision of public sanitation systems to protect the environment from pollution and health hazards. Major infrastructures were scaled to meet the projected development needs of accommodation facilities over 10-15 years with an ultimate saturation capacity in land-use terms of some 174,000 beds (later scaled down to 130,000). The infrastructure was planned also to serve the needs of the local population. 1.03 The Bank group's involvement in the financing of tourism infra- structure complemented previous involvement in the development of hotel accommodations in the late 1960s in the form of financial assistance to local institutions financing tourism accommodation facilities. By the end of 1970, the Soci&t Nationale d'Investissement (SNI), now Banque de D6veloppement Economique de Tunisie (BDET), had received some US$25 million in Bank loans (Loans 449, 512 and 648 of May 1966, September 1967, and November 1969, respectively), and onlent some US$14.5 million to private investors for hotel construction. In 1969, IFC with a US$8.0 million loan, and the provision of US$2.2 million equity, assisted the Government in creating the Compagnie Financibre et Touristique (COFITOUR) as a specialized tourism financial institution. Additional IFC financial support to tourism development includes a US$1.6 million loan (US$0.3 million equity) to the Socift6 Touristique -2- H6telibre (STH) in 1973 and a US32.5 million loan (IJS$.07 million equity) to the Soci6t6 Sousse Nord in 1975. 1.04 The Bank group has also assisted with the development of Tunisia's various infrastructure systems on a countrywide basis and the tourism infra- structure provided under this project constitutes a part of such system. The Bank group's general infrastructure loans have been as follows: Amount in Year Project Loan No. US$ m. 1968 First Water Supply Project 581 15 1970 Second Water Supply Project 209 10.5 1971 First Power Project 815 12 1974 Third Water Supply Project 989 23 1975 Second Highway Project 1188 28 1975 First Urban Sewerage Project 1088 28 1976 Second Power Project 1355 14.5 1977 Fourth Water Supply Project 1445 21 1978 Third Highway Project 1601 32 1979 Second Urban Sewerage Project 1675 26.5 1979 Fifth Water Supply Project 1702 25 1980 Fourth Highway Project 1841 36 1.05 This project completion report is based on information contained in the Project Appraisal Report (Pt-5a of May 30, 1972) and a review of Bank files which included supervision reports and progress reports prepared by the Borrower. A supervision mission visited Tunisia in March-April 1981 to obtain additional information. II. SECTORAL BACKGROUND 2.01 At the time of appraisal at the end of 1971, tourism had already made substantial progress in Tunisia during the preceding ten years. International arrivals had increased from 53,000 in 1962 to 608,000 in 1971 and nonresident bednights from 396,000 to 5,821,000 over the same period. These growth rates, at an annual average of over 30% for arrivals and about 35% for bednights (the discrepancy being explained by a lengthening of average stay from 7.5 to 9.6 days), were among the highest in the Mediterranean. 2.02 Tunisia's success in the 1960s was related to the advent and rapid growth of air charter package tours which tapped the mass markets of the major European tourist-generating countries. The handicap of the sea crossing was eliminated and Tunisia's geographical location (the closest North African destination for the major European markets) afforded easy access at competi- tive air transport costs. The country's extensive beaches and pleasant climate for most of the year were undoubted assets. The low-cost economy was -3- another attraction. Finally, there was a timely investor response and hotel capacity increased tenfold from 4,000 beds in 1962 to 41,000 beds in 1971. 2.03 At this point, the Tunisian authorities were convinced that the market prospects were good for further tourism development throughout the 1970s and thereafter, provided that infrastructure constraints and shortages of trained personnel were removed and a favorable hotel investment climate was maintained. Accordingly, the target for 1.5 million arrivals was advanced from 1985 to 1980. In the event, 1.6 million arrivals were recorded in 1980. This represents an annual average increase slightly in excess of the targeted 9%. 2.04 Tourism growth was not smooth throughout the 1970s. As elsewhere, tourism traffic declined in 1973 and 1974 as a result of the worldwide energy crisis and the related setback in economic conditions. The sector recovered rapidly in Tunisia in 1975, considerably faster than many other destinations, and topped one million arrivals for the first time. However, there was once more a pause in 1976 and 1977, possibly as the result of special factors such as the- closing of the border with Libya. Since then, traffic has shown a healthy and steady increase over the last three years, averaging 16.5% annually, a rate in excess of double that for the Mediterranean region as a whole. 2.05 As a result both of the sluggish performance in the mid-1970s and the (probable) related hesitancy of the Tunisian authorities to accord the tourism sector top priority, hotel investor interest lagged at that time so that, in the following three years, the growth in the supply of hotel beds was slower than that for traffic. Total bed capacity rose from 64,097 in 1977 to 71,150 in 1980, an annual average increase of only 3.5%. As a result, the average bed occupancy rate rose from 47.1% to 60.0%. The latter rate is very high as a national average for a tourist destination where the preponderance of traffic is directed toward highly seasonal beach destinations. In fact, at the most successful resort areas, a large number of hotels were operating at full capacity (or even beyond) during the high season. 2.06 As a result of the excellent occupancies and the related substantial profitability, investor interest revived and by early 1981 the ONTT had identified tourist accommodation projects totalling 56,045 beds. Of these, however, only 1,424 were actually under construction so that there were capacity constraints projected for both 1981 and 1982. On the other hand, there were a further 12,896 beds fully studied and ready for implementation. Provided finance could be found for these additional beds and project execution were expeditious, the capacity constraints could be eased in 1983-84. Early drafts for the tourism sector of the Sixth Plan, 1982-86, have established a target of 40,000 additional beds (including 10,000 in seasonal vacation villages) in operation by 1986. This would entail investments of around TD 30 million (US$785 million). In order to maintain the profitable 1980 occupancy rates, traffic would have to increase at an annual average of about 9%, fully consistent with long-term average growth rates registered over the 1960s and 1970s and therefore a reasonably attainable marketing objective. -4- 2.07 Gross foreign exchange receipts from tourism have increased steadily each year since the early 1960s. In 1971, at TD 53.8 million (US$130.9 million), tourism was the largest single foreign exchange earner, providing 25.3% of all such earnings. By 1980, tourism earnings had grown to TD 259.8 million (US$632.1 million) and, although the sector had been replaced by oil as the largest earner, it still provided 24.5% of all foreign exchange receipts. If the tourism section of the Sixth Plan were adopted and achieved, gross foreign exchange receipts in 1986 would total about TD 430 million (US$1,046 million) in constant 1980 prices. 2.08 Buployment in the accommodation industry has grown steadily. Reaching 16,500 in 1971, it increased by 74% to 28,675 in 1980. The draft Sixth Plan would add an additional 16,000 jobs. In addition to those employed in the accommodation industry, it is estimated that a further 25,000 were employed in 1980 in other tourism enterprises, such as restaurants, specialized local transport, travel agencies, handicrafts, tourist shops and a variety of entertainment, sports and leisure facilities. Furthermore, perhaps another 50,000 were employed in activities directly supplying goods and services to the accommodation and other tourism enterprises. 2.09 A summary of ten principal indicators of tourism development in Tunisia since 1962 is contained in Table 1. III. PROJECT PREPARATION AND APPRAISAL 3.01 In preparing the infrastructure projects, the Tunisian government, the Bank and KfW (co-financier) focused on three major objectives: (i) the establishment of an appropriate juridical and legislative framework for acquiring land for hotel development, providing incentives to investors, and controlling hotel activities; (ii) the development of land-use plans for addressing tourism development in suitable areas and protecting the physical environment; and (iii) the provision of least-cost infrastructure to support tourism development. In the process, the Bank's main contribution was to help the Tunisian government in planning tourism development in accordance with sound economic principles. For example, tourism development on the Kerkennah Island, originally envisaged in the Master Plan, was discarded because of the high infrastructure development costs. The Bank was also instrumental in the establishment of (i) the "Agence Foncibre Touristique", a land agency especially created to acquire land for tourism development, (ii) a special unit for maintaining and operating the project sewerage facilities which eventually became the Office National de l'Assainissement (ONAS), and (iii) the Infrastructure Department of the Office National du Tourisme Tunisien (ONTT), which was assigned the responsibility of the project. 3.02 The project was appraised in December 1971 by an appraisal mission consisting of nine Bank staff members and one consultant, covering most of the needed technical, financial and economic specialities. The project's program of works and cost estimates were based on preliminary engineering studies carried out by ONTT in association with SONEDE (National Water Authority), TABLE 1: Sumnarv Indicators of Touriam Development Average Bed Woreign Receipts Cumulative Employment International Bed International resident Length Occupancy Exchange per Investment in in Arrivals Capacity Bednights Beduights of Stay Rates Receipts Bednight Accomodation Accorrmodation Year _No.) (No.) (No.) (No.) (Nights) (%) (TD'000) ('D) (TD'000) (No.) 1962 52,752 4,077 395,777 244,642 7.5' 58.2 1,970 5.0 10,141 1,631. 1963 104,731 5,743 540,759 21.1,348 5.2 45.7 3,700 6.8 16,772 2,297 1964 138,238 7,573 694,374 212,628 5.0 44.0 5,300 8.1 29,636 3,029 1965 165,840 8,726 1,129,416 190,737 6.8 50.0 9,200 8.1 40,675 3,490 1966 218,817 14,484 1,636,881 204,841 7.5 40.0 13,600 8.3 51,307 6,194 1967 231,088 17,996 2,030,086 225,239 8.8 46.4 16,433 8.1 62,417 7,198 1968 330,284 23,263 3,082,313 261,927 9.3 56.4 22,168 7.2 79,412 9,305 1969 373,320 30,421 3,406,422 274,122 9.1 50.9 26,101 7.7 94,304 12,168 1970 410,749 35,297 3,819,616 295,367 9.3 46.7 31,600 8.8 108,612 14,119 1971 608,206 41,252 5,821,090 296,L68 9.6 56.7 53,800 9.2 126,439 16,500 1972 780,350 46,306 6,777,779 326,548 8.7 57.6 68,437 10.1 145,807 16,522 1973 721,897 52,924 5,882,497 371,056 8.1 43.7 72,395 12.3 169,745 21,170 1974 716,003 55,748 5,636,385 436,585 7.9 41.2 80,873 14.3 182,022 22,299 1975 1,013,851 62,397 8,652,556 520,344 8.8 53.7 115,158 13.0 188,323 24,959 1976 977,818 63,333 8,898,029 673,268 9.1 51.0 126,918 14.3 199,770 25,333 1977 1,015,966 61,,097 8,117,577 686,88 8.0 47.1 139,439 17.2 210,613 25,639 3978 1,141,942 66,059 8,804,945 651,310 7.7 50.0 169,691 19.0 229,070 26,424 1979 1,355,951 68,843 11,170,943 840,073 8.2 59.0 219,186 19.1 238,570 27,537 1980 a/1,602,051 71,150 12,097,984 694,394 7.6 60.0 259,783 21.5 254,719 28,675 1986 b/ 2,300,000 111,000 19,071,840 1,650,000 8.3 60.0 430,000c/ 21.5 c/ 604,000 c/ 44,675 a/ Provisional bI Draft Plan targets c/ In 1980 dinars Source: ONTT -6- STEG (Power Authority), and PTT (Telecommunications Ministry), and with the assistance of the consulting firm SOGETHA for water supply, BCEOM for sewerage, and STUDI-BCEOM and SCET for roads. Preliminary engineering was based on the Master Plan (1:25,000 scale) for the six tourism zones, with the understanding tnat it would have been reviewed after the completion of a detailed land use plan for each zone at the 1:2000 and 1:5000 scale. The preparation of these plans was awarded, in consultation with the Bank, to the consulting firms ITALCONSULT and SCET. Appraising the project on the basis of preliminary engineering studies based on a 1:25,000 scale Master Plan was a major cause of the great difference Detween the quantity and cost of the works implemented and those planned at appraisal. Moreover, the fact that the project had not yet reached the stage of final design was not adequately reflected in the loan agreement which would have needed a more general project description. 3.03 As defined at the time of appraisal and described in the loan agreement, the project consisted of the following parts. A. Infrastructure works, varying according to the project zones and including: - the improvement or construction of a total of 196 km of main roads, access roads and bicycle paths; - the installation of a total of 140 km of water supply and distribution mains, the construction of 4 reservoirs with a total capacity of about 15,000 m3, and exploratory drillings, development and equipment of groundwater resources in the region of Koutine to serve the tourism zones of Djerba and Zarzis; - the construction of a total of 113 km of main sewers with about 44 lift stations, 15 treatment and disposal facilities, and connection lines to hotels; - electrical installations to connect with hotels and supply them with power from the STEC HV system, including MV and LV lines, transformer stations and all ancillary installations; and - installation of telephone and telex equipment in each hotel, and expansion of local public exchanges to handle the additional load. B. Studies and professional services for: - preparing the land-use plans for the project tourism zones; - preparing detailed engineering and supervising the construction of the project infrastructure works; and - preparing a feasibility study for sewerage treatment and disposal in "Grand Tunis." C. Studies for the expansion of hotel and tourism training. D. Training of specialists to operate the sewerage treatment and disposal facilities. E. Promotion program to attract tourism investment in the project zones. F. Management and equipment (including technical assistance) for ONTT's Infrastructure Department and other project implenting agencies; and -7- G. Working capital to enable SONEDE to start operating the sewage disposal and treatment facilities. 3.04 The total cost of implementing the project was estimated at DT 26.5 million or US$55 million equivalent. The financing plan of the project included a US$14 million Bank loan, a US$10 million IDA credit, a DM 40 million German loan by KfW, and Tunisian budgetary funds for some TD 9 million. Project implementation was thus to be financed by the Bank, IDA, KfW and the Tunisian government in the proportion of 25.4, 18.2, 22.7 and 33.7 percent, respec- tively. Of the foreign financing 81.5% was calculated to cover the project foreign exchange cost, while the remainder would contribute to local cost financing. IV. PROJECT IMPLEMENTATION Effectiveness 4.01 The Loan Agreement specified March 1, 1973 as the date of loan effectiveness. The project became effective on June 29, 1973, four months after the original date. This delay was mainly due to difficulties in the enactment of the legislation to establish the tourism land agency (see para. 4.04) and in appointing project staff. Covenants 4.02 The Loan Agreement and the two Project Agreements with ONTT and SONEDE, respectively, included a comprehensive set of covenants reflecting the complex nature of the project and the Bank's desire to ensure effective implementation of a new type of project. The overall performance of the Tunisian government in meeting the various covenants was good. 4.03 Problems were encountered only in the fulfillment of the covenants related to the enactment of land-use plans for the project zones and the acquisition of land for project purposes. All land-use plans were to have been enacted by September 28, 1975, three years after the Loan Agreement date. In the event, only the land-use plans of Tunis South and of the Beni-Khiar portion of Hammamet-Nabeul were approved by that date. All other plans were approved in 1976 and 1977. The difficulty in preparing and enacting the plans was underestimated at appraisal time by both the Tunisian government and the appraisal mission. This had critical consequences in delaying the preparation of final engineering and consequently project implementation. It would have been preferable to postpone project appraisal until after completion of the land-use plans. 4.04 Land acquisition was the cause of delay in the implementation of several infrastructure works. Despite the provision of the Loan Agreement, ONTT and the Agence Foncibre considered it inappropriate to undertake any land expropriation in the project areas. Also, they considered it inappropriate to acquire land at prices substantially higher than those of previous trans- actions of agricultural land, because this would have increased the reference -8- prices for further land acquisition. The negative impact of delays in land acquisition on tne implementation of a number of infrastructure works could probably have been reduced by planning land acquisition for all infrastructure works earlier and in detail, and exceptionally by resorting to land expro- priation. 4.05 According to the Loan Agreement, the Borrower was to have reviewed the tourism incentive study within one year of its completion to have determined, in agreement with the Bank, any amendments to be made to the existing tourism incentive systems. The tourism incentive study was completed in 1975 and reviewed by ONTT in 1976. The conclusion of ONTT review was that the total amount of existing incentives was basically sound, but that it would be preferable to shift them from tax and customs duties exemptions to invest- ment grants. The proposal was accepted by the Bank on the occasion of a 1977 tourism sector review. However, since then the Tunisian government has been reluctant to enact ONTT's proposal because the Ministry of Finance considers it easier and more cost effective to renounce a source of income rather than provide cash grants from budgetary sources. The Bank's present position is that the existing system is acceptable and there is no pressing reason to push for modification. Planned and Actual Implementation 4.06 In 1975, ONTT, with Bank and KfW approval, carried out a general reassessment of the planned project infrastructure program. This was prompted by. (i) the need for limiting investment costs inflated by the world economic recession and delays in project implementation, (ii) tne completion of the detailed land use plans (para. 3.02) which determined changes in the infrastructure design, (iii) a government reassessment of the Tunisia tourism development targets to cope with a lower than expected growth of international arrivals, and (iv) were government attitudes toward providing hotel investors with infrastructure incentives. The reassessment resulted in an amendment of the project description of schedule 4 of the Loan Agreement, including a partial reduction in the quantity of infrastructure to be built under the project and the transferring to private financing of components such as hotel transformers and hotel telephone switchboards. Subsequently, in 1979 and 1980, a few other infrastructure works were postponed because they were not needed at that time. 4.07 The program of infrastructure works as revised in 1975 and ultimately implemented included the following changes: - the number of km of roads is 38% less than planned at appraisal; - the number of km of sewerage mains is 44% less than planned at appraisal; - the number of lift stations is 29 instead of 44; - the number of sewerage treatment plants is 10 instead of 13 (although in the case of Tunis North, the project will use facilities built by ONAS to serve the northern part of Grand Tunis); - the number of km of water mains is 10% more than planned at appraisal because of the extension of water lines for use by local population; -9- - the number of reservoirs is three instead of four with a total capacity of 11,500 m3 instead of 15,000 m3; - the power component includes the construction of additional MV lines, in particular in Djerba-Zarzis, replacing the implementation of LV lines; the implementation of LV lines and MV-LV transformers being transferred to the financing by hotel investors; and - the telecommunications component (which was originally designed to include the installation of telephone and telex equipment in each hotel and the expansion of local public exchanges to handle additional loads) provides for telephone distribution lines exclusively; telephone lines, financed under the project being used to extend service to the local population (PTT is assuring the extension of telephone exchanges with its own resources). 4.08 Whereas the land-use plan, as originally appraised, indicated a phy- sical capacity for hotel development of 174,000 beds, the 1975 project revision recommended postponing the development of a number of subzones and thus reduced that theoretical capacity at 130,000 beds. The infrastructure actually installed based on the project revision would limit hotel development to 74,000 beds, while relatively minor infrastructure additions would raise the latter figure to about 90,000 beds. These constraints on bed capacity mainly result from the phased development of critical infrastructure facilities such as sewerage and water supply. At Djerba and Zarzis, present serious water supply constraints could jeopardize the full utilisation of parts of the other infrastructure works already executed. Since the ultimate construction of a desalinization plant could remedy this situation, feasibility studies for such a facility were financed under the project and completed in 1977; the Government and SONEDE are still assessing the many technical, financial and operational problems posed by the implementation of the facility. Meanwile, SONEDE, with the financial assist- ance of KfW is expanding water supply production throughout the south of the country to provide piped water to rural settlements. Expansion of water pro- duction would also serve additional tourism development. However, since the water requirements of hotels compete with those of the rural population, KfW has included special covenants in its Loan Agreement limiting the amount of water to be used for tourism. According to the possible results of water saving measures to be applied by hoteliers, this additional capacity could allow from 2,000 to 5,000 additional beds and postpone the need for a desalinization plant from 1986 to 1990. 4.09 The overall implementation of the software components of the project was carried out satisfactorily even though several of them were the object of major organizational changes and were not financed under the project. Because of the creation in 1974 of ONAS, the implementation of Parts D and G of the project--the training of specialists and working capital to enable SONEDE to start operating the sewage disposal and treatment facilities--became super- fluous. ONAS fulfilled the above obligations with Government funds, as well as financial assistance from a specifically designed Bank sewerage project (Loan No. 1088, dated January 28, 1975). Also, the financing under the project of Part E--promotion to attract tourism investment in the project zones--became superfluous because ONTT decided to implement it exclusively with in-house personnel and budgetary funds. -10- 4.10 On the otner hand, the studies for expanding the hotel and tourism training program carried out by ILO, were instrumental in the preparation of a hotel training project which prompted the construction of two training centers in Hammamet and Sousse with a yearly output of 250 students each. The project received Bank financial assistance (Loan No. 1029-TUN) and was also completed in 1981. Original and Actual Implementation Schedule 4.11 The project was completed some four years behind the planned com- pletion date of December 12, 1976. However, most infrastructure facilities were completed with an average delay of two years, with only a few not being completed until two years thereafter. Table 2 compares the original and actual implementation schedule of the various project infrastructure works through the proxy of the expected and actual expenditure profiles: Table 2. EXPENDITURES ON INFRASTRUCTURE IMPLEMENTATION (in %) 1974 1975 1976 1977 1978 1979 1980 a/ Total Roads - expected 10 85 5 100 - actual 18 24 39 12 7 100 Sewerage - expected 3 48 49 100 - actual 2 18 16 23 20 21 100 Water - expected 48 52 100 - actual 2 45 22 13 6 12 100 Power - expected 16 34 43 7 100 - actual 5 0 19 45 10 8 13 100 Telecom. - expected 27 53 20 100 - actual 23 42 11 24 100 TOTAL - expected 6 55 37 2 100 - actual 1 5 23 24 19 13 15 100 aT Includes final expenditures carried out in 1981. The delay in project implementation was mostly due to slow preparation of the detailed land-use plans of the project zones and problems in acquiring land for the construction of specific infrastructure works (paras. 4.03 and 4.04). Occasionally, project implementation was delayed by coordination problems between ONTT and the utility agencies during critical phases of project implementation. Because of continuous unpredictable delays in awarding -11- contracts and implementing a few infrastructure works in the final project implementation phase, the Bank had to postpone the original closing date three times from December 31, 1977 to December 31, 1980. Project Cost, Procurement and Disbursements 4.12 The final cost!/ of the project totals about DT 31.million or 18% more than the appraisal estimate of TD 26.5 million. The cost of the project in dollar equivalent, taking into account the effects of exchange rates changes on the yearly project expenditures, could be set at US$74.1 million or 35% more than the appraisal estimate of US$55 million. Since, according to the completion mission estimate, the actual foreign exchange component of the project amounts to 48% of the total project cost (55% according to the appraisal estimate) the foreign financing (para. 3.04) largely covers all project foreign exchange costs. 4.13 Final costs for the individual project components vary greatly with roads, and electricity, showing savings of 18% and 20%, respectively, and water and sewerage having increases of 17% and 67%. Also, land acquisition and the cost of studies and project administration had sizeable increases. Cost savings mainly depend on reduction of the quantity of works resulting from the 1975/76 project revision (see para. 4.07). Cost overruns are mainly related to (i) delays in the original project implementation combined with the domestic and international inflation that followed the 1973/74 energy crisis; and (ii) the final definition of quantities and works following the completion of the land-use plans and, subsequently, the final design of infrastructure works. After the project revision of 1975/76, there was no significant change in the final cost of the individual project components. Table 3 gives a comparison between the expected and actual costs by project component and zone. 4.14 The implementation of the project called for the awarding of over 100 contracts of which 46 were for civil works and the remainder for procurement of construction materials, equipment and professional services (see Annex VII). Despite the large number of contracts dealing with many different infrastructure works, procurement was satisfactorily carried out in accordance with the provision of the Loan Agreement and Bank guidelines. 4.15 Disbursement of the IDA credit (US$10 million) and Bank and KfW loans (US114 m. and DM 40 m. , respectively) was slower than expected at appraisal because of delays in project implementation. Also, on several occasions, disbursements were delayed by slow payments to contractors as well as slow preparation of withdrawal applications by the project implementation agency. Moreover, in 1977 the disbursement percentage of civil works (70%) was reduced to 30% and disbursements on the project administration expenses were stopped in order to allow further Bank disbursements until completion of all project works. While retaining the original disbursement percentage for civil works 1/ Including a few construction works still under implementation at the date of the completion mission of March 1981. -12- Table 3: Comparison of Appraisal Forecast and Actual Project Costs (DT and US$ millions) Appraisal Actual TD US$ % TD US$ % (TD) (US$) By Project Component Roads 6.92 14.32 26.0 5.79 13.76 18.6 18.6 Sewerage 8.03 16.63 30.2 13.73 33.19 44.2 44.8 Water .3.95 8.18 14.9 5.07 12.04 16.3 16.3 Electricity 3.52 7.28 13.2 2.17 5.15 7.0 7.0 Telecommunications 1.55 3.22 5.9 1.36 3.31 4.4 4.4 Land Acquisition 0.48 1.00 1.8 0.95 2.30 3.0 3.0 Project Unit and Planning 2.11 4.37 8.0 2.02 4.34 6.5 5.9 TOTAL 26,56 55.00 100.0 31.09 74.09 100.0 100.0 By Project Zone Tunis North 1.51 3.13 5.7 1.83 4.36 5.9 5.9 Tunis South 1.55 3.21 5.8 2.14 5.19 6.9 7.0 Hammamet 5.48 11.33 20.6 5.83 14.00 18.8 18.9 Sousse 6.70 13.88 25.2 9.53 22.94 30.7 31.0 Djetba 5.97 12.35 22.5 5.17 12.34 16.6 16.7 Zarzis 2.77 5.73 10.4 3.62 8.62 11.6 11.6 Land Acquisition 0.48 1.00 1.8 0.95 2.30 3.0 3.0 Project Unit and Planning 2.11 4.37 8.0 2.02 4.34 6.5 5.9 TOTAL 26.57 55.00 100.0 31.09 74.09 100.0 100.0 -13- would have terminated disbursement at the end of 1979, well ahead of the completion of all project works, the change to 30% caused additional delays in the disbursement of the loan proceeds. At the closing date of December 31, 1980 the loan presented an undisbursed balance of US$946,347. At the Tunisians' request the Bank agreed to keep the loan account open for a few additional months to allow disbursements on the expenditures of contracts awarded prior to the closing date. Ultimately, the Bank disbursed also the complement to 70% of a few withdrawal applications for civil works previously considered at 30%. This allowed to complete disbursement of all the loan proceeds but $100.000 (cancelled amount). It is expected that the KfW loan will be closed soon. Indeed, because of the revaluation of the Deutsche mark as well as the reduction in the volume of project works, the KfW loan would have presented a sizeable undisbursed balance. This has been avoided because KfW agreed, upon the Tunisians' request, to disburse the complement to 70% on a large number of withdrawal applications for civil works on which the Bank disbursed at 30%. Use and performance of contractors, suppliers and consultants 4.16 Construction work completed by contractors throughout the project was generally of good quality and only in a very limited number of cases ONTT had to postpone provisional acceptance because of deficient standards. Contrac- tual litigation was infrequent, and, when it arose, resulted from differing interpretation between ONTT and contractors on the responsibility for con- struction delays, the effect of price escalation formulas on the contract prices and the damage due to contractors by an unpredictable reduction in construction quantities. ONTT has already satisfactorily solved most legal cases and expects to do as well for those still pending. 4.17 Equipment suppliers' performance was generally satisfactory, except for delays in the delivery of telecommunication plastic ducts. This, as well as organizational constraints on the part of PTT, contributed to delay imple- mentation of the telecommunications component. 4.18 The performance of consultants employed for the preparation of the physical planning and final engineering studies as well as the tourism incentive, hotel training and water desalinization studies, was also satis- factory. Nevertheless, it is difficult to evaluate the impact of the tech- nical assistance on the project direction because, while undoubtedly some particular types of expertise were needed in the early stage of project implementation, the cost effectiveness of the overall technical assistance program is in doubt, given the qualified managerial and operational staff available within the project direction itself. Reports and Auditing 4.19 Throughout project implementation, ONTT prepared and forwarded quarterly reports to the Bank for information and comments. The reports were generally comprehensive and accurate although not always prepared on time. The preparation of reports every six months would have achieved the same information and operational results while saving work for ONTT and allowing a more timely submission of such reports. As required by the project agreement, ONTT had the accounts and financial statements of the Infrastructure Depart- ment satisfactorily audited by independent auditors at the end of each fiscal year. -14- V. INSTITUTIONAL ASPECTS 5.01 When the Bank visited Tunisia in January 1969 to identify and start preparation of the tourism infrastructure project, a parastatal organization, the Commissariat G6n6ral du Tourisme et du Thermalisme (CGTT) was already well established and dealt with nearly every aspect of tourism development. After a brief change to ministerial status, the government tourism organization was transformed into an autonomous body, the Office National du Tourisme et du Thermalisme (ONTT), which continued the activity of CGTT under the supervision of the Ministry for the Economy. 5.02 The Bank's main contribution to institutional development through the infrastructure project consisted in assisting the Tunisian government in (i) setting up a special project unit, later on transformed into ONTT's Infra- structure Department, to coordinate and finance the development of tourism infrastructure facilities, (ii) establishing a specialized land agency, the Aence FonciEre Touristique (AFT) , to acquire land for tourism development and (iii) streamlining arrangements between ONTT, the coordinating and financing agency, and the government agencies in charge of executing and later on operating the various infrastructure facilities. In this respect, the project was also instrumental in the creation of the Office National de l'Assainis- sement (ONAS) the natural outcome of the special projects division, created to maintain and operate the project sewerage facilities within the Hydraulic Department (HAR) of the Ministry of Agriculture. 5.03 In retrospect, it appears that the diagnosis of the institutional issues at appraisal and the action taken to ensure effective project imple- mentation were appropriate and worked satisfactorily. However, the arrange- ment whereby ONTT acted as the coordinating and financing agency while other agencies acted as executors was not free of problems and entailed occasional conflicts on infrastructure design, planning and procurement, as well as lengthier procedures of preparation and approval of bidding documents and awarding of contracts. While the first problem is the inevitable and often useful result of the interaction process between a multi-disciplinary coordinating agency and specialized executing agencies, the second could possible have been avoided by transferring to the executing agencies full responsibility of awarding contracts and paying contractors. 5.04 Considering the good performance of the Infrastructure Department as well as the considerable expertise acquired by its managerial and professional staff, ONTT wishes the Department to continue as part of its permanent organizational structure. While continuing its activity of coordinating and financing specific integrated infrastructure projects, the Infrastructure Department should also promote and follow up projects autonomously carried out by other agencies as well as private developers. 5.05 The AFT has encountered funding problems. Its original capital of TD 1.0 million was increased to TD 1.5 million only in 1981; this will allow a limited expansion of its acquisition program. Because of its statutes, AFT was required to sell land at the average acquisition cost plus 10% to cover its administrative expenditures. Only recently, and after many discussions -15- with Bank supervision missions, the AFT has been authorized to revalue land prices in order to take inflation into account. According to its legislation, in July 1980, the AFT lost its preemptive rights on the land sold in the tourism zones. This will weaken AFT's role in controlling land prices in the project areas and could generate speculative tendencies. However, an increase of land prices to market prices in the project areas appears appropriate because it will thereby eliminate indirect subsidies to the tourism sector through the underpricing of tourism land. 1/ This problem was underestimated at the time of appraisal when emphasis was placed wholly on fighting land speculation. VI. FINANCIAL ASPECTS 6.01 The various infrastructure facilities are operated and maintained by the relevant agencies as part of their respective national systems. Sewerage, water, electricity and telecommunication charges and tariffs are established nationwide on the basis of the general financial policies of the agencies. The Bank is extensively involved in financing of water supply, sewerage and electrification projects (para. 1.04) and, through these projects has influ- enced such policies. 6.02 In accordance with the project agreement with SONEDE for the imple- mentation of the tourism infrastructure project, its water rates in the project areas were reviewed upon completion of an hydrogeological and water consumption study already being carried out at the time of appraisal. On December 19, 1978, a joint decree of the Ministries of Finance and of Agri- culture established a new national tariff structure with progressive tariffs for residential and industrial users (TD .068/m3 for the first 40 m3, TD .110/m3 for the next 30 m3 and TD .150/m3 for over 70 m3) and a flat tariff for tourist users (TD .220/m3). The establishment of progressive and/or seasonal rates for water for tourist users was discarded because it was con- sidered too complex to apply and economically insignificant, given the operating pattern of hotels in Tunisia. SONEDE's data on operating costs, including depreciation of capital investments, show that the selling price of water to tourist users in all project zones is in excess of the cost of water. 2/ Assessment of financial performance of SONEDE, including adequacy of operations and of tariff policy, was carried out on occasion of the PCR of the third water supply project, Loan 989, dated May 28, 1974. 6.03 Financial covenants for the sewerage and water pollution abatement facilities in the project areas called for the establishment of sewerage charges sufficient to cover all operating costs, including maintenance and provision for depreciation and renewal of the fixed assets. The presidential decree No. 78-972 of November 7, 1978, set the quarterly charges for tourism 1/ Cost of land for hotel projects in the tourism zones represented an average of 4% of total investment as against an accepted ratio of up to 10% in other zones and competitive destinations. 2/ The actual economic cost of water in Djerba/Zarzis according to recent KfW estimates appears to be considerably higher in the range of DT 0.400 per cubic meter. -16- users at TD 0.750 per connection and TD 0.085 per m3 of water consumed. Rates for residential and industrial users are TD 0.020 and TD 0.35 per m3, respec- tively. All charges are collected together with the water bill by SONEDE and remitted to ONAS. The present rates for residential and industrial users are not sufficient to cover fully depreciation and provide for the renewal of fixed assets. In the case of tourism users, the rates will probably meet the above requirements when tourism development in the various proje-t zones is complete. The latest assessment of the operation and the financial position of ONAS was carried out during a combined supervision mission of the first and the second sewerage projects (Loans 1088-TUN and 1675-TUN) in November 1980. With the assistance of the consulting firm SOTINFOR, ONAS is reviewing its present structure of sewerage charges. SOTINFOR will assist ONAS to improve and modernize its financial and administrative services. 6.04 The tourism infrastructure loan agreement does not include any specific financial covenant for the power and telecommunications components. This is due to the fact that the relevant facilities represent a marginal share of overall investments in the power and telecommunications sector in the project area and they are closely related to the additional requirements of each local network. VII. HOTEL DEVELOPMENT 7.01 The appraisal projected the opening of about 56,000 beds in the six zones during the 1972-81 period, of which 13,000 would be opened by the end of 1974, thus adding to the stock of "existing" hotels, leaving 43,000 beds, to be opened between 1975 and 1981, properly ascribable to the project as "new" hotels. Accordingly, allowing for capacity already in operation prior to 1972, there would be a total of 89,000 in operation by 1981. In fact, there were only 44,481 beds in operation in 1981. Of these, 8,151 new beds had been installed by 1981, in contrast with appraisal projection of 43,000. Even allowing for the delays in infrastructure implementation and thus extending the period for project-related hotel investment until 1985, only 58,065 beds are now projected to be in operation in the six zones (see Table 4). Thus, only 21,737 new beds may become operational by 1985, about one-half the appraisal's projection. This projection is based on the number of beds under construction or in the ONTT pipeline as of April 1981. Some of these projects in the pipeline may not materialize, particularly those scheduled for late in the five-year period, while others, not yet listed, may be added later. 7.02 There are probably several reasons for the discrepancy between appraisal projections and the actual performance until 1981 (and probably thereafter) for accommodation development. The appraisal based its pro- jections on a linear extrapolation of 1967-72 trends while, in the event, the hotel investment climate in the mid-1970s, following the 1973-74 energy crisis, became radically less propitious than previously. Once the investment climate improved, along with increases in tourist traffic in the late 1970s, and new investment decisions were made, the inevitable gestation delays meant that the resultant additional capacity did not become operational until 1979-81. In retrospect, the appraisal estimates were also optimistic concerning a sustainable high growth rate over an extended period of time. -17- Table 4: Present and Projected Accommodation Capacity in the Six Project Zones, 1981 and 1985 (beds) 1981 1985 Project Zone Appraisal Projections Actual Prospective Tunis North 5,700 1,140 5,260 Tunis South 5,200 2,129 2,129 Hammamet 35,000 18,299 22,575 Sousse 22,500 11,674 15,414 Djerba 14,700 7,549 8,999 Zarzis 5,900 3,690 3,690 TOTAL 89,000 44,481 58,067 7.03 Although the original appraisal targets were not met,the Sousse and Hammamet zones performed better relative to the other zones. This is explained by the fact that they were, and are, the two most developed zones and many investors prefer the security of locating in already proven destinations. Moreover, in the case of Sousse, a large-scale complex at Sousse Nord (including the Port El Kantaoui) had already been planned, and p rtially financed, by the mid-1970s and thus could be implemented without de ay. In ontrast, at Djerba the 2,500-bed complex of Dar Djerba was already under constXction at loan signature and was opened in 1974 and this substantial additional "existing" bed capacity has inhibited further investment since. At Tunis South, seasonality has discouraged large additional investments. Finally, at Tunis North, delays in infrastructure implementation also delayed hotel investment decisions, but now no less than 4,120 new beds are planned by 1985. 7.04 Under the project, AFT was established to prevent land speculation by acquiring land in the tourism zones and reselling it to hotel investors. How- ever, this agency was purposely deprived of any investment promotion role, a role which was assigned to ONTT, exclusively. This negatively affected the implementation of an aggressive sales oriented land acquisition policy. 7.05 It has been feared that the lack of trained personnel would constrain hotel development and the project therefore included funds for the study of an expansion in hotel training facilities. The subsequent hotel training project was financed by the Bank (Loan No. 1029-TUN, signed on July 17, 1974) and is now substantially completed (see relevant PCR). Thus, this potential con- straint on hotel development has in the main been eliminated. 7.06 Finally, the availability of hotel finance has fluctuated and occasionally inhibited investment. During the mid-1970s particularly, when there were considerable uncertainties as to the future growth of tourism in Tunisia, equity investors were looking to other sectors. At the same time, -18- the main Tunisian sources of hotel credit funds, BDET and COFIT, were both giving higher priority to otner sectors and/or were short of finance for hotels. However, since 1979 there seems to have been little shortage of equity funds for hotel investment while the outlook for obtaining loan finance from abroad may have improved. The large number of hotel projects recently submitted to ONTT's approval indicates an improvement in the investment climate and better prospects for further tourism development. VIII. ECONOMIC REEVALUATION 8.01 As in the appraisal, the economic reevaluation takes into account a larger program of investments (and related Denefits) than those specifically financed under the project itself. Investment costs include not only those of infrastructure works but also those of hotels, other tourist accommodations and other tourism enterprises, such as restaurants, recreational facilities and tourist shops, all made possible by the installation of the project's package of infrastructure. The benefits result from the additional receipts obtained from tourists. 8.02 In measuring cost and benefits, a distinction is made between exist- ing and new tourism facilities. The former are taken to be those in the six zones already in operation prior to 1976 on the assumption that these either existed before loan signature or were under construction, or that the invest- ment decision to construct them had been taken prior to loan signature. The reevaluation thus delays by one year, as compared with the appraisal, the date at which tourist facilities are regarded as "new" in order to take into account the early delays in project implementation. Furthermore, in order to reflect the gestation period for investments in hotels and other tourism en- terprises, the reevaluation includes all such investments in the six zones completed and ready for operation by the end of 1985, in contrast to the appraisal which expected such investments to be completed by 1981. Revenue and Cost Assumptions 8.03 Since investments in infrastructure included in the project have now been completed, their actual costs (rendered in 1980 prices) and their year- by-year phasing are now known. In addition, the costs of certain minor infra- structure not included in the project have been taken into account. On the other hand, while the appraisal included the cost of a desalinization plant at Djerba-Zarzis (estimated at TD 1.8 million 1973 prices), such a plant in the event was not needed because alternative water sources were subsequently found, and, accordingly, such a cost need not be included. Actual investment costs in hotels and other tourism facilities built between 1976 and 1980 (all rendered in 1980 prices), have been used, while known unit costs in 1980 prices have been used to calculate all such investments until 1985. For all investments associated with the project, necessary replacements were inserted into the cost stream. Furthermore, since each investment item is regarded as having a 25-year life, residual values are taken into account at the appro- priate future year for each item. Finally, all customs duties and taxes (calculated at 19% of total investment costs) have been excluded. -19- 8.04 The gross benefits are the receipts from tourists made possible by the project. (Since these receipts include payments for public utilities, the benefits to such utilities are thereby taken into account.) For "new" hotels in operation during 1976-80, the actual average bed occupancy rates for each zone are used. For "new" hotels starting operations from 1981 onwards, it is assumed that three years from the start-up of such hotel will be taken for bed occupancy rates to build up to the 60% actual average bed occupancy rate for all Tunisian hotels in 1980, namely 50%, 55% and 60% in the three successive years. For the "new" hotels in operation from 1976 or thereafter until 1980, estimates based on actual performance are made for gross revenues. For hotels after 1980, average bednight revenues in 1980 are used (TD 15 per night). Gross operating profits (or benefits net of operating costs) are calculated 26% of total revenues in the Hammamet and Sousse zones and at 24% at the Tunis North, Tunis South, Djerba and Zarzis zones, these percentages being based on recent average experience. 8.05 With respect to "existing" hotels and other tourist enterprises (all those in operation prior to 1976), the analysis assumes that without the proj- ect their occupancies would have declined because the absence of adequate infrastructure (particularly of sewerage to combat pollution) would have had an adverse impact on market growth. Thus, it was assumed that 5 percentage points of the occupancy in "existing" hotels resulted from the project and the gross operating profits (or benefits net of operating costs) were calculated on the same basis as for new hotels as described in the previous paragraph. 8.06 For gross tourist receipts outside hotels and other accommodations, the actual daily average of TD 6.5 in 1980 is used. This amount is applied to the actual total bednights until 1980 and the projected total bednights there- after. Gross operating profits (or benefits net of operating costs) are assumed to be 35% of total revenues for all zones. 8.07 Both the appraisal and the reevaluation exclude benefits to the local population of the investment in infrastructure and to this extent the economic return is understated. Also, the costs and benefits from international air travel and tour operations are likewise excluded in both sets of calcu- lations. However, whereas the appraisal assumed that these benefits would mostly accrue to foreign airlines and travel agents, in fact Tunisair and Tunisian-owned tour operators have expanded considerably since the early 1970s. Accordingly, the exclusion of these benefits probably leads to a further understatement"of the economic return. Economic Rates of Return 8.08 The reevaluat{on shows an internal economic rate of return of 22.7% on the total program of investments, considerably higher than the 16.3% calculated in the appraisal. This substantial improvement has come about as the result of a number of variations in the event from the appraisal assumptions. The additional beds now in the program total 21,737 instead of the 43,000 assumed in the appraisal. This represents a substantial reduction in investment costs but, on the other hand, since occupancies and hotel profitabilities are higher than appraisal projections, hotel benefits have not -20- been reduced in a similar proportion. Since the already sunk costs in the package of infrastructure physically would permit a much larger hotel capacity, additional hotel investments beyond those included in this analysis (if individually viable) would make a marginally greater contribution to the program than previous hotel investments. 8.09 As in the appraisal, the analysis was modified for an economic value of labor 25% below market wage rates and of foreign exchange 33% above the exchange rate. The resulting rate of return is 32.5%. This compares with 16.9% and 20.7% for shadow wage and shadow foreign exchange rates adjustments respectively in the appraisal (which did not present a calculation for the combined modification). 8.10 The analysis was tested for sensitivity to a 10% reduction in total gross operating profits from 1981 onwards. Such a reduction could result from lower occupancy rates than assumed, lower hotel prices, an increase in operating costs as percentage of revenues, or a combination of these factors. In this case, the rate of return would be 20.6% as compared with the best estimate of 22.7%. This diminuation is proportionally less than that in the appraisal (from 16.3% to 14.3%) because in this analysis, it has been possible to use actual gross operating profits for the 1976-80 period. 8.11 Because of the uncertainties concerning the benefits of the project to existing hotels (see para. 8.05) , these were reduced from 5 percentage points of occupancy to 2 percentage points. This results in a 17.6% rate of return compared with the best estimate of 22.7% (14.3% and 16.3% respectively in the appraisal). 8.12 It is thus demonstrated that for the worst likely future outcome of the project and associated program, the economic rate or return could be above both that projected in the appraisal and the opportunity cost of capital in Tunsia. 8.13 Separate rates of return were also calculated for each tourism zone. As compared with those in the appraisal, they are as follows (in %). Reevaluation Appraisal Tunis North 22.1 12.4 Tunis South 15.0 10.9 Hammamet 37.5 19.4 Sousse 21.4 17.4 Djerba 14.1 17.6 Zarzis 14.7 15.0 All 22.7 16.3 The reasons given in the appraisal for the different rates of return between zones included the differing characteristics of the hotel and tourist trade, -21- with respect to hotel category mix, seasonality and occupancy rates, and the differing extent of the infrastructure backlog at the outset. These factors certainly had some impact. However, the extent to which in each zone new hotels were, and are being, constructed in relation both to the required infrastructure investments and the quantity of existing hotel capacity are perhaps the most important factors. 8.14 For example, the rate of return in Djerba is lower than in the appraisal, because no new hotel capacity has been installed there, nor is any expected before 1984, while the infrastructure investment at US$13.91 million (or 25.3% of total project costs) was substantial. The main reason the rate of return, although the lowest, remains as high as it is (14.1%), is because the substantial number of beds (7,449) already existing in 1976 derived bene- fits from the project. On the other hand, the rate of return of Tunis South shows a substantial improvement because, although no additional capacity was in operation by 1980 and only 398 additional beds are forecast by 1985, infrastructure investment costs were comparatively low (US33.5 million or 6.4% of total project costs) while the existing hotel capacity was substantial compared with such costs. Likewise, Tunis North shows a substantial improve- ment in the rate of return even though there has been no additional capacity in the zone (whose perimeter has been reduced since appraisal) nor is any envisaged until 1985, also because the infrastructure investments were low (US$3.43 million, or 6.2% of total project costs) as compared with the benefits to existing hotels. Hammamet, already with the highest rate of return in the appraisal, shows the greatest improvement in the present analysis (from 19.4% to 37.5%) because there was the largest number of existing beds in the zone (at 15,833 beds, about half of the beds in all six zones), a substantial number of new beds (6,422) and modest infrastructure investment costs (US$12.7 million or 23.1% of total project costs) relative to the size of the existing and new hotel capacity. Foreign Exchange Earnings 8.15 Given a persistent foreign trade deficit and the prospect of Tunisia becoming a net importer of oil by 1986 (see para. 2.07), alternative sources of foreign exchange earnings are of high priority. The tourism sector already provides around 25% of such earnings (see para. 2.07) and the project and the associated program are providing substantial additional earnings so that the sector will probably increase the proportion it provides of all earnings and may well replace oil as the largest single source by the mid-1980s. 8.16 That additional gross foreign exchange revenues attributable to the program of infrastructure and superstructure investments is estimated (in 1980 prices and rates of exchange) at about TD 114 million, or US$276 million, in 1987 when all facilities have become fully operational. This is roughly the same amount as projected in the appraisal for 1984 (the year then scheduled for full operations), namely TD 125 million, or about US$287 million in 1980 prices and rates of exchange. 8.17 Allowing for operating costs in foreign exchange and annual debt service and profit repatriation on foreign investment, net foreign exchange earnings in 1987 are calculated at about US$212 million (in 1980 prices and rates of exchange), or 77% of gross earnings. -22- Employment 8.18 When in full operation, the program of investments will have generated about 8,700 additional permanent hotel jobs. This is substantially below the appraisal estimate of 12,500 such jobs because considerably less additional hotel capacity will have been installed (see para. 7.01). However, the program will have generated an additional 8,000 jobs in tourism enter- prises outside the hotels and a further 15,000 jobs in activities providing goods and services directly to tourism enterprises. Finally, substantial construction employment has been generated. IV. THE BANKS'S ROLE 9.01 Besides providing financial assistance, the Bank helped the Tunisian government to conceive and plan the tourism infrastructure development within the framework of a comprehensive sectoral approach. The Bank was also instru- mental in the enactment of legislation regulating the development of tourism land, the creation of the Agence Foncibre Touristique (AFT), and the setting up of a special unit for maintaining and operating the project sewerage faci- lities which eventually became the Office National de l'Assainissement (ONAS), which now has the responsibility for all sewerage facilities in Tunisia. 9.02 The need for Bank supervision during project implementation was relatively limited, because the Borrower was in general responsive to Bank advice. The main discussions between the Bank and the Borrower concerned the project composition at the time of the 1975 revision and, subsequently, the need to concentrate hotel investments in the tourism zones and avoiding sub- sidies in the selling price of tourism land. All discussions had a satis- factory conclusion and prompted specific government actions. 9.03 Because the project included different infrastructure facilities, the Tourism Department strongly relied on the assistance of other Bank project divisions for supervising the implementation of specific infrastructure works. Cooperation was smooth and effective although there were occasionally minor delays in the processing of bidding documents due to the temporary unavailability of staff. The participation of staff from the various project divisions in the appraisal was essential in ensuring continuity between appraisal and supervision. Moreover, the fact that the Bank made other loans for infrastructure developments, in addition to those comprising components of the tourism project, helped to ensure enhanced supervision and consistent and comprehensive policies. 9.04 In 1978, on the occasion of the discussion of a sector review report, the working relationship between ONTT and the Bank became strained because of different views on the potential economic returns from expanding beach hotel accommodation capacity. The sector report warned that existing accommodation capacity had unsatisfactory occupancy rates and that because of dilution effects on off-season tourism demand, an immediate capacity expansion would prejudice the overall financial and economic performance of the sector. -23- ONTT felt that, because of the seasonal structure of the Tunisian tourism market, capacity expansion would have only marginal effects on occupancy rates and consequently on hotel financial and economic performance. 9.05 From 1977 to 1980, accommodation capacity expanded very little (from 64,097 to 71,150) and occupancy rates increased dramatically (from 47.1% to 60%). To some extent, the increase in occupancy rates was due to the limited increase in accommodation capacity. But, there was also a rapid growth in traffic (averaging 16.5% annually) reflecting Tunisia's strong competitive position and, probably, an augmented marketing effort. However, restraining capacity growth has not had the effect of improving seasonality, as the 1981 sector review had suggested it might. The fact that the Bank suggested a slow-down in the development of accommodation facilities in 1978 and postponed discussions of a possible loan to COFIT for onlending to tourism investors was perceived as inconsistent with the Bank financing of the infrastructure project and in particular with Section 4.02 of the Loan Agreement which states that ". ..Borrower shall use its best efforts to provide the financial institution.. .with all appropriate means to finance hotel and tourism industry investments in the project zones. ..". However, a better understanding of the Bank's position and the nature of the sector mission's recommendations was achieved on the occasion of a subsequent Bank assessment of the tourism sector carried out in 1979. 9.06 The present situation of the tourism sector is most appropriate for external financial assistance to tourism financial institutions operating in the tourism sector. In 1979, the Tunisian government received financial assistance from Kuwait and is presently seeking additional assistance from other oil-producing countries. X. CONCLUSION 10.1 In retrospect the Bank's interpretation of the Borrower's sector priorities and problem was correct. The project appears justified in terms of general objectives and content as proved by the pivotal role in the country's tourism development as well as its higher than expected ERR (para. 8.08). The need to revise the size of the project in 1975 was mostly the result of unpre- dictable events on the international scene (para. 4.06). However, that revision could have been avoided by designing an initial project for a first phase of a planned overall development program. This is what ultimately happened following the project revision but with some waste of time and some inconsistencies in the various infrastructure investments. A phased approach was probably discarded because of excessive reactions to short-term market prospect as well as uncertainties in the actual financing of subsequent project phases. 10.2 The Bank's assessment of the Borrower's implementation capacity was accurate. ONTT and all other project executing agencies demonstrated the managerial and the technical skills needed to execute and operate the project facilities effectively. However, the Bank was too optimistic in assessing the amount of time that ONTT would require to overcome the organizational and procedural constraints related to the preparation of the land-use plan (para. 4.11) and to coordinate the activity of other project executing agencies (para. 5.03). -24- 10.3 As stated earlier in the report, the delays encountered in project implementation as well as the slow-down in the development of international tourism following the 1973-74 energy crisis resulted in a much slower than expected development of accommodation facilities in the project zones. Consequently, a comprehensive and final evaluation of the project needs to be postponed to a later stage when all hotels and other superstructure are in place and operational. However, it is already possible to formulate a number of observations: (i) Initial delays in project implementation could have been avoided by completing the preparation of the land-use plans for the project zones and advancing the preparation of final engineering for the project infrastructures before project appraisal. The recent Bank policy requiring completion of final engineering before Board presentation stems from similar problems experienced in many of the Bank's infrastructure projects. (ii) Comprehensiveness and a sectoral approach constitute the main feature of the project and make it a model of good planning. However, these goals could have been combined with a phased development process more responsive to the unpredictable development of tourism demand. This would have further enhanced the project's economic and financial returns through a better exploitation of the infrastructure facilities. (iii) Developing the project tourism zones through the subsequent densification of subzones would have better suited the operational requirements of the infrastructure facilities and the marketing needs of hotels. This strategy is being applied for the development of Sousse Nord, where a specific company was created to develop secondary infrastructure and accommo- dation facilities as well as to promote land sales. While the possibility of replicating the experience of Sousse Nord is limited to very few zones which present sizeable portions of contiguous vacant land (e.g., Djerba), the activity of AFT could be focussed as to achieve this objective in all zones. This requires an expansion of the AFT's present role in acquiring land and promoting its sale especially since AFT lost in July 1980 its preemptive rights. Several supervision missions have discussed this issue with the Government and found positive response. (iv) Project financing was limited to basic infrastructure facilities. In retrospect, it would have been preferable also to provide for solid waste collection and disposal, street lighting, municipal parks and equipped recreational areas. The project could have also tackled the problem of using treated sewerage water either for agricultural purposes or for garden- ing. ONTT is well aware of the above possible improvements and is planning their implementation jointly with the interested local and central agencies. -25- (v) The project description in the Loan Agreement was associated with a detailed listing of the project works and relevant quantities. Given the programmatic nature of the project and the long implementation period, it would have been preferable to have had a more general project description. (vi) In terms of goals and resource mobilization, the Tunisia tourism infrastructure project constitutes one of the most original and ambitious tourism projects ever implemented. The project's success will be measured in the coming five to ten years according to the actual growth of tourism accommodation capacity and tourist arrivals and revenues in the project zones. Environmental control and integrated physical and economic planning stand out among the major project achieve- ments and are instrumental to an optimal growth. To ensure that these achievements remain a lasting legacy of the project, it is essential that the institutions built for the project implementation stay at work and progressively shift from con- struction to monitoring and supervision activities. Government is aware of this need and is taking measures to this effect. -26- ANNEX 1 TUNISIA: TOURISM INFRASTRUCTURE PROJECT (LOAN 858-TUN; CREDIT 329-TUN) Bednights Registered in Project Zones (in '000) Zone 1979 1980 Tunis North 299 264 Tunis South 64 56 Hammamet-Nabeul 3,427 3,610 Sousse 2,601 3,001 Djerba 1,665 1,765 Zarzis 456 571 All Zones 8,512 9,267 Total Tunisia 12,017 12,792 % Six Zones 70.8 72.4 TUNISIA: TOURISM INFRASTRUCTURE PROJECT (LOAN 858-TUN; CREDIT 329-TUW) Evolution of Bed Capacity in the Project Zones (Number of beds installed at the end of the year) Project Zone Actual Prospective 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 Tunis North 1,140 1.140 1,140 1,140 1,140 1,140 1,140 1,140 1,140 1,140 1,140 1.140 1,140 5,260 Tunis South 1,731 1,731 1.731 1,731 1.731 1,731 1,731 1,731 1,731 2,129 2,129 2,129 2,129 2,129 Hamamet-Nabaul 12.017 14,604 15,136 15,833 16,153 16,153 16,640 17,134 17,410 18.299 18,949 21,085 21,635 22.575 Sousse 5,103 5,643 5.647 7,005 7,563 7.563 7,905 9,233 10,159 11.674 12,124 13.814 14,814 15,414 Djerba 5,488 6,982 7,449 7.449 7,549 7,549 7.549 7,549 7,549 7.549 7,549 7,549 7,999 8,999 Zards 1,750 2L20 2,360 3,172 3,72 3,172 3 3.172 3,172 3690 3 3 3 690 3 TOTAL 27,229 32,300 33,463 36.380 37,308 37,308 3 39,959 41.161 481 45.581 47,407 51,407 5, Ll Bed capacities in 1972 are occasionally different from those of the appraisal report because of Changes in the final perimeters of the tourism zones. H! -28- ANNEX III TUNISIA: TOURISM INFRASTRUCTURE PROJECT (LOAN 858-TUN; CREDIT 329-TUN) Project Costs by Component and by Zone (TD'000) Tunis Tunis m et Sousse Djerba Zarzs Total North South Administration 82 83 275 420 195 195 1250 /1 Studies 54 372 157 218 515 270 1778 /1 Land 30 70 200 120 400 130 950 Roads 339 966 747 1189 1273 1029 5543 Sewerage 926 - 4441 6160 812 935 13421/2 Water 140 345 - 1401 1700 1042 4628 Power 317 354 328 430 442 297 2168 Telecommunication 80 - 256 287 596 143 1362 Total 1968 2190 6404 10225 5933 4041 31090 /1,/2 /1 Total amount includes DT 192,000 f or hotel training and tourism incentive studies. /2 Total amount includes DT 136,000 for the construction of Radee experimental stabilization ponds. TUNISIA: TOURISH INFRASTRUCTURE PROJECT (LOAN 858-TUN: CREDIT 329-TUN) Percentage Distribution of Project Infrastructure Investments Between Tourism and Residential Use 1 Tunis North Tunis South Hammamet Sousse Djerba 2erais Tourism Residential Tourism Residential Tourism Residential Tourism Residential Tourism Residential Tourism Residential Roads 60 40 80 20 80 20 90 10 100 - 80 20 Sewerage 100 - - - 70 30 60 40 100 - 90 10 Water 100 - 100 - - - 100 - 80 20 80 20 Power 90 10 80 20 80 20 90 10 90 10 90 10 Telecommunication 100 - - - 80 20 100 * 90 10 90 10 L Tentative estimate based e the respective use of the Infrastructure facilities by the teertat and resident popalatie. '-i TUVISIA: TOUMISN IMUASTRUCT%a IPADCT (LOAAM 58-TN: CUDIT 329-TV1) Average Investment Cost Per Metal Room (TD) Reference date: Jxuuary 1.1981 Type of Expenditure Type of Acconndation Facility Site Works Construction F Lent- urniture & Fitures TOTAL Amount 1 Amount i Amount % Amount % Amount % 5* hotel L.C. 950 70 6,340 65 1,230 35 1,950 40 10,470 54 410 30 420 35 8O 65 02 9 46 Total 1,360 100 9,760 100 3,510 100 4,870 100 19,500 100 7 50 18 25 100 4* hotel L.C. 770 70 5,780 70 970 35 1,725 50 9,245 60 F 330 30 2480 30 8 65 150 _. 40 Total 1,100 100 8,260 100 2,790 100 3,450 100 15,610 100 7 53 18 22 100 3* hotel L.C. 410 70 4,280 70 710 35 1,480 60 6,880 62 y_ 175 30 30 65 995 40 4,20 38 Total 585 100 6,115 100 2,025 too 2,475 100 11,200 100 5 55 18 22 100 2* hotel L.C. 180 70 3,700 70 520 35 1,140 65 5,540 63 --L 80 230 3016- -( 970 _35 61 35, I.6 3w Total 100to 5,300 100 1,490 100 1,750 100 8,800 too 3 60 17 20 100 Pension L.C. 90 70 3,260 75 360 35 865 70 4,575 68 F 40 30 25 670 65 375 30 32 Total 130 10 4,350 100 1,030 100 1,240 100 6,750 100 2 65 15 18 100 Aparthatel L.C. 410 70 4,100 75 360 35 820 60 5,690 67 P 170 30 1,370 25 670 65 550 40 2,760 Total 580 100 5,470 100 1,030 100 1,370 100 8,450 100 7 65 12 16 100 Note 1: Investment costs comprise taxes including import duties and sales taxes on imported items (approximately 6.6% of the cost of the 3* hotel) Professional services are included in the various items and represent about 10% of the total cost. Cost estimates do not include physical and price contingencies, as well as the cost of land, utility connections, pre-opening expenses, and worklug capital. The latter group represents from 15%to 20% of the total average investment coat, Note 2: Investment costs for vacation villages are similar to those of the 3* hotel. -31- ANNEX VI TUNISIA: TOURISM INFRASTRUCTURE PROJECT (LOAN 858-TUN: CREDIT 329-TUN) Disbursements (US$ million equivalent) Actual Appraisal Estimate Fiscal Year/ Cumulative Cumulative Quarter Disbursements Disbursements % Total Disbursements Disbursements % Total 1973 3 0.8 0.8 3 4 0.9 1.7 7 1974 1 - - 0.6 2.3 10 2 - - 1.0 3.3 14 3 - - 2.0 5.3 22 4 0.2 0.2 1 2.0 7.3 30 1975 1 0.2 0.4 2 1.9 9.2 38 2 0.2 0.6 3 2.0 11.2 47 3 0.6 1.2 5 2.0 13.2 55 4 0.2 1.4 6 2.0 15.2 63 1976 1 - 1.4 6 2.0 17.2 72 2 0.2 1.6 7 1.9 19.1 79 3 - 1.6 7 1.4 20.5 85 4 2.3 3.9 16 1.3 21.8 91 1977 1 2.1 6.0 25 1.3 23.1 96 2 1.8 7.8 32 0.9 24.0 100 3 1.2 9.0 37 4 - 9.0 37 1978 1 1.0 10.0 42 2 3.7 13.7 57 3 - 13.7 57 4 - 13.7 57 1979 1 - 13.7 57 2 - 13.7 57 3 3.3 17.0 70 4 - 17.0 70 1980 1 0.8 17.8 74 2 1.8 19.6 82 3 0.4 20.0 83 4 0.4 20.4 85 1981 1 - 20.4 85 2 1.1 21.5 90 3 - 21.5 90 4 1.5 23.0 96 1982 1 0.9 23.9 99 -32- TUNISIA: TOURISM INFRASTRUCTURE PROJECT (LOAN 858-TUN: CREDIT 329-TUN) ANNEX VII List of Awarded Contracts Page 1 Contract Type of Contract Contract Procureuent Nationality Amount Procedure of Awardee Afrique Travaux Civil works 540;223,220 ICB Tunisian Colas " " 397.707,932 ICE Ali M"Hemi " " 490.412,699 ICE BCEOM Prof. services 2.275,142 French 60.200,00 FF SOMATRA Civil works 377.954,836 ICE Tunisian SABAG-SOTUDEF " " 281.731,670 ICE Tunisian Analemard " " 1.077.493,051 ICB French 5.285.134,00 FY SOKDE " " 9.351,388 Negotiated Tunisian SGREG " " 1.799.977,301 Negotiated French 4.217.415,17 FE STEG " 5.979,467 Negotiated Tunisian STE Prot. of Equip. 81.402,100 LCB Tunisian SOKATRA Civil works 122.683,307 LCB Tunisian Constantin Proc. of Equip. 14.781,175 LCB Tunisian SONEDE Civil works 5.141,288 Negotiated Tunisian SOCEA-Bonna Civil works/equip. 1.483.969,407 DT IC3 French 10.442,444,13 FF STEG Civil works 6.685,214 Negotiated Tunisian STEG " " 5,365,952 Negotiated Tunisian STEG " " 25.534,353 Negotiated Tunisian STEG " 14.976,733 Negotiated Tunisian ERAP Civil works/equip. 1.589.960,639 ICE French 13.481.044,00 FF! Bolinger Civil works/equip. 1.045,176,000 ICE Swiss 4.477,635,10 FS SONEDE Civil works 15.142,891 Negotiated Tunisian STEG " " 17.122,050 Negotiated Tunisian SPIE-Batignolle Proc. of equip. 793.971,730 ICE French 8.202,629,39 FF STEG Civil works 5.591,221 Negotiated Tunisian COVER " " 647.651,750 ICE Tunisian -33- ANNEX VII Paie 2 Contract Type of Contract Contract Procurement Nationality Amount Procedure of Awardee Planchet-Cometra Civil works/equip. 511.955,451 ICB French/ 1.822.588,40 F Tunisian STEG Civil works 17.602,670 Negotiated Tunisian STEG " " 26.997,015 Negotiated Tunisian SONCOLE Civil works 20.989,319 Negotiated Tunisian Bonna-Cogelec Civil works/equip. 489.992,032 LCB Prench/ Tunisian ONAS 216.000,000 Tunisian Alsthone Proc. of Equip. 198.300,00 FF Negotiated French ETERNIT Proc. of Equip. 59.346,369 ICB French 760.789,51 F E1 Anabib Proc. of Equip. 67.234,450 ICB Tunisian Pont I Housson " " 22.884,379 DT 549.495,31 7r ICB French Pont I Mousson " " 11.371.597,03 FF ICP French Ponderies Reunis 16.819,746 LCB Tunisian SOCEA Civil works 651.054,395 ICB French 1.359.043,14 FF Ban Zazia " 689.766,699 LCB Tunisian Brosettes Proc. of Equip. 12.048,524 LCB Tunisian SPIE-Batignolle Civil works/equip. 16.423,000 ICB French 498.718,00 FF Equipment Electrique Proc. of Equip. 21.216,000 LCB Tunisian Bouaguenda Civil works 208.625,307 LCB Tunisian Sogethel " " 64.625,935 LCB Tunisian SONEDE Proc. of Equip. 217.200,000 Negotiated Tunisian STEG Proc. of Equip. 107.400,000 Negotiated Tunisian Racaniere Civil works 42.257,450 LCB Tunisian Racaniere " " 13.764,540 LCB Tunisian STEG Proc. of Equip. 55.987,641 Negotiated Tunisian SOTEE Elloumi Civil works/equip. 49.736,890 Negotiated Tunisian STEG Proc. of Equip. 1.160.000,000 Negotiated Tunisian STEG Proc. of Equip. 128.341,956 Negotiated Tunisian TUNELEC Civil works 26.548,518 LCB Tunisian SACE Proc. of Equip. 24.707,15 US LCB Italian ATEM Civil works 105.000,000 LCB Tunisian STE " " 15.174,200 LCB Tunisian -34- ANNEX VII Parr I Contract Type of Contract Contract Procurement Nationality Amount Procedure of Awardee STEG Civil works 12.639,165 Negotiated Tunisian Paul Racaniere " " 36.622,693 LCB Tunisian SOCOS " " 33.504,500 LCB Tunisian SOCOS " " 12.798,240 LCB Tunisian STEG Proc. of Equip. 25.931,444 Negotiated Tunisian STEG Proc. of Equip. 17.980,450 Negotiated Tunisian SOCOS Civil works 16.582,250 LCB Tunisian STEG " " 12.419,575 Negotiated Tunisian France-Transpo Proc. of Equip. 299.118,00 FF ICB French EMB Civil works 23.113,625 LCB Tunisian STE " 91.919,440 LCB Tunisian STEG " 7.176,185 Negotiated Tunisian Pawels Intern'l Proc. of Equip. 663.860 BF ICB Belgian Cablerica de la Seine Proc. of Equip. 2.380.407,80 FF ICB French Standard Electrica Proc. of Equip. 354,460.00 US ICB Spanish Inoplast Proc. of Equip. 274.142,465 LCB Tunisian Ben Zazia Civil works 104.855,000 LCB Tunisian SAP Proc. of Equip. 3.729,000 LCB Tunisian Fonderies Reunis Proc. of Equip. 13.086,240 LCB Tunisian TED-INCO Civil works 168.110,500 LCB Tunisian Ben Said " " 98.439,608 LCB Tunisian Ben Sald " " 29.923,630 LCB Tunisian SCET/Intern'1 Studies 163.713,000 - French 1.148.870,00 FF ITALCONSULT Studies 83.146,000 - Italian 238.333,000 LI BCEOM-STUDI Studies 6.798,000 - French 45.518,00 FF SCET Intern'1 Studies 6,308,000 French 66.735.09 FF BCEOM-STUDI Studies 90.423,595 - French SCET/Interm'l Studies 82,921,825 - Trench 274.811,43 FT BCEGM-STUDI Prof. services 105.302,000 - French 1,664.200,00 FF BCEPM-STUDI Prof. services 5.180,000 - French 183.700,00 FF -35- ANNEX VII Page 4 Contract Type of Contract Contract Procurement Nationality Amount Procedure of Awardee Den Smaan Prof. services 9.019,000 Consultation Tunisian ONTT/Agriculture Studies 8.009,000 Negotiated Tunisian AEUD Prof. services 8,389,000 Negotiated Tunisian AEUD Prof. services 5,427,000 Negotiated Tunisian SOGREAH Studies 446,000 Consultation French 44.370,00 FF SOGREAR Studies 15.780,000 Consultation French 151.494,14 FF SOGREAH " 5.800,000 " French 245.437,44 FF SOGREAH " 9.700,000 " French 410.472,96 FF SONEDE " 14.911,350 Negotiated French SONEDE " 316.751,024 Negotiated French BIT " 39,100.00 US French Architecture- " 1.410,000 - French Urbain SOTUETEC-SETEC " 35.750,000 - French Economic 277.450,00 F7 TUNISLA: TOUR15M INFRASTRUCTURE PROJECT (OAN 858-TUN; CREDIT 329-TUN) Coste and Benefit Strea Suearyl (TD'000) Tunis North Tunis South Höfiammet Sousse D Mera Zarsie 1l Zones Year C W.O.1 1.. C W.O.B. N.. C , N.0.B .B. c 3.0.3. N.B. C N.0.3. N.B. C N.O.B. N.D. C N.O.B. N.. 1973 27.00 0.00 -27.00 61.00 0.00 -61.00 62.00 0.00 -62.00 117.00 0.00 -117.00 83.00 0.00 -8.00 72.00 0.00 -72.00 472.00 0.00 74 31.00 e.00 -31.00 51.00 0.00 -51.0 62.00 0.00 -62.00 136.0 0.00 -136.00 105.00 0.00 -10.00 100.00 0.00 -100.00 448.00 0.00 -o4. 75 36.00 0.00 -36.00 623.00 0.00 -623.0I 313.00 0.40 -548.00 0767.00 0.00 -157.00 397.00 0.00 -W97.00 298.00 0.00 -298.00 340.03 0.00 -74'.00 76 09.00 122.00 -67.00 266.00 136.00 -80.00 27.000 2045.00 34.70 39.00 15 15.00 -2413.00 7.00 809.00 -921.00 907.00 340.00 -567.00 9070.00 117•00 -700.30 77 270.00 122.00 -148.00 578.00 126.00 -392.00 2354.00 2106.00 -24. 20CMO 1439.00 -s6.00 1790.00 809.00 -981.00 1225.00 340.00 -935.00 KUo.CO 5002.0 -32.00 78 15.00 122.00 -26.00 309.00 186.00 -123.00 31.0 2316,00 -14.00 3331.00 140C0 -1923.00 979.00 809.00 -170.00 563.00 340.00 -243.00 34.00 51pi- -313.CO 79 73.00 122.00 49.00 292.00 1eå.O0 -106.00 3723.00 2971.00 -812.00 17.0 4 00 --:00 5?.00 01.00 240.00 520.00 340.00 -110.00 15243.00 .26.00 - -.00 1980 44.00 122.00 7.00 17.00 186.00 51.00 2275..00 3392.00 1007.00 609.00 4M96.00 -2273.03 943.00 80.00 -134.00 462.00 340.00 -122.00 0028.C0 974L.0 22.0 81 836.00 122.00 -714.00 1570.00 612.00 -950.00 452..00 443.00 -45.00 m310,u 66!.0 -,2.00 102_.00 807.00 -277.00 15073,0 896.00 -694.00 19,.00 135700 -63.00 82 219.00 122.00 -97.30 49.00 656.00 607.00 3310.00 5344.00 1034.10 4200.:0 74I?.%0 31-,.0 521.00 80L.00 224.00 242.00 951.00 709.00 ia,o012^2.0o 1.' 83 0.00 122.0 122.00 0,00 693.00 690.00 1433.00 7724.00 -6219.03 7522.0 9500.00 00 204.00 cc4.00 601.00 0.00 1006.00 1006.00 C.4~-5-.0 - 84 250.00 122.W -12W..0 3 . 69.0 379.30 022MC0 9.0 3i.3 3D9.00 10734.90 4525.0 017.00 12 .0 -3727.00 560.M 1000.00 446.00 0 910.00 85 23706.00 4130.00 -19176.00 7.00 698.00 691.C0 6294.00 10202.3 0 73.00 732.70 113.02 6077.0 50.0 2402.00 -311.00 04.00 11.00 192.00 42.00 .41.00 +:'.0 86 0.00 4981.04 490000 0 6930 691.00 3a.C0 12416.00 1Ml:. å0 ! 1204.00 10U3.00 22.00 2167.00 2545.00 14,00 1006.00 992.0 07;0,00 3! 2.0 3732,C 87 0.00 542.3 5425.00 7.00 695.C 690,00 31300 10:200 03215.3 0.:.) 1^12.00 113.0 22.00 274.00 2652.00 14.00 106.00 992.00 1245.03 322M0 3;1 2.00 88 0.00 5425.00 012.00 234.00 690.00 464.00 65/30 10.2300 99)1.0 1422. 0 2102.» 1074.00 94.00 2474.00 220.00 224.00 1006.00 782.00 26 '00 3,3-3 2,.03 89 250.00 5725.00 5175.00 326.0) 690.00 372.00 1613.00 1053.0» 6945.00 211,.00 121å2.00 I007.00 92700 2474.00 1539.00 596.00 1006.00 410.00 035.00 3233.00 2, .,3 1990 32.00 0425.0 392.00 7.00 6n.00 691.00 2233.0 101.00 32m5.00 13'. 0 12162.00 125.0) 152.00 2474,00 232.00 36.00 106.00 970.00 3217.03 3230 Q0.. 91 0.00 42.00 542M0 0.00 693,00 69M.13 666.00 102 902.0 777.23 120.00 112:.00 647.00 247,0 lV29.00 0.00 1006,00 1006.0 ?.0 23 3'2Eo0 92 3555.00 7C7.00 1873.00 0.00 693.00 073.33 1091.00 17023.0 9237.07 07202 12002.16M 111044tå,0 11114.00 043.00 24 000 000 00000 006.00 . 3 3300 1.0 93 0.00 74:5.00 5042.00 7,00 69L.00 691.00 331.00 10537.03 10227.20 011-63 o o S00 22.00 2,11M 2452.00 14,00 1006.00 992,0 1700.O 3 0 94 249.00 54.0. 5176.00 326.00 699.00 372.0 1063.00 0 0.00 0i00 2l-?.3 L162.00 SC33.0 86 .00 2474,00 1611.00 574,00 1006.00 432.00 33.0 3 . 0 95 0.00 54:5.00 015.00 234.00 67a.00 464.)0 657.00 1013.00 ? 10.00 I0M6.00162.00 10734.00 22.00 274.00 241.00 202.00 1c06.00 C04.00 2343.00 3"'L . 96 0.00 4.00 5C5.00 7.00 69G.N 691,00 726.100 9IMS)00 M2,00 0.0 2..0 10e.00 94.00 2474.00 2.2.0 3.00 1006.00 971.00 15-3,0 3223.00 00 3 97 0.M 5 C.W3 SS.M0 7.00 60.300 091.00 2 7. 50 10:I.S 0 107.M 1411.0 112162.00 105130 152.00 2474.00 2322.00 36.00 109.00 970.00 3V,.3 3:323.00 2 . .c9 98 32.0 42.00 53173.00 7.00 6?3.00 691.70 666.0 1c7,3.00 92'.0) 778.0 1-160.0 11334.00 717.00 2474.00 1757.00 36.00 100.00 97731, 3232.0 J,00 og 304.00 5425.00 1621.00 31.00 692.00 379.00 774,0 1023.00 ??'.00 2472.0 12162.00 9690.0 1623.00 2474.00 186.00 2420.00 1006.00 -1414.00 . 32323.00 21036 00 2000 0.00 .421.0 55.70 7.00 8.0 61M.00 -19.00 10 . 1.3.0 -1720.00 w21U;.7- 1392.00 22.00 24704.00 2452.00 0.00 1006.00 Icos, 30 -1737.10 3233.00 3ý7.90 01 0.00 WN3 I3 5103.D 0.00 512.00 512.00 21.00 M3,0L00 8332.00 212.00 U07o.M 103?. -1002.00 1265.00 2073.00 0.00 06.00 105.00 -775.00 761-0.00 2 .0 02 0.00 53.0 53.0.00 207.00 512.00 3IS.D0 21.00 EU7-c0 0921 1 274.m 10571.0 9247.00 -30.00 1E.00 17D.30 1870.00 107..00 -e41.00 3n6.00 27i10.00 2'74.00 03 0.00 13D3.00 5303.00 -19.0 512.00 531.00 -tO.00 7674.00 7860.01 95.00 1¢3.00 93.00 -26.00 100W.00 03.00 -37.00 1006.00 1043.00 -163200 26K23.00 20.1 0 04 249.00 5023.90 5004.00 243.00 512.00 239.00 2676.00 6982.00 4220.C -643.00 7C34.00 U10 -876.0 18..00 2741.00 -15.0 1006.00 1021.00 1654,00 23672.00 210.35 05 3804.00 5303.00 1499.00 -19.00 512.00 531.00 -607,00 631.00 6920.00 -00o.00 653.00 31:t.03 -637.00 65.00 2752.00 -518.00 1006.00 1524.00 318.00 21452.00 21134.00 06 0.00 5303.00 5303.00 -625.00 512.00 1137.00 -623.00 5983.00 6606.00 -2844.00 41.M 7 112.00 -862.00 1.65.00 2727.00 -15.00 1006.00 1021.00 -4969.0 18937,00 237)6,00 07 0.00 5303.00 5303.00 19.00 0.00 -19.00 -5603.00 43104.00 9917.00 -1704,00 3674.00 S37T.00 -36.00 1E61.00 l. 00 -37.00 0.00 37.00 -7361.00 11156.00 22517.0 08 0.00 5303.00 5303.00 0.00 0.00 0.00 1629.00 3415.00 178U.00 -2901.00 1437.00 43.00 -34.00 184.00 1901.00 0.00 0.00 0.00 -1303.00 12065.00 03376.00 09 249.00 5303.00 5054.00 319.00 0.00 -319.00 1507.00 20s8.00 581.00 -556.00 9C4.C0 1140.00 -820.00 1B4..00 2685.00 0.00 0.00 0.00 6^9.00 10240.00 9t41.00 2010 -942.00 5303.00 147a5.00 0.00 0.00 0.00 0.00 1344.00 1344.00 -2206.00 1811.00 4017,00 -2203.00 348900 2409,00 0.00 0.00 0.00 -13891.00 9744.00 23415.GO 1 Titurea are net of taxes and expreased In December 31. 1980 Tunisla Dinmre. C - Cost21 M.0.1. - get Operatin3 åenetite; .B. - det senefit (LOU 8%-1U CUEMT $29-TIMQ cenrtle p~elet Tch.dml8 • 43 CA Q15 QlI G17 914 419 911 Q25 QEF 27 Qfg Apprt.l1 Actual ------------ App.rataI kam- - *- - - Tao - APPraisål A pp ra t I- --e l - - - - m ril. Dig- Apprai a l U I r c T d a21cu 7 91 L å ftC IT- Apretal Aa.mal ....______.__..._ Appraise1 11101,701,0 * 1-4 ( '.00) u l7 3,2.1,,4.4 Appr.as1 2110 3774 3R.o 810.f 11 231 25 in1 15g1  TUNISIA TOURISM PROJECT JEA ri - - -.-4Q.BON - - D E1B .. - - r-. . . ( /-. oad * - ft-!oL.ke hh 4 -'t-rtV --ec Z ne ANU AR B ~fE F- j2 RD ju~~ 4- 7 L iM ~ir.lerriational Boundories "A U Y 7 2 -- C -