Algeria - Transport Technical Assistance Project

Document of The World Bank Report No: 22501-AL PROJECT APPRAISAL DOCUMENT ONA PROPOSED LOAN IN THE AMOUNT OF US$8.72 MILLION TO THE PEOPLE'S DEMOCRATIC REPUBLIC OF ALGERIA FOR A TRANSPORT TECHNICAL ASSISTANCE PROJECT July 13, 2001 Finance, Private Sector and Infrastructure Middle East and North Africa Region  CURRENCY EQUIVALENTS (Exchange Rate Effective December 2000) Currency Unit = Algerian Dinar (AD) ADI = US$0.013 US$l = AD75 FISCAL YEAR January 1 -- December 31 ABBREVIATIONS AND ACRONYMS AA = Air Algerie BA = Banque d,41#grie (Central Bank of Algeria) BAD = Banque Algerienne de Developpement CAS Country Assistance Strategy DAC = Direction de I 'Aviation Civile DEP = Direction des Equipements Publics DFE = Direction des Finances Exterieures EGSA = Etablissement de Gestion des Services Aeroportuaires EMP Environmental Management Plan ENNA = Entreprise Nationale de Navigation Aerienne EPE = Entreprises Publiques Economiques ERR = Econornic Rate of Retum FMPM = Financial Management Procedure Manual FMR = Financial Management Report FMS = Financial Management System FS = Financial Statement GDP = Gross Domestic Product GEF Global Environment Facility GOA = Government of Algeria HSCP = Holding Service, Chimie et Pharmacie IBRD = Intemational Bank for Reconstruction and Development ICR Implementation Completion Report IDA = International Development Association IGF = Inspection Generale des Finances LIL = Learning and Innovation Loan MIS = Management Information System MoT = Ministry of Transport MPCR = Ministere de la Participation et de la Coordination des Reformes MPW Ministry of Public Works NGO = Non-Govenmnental Organization NPV = Net Present Value PIP = Project Implementation Plan PMR = Project Management Report PMU = Project Management Unit PPI Private sector Participation in Infrastructure PTAP = Privatization Technical Assistance Project SA Special Account SIEGA = Societe d'Exploitation et de Gestion Aeroportuaire SNTF = Societi Nationale des Transports Ferroviaires SOE = Statement of Expenses TA = Technical Assistance TOR Terms of Reference Vice President: Jean-Louis Sarbib Country Manager/Director: Christian Delvoie Sector Manager/Director: Emmanuel Forestier Task Team Leader/Task Manager: Michel Loir  ALGERIA TRANSPORT TECHNICAL ASSISTANCE CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key performance indicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2 2. Main sector issues and Government strategy 2 3. Sector issues to be addressed by the project and strategic choices 5 C. Project Description Summary 1. Project components 6 2. Key policy and institutional reforms supported by the project 7 3. Benefits and target population 7 4. Institutional and implementation arrangements 8 D. Project Rationale 1. Project alternatives considered and reasons for rejection 10 2. Major related projects financed by the Bank and other development agencies 10 3. Lessons learned and reflected in the project design 11 4. Indications of borrower commitment and ownership 11 5. Value added of Bank support in this project 11 E. Summary Project Analysis 1. Economic 12 2. Financial 12 3. Technical 12 4. Institutional 12 5. Environmental 13 6. Social 13 7. Safeguard Policies 14 F. Sustainability and Risks 1. Sustainability 15 2. Critical risks 15 3. Possible controversial aspects 15  G. Main Loan Conditions 1. Effectiveness Condition 16 2. Other 16 H. Readiness for Implementation 16 1. Compliance with Bank Policies 17 Annexes Annex 1: Project Design Summary 18 Annex 2: Detailed Project Description 21 Annex 3: Estimated Project Costs 38 Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 41 Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summary 42 Annex 6: Procurement and Disbursement Arrangements 43 Annex 7: Project Processing Schedule 57 Annex 8: Documents in the Project File 58 Annex 9: Statement of Loans and Credits 69 Annex 10: Country at a Glance 61  ALGERIA TRANSPORT TECHNICAL ASSISTANCE Project Appraisal Document Middle East and North Africa Region MNSIF Date: June 26, 2001 Team Leader: Michel A. Loir Country Director: Mr. Christian Delvoie Sector Director: Mr. Emmanuel Forestier Project ID: P072458 Sector(s): TP - Ports & Waterways, TU - Urban Transport, TY - Other Transportation Lending Instrument: Technical Assistance Loan (TAL) Theme(s): Transport Poverty Targeted Intervention: N Program Financing Data [X] Loan [ 3 Credit [ Grant [] Guarantee 1 Other: For LoanslCredits/Others: Amount (US$m): 8.72 Proposed Terms (IBRD): Fixed-Spread Loan (FSL) Grace period (years): 5 Years to maturity: 14.5 Commitment fee: 0.85% for first four years; 0.75% Front end fee on Bank loan: 1.00% thereafter Financing Plan (US$m): Source Local Foreign Total BORROWER 1.56 0.93 2.49 IBRD 0.00 8.72 8.72 FOREIGN SOURCES (IJNIDENTIFIED) 0.00 0.04 0.04 Total: 1.56 9.69 11.25 Borrower: PEOPLE'S DEMOCRATIC REPUBLIC OF ALGERIA Responsible agency: MINISTRY OF TRANSPORT Address: 119 rue Didouche Mourad, Alger, Republique Algerienne Democratique et Populaire Contact Person: Mr. Ali Akrouf, Conseiller du Ministre Tel: 213 2174 75 22 Fax: 213 21 29 23 60 Email: Contact Person: Mr. Ali Akrouf, Chief of the Project Management Unit Tel: 213 21 74 75 22 Fax: 213 21 74 75 23 Email: aa520822@yahoo.fr Estimated disbursements (Bank FYIUS$m): FY 2002 2003 1 2004 2005 2006 Annual 2.64 4.10 1.78 0.20 Cumulative 2.64 6.74 8.52 8.72 Project implementation period: Decembre 2001 to December 2004 Expected effectiveness date: 12/31/2001 Expected closing date: 06/30/2005 O:S PAO F-n MR,e h -D0 - -  A. Project Development Objective 1. Project development objective: (see Annex 1) The Transport Strategy Note, which the Bank forwarded to the Govermment of Algeria (GoA) in January 1999, outlined the need to modernize and expand transport services and systems, and to improve the integration of transport modes. The Project development objectives are therefore to: * set up a policy and institutional framework that will facilitate private participation in infrastructure (PPI); * demonstrate the viability of mainstreaming transport concessions through successful launching of two schemes, one as a Build-Operate-Transfer (BOT) for the Algiers subway, the other as a concession to operate part of the port of Djendjen; * strengthen GoA's capacity to manage and regulate the transport sector; and * rehabilitate the railways so that they contribute to better and more cost efficient transport of people and freight nationwide. 2. Key performance indicators: (see Annex 1) * Private sector participation in port services delivery effective by 2005. * New port and airport PPI schemes launched by 2005 respectively covering at least 1 million tons (mt) of general cargo and over 500,000 passengers. * Over 25% of international air traffic liberalized and urban transport in Algiers fully funded by 2005. * Combined rail market share of over 15% by 2005. B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: R96-15 [Rev.] Date of latest CAS discussion: 02/27/96 A new CAS is under preparation. The January 1999 Transport Sector Strategy Note and the ongoing dialogue between the Bank and the Government of Algeria have identified issues that are critical bottlenecks to the liberalization of the transport sector, itself necessary to achieve faster economic growth and deeper integration with the global economy 2. Main sector issues and Government strategy: Sector issues The transport sector operates under burdensome managerial, operational and financial structures developed under the former centralized and socialist political system. The transition to a market-oriented economy driven by private investment, which is at the heart of the GoA's new strategy, calls for drastic changes in the way transport is organized and resources are allocated. A review of each sub-sector is given in Annex 2, and a description of key issues provided below. * Sector policy definition. Strategies for most transport sub-sectors have yet to be formulated along founding principles of GoA's new policy. While private sector involvement is emphasized, there is no legal or regulatory framework in place to provide assurance to, or guarantee the rights of, private investors. For instance, trucking and urban transport experienced an explosion of services provided by the private sector, however, improper regulations caused market failures, which hurt both the user and the provider. While ports and airports are being opened to the private sector, a lack of clear regulations might limit the quality of investors. Also verified in other subsectors, the influence of cumbersome management systems of the past still pervades railway policies with a - 2 -  negative impact on productivity (the overall railway market share has fallen to below 10%). In general and all too often in the past, sector policies have been focused on serving the interest of public monopolies in operation. * Limited private sector participation. In ports, the Entreprises Publiques Economiques (EPEs) run practically all services (private activities are limited to ship handlers, freight forwarders, cargo handling on the land transport interface), and the same is true of the country's airports, managed by Etablissements de Gestion des Services Aeroportuaires (EGSAs). While the Societe Nationale des Transports Ferroviaires (SNTF) did unbundle part of its special rail services, they remain wholly owned subsidiaries or joint ventures with railway users in the public sector. In air transport, Air Algerie (AA) is in competition with local private airlines on domestic routes, but is the exclusive carrier on main international routes. * Limited competition in the market. This is the direct consequence of too many public monopolies still in place. However, there are a few cases where public enterprises lost their monopolies including in urban and air transport. But, even in such cases, the competition is subdued. Private firms are barred from entering specific markets (for instance Etusa for urban bus transport within Algiers), sometimes because they are lucrative (AA faces competition only on the domestic market where 60% of its total flying hours only yields 15% of its total revenue). * Weak financial status. Most transport services are deemed public in nature and special constraints bear on providers which are not fully compensated. Together with a lack of strong incentives to raise productivity, it maintains a climate conducive to financial weaknesses especially for railways and urban transport companies and the Government must bear the burden of costly financial restructuring plans. Infrastructure investments are also subject to periodic squeezes since their sources of financing comes primarily from the GoA budget, which has been hard hit by the recent economic crisis. This partially explains why the quality and coverage of transport infrastructure is limited and this again has a negative impact on operational performance. - Misconstrued investment priorities. Central planning has often led to suboptimal allocation of budget resources. Ill-timed decisions and poor coordination of complementary investments have perpetuated poor performance and missed economic opportunity. Past railway investments are a good example of misallocated resources. Over the last ten years, close to US$5 billion of public funds were channeled to the railways, however rail market shares continued to decline. There is also insufficient coordination between the Ministry of Transport (MoT) and the Ministry of Public Works (MPW), with the latter generally in charge of infrastructure development planning and endowed with the corresponding budget. * Limited capacity to implement investments. Weaknesses in the local consulting and contracting industry are partially due to the large presence of dominant public firms, and these public entities often have difficulties responding to the needs of projects as they evolve. A burdensome budgetary process affects disbursement of public funds. Two large projects exemplify this issue: (a) the construction of a 12 km metro line, which began in 1990, is only one third through completion; (b) the construction of the terminal building at Algiers airport was halted a few years ago, and now requires some US$100 million to be completed. * Widespread overstaffing. This is an endemic problem for most public transport enterprises. In some cases, shrinking business has exacerbated the issue. For instance, Air Algerie has a fleet of some 40 aircraft but employs some 8,300 staff. The ailing shipping industry still employs about 8,000 staff and, even after the loss of 4,000 jobs over the last four years, some 12,500 employees still work for the railway company, a number which grossly exceeds needs. The Government strategy The GoA's strategy for the sector as outlined in a Note issued by the MoT in April 2001 is to modernize and expand transport infrastructure and raise private foreign and local capital in support of this goal. For - 3 -  commercial services, the objective is to privatize remaining public enterprises and encourage competition in the market. For public goods or services, private sector participation will be sought under concession contracts. The new strategy is based on a clear understanding of the issues described above and on the realization that, with a need to reduce the budget deficit and to mitigate the social impacts of moving to market-based policy, there will be fewer budget resources available for infrastructure investments, given the priority assigned to social goals. What the GoA feels should be clarified is the way to handle the increasing demands from prospective investors and select those that are good for the country in a long term perspective. International expertise will be sought to guide and implement the transport strategy. GoA has resolved to: * Create an institutional framework conducive to PPI. In acknowledgment of flaws that even recent laws have carried over (for instance: Law 98-05 of June 27, 1998 for ports and shipping; or Law 98-06 of June 27, 1998 for civil aviation), amendments have been passed in December 2000 by the National Assembly. * Widen the scope of competitive transport markets: the land transport law is also being revised to, among other things, eliminate monopolies. In air transport, signing of the Yamoussoukro Agreement creating an open sky all across Africa in November 1999 shows a willingness to liberalize markets beyond trucking and intercity bus transport. Competition is expected to lead to better and more cost-effective services across the transport sector. 3 Opening the equity of public enterprises to private investors. 3 Tap local dynamism by decentralizing government responsibilities to the new port organization and by the proposed reorganization of urban transport management in Algiers. a Develop regulatory capabilities that fit the circumstances of each sub-sector so that private activities do not work against the common good. International standards will apply. - Streamline investment planning: while the GoA is not necessarily after reducing its contribution to transport, it wants to ensure that wherever public funds are channeled, they are put to efficient use. In that regard, rehabilitating the railways is of the highest priority. 3 Mitigate negative social impacts of reform by seeking to minimize staff redundancies through retraining, redeployment of the labor force, controlling tariffs in markets where segments of the population are socially vulnerable (urban transport for instance), and, as a last resort, funding severance plans. The Government has embarked on a privatization program of the more than 400 State-owned EPEs. A new privatization law, amending the 1995 privatization laws, is under preparation and the Government is expected to adopt a new privatization program encompassing 120 medium and large EPEs at the same time. This program is being prepared by the Ministere de la Participation et de la Coordination des Reformes (MPCR), which will also be in charge of its implementation with the help of the new privatization agency. The Bank Privatization Assistance Learning and Innovation Loan (LIL) approved in July 2000 is supporting this policy, which covers transport public enterprises. By paving the way to private operations and investments on public land, the proposed TA project is an indispensable complement to the LIL. Overall, the GoA transport strategy is adequately focused and designed, and largely in agreement with the Bank recommendations. Views may marginally differ on the speed with which the transition should proceed (unbundling of port EPEs for instance) or on transport as a public service, but the right goals are set and the GoA has engaged in dialogue with the Bank which will, with tirne, broaden the consensus on how to reach these goals. -4 -  3. Sector issues to be addressed by the project and strategic choices: The above-mentioned Bank transport strategy note, the seminar on infrastructure concession held in Algiers on June 10-1 1, 2000, and the mid-July high level meeting between the Bank and the Government to discuss the future of Bank assistance to Algeria helped sharpen the proposed strategy and identify focal points for Bank assistance to the transport sector. Main sector issues are addressed by the project which will: * establish an appropriate policy framework for PPI in ports, airports and the Algiers subway; * restructure a defective organization of urban transport which, in Algiers, could undermine the success of the subway; * strengthen regulatory capabilities that are now ill-suited to handle the challenge of PPI and private sector development; * correct railways inefficiencies that drain the GoA budget; * address the marginal impact to date of trade facilitation initiatives. Strategic choices focus on helping the GoA define and implement an appropriate PPI framework, build needed regulatory capabilities, reorganize urban transport, and turn around SNTF. The sector background where the strategy is rooted is given in annex 2 and summarized hereafter. * In ports, the Law 98-05 of June 25, 1998 and the Executive Decree of August 18, 1999 set the stage for an in-depth port reform that the project will help implement. The strategy is to: (a) support the installation of three new Regional Port Authorities; (b) advise the GoA on drafting the detailed legislation in order to set up a concession framework conducive to PPI; (c) develop port regulatory capabilities at the MoT; (d) harmonize national port development by financing a Strategic Plan; (e) provide a new impetus to trade facilitation actions; (f) develop a private sector participation blue print, port by port and service by service; (g) prepare concessioning of part of the Djendjen port. - In airports, the primary objective is to create a policy framework for development of airport concessions, and ensure that the parallel concessioning of the Algiers terminal building is consistent with maintaining the operational and financial integrity of the national airport network. The secondary objective is to build airport regulatory capabilities. The outcome of the TA project is to broaden the scope of airport concessions by identifying those in isolation or in clusters that could be offered to prospective bidders. * In air transport, the Project will support GoA's liberalization strategy. There is a compelling need to harnonize the pace of AA's privatization and liberalization of the intemational air transport market. The TA project will address this need by informing and providing guidance to the Direction de l'Aviation Civile et de la Meteorologie (DAC) in its upcoming negotiations of air transport agreements with foreign countries. The focus will be on adapting regulations and building regulatory capabilities, and on setting forth a strategy for development of the national air transport industry in a competitive market. * In rail transport, the Bank carried out an in-depth diagnosis of the sub-sector which concluded that (a) SNTF lacked autonomy; (b) public service obligations were imposed on the company without proper financial compensation; (c) investment choices did not rely on solid economic justifications; (d) maintenance failed to cover needs resulting in low rolling stock availability rates; (e) the financial functions were weak, from general accounting to costing; (f) the marketing policy lacked selectivity; (g) the service and work subsidiaries had little incentive to live up to their potential; and (h) human resources management lacked dynamism. The project will seek to create a new legal framework for railway management and operations; streamline management of persomnel, finances and maintenance; define a strategy for modemization of telecommunications; develop public-private partnerships for infrastructure development and upgrading; and pursue other privatization opportunities for non core services. -5 -  * In urban transport, one of the GoA priority is to complete the Algiers subway system. The project will make sure that when it starts, the subway will operate in an environment that sustains it. The project strategy is to develop such an environment and build an organization with the capacity to plan and coordinate the various transport modes, to fund investmnents and public service obligations and make for financially sustainable public transport. The project has a broader scope than the subway itself, and while limited to Algiers, it will develop an organizational blueprint that could be replicated elsewhere. In short, the project will (a) assist in setting up a management authority in the Greater Algiers; (b) study future mobility needs and devise a transport master plan; (c) adapt the traffic plan to alleviate current constraints; (d) diagnose air quality as a starting point of broader follow up action toward curbing transport pollution. C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): There are five components under the proposed project plus one dealing with the project financial management system. Costs are net of taxes. Component I - Ports. The port component is designed to (i) implement an institutional framework for better public planning, land management and regulation, while opening the delivery of services to private sector participation under competitive conditions; and (ii) support concessioning of international transshipment activities within the port of Djendjen. Component 2 - Airports. The airport component is designed to: (i) adapt the national airport policy framework to create conditions of financial sustainability and allow for new airport concessions; (ii) ensure an harmonious integration of the Algiers airport in the new framework; and (iii) develop local regulatory capacities. Component 3 - Air transport The air transport component is designed to: (i) update the national strategy to liberalize international air transport and assist DAC as needed in upcoming negotiations with foreign nations of air transport treaties; (ii) develop a regulatory framework consistent with the strategy; (iii) strengthen regulatory capacities and train staff to that effect. Component 4 - Railways. The railway component is designed to: (i) restructure SNTF to be more competitive and financially sustainable; (ii) build staff skills particularly in areas of finance and marketing; and (iii) prepare a core investment program in support of the rehabilitation strategy. Component S - Urban transport The urban transport component will: (i) set up an autonomous management and regulatory authority in the Greater Algiers and create conditions for harmonious development and adequate funding of public transport, including the future subway system; and (ii) support concessioning of this subway system. Component 6 - Project financial management. This component will ensure that the project's Financial Management System (FMS) complies with the Bank's requirements for administration, reporting, and transaction recording. A quarterly Project Management Report (PMR) will be submitted based on reliable and timely recorded infornation. A consultant will be hired to set up the FMS and develop appropriate software (its cost will be financed by the Bank loan). Office equipment needed to run the FMS will also be purchased and financed from local sources. - 6 -  indicative Bank- % of Component Sector Costs %h of financing Bank^ WUS$M) Total (US$M) financing 1. Ports TP 2.48 22.0 2.09 24.0 2. Airports TV 0.40 3.6 0.34 3.9 3. Air transport TV 0.57 5.1 0.49 5.6 4. Railways TW 3.76 33.4 2.90 33.3 5. Urban transport TU 3.90 34.7 2.79 32.0 6. Project financial management BF 0.05 0.4 0.02 0.2 Total Project Costs 11.16 99.2 8.63 99.0 Front-end fee 0.09 0.8 0.09 1.0 Total Financing Required 11.25 100.0 8.72 100.0 2. Key policy and institutional reforms supported by the project: Given that much in the project content is about implementing reforms already adopted by the Government, there are just four areas where local consensus has yet to be built. 3 Creation and empowerment of an urban transport authority in major cities starting with Algiers. Design and implementation of reforms in urban transport will require close cooperation between the Wilaya and MoT. The TA project will seek to foster this cooperation and answer technical and fmancial questions associated with the urban transport reform, and act as a consensus building mechanism. * Railway reform. The Government is concerned about the current status of the railways and intent on their restructuring. There might be resistance by those who view railway services as a public responsibility. Therefore, the project will particularly aim at creating conditions for a consensus to emerge and for good communication with all stakeholders. * Air transport liberalization. It will have to be founded on the principle of equal treatment for all airlines both on the domestic and the international markets. * Elimination of excess labor in transport. Excess labor inflates costs and discourages PPI. This will remain the case as long as a comprehensive staff reduction plan is not formulated. A risk exists that PPI through providing market access to new competitors will give newcomers an edge over former monopolies facing labor issues, causing the latter to go bankrupt and resulting in large scale lay-offs. Project activities will raise awareness of those issues and advise on the most effective ways to handle them to best mitigate social transition costs. By the project's mid-term review (MTR), the impact of social issues will have been determined, along with an outline and costing of various social plans. These activities could be launched as a follow up to the technical assistance project. 3. Benefits and target population: Generally, the population at large will benefit from reforms implemented under the project. The coverage and frequency of services for transporting people and freight would improve. Taxpayers will eventually bear lower transport subsidies when the project's new policies are implemented, since private capital will be a partial substitute for public investment funds, and the financial rehabilitation of the railways will also reduce the need for budget support. More broadly, the proposed project will generate substantial benefits that will pervade the economic system. By its nature, this operation does not warrant a cost benefit analysis. -7-  4. Institutional and implementation arrangements: The project will be implemented by an adequately staffed Project Management Unit (PMU) located within MoT. The PMU will be headed by a staff at director's level who will coordinate project activities and provide advice and guidance to representatives of the various transport sub-sector directorates, and SNTF on project-related matters. The director will be assisted by a financial manager and an administrative officer, who will be in charge of the financial management and procurement activities of the project respectively. PMU staff will be accountable for establishing an adequate FMS, including interaction with MoT's budget department and the Banque AIgerienne de Developpement (BAD), and for monitoring and reporting. The establishment of the PMU and appointment of its staff is a Condition of Board Presentation. The MoT is familiar with Bank procedures on project implementation, as it was the executing agency for the Third Ports Project, which closed on June 30, 1998, and the Algerian component of a regional GEF project. Risks of management failures by the unit are therefore minimal. In order to steer project implementation toward meeting its goals and to monitor the work done by the PMU, a Coordination and Steering Committee will be set up by effectiveness and headed by the Secretary General of the Ministry of Transport. It will include representatives from other ministries involved in the project, as well as participation from the Algiers Wilaya. In order to provide needed authority and impetus to the establishment of an Urban Transport Management Authority for the Greater Algiers area, a task force comprised of senior staff from the Wilaya, the MoT and the Ministry of Finance will be established and empowered to pilot studies, draw conclusions and present reconunendations for decision by the Council of Ministers. The establishment of the Task Force and nomination of its members are Conditions of Disbursement under the urban transport component. All contracts will be approved by the PMU. However, its various correspondents in specialized directorates within the Ministry of Transport, including port, civil aviation, land transport and urban transport directorates, and at SNTF, will, under the guidance of the PMU manager, have delegated responsibility to prepare tenders, and negotiate and execute contracts. Specific coordination arrangements will also be needed with the Ministere de la Participation et de la Coordination des Reforrnes (MPCR) regarding the privatization of transport enterprises (e.g. AA; port EPEs). MPCR is the executing agency for the Privatization Technical Assistance Project (PTAP) and has its own project unit which is familiar with Bank procedures. Implementation arrangements, including those related to procurement, financial management and disbursement, will be included in the Project Implementation Plan (PIP) submitted in draft as Condition of Negotiations. The final PIP will be submitted as a Condition of Effectiveness. Project Financial Management System (FMS). A review and assessment of the FMS of the MoT, and the set up of the FMS of the project are detailed in Annex 6 and summarized below. Assessment of the MoT financial management capacity, including its current organizational structure, staffing, accounting and budgeting practices, and internal controls, was undertaken during preparation. The evaluation, which was conducted by a Financial Management Specialist, concluded that MoT's financial, budgeting, and accounting functions are appropriately performed and adequately staffed. The FMS is based on public accounting procedures and principles, and uses an accounting system maintained - 8 -  on a cash basis, as defined by the Algerian Public Accounting Law. All transactions in terms of commitments and flow of funds are recorded manually. In order to ease project implementation and monitor project activity, a FMS will be developed for the PMU and set up with the assistance of the same consultant who is preparing the FMS for the PTAP. It will be implemented according to the agreed time-bound action plan detailed in Annex 6. The FMS will be based on the principles and procedures defined by the national public accounting law and adapted to Bank's requirements for efficient and transparent financial management arrangements. It will include a Chart of Accounts, the preparation of a Financial Management Procedures Manual (FMPM) describing the FMS to be established at the PMU and intemal control mechanisms, and the implementation of a data processing system, which will include project activities, and training of staff. The FMS will provide the tools for documenting the flow of funds and operation of the project including preparation of Project Management Reports (PMRs). Regarding the implementation of the FMS and building the data base, it was agreed that the PMU, during the interim period, will adapt PMRs (1-A, 3-A, 3-B), using excel software to monitor and record data related to the project. Sample documents have been provided and MoT's Management Information System (MIS) will assist the PMU to set up these tables. In the meantime, PMU will enter into an agreement with the consultant who is preparing the FMS/FMPM for the PTAP to adapt the FMS to this operation. The FMS and related FMPM will be adopted by loan effectiveness. The final PMRs format will be implemented not later than June 30, 2002. Auditing Arrangements. The project financial statements maintained by the PMU, the special account activities maintained by BAD, and SOE-based disbursement prepared by the PMU would be audited by an independent auditor under terms of reference acceptable to the Bank and according to intemational standards of auditing. The auditor will review and give an opinion on the financial statements, and prepare and submit separate opinions on the accuracy and appropriateness of the project accounts, the activity of the special account, and the use of statements of expenditures. The annual audit reports and the reports on project and special account will be submitted to the Bank within six months after the end of each fiscal year. Disbursements. Disbursements from the Bank loan will be made using traditional procedures based on complete documentation, including Statements of Expenditure (SOEs) and direct payments to consultants. However, it was agreed that the FMS will be implemented to ensure that the project is appropriately managed and to produce the required monitoring arrangements and reporting (quarterly PMRs). To facilitate disbursement, a Special Account will be opened at the Central Bank of Algeria (BA) and managed by BAD. The initial deposit into the SA will be US$870,000. The detailed financial management and disbursement arrangements are summarized in Annex 6. Procurement. Consulting services will be procured in accordance with Bank Guidelines for Selection and Employment of Consultants (published in January 1997, revised in September 1997 and January 1999). Some 80 % of loan proceeds will be allocated to major studies costing US$200,000 or more and for which expression of interest will first be invited followed by short listing Some 10% of loan proceeds will be allocated to training, seminars and short-term consulting services, which will consist primarily of small contracts (less than US$20,000) that could be awarded to consultants selected on a sole source basis. Study trips will be financed under the loan up to a cumulative amount of US$50,000. For all studies and consulting services costing US$100,000 or more per contract, the Bank prior review will be mandated. Further details on procurement rules are provided in Annex 6. Mid-Term Review. A mid-term review will be held no later than January 31, 2003. In particular, its purpose is to assess the success and failures of implementation with, among other things, a focus on the -9-  institutional development in urban transport, the railway rehabilitation and air transport liberalization, and to reach agreement with the Borrower on measures to meet the project's development objectives. In order to prepare the mid term review, a report on project implementation will be submitted to the Bank by the Borrower on October 31, 2002 at latest. D. Project Rationale 1. Project alternatives considered and reasons for rejection: Investment projects could have been considered for each of the sub-sectors covered by the proposed TA. However, establishing a proper policy framework first is essential, and this would have kept loan resources earmarked for investments idle until after the second or third year, a costly proposition. In some cases, a concession contract would have to be signed before knowing the share of investments that would be covered by the GoA, and hence the amount of lending that the Bank could bring to cover part of this share. In addition, since signing of concession contracts can take up to a few years, there is added uncertainty as to the size of the investment portion in the Bank loan, and the timing of its mobilization by the Borrower. It is preferable to separate the institution building financed under the proposed TA project from the investment part, which could be taken up in a follow on project and/or by other donors and investment banks. An adaptable program loan could have met the above-stated requirements, but its preparation would have taken much longer. During the mid-July meeting with Bank management, the GoA clearly expressed its need for fast processing of a Bank operation in the transport sector. They wanted to tackle ports, airports, air transport and subway policy and institutional issues in earnest, and the proposed TA loan is therefore more responsive to their request. The Government's preference for a fast TA loan was confirmed during the preparation mission. 2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). * The only ongoing transport project is the Sixth Highway Project. Suspended in 1999, loan disbursements resumed on February 9, 2000 upon assurances received that outstanding issues had been properly resolved. The project was recently withdrawn from the list of projects at risk. v The Third Port Project came to closure on June 30, 1998. The Implementation Completion Report concluded that the project outcome was satisfactory and that it met its development objectives. - 1 0 -  Latest Supervision Sector Issue Project (PSR) Ratings iBank-financed projects only) Implementation Development Bank-financed Progress (IP) Objective (DO) Road maintenance and capacity Sixth Highway Project (Loan S S building in central and local road 3839-AL: US$130 m) - management, plus development of a ongoing - road fund Strengthening port management and the Third Ports Project (Loan S S finances of port enterprises; catching 3105-AL: US$63 m) - closed - up with technological gaps by financing container facilities in three major ports. Other development agencies IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory) 3. Lessons learned and reflected in the project design: A high level of Government commitment to project objectives and establishment of an effective coordination mechanism when more than one agency is involved are essential for successful project implementation. 4. Indications of borrower commitment and ownership: The Borrower requested this project during the mid-July meeting with the Middle East and North Africa Regional Management Team. The preparation mission was greatly facilitated by MoT officials, who engaged in frank discussions on transport issues and provided all infonnation requested in a fully satisfactory manner. Ownership is evidenced by the mobilization of local resources in support of project preparation and the broad sharing of views with the Bank regarding the need for, and orientation of, transport reforms. 5. Value added of Bank support in this project: Through the Transport Strategy Note, the Infrastructure Concession seminar, and the dialogue that led to preparation of the Transport TA project, a consensus has emerged between the Ministry of Transport and the Bank on the content of the sector reform. The Algerian Government wanted to pursue private-public partnerships for development of its transport infrastructure, but the relative isolation of the country over the last decade and the lack of local experience in PPI schemes led them to seek assistance from the Bank. The Bank can best support the implementation of PPI schemes by facilitating concession deals that are truly beneficial to the country. The transparent procedures to be applied under the proposed project will likely have a positive demonstration effect, which will support growth in public-private partnerships. Finally, Bank assistance will provide comfort to quality investors who, otherwise, might be discouraged from bidding for transport concessions and transport privatization transactions in Algeria. - 11 -  E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (see Annex 4): O Cost benefit NPV=US$ million; ERR = % (see Annex 4) O Cost effectiveness * Other (specify) This project does not lend itself to an economic evaluation. 2. Financial (see Annex 4 and Annex 5): NPV=US$ million; FRR = % (see Annex 4) No project cost recovery is expected, therefore no financial analysis is warranted. Fiscal Impact: 3. Technical: The project will not finance investments. It will in one case (the Algiers subway) finance technical studies to ascertain soundness of works already carried out and measure technical risks in completing the tunnel. Technical issues identified will be addressed by those same studies. 4. Institutional: This TA project has a strong emphasis on building institutional capacity, as detailed in Annex 2. 4.1 Executing agencies: Ministry of Transport 4.2 Project management: The MoT will manage the project through a PMU that will have responsibility for coordinating the project's implementation and consolidating related technical and financial data. The PMU will have counterparts in each subsector unit within the MoT, at SNCFT and BAD to handle the procurement and financial activities under its supervision. An FMPM will be developed, including a description of financial management policies and procedures, and internal control arrangements, definition of roles and responsibilities of PMU staff and of their counterparts in BAD, and timetables and frequencies for preparing and transmitting financial data. 4.3 Procurement issues: None 4.4 Financial management issues: No significant FMS issues are anticipated. The PMU to be created under the MoT will be responsible for consolidating financial and administrative information provided by the participating subsectors for the project. The PMU would have appropriate means and skills, and will provide training to all staff in charge of managing financial transactions related to the project to consolidate data, generate financial reports, and monitor project activities The possibility of a delay in creating the PMU or in preparing PMRs are mitigated by the following: * GoA's commitment to create and maintain a well staffed PMU before Board Presentation; * designation of representatives from each department in the MoT and a counterpart in BAD responsible - 12 -  for handling all disbursement aspects of the project; * hiring a consultant to define procedures, which would in particular govern management of project expenditures, and to adapt an adequate computerized system for PMR; and * implementation of computerized FMS to be run by the PMU. 5. Environmental: Environmental Category: C (Not Required) 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. It is not anticipated that the project will have any direct environmental impacts. However, the transport sector does raise a number of issues related to infrastructure maintenance and construction, operations of motor vehicles and associated gas emissions, oil and gas spillages, noise, etc... Road safety is another area of concern. In two instances where the project will prepare tendering for concessioning of the subway and part of the Djendjen port, a clear link will exist between project-related activities and investments to follow. These projects will have environmental consequences which will need to be addressed accordingly and related tasks will be funded by the project. Master plans studies will also be carried out for ports and urban transport in Algiers. Environmental aspects will be taken into consideration when comparing policy and investment options: terms of reference for detailed environmental assessments will be prepared and funded by the project for inclusion in the package of more detailed feasibility studies, which will be carried out before decisions are made to program any investment. Finally, development of local regulatory capacities will include environmental safeguarding. Many of studies and consulting services included in the project will therefore include parts and input dealing with the environment. In addition, there will be self standing environmental studies regarding the Algiers subway and the port of Djendjen. Therefore, the environmental content of this project is not negligible and a simplified Environmental Management Plan will be part of the Project Implementation Plan in order to facilitate monitoring of environmental activities under the project. 5.2 What are the main features of the EMP and are they adequate? The simplified EMP will cover studies on potentially negative envirornental impacts associated with investments recommended by the project, setting up of a framework for dealing with environmnental aspects in concession contracts, and capacity building to regulate transport in relation to the environment 5.3 For Category A and B projects, timeline and status of EA: Date of receipt of final draft: 5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms of consultation that were used and which groups were consulted? The terns of reference of environmental studies related to the Algiers subway project and the Port of DjenDjen will include a provision for consultation with focus groups (potential subway users, local municipalities, elected officials, etc..). 5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results of the EMP? A simplified EMP will be monitored through project supervision and reporting by the PMU. 6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. - 13-  Urban transport raises affordability issues. The project includes household surveys in the Greater Algiers area that will, among other purposes, sharpen the diagnosis on how mobility needs are currently satisfied and provide guidelines on establishing a future tariff policy for subsidizing transport modes, particularly the subway. In general, the project will examine the issue of staff redundancies in the sub-sectors. A framework for preparation of social plans will be worked out. The World Bank support to their implementation could then be envisaged. 6.2 Participatory Approach: How are key stakeholders participating in the project? Not applicable 6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? Not applicable 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? Since the project will only design, and not implement a framework for social plans, it will be left to the Government to ensure that social needs are properly addressed. One can expect the Government to be particularly cautious in handling the issue of overstaffing, which will be one of the most effective safeguards against decisions that could adversely affect workers. 6.5 How will the project monitor performance in terms of social development outcomes? The social development outcomes will not be monitored under this TA project because they will materialize under follow up operations, which will devise appropriate monitoring strategies in due course. 7. Safeguard Policies: 7.1 Do any of the following safeguard policies apply to the project? Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) 0 Yes * No Natural habitats (OP 4.04, BP 4.04, GP 4.04) 0 Yes * No Forestry (OP 4.36, GP 4.36) 0 Yes X No Pest Management (OP 4.09) 0 Yes 0 No Cultural Property (OPN 11.03) 0 Yes 0 No Indigenous Peoples (OD 4.20) 0 Yes * No Involuntary Resettlement (OD 430) 0 Yes * No Safety of Dams (OP 4.37, BP 4.37) 0 Yes 0 No Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) 0 Yes 0 No Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60) 0 Yes * No 7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies. Not applicable - 14 -  F. Sustainability and Risks 1. Sustainability: The proposed TA project will build capacities in urban transport management (in Algiers), in regulation (ports, airports, urban transport, air transport) and in railway management and operations (commercial, financial and technical functions). The TA package is designed to ensure knowledge transfers. The performance of consultants is as critical as the designation of local counterparts. Sound procurement of expert services and efficient monitoring of TA missions by the Project Unit and by the Bank will enhance the chances of successful capacity building. 2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1): Risk Risk Rating - Risk Mitigation Measure From Outputs to Objective Less than adequate staffing of the urban M Training provided under the project and transport agency created in Algiers and mid-term review by the Bank. insufficient funding. Low quality private sector entry in the M Selection criteria and performance monitoring market of port services. systems will be devised under the project. Concessioning of the Algiers airport N Coordination between project activities and inconsistent with maintaining a financially concessioning of the Algiers terminal by DACM sustainable national airport network. will minimize that risk. Decision by Government to end its N Mid-term review by the Bank. transport liberalization policy. From Components to Outputs Disagreement between the Ministry of M Coordination body to be set up as a condition of Transport and the Algiers Wilaya in disbursement, plus mid-term review by the setting up and funding an urban transport Bank. agency. Handling of the concessioning process. N Sound procurement; close monitoring. Weak consulting services N Sound procurement; close monitoring. Weak private sector response to the M Good design of the incentive framework by incentive framework developed under the project-financed consultants. project. Resistance to change. S Good communication of the outcome of the project-financed studies. Overall Risk Rating M Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk) M 3. Possible Controversial Aspects: None - 15-  G. Main Loan Conditions 1. Effectiveness Condition - Submission of the final PIP. - Establishment of the Coordination and Steering Committee. 2. Other [classify according to covenant types used in the Legal Agreements.] Condition of Board vresentation - Establishment of the PMU including designation of its members. ,Condition of disbursement - Establishment of a task force including nomination of participating senior staff from the Ministry of Interior and Local Collectivities, the Algiers Wilaya, the MoT and the Ministry of Finance, with appropriate delegation of powers, to prepare the technical work leading to the creation of the Urban Transport Management Authority for the Greater Algiers, and to submit related measures to the GoA's decision, is a Condition of Disbursement under the Urban Transport Component. Dated covenants - Mid-term review: (a) an implementation report to be prepared no later than October 31, 2002 and (b) a -nid-term review to be held no later than January 31, 2003 for an in-depth evaluation of progress achieved in implementing the project, especially for what relates to the establishment of an Urban Transport Management Authority, concessioning of the subway, the Algiers airport and part of the port of Djendjen, opening of the port service market to private sector participation, and air transport liberalization. If need be, an agreement between the GoA and the Bank will be sought on measures needed to correct the irnplementation course in order to achieve project development objectives. Financial covenants - Audit requirements -Project accounts, transactions on the Special Account and Statement of Expenditures will be audited annually and the audit report will be submitted to the Bank not later than six months after closing of the Borrower's fiscal year ending December 3 1. Reporting requirements - Submit PMRs reports quarterly. The first report should be submitted no later than June 30, 2002. H. Readiness for Implementation a 1. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. Z 1. b) Not applicable. O] 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. []3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. I 4. The following items are lacking and are discussed under loan conditions (Section G): Project Implementation Plan - 16 -  I. Compliance with Bank Policies M 1. This project complies with all applicable Bank policies. D 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies. 1 ichel A. Loir Mr.Emmanuel Forestier Mr. Christian Delvoie Team Leader Sector Director ountry Director - 17-  Annex 1: Project Design Summary ALGERIA: TRANSPORT TECHNICAL ASSISTANCE ey Pe rance;0 0 Hieran of Ojc i Iicators :Mniton & Evaation Citical Assumptions Sector-related CAS Goal: Sector Indicators: Sector! country reports: (from Goal to Bank Mission) - Remove sector bottlenecks to Maritime traffic, excluding Country statistics - Social integration (low level faster growth and integrate hydrocarbons, up by 20% in of unemployment) Algeria in the world economy. 2005 (Base 2000: 18mt) - Dynamic world market - Moving to a private sector Direct foreign investments in Country statistics - same as above led economy transport: no less than US$2 billion from 2001 to 2005 (Base 2000: 0) - Strengthening governance Competition level Country statistics - same as above and regulatory capacities at (concentration indices by all level of Government. transport market segments) - to be determined - Project Development Outcome / Impact Project reports: (from Objective to Goal) Objective: Indicators: I. Set up a policy and - Transport services - Country statistics. - Fair and prompt handling of institutional framework liberalized by 2005. - Special surveys. contract related legal issues by conducive to PPI development - Reports by PMU. the judiciary. and liberalization in transport. - ICR. 2. Demonstrate the feasibility New ports and airports PPI Same as above. Sustained growth of the PPI of mainstreaming transport schemes launched by 2005, market in the world. concessions through respectively covering: successful launching of - over 1 million tons; project ones (subway, ports, - over 500,000 passengers. airports). 3. Build stronger capacities in - Over 25% of international Same as above. - Foreign countries willing to transport sector management air traffic liberalized by 2005. sign Open Sky treaties. and handling of regulatory - Urban bus transport is - Stable local and/or central functions. provided under competitively financing sources supplement awarded concession contracts farebox revenues. by 2005. 4. Rehabilitate the railways to - Combined rail traffic: - SNTF statistics and surveys. The GoA limits/reduces its make them contribute better >4500 million traffic - ICR. interference in railway to cost efficient transport of units by 2005 management and compensate people and freight nationwide. (Base 2000: 3000 million PSOs timely and in full. TU) -18 -  Key Performance Hierarchy of Objectives Indicators Monitoring & Evaluation Crtical Assumptions Output from each Output Indicators: Project reports: (from Outputs to Objective) Component: Regional port authorities run Traffic growth >4% annually - Progress reports by PMU A good macroeconomic their ports efficiently and the through 2005. - Supervision reports framework allows for rapid national strategic plan is Containerized traffic >30% of - Port statistics economic growth of Algeria. approved. general cargo by 2004. - ICR Private competition in port No less than 2 companies - Progress reports by PMU Good competition between cargo handling is in progress. handling general cargo per - Supervision reports port enterprises ensures good port (average for Algiers, - ICR quality of port services. Oran and Annaba combined). Part of Djendjen is operated Concession contract signed by - Supervision reports Contract terms are adhered to under a concession contract. December 2003. - ICR by parties. A national airport policy to June 2003. - Progress reports by PMU System in place to run and promote PPI schemes is - Supervision reports fund "public service" airports. adopted and implemented. - ICR The Algiers airport Implementation of the Same as above Macroeconomic conditions concession is harmonized concession contract for the conducive to full adherence to with the national airport terminal building is problem contractterms by both parties. strategy and new regulations. free. The international air transport no less than 5 air transport Same as above Willingness of EU states to market is gradually liberalized treaties negotiated on a more sign more liberal air treaties and the local air transport is liberal basis by December with Algeria. sustainable. 2004. Railways are restructured and Ratio of labor costs to traffic Same as above The GoA meets its financial generate operating surpluses. revenue down to 35% in 2005 obligations. Social peace is (Base 2000: 67%) maintained at SNCFT. SNTF work and service December 2004 Same as above Successful private take over of subsidiaries, and Infrafer are the work and service pivatized. subsidiaries. A comprehensive planning Transport Authority Same as above The Authority is given management and regulatory established by January 2003. financial means framework for urban transport commensurate to its tasks by is in place in Algiers. the GoA and the Algiers Wilaya. The Algiers subway is being Concession contract signed by Same as above Contract terms are adhered to built under a BOT contract. December 2003 by the two parties. Efficient and affordable bus Share of public transport in Same as above Sustained economic growth in services are offered to the Algiers > 60% by 2004. the Greater Algiers; strong people living in the Greater Nr. trips/day/urban dweller by private sector response to the Algiers area. 2004: >1 (base 2000: 0.7). new incentive framework. - 19 -  fHirarcyof ObXjecis iE Inicos : MonI__1ng & ,EviuaIn Critical Asum ns I Project Components I Inputs: (budget for each Project reports: (from Components to Sub-components: component) Outputs) Ports. Implementation of the US$1.33 million Reports by PMU. Top experts are available. new institutional framework Bank supervision report. Sustained commitment to let and capacity building in the Consultant reports. private port operators in the port public administration. ICR. market. Ports. Concessioning of part US$1.15 million Reports by PMU. Contract terms are adhered to of the port of Djendjen. Press releases. by parties. Airports. National airport US$0.31 million Reports by PMU. The Algiers terminal building strategy definition. Bank supervision report. concession consistent with the ICR. proposed policy framework. Airports. Building regulatory US$0.10 million Reports by PMU. Top experts are available. capacities. Bank supervision report. Political will to tender new ICR. airport concessions. Air transport. Definition of a US$0. 10 million Same as above. GoA commitment to liberalize national air transport strategy the air transport market. and negotiation of air treaties. Air transport. Building US$0.46 million Same as above. Top experts are available. regulatory capacities at DAC. Railways. Support to strategy US$3.19 million Same as above. Top experts are available. definition and to restructuring Consultant reports. Good supervision by the GoA of the railway institutional set and the Bank. up and operations. Railways. Promotion of US$0.58 million Same as above. Good preparatory work by public-private partnerships. consultants. High quality bids. Urban transport. Setting up US$0.52 million Reports by PMU. The GoA and the Algiers a management and regulatory Bank supervision report. Wilaya cooperate and pay framework in Algiers Wilaya. Consultant reports. financial compensation for ICR. public service constraints. Urban transport. Strategy US$0.92 million Same as above. Top experts are available. definition and reorganization Sound process to auction lines of bus services in Algiers Good Bank supervision. Wilaya. Urban transport. US$2.46 million Same as above. High quality bids. Contract Concessioning of the Algiers Press releases. terms are adhered to by subway parties. - 20 -  Annex 2: Detailed Project Description ALGERIA: TRANSPORT TECHNICAL ASSISTANCE The project has six components By Component: Project Component I - US$2.48 million Technical Assistance to the port reform Background 2.1 Algerian ports and cities have thrived alongside one another for centur ies. However, with the development of urban areas, land for expanding quays, building storage areas and constructing access routes to transporting goods by land have largely disappeared. The devek )pment of efficient port operations has also been hampered by facilities that have not kept up with the E lace of new shipping and port technologies, and by trade procedures, particularly customs clearance, wThi ich prevent fast transit of goods: containers are said to spend an average of 20 days in port storage. On the other hand, Algeria has a high density of ports with ten along its 1,000 km-long coastline, a large and edlic ated population, and good rail connections with ports which could enhance trade logistics, were the righit commercial environment created. 2.2 The institutional framework, which provides for Economic Public Enl erprises (EPEs) to operate individual ports, is overseen by the Ministry of Transport (MoT) in terms of re( gulations, management and operations, while the Ministry of Public Works has responsibility for developi nent planning, funding and implementation of port investments. The private sector has had only limited invc )lvement in service delivery. The EPEs, wholly owned by the Public Holding "Chimie, Pharmacie, Services'', lack incentives to perform like commercial entities, as was envisaged, and often suffer from Govern ment budget priorities and constraints. Combined, these constraints prevented port services from contril buting to a more open and diversified Algerian economy. The relative weaknesses of port services dete r modernization, and most ships visiting Algerian ports are old and ill suited to efficient cargo handling. Overall, local traders suffer logistical handicaps in an international competition that has grown tougher. 2.3 In 1998, the Government of Algeria (GoA) engineered a comprehens ive reform designed to speed the modernization of port management and port facilities, sanctioned by Law 98-05 of June 27 1998 (the " Code Maritime"). The Landlord Port model was adopted, leaving regu h rtory, planning and land use functions vested with public entities, while service delivery is to be competiti% rely performed by commercial entities. 2.4 In order to allow for private participation in ports, the EPEs would e ,ither face private competition or be unbundled and opened to private capital. Most activities would 1 e licensed or granted under concession contracts. Three regional port authorities were created by de crees dated August 18, 1999 (Number 99-119 thru 202) respectively grouping ports in the east, center arid west of the country. Phase I of implementation of these decrees is underway and consists of: (a) tra ,,ferring responsibility and staff from the EPEs to the new port authorities; and (b) preparing detailed regu li itions for implementation of the Code Maritime. The GoA indicated that they had enough expertise to coi( luct this first phase, expected to be completed by mid-2002. Objectives of the project technical assistance 2.5 The objectives are as follows: (a) Fine tuning of the new port institutional framework; (b) Formulation of the strategy of private sector participatioii in commercial activities with - 21 -  competition in or for the market; (c) Formulatior i of the national port development strategy; (d) Promotion c )f a port concession at Djen-Djen; and (e) Implemental ion of trade facilitation procedures. Scope of services 2.6 Fine tuning of the v new port institutional framework This involves establishing clear definitions of port authorities' responsib ilities and modus operandi. There are several dimensions to this: (a) Apportionme, it of specific responsibilities: The technical assistance will propose solutions to streamline the relationship between: (i) ports unde r a regional authority; (ii) the three ri -,gional authorities; (iii) each of these, and the central overseeing body and; (iv) responsibil it ies in the field of investment planning, design and decision-making. Supervisiox i exercised by MT plays a key role in national policy making, the harmonizat ion of regional port development and definition of legal and operational standards. (b) Options to regu late port activities: The project TA will cover four areas: (i) conditions i ,or licensing commercial activities without investments, (eligibility thresholds for would-b e port operators; decision making level; rights and obligations when using public prope rty, etc..); (ii) concessionin Lg processes (selection of candidates; specification of the contractual framework; norms of contract duration; tariffs and taxation; guarantees and ownership rights; markl xt accessibility for foreign investors; dispute resolution); (iii) port pricing A ',degree of freedom, consultation of users on tariff changes, protection against abuses and ai iti-competitive practices); and (iv) environmentl I safeguards (dredging, cargo handling and storage, worker's safety). (c) Amendment of th, e legalframework: Retained options may imply that existing regulations be amended or comr ileted to ensure consistency. All reference documents, including concession agreements and cc iitracts, will be prepared. (d) Assistance to the overseeing ministry: The MoT, which will lead the reform through its completion, and v sill require advisory services and training. This assistance will also build in-house capacity to efficiently handle port regulations, including those dealing with the environment. (e) Assistance to reg ional port authorities: Some assistance services will be included to overcome implemi ntation blockages, such as legal advice and consulting services for communications wi th staff and the port community. 2.7 Formulation of a stratei xv for nrivate sector participation in commercial port activities. (a) This sub-component will complement the previous one by providing guidance on market restructuring. For each port, the project TA will analyze: existing conditions of port operations and propose a strategy reconciling the objective of maximizing cow ipetition in or for the market with the one of having port companies with enough traffic to be financially st istainable and capable of investing in equipment; (b) As a corollary to the previous point, this strategy and i -he business plans worked out and approved for the EPEs will have to be harmonized; and (c) Finally, opp ortunities to develop new facilities under Build-Operate-Transfer (BOT) contracts will be assessed and pro posed for action. 2.8 Formulation of the natior tal port development strategy. Partly in relation to the development of - 22 -  BOT contracts in para. 2.7, the proposed TA will assess extension needs and, based o n projected traffic, will recommend a Strategic Development Plan. This plan will include actions to ra ise port efficiency through gains in productivity and capacity derived from a better trained world borce, modernized organization and handling methods, tapping the potential offered by modem logi. stics for efficient intermodalism and transport interfaces, and investments with proven economic and financ ial viability. 2.9 Promotion of a port concession at Djen-Djen. A 850 m-long and 300 m-wic le area along the western breakwater is unoccupied and available for development of new activities. 'I 7ransshipment of containers is an option. The TA will carry out some technical studies and a market survt -y to identify the best opportunities and propose a coherent logistic and commercial concept. An environmn -ntal audit of the development zone is included. The tender documents for the concessioning procedure wil I be prepared, as well as those for the selection of the Consulting Services (Investment Bank) providing a ssistance for the concessioning procedure. 2.10 Facilitation of international trade procedures. The TA will support the ongoing prc 'gram led by the Shipping Directorate at the MT in three ways: (a) execution of surveys to determine the port storage time and costs for a sample of commodities with a view to propose a set of pertinent indicators that would be used for futuz v monitoring of impacts from facilitation measures; (b) execution of surveys to assess progress and pinpoint issues such as ma r1 -,et distortions associated with the liberalization of port professions (e.g., ship agents and freiE ;h t forwarders); and (c) organization of seminars and information dissemination to take stock of foi -eij ;n and local experience in trade facilitation and lay out an agenda for future action. Design, planning and financing of the technical assistance 2.11 The proposed TA will consists of three studies, and three specialized consulting serv ices packages. (a) Study on the legal and regulatory framework (i) Covers (a), (b), and (c) of para. 2.6 (ii) Needs expertise from lawyers and port and environmental specialists (iii) Will be executed from January to June 2002. (iv) Budget estimated at US$200,000. Source: Bank loan. (b) Study on private sector participation (to be closely coordinated with the previous one!) (i) Covers para. 2.7 except point (c). (ii) Needs financial and port expertise. (iii) Will be executed from January to September 2002. (iv) Budget estimated at US$250,000. Source: Bank loan. (c) Study on the port Development Strategic Plan (i) Covers para. 2.8 and (c) of para. 2.7. (ii) Needs port engineers, economists, operation specialists, financial analysts. (iii) Will be executed from June 2002 to April 2003. (iv) Budget estimated at US$600,000. Source: Bank loan. (d) Consulting services to MT and regional authorities; training (i) Covers (d) and (e) of para. 2.6. (ii) Service contract with a port: experts sent on request. (iii) Will be executed over 2001 through 2004 (40% in 2002; 40% in 2003; 20% in 2004). (iv) Budget estimated at US$200,000. Source: Bank loan. (e) Consulting services to concessioning of Djen-Djen - 23 -  (i) Cover s para. 2.9. An investment bank will be hired to conduct market and feasibility studies relate d to the concession scheme, then to help select a concessionnaire. (ii) Need s shipping and port experts, economists, environmental specialists and lawyers. (iii) Will be e3Lecuted from January to December 2003. (iv) Bud, ,et estimated at US$1,100,000. Source: Bank loan (it is understood that the investment bank will also collect a success fee). 69 Consult ing services in trade facilitation (i) Co, iers para. 2.10. (ii) Nei Ads expertise in trade procedures, customs, electronic data interchange. (iii) Wi 11 be executed from January to July 2003. (iv) Bu dget estimated at US$50,000. Source: bilateral or multilateral grants. Project Compo nent 2 - US$0.41 million Technical Assistance to the airport reform Background 2.12 The C ;o A currently owns and operates a public airport network comprised of 30 airports (of which 12 are open to the international traffic) which accommodated some 5 million passengers in 1999. However, air pa rt traffic in the eighties was in excess of 8 million passengers, which gives an indication of the magnitud le 'c,f the trend reversal that occurred in the nineties. At the same time, there is a significant growth poteiatiz L if the factors that caused traffic to drop are eliminated. These factors included: adverse security con iditi ions which led foreign airlines to pull out, restrictions in the number of visas issued, the economic c disis, which reduced trade and the purchasing power in Algeria. 2.13 Th e ir Lstitutional framework bears resemblance to that of ports. Three public enterprises (in French: "I stab lissement de Gestion des Services Aeroportuaires" or EGSA) are entrusted with the operation and light maintenance of a cluster of airports in their respective jurisdiction. Based in Constantil ae, A Igiers and Oran, the EGSA Est, Centre et Ouest operate airports in their third of the country running n torth to south. Air traffic control is the responsibility of another public enterprise, the Entreprise National, e de . Vavigation Aerienne (ENNA), which deploys and operates needed systems, including power sub-stati ons tl iat sell power to the EGSAs. The Ministry of Public Works is in charge of infrastructure developi nent, planning and execution of related works, and maintenance through its "Service des bases aerienn es". 2.14 Each airport cluster includes a mix of profitable and unprofitable airports, but cross-subsidization allows all to 'break even financially. The EGSAs also benefit from recouping part of the revenue earned by ENN-A L frorri taxes, which compensates them for some airport joint-costs they bear. The existing organ: ization must be strengthened financially, as cash generation only covers operation and routine maint enance costs, and the cost allocation between the EGSAs and ENNA needs streamlining. 2.15 Finally, the Government policy now favors a broad based private participation in airports through conc .ession earrangements ranging from service contracts to BOTs. The new institutional set up created by LawA r 98-06 of June 27, 1998 was amended in December 2000 to take out provisions that would have dete ,rred foreign investors from bidding (constraining nationality clauses in particular), because of unc ;ertainties in the text on responsibilities, rights and remedies. The Algiers airport is the first concession in which the GoA will select the concessionaire with the assistance of an investment Bank. - 24 -  Objectives of the project technical assistance to airports 2.16 The overarching objective is to help GoA formulate an airport strategy that will best serve growing international and national mobility needs triggered by the expected acceleration of national economic growth, and foster balanced development across the country. To this end, maintaining the integrity of the national airport network is essential. The focus of the strategy is on private participation under airport concessions as a means of achieving the objective of raising needed capital and making airports more efficient. Safety and security, competitive delivery of services, financial sustainability and protection of the environment are other prominent features of that strategy. Scope of services 2.17 Evaluation of the airport system and development prospects. The current status of airports will be assessed, including legal frameworks, finances, operational performance, handling of the technical functions of safety and security along with development prospects and opportunities for private sector participation. Detailed tasks include: (a) Visits to airports to identify their strength and weaknesses, the conditions under which all parties involved in management and operations interact, constraints to private participation in service delivery, and labor and environmental issues; (b) Comparisons among Algerian airports and those in Maghreb countries with similar development levels in order to rate the performance of the former. Indicators will be measured and included in the report. (c) Analysis of operational and managerial changes designed to enhance airport efficiency leading to recommendations on ways to remove existing obstacles. (d) Based on the GoA's medium-term economic policy and associated prospects of liberalization and privatization, the previous assessment of unrealized potential in airports, intemational trends in air transport and strategies pursued by major airlines and world airports, a traffic forecast will be made spanning a 25-year period with distribution of flows by airport cluster. (e) The traffic forecast will be used to determine short and medium term needs for developing airport infrastructure. The physical layout of investments will be specified as well as their costs, a preliminary assessment of potential environmental risks will be carried out, and terms of reference for detailed environmental assessments will be prepared knowing that related studies will be executed under other follow up operations. (f) The financing plan corresponding to proposed investments will be studied and possible sources identified, especially private ones. 2.18 Development and evaluation of options for private participation. The study will follow three steps to determine the most promising modes for private sector participation, taking into account GoA's policy objectives. (a) The feasibility of competition for the market will be assessed. PPI options for individual or a cluster of airports will be identified for their potential to fulfill needs of balanced airport development and attract private investment. Staffing issues associated with an option will be reviewed and social schemes proposed to bring staffing in line with quantity and quality needs. Various legal arrangements will be discussed and ranked by merit (concession contracts, licenses, etc.), and a timetable set out for implementation of each option. (b) Financial viability of each option will be tested through preparation of financial forecasts covering each transaction contemplated and outlining the advantages of private participation. A financial model will be developed and sensitivity analyses carried out. Important parameters include: (i) economic growth; (ii) investment costs; (iii) operating expenses; (iv) operating revenues; (v) balance sheet and depreciation accounts; (vi) taxation regimes; (vii) financing terms; and (viii) contract duration. The valuation of options will be presented as a range of - 25 -  values based on methods tailored to airports and widely recognized abroad. (c) A summary of the pros and cons associated with each option will be made, covering legal, institutional, financial, technical and operational aspects; and implementation arrangements specified. (d) Assistance will be provided to the GoA in selecting best options. A workshop will be organized to that end. 2.19 Finalization of the GoA PPI strategy for airports. Assistance will be provided to complete GoA's strategy for airports. Specific activities will include: (a) Carrying out market research to test the responsiveness of private investors to each option; (b) Finalizing recommendations on implementation details, including changes of the institutional framework; (c) Propose a human resources plan associated to the best option (including severance, retraining and redeployment of staff) and processes designed to smooth out implementation of the plan; (d) Defining an implementation schedule for the best option; (e) Preparing an Information package to attract potential investors; and (f) Defining interim management and financial arrangements for airports that could not be proposed to private investors, consistent with sustainability of the public service. 2.20 Building regulatorv capacities. Because private participation in airport infrastructure and operations is expected to expand in the future, the civil aviation department will have to strengthen its capacity to regulate private activities, define national norms, manage concessioning processes and contracts, update and/or develop environmental safeguards. Local dissemination of best international practices and targeted training will be carried out under this TA sub-component. The scope of services also includes a discussion of the merits and feasibility of developing an independent regulatory system. Services will also include ensuring consistency between the airport strategy definition exercise described above and the parallel concessioning of the Algiers terminal building. Design, planning and financing of the technical assistance 2.21 The above TA will be delivered as one major study and advisory services. (a) Study for definition of the national airport strategy and identif cation of concessions. (i) Covers paras. 2.17 through 2.19. (ii) Needs airport management and operation, and legal expertise, plus financial analysts, transport economists and environmental specialists. (iii) Will be executed from January 2002 to January 2003. (iv) Budget estimated at US$300,000. Source : Bank loan. (b) Advisory services and training (i) Covers para. 2.20. (ii) Needs international expertise in airport regulations: (a) short term missions will be called as needed to clarify job descriptions, prepare the work program and assist the Civil aviation directorate through the concessioning of the Algiers terminal; (b) study trips abroad for key officials; (c) organization of a seminar in Algiers in October 2002 to take stock of early capacity building initiatives and disseminate the international best practice. (iii) Will be executed from April 2002 to September 2004 (30% in 2002; 50% in 2003; 20% in 2004). (iv) Budget estimated at US$100,000. Source : Bank loan. Project Component 3 - US$ 0.57 million - 26 -  Technical assistance to air transport Background 2.22 Algeria liberalized its domestic air transport market which is competitively served by several airlines, including Air Algerie (AA), a public enterprise that held the monopoly of domestic and intemational air transport, and three private companies, Khalifa (the largest), Sahara Airlines and Eco Air. Tariffs and frequency of flights are freely deternined. However, AA remains the reference company on which others align their tariff. For intemational routes, the private companies have been authorized to serve provincial towns in Europe leaving the most profitable services between Algiers and foreign capitals to AA. International services to and from Algeria, with the exception of lines to Italy, neighboring countries and a few Arab countries, are exclusively provided by Algerian companies. 2.23 Notwithstanding these exceptional features, caused by security problems in Algeria, the international services are still ruled by bilateral treaties of Bermudan type based on which capacities are apportioned to national companies of the two signatories. This is the case in particular with Tunis Air and Royal Air Maroc. This old framework is being increasingly questioned by countries in favor of air transport liberalization within "open sky" policies. The GoA looks forward to moving in that direction and signed in November 1999 the Yamoussoukro Multilateral Agreement that promotes liberalization and creation of a common air transport market in Africa. Throughout the rest of the world, where stakes are higher, the GoA anticipates a gradual elimination of restrictions on splitting traffic rights, and full liberalization will eventually be achieved. Implementing this policy will be a difficult endeavor and the GoA feels it needs strengthening in order to handle future negotiations of air transport treaties with a clear strategic vision and the right amount of expertise. 2.24 This policy will require a pace that is consistent with the growth of the national air transport industry. In this regards, the future of Air Algerie is in question, since the company has serious handicaps that would be aggravated were it exposed to competition. Autonomous since February 1997, AA was restructured, but ensuing social disputes did not allow for implementation of its reorganization plan. AA faces numerous challenges, including: (a) AA must refocus its strategy on the dynamic parts of its business; (b) its fleet is obsolete; renewal orders have been placed for Boeing 737-800s, six of which have already been delivered. Financing costs are inflated by the country risk factor and the enterprise has not enough liquidity to cover its financing needs, and operational leasing has become the preferred option in recent years. (c) Management systems are outdated, especially for computerized reservations, an area that is key to commercial dynamism and where AA is badly lagging. (d) Excess staffmg inflates costs, in spite of a restrictive compensation policy which induces the best performers to move to the private sector where salaries are higher. (e) AA will soon commission its maintenance base, into which large resources have been sunk (about US$300 million). The base exceeds its own needs. How to obtain the certification that is indispensable to attract foreign customers is a vital question. Objectives of the project technical assistance to air transport 2.25 The TA will focus on developing local capacity in the regulation of air transport. The two pronged approach is to: (a) Assist in the formulation of an air transport strategy and in its implementation through upcoming renegotiation of bilateral and multilateral treaties; and (b) Develop a regulatory framework that is well suited to liberalizing the sector and train personnel to manage it. - 27 -  Scope of services 2.26 Formulate the national air transport strategy. This would be carried out in four stages: (a) The first stage would include a study review of worldwide experience in liberalizing air transport and identify key steps in developing "open sky" policies. The analysis will include a discussion of benefits drawn by countries which moved to liberalization, with measurable indicators to illustrate points. The focus will be on countries with which Algeria has signed treaties, with special scrutiny given to current and emerging regulations and policies in the EU. Attention will also be paid to national and international norms on noise limits, particularly those applicable or under discussion in the European Union, and which will greatly affect the operations of Algerian aircrafts. (b) The second stage would be a synthesis of new commercial strategies, including alliances, cross participation in capital and mergers, which major airlines have undertaken in response to liberalization. The purpose is to define models for repositioning of the national airline industry on competitive markets, and under conditions that would enhance chances of success. The analysis will cover both passenger and freight traffic. The development potential of international hubs in Algeria will be discussed both in connection with traffic liberalization with Europe, the Middle East (Algeria should be a party to the recent liberalization decision by the Arab Air Carrier Organization), and the American continent, and airlines strategies in response to such changes. (c) The third stage would be development and discussion with the Civil Aviation Directorate (CAD) and other relevant entities (national airlines, the EGSAs) of a medium term air transport policy framework. This analysis will specify the implication of such a policy, on a country-by-country basis. Several options will be presented dealing with the geographical scope and timing, and with the pace for moving through the various steps toward "open sky" agreements. Pros and cons associated with each of these will also be outlined. This part of the study will have to be coordinated with the analysis of AA's restructuring and privatization strategy, and with airport development, for instance, Oran versus Algiers. (d) Finally, short term support will be provided to CAD in order to give it insights in preparing to negotiate with foreign countries and with foreign airlines involved in flights to and from Algeria. 2.27 Develop local regulatorg capabilities suited to liberalization requirements. This activity would have three sides: (a) Definition of a new regulatory structure for CAD, or a new agency that could be specialized or multi-sectoral, and presentation of its merits compared to alternatives. The responsibilities assigned to that structure, namely to edict and ensure application of efficient market access rules, will be specified by a number of categories, including bilateral agreements, apportionment of traffic rights and licenses by traffic type, operating zone, contract duration, and criteria to appraise the creation of new lines. Organization charts, job descriptions, and work processes will also be detailed. (b) An appropriate level of human resources needed to run the regulatory structure will be identified, and the development and implementation of a Training Plan undertaken. (c) A review of the current legal and regulatory framework, as well as proposals to amend texts to restore consistency between existing framework and the new regulation structure, will be conducted - 28 -  Design, planning and financing of the technical assistance 2.28 The proposed TA will be delivered in three packages respectively covering studies, consulting services and training. Reasons for doing so are due to the specialization of subject matter, the nature of proposed intervention, the speed with which the program will be implemented. Missions will be coordinated by CAD and undertaken in a parallel fashion. (a) Sector strategy study contract (i) A single contract covering the content of para. 2.26 except (d). (ii) Contract with a specialized consultant able to mobilize experts in air transport policy and in the airlines business and international public law, actively engaged in working relations with air transport world and regional organizations (ICAO, IATA, Arab Air Carrier Association, etc. ). (iii) Execution over 4 months (January thru June 2002). (iv) Budget: US$100,000. Source of financing: Bank loan. (b) Consulting services (i) Includes two types of assistance: (a) on-demand advice to negotiations ((d) of para. 2.26); (b) Contract with a consultant covering the content of para. 2.27 except (b). (ii) Requires expertise (a) on issues specific to the country about to negotiate with CAD; (b) in air transport regulation. (iii) Execution: (a) distributed over a little more than two years (September 2002 to December 2004); (b) March 2002 to March 2003. (iv) Budget: (a) US$50,000; (b) US$300,000. Source of financing: Bank loan. (c) Training (i) Covers (b) of para. 2.27. (ii) Includes: (a) study trips for CAD managerial staff; (b) organization in Algeria of seminars on themes of the Training Plan. (iii) Execution: (a) April 2002 to December 2004; (b) three to four contracts over March 2002 to June 2004. (iv) Budget: (a) US$25,000; (b) US$75,000. Sources: Bank loan. Project Component 4 - US$3.77 million Technical assistance to railway rehabilitation Background 2.29 Railway management in Algeria is entrusted to Societe Nationale de Transport Ferroviaire (SNTF) based on the general principles underlying Public Service. SNTF is a public enterprise overseen by the transport ministry and governed by statutes included in Decree 90-391 of December 1, 1990. The regulatory framework for railways is defined in the convention between the GoA and SNTF, which was approved by Decree 88-128 of June 28, 1988, and by a Cahier des Charges approved by ministerial order on December 22, 1990. 2.30 In the late 1990s, the sector was in deep crisis, with rail traffic falling dramatically as a result of terrorist acts and insecurity, and also from a deterioration in rail's competitiveness against its main competitors. For instance, freight volume dropped from 2.7 billion ton-km in 1990 to 2.0 in 1999, while passenger traffic fell from 3 billion passenger-km to 1,1 billion over the same period. Today, railway productivity remains low compared to networks in comparable countries. The US$3.7 billion invested in railway infrastructure over the last ten years failed to improve the situation. The system for financing rail investments and operations has no adequate basis, is costly to the GoA, and, in practice, is not applied in a - 29 -  consistent manner. Finally, the commendable efforts made by SNTF management to rehabilitate the company in recent years have not had an impact on the most serious issues, namely: a lack of real managerial autonomy, cumbersome procedures and bureaucratic management, a predominant civil service culture and weak commercial functions, significant attrition of in-house experience and technical competences, weak training and skill development programs, inadequate compensation policy, backward technical, administrative and financial systems, and overstaffing. 2.31 Despite the major problems it faces, the railway sector could play a role in the future market-based transport system by focusing on business niches where it has comparative edges over competitors. A railway revival is a long-term proposition that could take from seven to ten years and would be dependent on the implementation of a new GoA sector policy, and reforms in how SNTF is managed. Objectives of the project technical assistance 2.32 The TA will pursue four objectives: (a) Refocus the economic role of the railways in a market economy. (b) Transform the railway institutional framework. (c) Restructure SNTF to be more competitive and to operate in a more commercially-oriented manner. (d) Prepare a medium- term railway investment plan. Scope of services 2.33 Refocus the railwas economical role in a market economy context. Moving toward a market-based economy will bring significant changes in the railway business in terms of increased competition and diversified demand. Within such a context, the role played by the railways in the various markets, such as ore transport, other freight transport, intercity passenger transport, provincial services, suburban services, would have to be reinvented. 2.34 Transform the railways institutional framework. This would address the: (a) railway's legal and regulatory framnework; (b) railway's overall organizational set up; (c) financial relations between the GoA and the railway company. (a) Legal and regulatory framework: the objective here would be to delineate a flexible new framework where the GoA would still control development of new lines (either directly or through granting of concessions), but where railway operations would be conducted under a concession contract, covering either management of infrastructure only or infrastructure management plus the operation of railway services. (b) Basic railways organizational set up. The Algerian "Railway Group" would be anchored in a company entrusted with a concession for the entire existing railway network (a revamped SNTF) with autonomous railway transport operators specialized on certain traffic (particularly for freight). A separate public entity would manage infrastructure development, and public contractors dealing with railway works would be restructured and privatized. (c) Financial relations between the GoA and the railways. Eventually, financial contribution by the GoA to the railways would be limited to the following: compensation of public service obligations (suburban transport, social fares) and level crossing expenses; and construction of new lines, road overpasses and fences along the railway right of way. During a transition period that would allow the railways time to bridge efficiency gaps, the GoA would also finance infrastructure renewal and rehabilitation. 2.35 Set the stage for a re-engineered railway company. The purpose of this activity is to create an efficient railway group by 2006, managed as a commercial undertaking and financially breaking even. - 30 -  There are several dimensions to this objective. (a) Operation methods. Operating and maintenance costs must be cut through introducing adequate radio-block systems, restating the maintenance policy and resorting to contracting out. Current procedures for mitigation of environmental risks (work and traffic safety, track maintenance procedures, etc..) will be reviewed with recommendations for changes when and where deemed warranted. (b) Maintenance of rolling stock Maintenance policies will be changed to increase performance and lower costs. Logistics and maintenance bases will be streamlined. Possibilities for contracting out functions will be explored. As for operations, the consultants will assess procedures to mitigate environmental risks, particularly at the workshops. (c) Internal reorganization of the railway group. Internal structures will be adapted to accommodate in-house capabilities in marketing, planning and economic feasibility studies. More generally, existing structures will be assessed toward creating those that are missing or beefing up those which are under-developed. This would apply to environmental screening of contemplated investments and working procedures. (d) Upgrading the telecommunication and radio-block systems. The productivity of rail operations is undermined by outdated telecommunication systems. The project will finance a telecommunication master plan that will take into account the ongoing Telecom refonms in Algeria (railway companies elsewhere derived benefits from allowing telecommunication companies to use their rights of way. This might permit railways to have free telecommunications networks for their own operations). The study will cover conditions under which SNTF could enter into such telecom contracts. (e) Adjustment of human resources. A severance program will be proposed and the compensation policy revised, leading to a training and specialized skills development program. (f) Promotion ofpublic-private partnerships. SNTF has already engaged in private partnerships, especially for motive power maintenance. Other partnerships are envisaged for transport services, including the electrification of the suburban network in the Greater Algiers, and implementation of the railway-business center complex at Algiers Agha. 2.36 Prepare a medium-term railwa investment plan. Priority investments directly supporting railway rehabilitation and the recovery of its traffic lost to road transport will be identified and pre-selected based on technical, financial and economic criteria. Detailed programming and engineering activities supporting these investments is not a part of the technical assistance, which will be limited to identifying and prioritizing investments, and preparing of terns of reference for detailed studies, including environmental impact assessments. Design, planning and fmancing of the technical assistance 2.37 The proposed TA will be delivered through studies and consulting services as follows. General strategy definition and revision of the institutionalframework Studies to deepen and complement the general blueprint of the railways strategy and of how to adjust its institutionalframework - mobilization of experts for short-term missions; - Execution from January thru September 2002. - Budget: US$200,000. Source of funds: Bank loan. Marketing strategy and business forecast: Procurement of a railway costing software - 31 -  - Such tool is essential to assessment of the economic role of railways and formulation of a commercial policy. - Services include training of in house operators. - Will be executed from January thru April 2002. - Budget: US$150,000. Source of funds: Bank loan. Study on the intercity passenger andfreight traffic competitiveness - Evaluation of the future railways economic role on these segments and definition of a commercial policy. - Will be executed from February thru October 2002. - Budget: US$300,000. Source of funds: Bank loan. Feasibility study of containerized traffic development and of the supporting commercial policy to implement. . - Evaluation of the feasibility of containerizing railway traffic and definition of the corresponding commercial policy. - Will be executed from June thru September 2002. - Budget: US$150,000. Source of funds: Bank loan. Assistance to setting up of marketing structures and training - Definition of structures and training. - Will be executed from October 2002 to December 2003. - Budget: US$300,000. Source of funds: Bank loan. Re-engineering of the railway company Transport technical organization scheme - Prepare a diagnosis of existing situation. Identify changes in the organization of train circulation, management and distribution of railway cars, management of train crews. - Will be executed from March 2002 to March 2003. - Budget: US$300,000. Source of funds: Bank loan. Track maintenance strategy - Prepare a diagnosis of existing situation. Define the future track maintenance policy. Assess possibilities of contracting out the works. Define the organization and staffing targets. Develop a training program. Make a maintenance budget forecast. - Will be executed from February 2002 to March 2003. - Budget: US$350,000. Source of funds: Bank loan. Maintenance strategyfor the rolling stock - Prepare a diagnosis of existing situation; elaborate a policy for the future; define the organization and staffing targets; develop a training program; restructure facilities. - Will be executed from June 2002 to June 2003. - Budget: US$250,000. Source of funds: Bank loan. Master plan of telecommunications and radio-block development - Will be executed from September 2002 to June 2003. - Budget: US$250,000. Source of funds: Bank loan. Modernization offinancial management and accounting systems - Prepare a diagnosis of existing situation; elaborate a strategy for improvement; prepare the bidding documents for later studies. - Will be executed from January 2002 to June 2003. - Budget: US$150,000. Source of funds: GoA. - 32 -  Human resources management strategy - Definition of staff severance programs and a new compensation policy. - Will be executed from April thru December 2002. - Budget: US$300,000. Source of funds: Bank loan. Project economic andfinancial evaluation training - The content and timing of this sub-component will be finalized at negotiations. - Will be executed during the first semester of 2002. - Budget: US$100,000. Source of funds: GoA. Support to promotion ofpublic-private partnerships and to privatization of business lines Assistance to concessioning of electrification of the suburban railway network in the Greater Algiers zone - Will be executed from January thru June 2004. - Budget: US$150,000. Source of funds: Bank loan. Support to implementation of the station and business center at Algiers Agha under a BOT contract - Requires hiring of a consultant specialized in privatization. - December 2003 to June 2004. - Budget: US$300,000. Source of funds: Bank loan. Assistance to privatization of contracting and service SNTF subsidiaries - Requires hiring of a consultant specialized in privatization. - Will be executed from March 2002 to March 2003. - Budget: US$ 100,000. Source of funds: Bank loan. Development of a medium term program ofpriority investm ents for the railways. Identification and Selection ofpriority investments - This study will form the basis of future investment funding requests to Donors. - Will be executed from June thru September 2003 (after the strategy track, rolling stock and telecommunications studies are completed). - Budget: US$300,000. Source of finds: Bank loan. Project Component 5 - US$3.90 million Technical assistance to urban transport - 33 -  Background 2.38 As was the case for major cities throughout Algeria, urban development in Algiers, with a population of about 2.5 million at present, was quite strong over the last decade. Typically, public enterprises were unable to cope with demand, and the private sector was authorized to enter the market, leading to an increase in the supply of transport services. Private operators now control three-fourths of the market. However, flawed definition and loose enforcement of regulations created serious market distortions: on the one hand, services are expensive (tariffs are high and unregulated by the GoA; they are frequently hiked) while the quality of service is low and transfers poorly organized, resulting in high transport costs for certain categories of users; on the other hand, too many service providesr contribute to congestion in the city center. A low motorization rate for the population (7% in Algiers) and a high proportion of trips on foot, even over long distances, point to shortcomings in the urban transport organization. 2.39 The GoA intends to complete Line I of the future Algiers subway system, which has been under construction since 1990. An ongoing study will update the economic and financial justifications of this project and its institutional set-up. The study should be the basis on which the GoA will advance its plan to seek a private concessionaire for the 12-km long line stretching from Hai El Badr to Oued Koriche. This subway will be a key feature of the urban transport system for Algiers. It is expected to be commissioned to traffic by December 2007 or early 2008 (subject to signing of a concession contract by June 2003). 2.40 Urban transport and traffic responsibilities are scattered among several authorities the most important of which are the Ministry of Transport (MoT), the Algiers Wilaya, and the country's various municipalities. Furthermore, urban transport is critically under-funded in both operations and investments, and the Algiers subway project will exacerbate this situation. Harmonious and sustainable development of transport within the Greater Algiers area requires the establishment of a management authority (in French " Autorite Organisatrice") that would be endowed with sufficient financial resources, sheltered from the vagaries of budget decisions and fully empowered to regulate and control transport operators and manage traffic. Objectives of the project technical assistance 2.41 The TA will pursue the following objectives: (a) Reforrn the institutional and financial framework of urban transport in Algiers, and establish an urban transport authority for Greater Algiers. (b) Prepare concessioning of the subway's Line I in a way maximizing chances of success. (c) Plan the reorganization of existing transport modes within the Greater Algiers with a view to strengthen the synergy between the subway and other modes, and integrate transport more effectively in urban development plarming. (d) Insert the private supply of public transportation in a competitive framework that would ensure better coverage of urban mobility needs than is the case at present. Scope of services 2.42 Reform the institutional and financial framework of urban transport in Algiers. The TA here will include the following studies and consulting services. (a) Completion of the transport institutional organization studyfor Greater Algiers. This study, started by the Wilaya, will be completed under the project with support from national and foreign consultants. It has three objectives: (i) design the organization in general, define its missions and its structures, together with staffing and financial requirements for both investments and operating costs; - 34 -  (ii) make recommendations on needed amendments to the existing legal and regulatory framework, which could serve as a blueprint that could be replicated in other cities; (iii) assess training requirements. (b) Tariff andfunding study. The objective is to: (i) assess the financing requirements of urban transport operators within Greater Algiers under various tariff assumptions; (ii) measure the impact of transport projects and of pricing policy variants on the GoA resources and on economic agents; and (iii) recommend variants and corresponding financing mechanisms which would permit the Management Authority to mobilize sufficient and stable resources, particularly user charges and indirect taxation. The possibility of applying the French system of "Versement Transport" will also be examined. The proposed recommendation emerging from this study will be important for the subway concession, as the concessionaire will evaluate risks of late or reduced payment of subsidies, without which the subway cannot be financially viable. The study will also consider the prospects of adapting the proposed scheme to other cities in Algeria. In the process of appraising the pricing variants, the study will take stock of the outcome of the household survey that will be executed under the project (see para. d below). (c) Assistance to implementation of the new institutional organization (i) Assistance to the Management Authority, including training of its personnel and that of central and local administrations in charge of urban transport and traffic management. (ii) Assistance to the Authority in contracting out transport services and implementing reforms (through specific studies). 2.43 Plan the reor_anization of existing transport modes. This sub-component includes the following three actions. (d) Household survey. The survey will evaluate: (i) people's mobility within Greater Algiers in order to better identify future subway traffic, (ii) unmet public transport demand as a result of missing means (foot trips), and the potential demand directed to other transport modes, (iii) affordability of tariff variants examined under the Tariff and funding study (see above). (e) Transport Master Plan for Greater Algiers area; Traffic and Parking Study for the city center. The objective of the Master Plan is to prudently allocate market share by mode over the medium and long-term perspective and within the various zones of the Wilaya, and to determine the levels of infrastructure and equipment needed to realize the proposed plans. The objectives of the traffic and parking study is to recommend changes in street layout to accommodate subway operations maximize motorized traffic safety and fluidity, and ease transport circulation. This study will be coordinated with that for bus service restructuring, and will include a road safety audit by an independent consultant. Environmental impacts of proposed solutions will be assessed at pre-feasibility levels, and terms of reference for more detailed studies (outside the project scope) will be prepared if needed for decision making. 69 Diagnosis of transport impacts on air quality in Greater Algiers. Deployment of air quality monitoring stations is in progress under a separate project, but measurements of the concentration of pollutants will not be available in the near future. The proposed assessment, which will be derived from the characteristics of the vehicle fleet, is designed to provide useful input to the Transport Master Plan study. It will focus on transport induced pollution, examine future trends, and make recommendations on mitigating measures. 2.44 Organize a competitive framework for surface urban transport (g) Study on consolidation and concessioning of urban bus services. The study will be used to - 35 -  identify actions to reduce the number of transport service providers to a level where the Managing Authority can monitor and enforce contractual service standards while optimizing competition in the market. This study would include, among other things, a definition of line packages, contractual tenns and recommendations on needed legal and regulatory changes. 2.45 Prepare concessioning of the Algiers subway. Activities under this sub-component would be the following. (hJ) Environmental impact study. This study, which would be conducted along Bank guidelines, will examine potentially negative environmental impacts of the subway project during construction and after the start of operations, and propose measures to mitigate these impacts. The measures identified will be imposed on the concessionaire. In addition to focusing attention on aspects related to dumping of materials excavated for tunnel construction, the study will also review issues pertaining to: (i) impacts of ongoing civil works on the circulation of motorized traffic and pedestrians; (ii) processes for undertaking expropriation and resettlement actions; and (iii) reconnecting utility networks, including water, sewerage, electricity, gas, telecommunications. (i) Geotechnical surveys. The purpose is to determine the feasibility of transferring geological risks in building the subway infrastructure to the concessionaire. The expert will review previous studies and the work already done in similar geological conditions. He will ascertain the volume, the methods and the costs of remaining works, as well as associated risks. The expert could recommend that other geological surveys be carried out before tendering the concession. fj) Evaluation of already completed civil works. This task is intended to provide prospective concessionaires with ways to ascertain risks associated with taking over the responsibility of works completed, and will form an integral part of the concession. (k) Assistance in the selection of a concessionaire. The consultant will assist the Management Authority in designing the final concession scheme, including a draft concession contract, and in forecasting its impact on public finance. Clauses will be drafted to safeguard the interest of the community, particularly for the environment, which the concessionaire will be bound to protect during and after construction. The consultant will provide assistance during the promotion stage, including providing information and identification of prospective investors, preparing pre-selection documents and tenders (including technical and financial bidding specifications), and provide advice from the bid evaluation stage through contract award. Support will also be given on financial engineering aspects, including the preparation of requests to Donors for financing of the GoA share of subway investments and negotiation of their loans. Design, planning and financing of the technical assistance 2.46 The key steps in project implementation are: (a) January 2003: establishment of the Management Authority. (b) June 2003: signing of the subway concession contract. (c) January 2008: commissioning of the subway Line I to traffic. 2.47 The project TA will be delivered through studies and consulting services with the following characteristics. (a) Completion of the Greater Algiers Institutional Reorganization study (i) Requires legal expertise and urban transport specialists. (ii) To be executed from February to May 2002. (iii) Budget: US$50,000. Source of financing: Bank loan. (b) Tariff andfunding study (i) Requires economists, financial and urban transport specialists. (ii) To be executed between March and November 2002. - 36 -  (iii) Budget: US$200,000. Source of financing: Bank loan. (c) Assistance to institutional reorganization (i) Implies specialized studies and short term expert missions. (ii) Will be distributed over the project implementation period (40% in 2002; 40% in 2003; 20% in 2004). (iii) Budget: US$250,000. Source of financing: Bank loan. (d) Household survey (i) Requires services by a consultant with broad experience in sample surveys and in transport planning. (ii) Will be executed from October 2001 to June 2002. (iii) Budget: US$150,000. Source of financing: GoA. (e) Transport, traffic and parking plans study. (i) Requires services by a consultant specialized in transport planning in large urban perimeters. (ii) Also requires a road safety expert to carry out the safety audit. (iii) To be executed between September 2002 and August 2003. (iv) Budget: US$500,000. Source of financing: Bank loan. (f) Study of transport impacts on air quality. (i) Requires consultants specialized in environmental management (ii) To be executed from Juen to December 2002. (iii) Budget: US$100,000. Source of financing: GoA. (g) Study on bus service consolidation and service concessioning (i) Requires expertise in urban transport and on legal matters. (ii) To be executed from April 2002 to February 2003. (iii) Budget: US$150,000. Source of financing: GoA. (h) Environmental assessment study for the subway. (i) Requires a consultant specialized in environmental management and in railway works. (ii) To be executed from Juen to September 2002. (iii) Budget: US$300,000. Source of financing: Bank loan. (i) Geotechnical surveys. (i) Requires a consultant familiar with underground works. (ii) To be executed from June to December 2002. (iii) Budget: US$200,000 plus a contingency allowance of US$300,000. Source of financing: Bank loan. () Evaluation of already completed civil works. (i) Requires a consultant familiar with underground works. (ii) To be executed from June to December 2002. (iii) Budget: US$400,000. Source of financing: Bank loan. (k) Assistance to selection of a concessionaire. (i) Requires a consultant conversant with concessioning processes and financial engineering thereof, with an urban transport specialization. (ii) Will be executed from June 2002 to June 2003. (iii) Budget: US$1.2 million. Source of financing: Bank loan (US$1 million) and GoA (the balance). Project Component 6 - US$0.03 million Project Financial Management - 37 -  2.48 This component is centered on project management needs without no direct development objective. Project activities will consist in setting up a Financial Management System complying with Bank requirements on project management. Details on the scope and timing of activities under this component are provided in Annex 6. In addition, the GoA will finance the office equipment needed. - 38 -  Annex 3: Estimated Project Costs ALGERIA: TRANSPORT TECHNICAL ASSISTANCE Algeria Transport Technical Assistance Project Components Project Cost Summary % % Total (Dinar allgrien) (US$) Foreign Base Local Foreign Total Local Foreign Total Exchange Costs Ports 25,326.0 155,574.0 180,900.0 337.7 2,074.3 2,412.0 86 22 Airports 4,221.0 25,929.0 30,150.0 56.3 345.7 402.0 86 4 Air Transport 5,803.9 35,652.4 41,456.3 77.4 475.4 552.8 86 5 Railways 38,516.6 236,602.1 275,118.8 513.6 3,154.7 3,668.3 86 34 Urban Transport 40,099.5 246,325.5 286,425.0 534.7 3,284.3 3,819.0 86 35 Project Management 316.6 1 944.7 2,261.3 4.2 25.9 30.2 86 - Totai BASELINE COSTS 114,283.6 702,027.7 816,311.3 1,523.8 9,360.4 10,884.2 86 100 Physical Contingencies 31.7 194.5 226.1 0.4 2.6 3.0 86 - Price Contingencies 10,696.3 65 705.7 76,402.0 38.4 236.1 274.6 86 3 rotal PROJECT COSTS 125,011.5 767,927.9 892,939.4 1,562.6 9,599.1 11,161.7 86 103 Commitment Charges - 23,289.8 23,289.8 - 291.1 291.1 100 3 Total Costs to be Financed 125,011.5 791,217.7 916.229.2 1,562.6 9,890.2 11,452.9 86 105 Table 1. Technical Assistance to the Port Reform Detailed Costs Base Cost - Negotiation 2002 2003 2004 2005 Total A. Fine Tuning of the New Port Institutional Framework Study on the Legal and Regulatory Framework 201.0 - - - 201.0 Etude d'inserion du secteur priv6 251.3 - - - 251.3 Study on the Development Strategic Plan 301.5 301.5 - 603.0 Subtotal Fine Tuning of the New Port Institutional Framework 753.8 301.5 - - 1,055.3 S. Private Sector Participation in Commercial Port Activities Consulting Services to MT and Regional Authorities; Training 80.4 80.4 40.2 - 201.0 C. Consulting Services to Concessioning of Djen-Djen Selecton of a Concessionnaire - 1,105.5 - - 1,105.5 D. Facilitation of InternatIonal Trade Procedures Consulting Services in Trade Facilitation - 50.3 - - 50.3 Total 834.2 1,537.7 40.2 - 2,412.0 Table 2. Technical Assistance to the Airport Reform Detailed Costs Base Cost - Negotiation 2002 2003 2004 2005 Total I. Investment Costs Study for the Nat. Airport Strategy & Identific of Concessions 286.4 15.1 - - 301.5 Service de cabinet-conseil et formaton 30.2 50.3 20.1 - 100.5 Total 316.6 65.3 20.1 - 402.0 - 39 -  Table 3. Technical Assistance to Air Transport Detailed Costs Base Cost - Negotiation 2002 2003 2004 2005 Total 1. Investment Costs A. National Air Transport Strategy Formulation Sector Strategy Study 100.5 - - - 100.5 B. Regulatory Framework Development 1. Consultng Services Selective Consult. Sces at Negotiation 37.7 12.6 - 50.3 Regulatory Framework Definition 226.1 75.4 - - 301.5 Subtotal Consulting Services 263.8 87.9 - 351.8 2. Training Study Trips 8.5 8.3 8.3 - 25.1 Seminars in Algeria 25.6 24.9 24.9 - 75.4 Subtotal Training 34.2 33.2 33.2 - 100.5 Subtota Regulatory Framework Development 298.0 121.1 33.2 - 452.3 Total 398.5 121.1 33.2 - 552.8 Table 4. Technical Assistance to Railways Rehabilitation Detailed Costs Base Cost - Negotiation 2002 2003 2004 2005 Total Investment Costs General Strategy Definition Studies to Deepen & Complement Railways Strategy 201.0 - - 201.0 Marketing Strategy and Business Forecast Procurement of a Railway Costing Software 150.8 - - - 150.8 Study on the Intercity Passenger and Freight Traffic Competitiveness 301.5 - - - 301.5 Feasibility Study of Containerized Traffice Development 150.8 - - - 150.8 Assistance to Setting Up of Marketing Structures and Training 75.4 226.1 - - 301.5 Subtotal Marketing Strategy and Business Forecast 678.4 226.1 - - 904.5 C. Re-engineering of the Railway Company Transport Technical Organization Scheme 226.1 75.4 - 301.5 Track Maintenance Strategy 263.8 87.9 - - 351.8 Maintenance Strategy for the Rolling Stock 125.6 125.6 - - 251.3 Master Plan of Telecommunicabons and Radio-Block Development 150.8 100.5 - - 251.3 Modemrization of Financial Management and Accounting Systems 90.5 60.3 - - 150.8 Human Resources Management Strategy 301.5 - - - 301.5 Project Economic and Financial Evaluation Training 100.5 - - - 100.5 Subtotal Reengineering of the Railway Company 1,258.8 449.7 - - 1,708.5 D. Support to Promotion of Public-Private Partnerships & privatization Feasibility Study of a Concession for Electrification of the Suburban Network - - 150.8 - 150.8 Support to concessioning the Algiers-Agha Station and Business Center - 30.2 271.4 - 301.5 Assistance to Privatization of Contracting and Service SNTF Subsidiaries 60.3 40.2 - - 100.5 Subtotal Promotion of Public-Private Partnerships & Prlvatizatlon 60.3 70.4 422.1 - 552.8 E. Development of a Medium-Term Program of Priority Investments - 301.5 - - 301.5 Total 2,198.4 1,047.7 422.1 - 3,668.3 -40 -  Table 5. Technical Assistance to Urban Transport Detailed Costs Base Cost - Negotiation 2002 2003 2004 2005 Total I. Investment Costs A. Institutional and Financial Framework Completion of the Greater Algiers Institutional Reorganization Study 50.3 - - - 50.3 Tariff and Funding Study 201.0 - - - 201.0 Assistance to Institutional Reorganization 100.5 100.5 50.3 - 251.3 Subtotal Institutional and Financial Framework 351.8 100.5 50.3 - 502.5 B. Reorganization of Existing Transport Modes Household Survey 150.8 - - - 150.8 Transport, Traffic and Parking Plans Study 201.0 301.5 - - 502.5 Study of Transport Impact on Air Quality 100.5 - - - 100.5 Subtotal Reorganization of Existing Transport Modes 452.3 301.5 - - 753.8 C. Competitive Framework for Surface Urban Transport Study on Bus Service Consolidation and Service Concessioning 135.7 15.1 - - 150.8 D. Concessioning of the Algiers Subway Environmental Assessment Study 301.5 - - - 301.5 Geological Surveys 502.5 - - - 502.5 Evaluation of Already Completed Civil Works 402.0 - - - 402.0 Assistance to Selection of a Concessionnaire 603.0 603.0 - - 1,206.0 Subtotal Concessioning of the Algiers Subway 1,809.0 603.0 - - 2,412.0 Total 2,748.7 1,020.1 50.3 3,819.0 Table 6. Project Management Detailed Costs Base Cost - Negotiation 2002 2003 2004 2005 Total I. Investment Costs A. Project Management Unit Establishment 30.2 - - - 30.2 Total 30.2 - - - 30.2 -41 -  Annex 4 ALGERIA: TRANSPORT TECHNICAL ASSISTANCE No economic analysis was needed -42 -  Annex 5: Financial Summary ALGERIA: TRANSPORT TECHNICAL ASSISTANCE Years Ending June 30 Amounts shown are in US$ '000 | Year 1 Year 2 | Year 3 Year 4 | Year 5 | Year 6 _Year 7 Total Financing Required Project Costs Investment Costs 3316.0 5282.0 2265.4 299.5 0.0 0.0 0.0 Recurrent Costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Costs 3316.0 5282.0 2265.4 299.5 0.0 0.0 0.0 Front-end fee 87.2 0.0 0.0 0.0 0.0 0.0 0.0 Total Financing 3403.2 5282.0 2265.4 299.5 0.0 0.0 0.0 Financing IBRD/IDA 2635.2 4100.0 1780.0 205.0 0.0 0.0 Government 768.0 1182.0 462.6 71.6 0.0 0.0 0.0 Central 768.0 1182.0 462.6 71.6 0.0 0.0 0.0 Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Co-financiers 0.0 0.0 22.4 22.4 0.0 0.0 0.0 User Fees/Beneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 3403.2 5282.0 2265.0 299.0 0.0 0.0 0.0 Main assumptions: - 43 -  Annex 6: Procurement and Disbursement Arrangements ALGERIA: TRANSPORT TECHNICAL ASSISTANCE Procurement A. Procurement responsibilities The MoT, through its Project Management Unit (PMU), will be responsible for the overall project's procurement activities, including compliance with procedures and timetables agreed with the Bank. The PMU will coordinate project activities with the representatives of the various transport sub-sector directorates involved, and SNTF. The PMU Director has already been identified and is a senior person within the MoT. He will be assisted by a financial manager and an administrative officer who will be in charge of the financial management and procurement activities of the project respectively. All contract awards will be approved by the PMU. However, the various transport sub-sector directorates (Port, civil aviation and urban transport directorates) and SNTF will have delegated responsibility to prepare the bid documents, negotiate contracts and monitor their execution in coordination with the PMU. Specific coordination arrangement will also be needed with the Ministere de la Participation et de la Coordination des Reformes (MPCR) regarding privatization and/or concessioning of transport services. B. Procurement Arrangements Procurement of the proposed project would be carried out in accordance with World Bank "Guidelines: Selection and Employment of Consultants by World Barik Borrowers" published in January 1997 (revised in September 1997 and January 1999), and the special provisions stipulated in the loan agreement. Procurement methods The methods to be used for the procurement described below are summarized in Table A: Consultant Selection Arrangements. Selection of Consultants Consulting services will be contracted under this project as follows: (a) some 21 major studies (each costing US$200,000 or more) for the port, airport, air transport, railway, and urban transport components, which are estimated to cost US$7.5 million (80% of the loan proceeds); and (b) technical assistance and training in the same areas. Details of these studies and services are mentioned in Annex 2. About US$900,000 (ust below 10% of the loan proceeds) will be allocated to short term expert missions and training seminars. While some packaging could be envisaged, the need to mobilize the right'expertise at the right moment will likely mean many small contracts. Study trips will be financed up to a cumulative amount of US$50,000. Firms All contracts for firns would be procured using Quality and Cost-Based Selection (QCBS), except for smaller contracts estimated to cost US$100,000 equivalent or less, which may be procured using - 44 -  Consultants qualifications (CQ) up to an aggregate amount not to exceed US$700,000. The use of the Bank's Standard Request for Proposals (SRFP) is mandatory for contracts estimated to cost more than US$200,000 equivalent, and should be used whenever possible for contracts below this amount. SRFP will consist of two standard forms of contract: one for complex time-based consultant assignments, for which remuneration is determined on the basis of time actually spent by consultants; and the other for assignments remunerated on a lump-sum basis. Individuals Specialized advisory services would be provided by individual consultants, selected by comparison of qualifications of three candidates and hired in accordance with the provisions of paragraphs 5.1 through 5.3 of the Consultant Guidelines, up to an aggregate amount of US$ 750,000. Contracts below US$20,000 may however be awarded on sole source basis, with the Banks prior agreement. C. Assessment of borrower's capacity to implement procurement Procurement activities will be carried out by the MoT through its PMU referred to above. Since several departments of MoT, namely the port directorate and the urban transport, as well as the head of the PMU, have been working with the Bank for many years before, the overall risk assessment resulting from the PMU's capacity assessment is judged to be average. The PMU will need to have in place a satisfactory system for filing, monitoring and reporting procurement actions, and should therefore take action to mitigate these risks. Procurement Plan By negotiations, the Borrower will have developed a procurement plan for project implementation. The proposed plan shall be furnished to the Bank for its review and approval, in accordance with the provisions of paragraph 1 of Appendix I to the Guidelines. At the end of each calendar year, the Borrower will update the Procurement Plan with a detailed procurement schedule for the coming year. A General Procurement Notice (GPN) would be advertised in the "United Nations Development Business" (UNDB) not less than six weeks prior to loan signing. Frequency of Procurement Supervision In addition to the prior-review by the Bank and on the basis of the capacity assessment of the PMU, it is recommended that one supervision mission be sent out every six months during project implementation to carry out a post review of procurement actions. The overall risk assessment (Average) means that the post-review field analysis should cover a sample of not less than I in 5 contracts signed. -45 -  Procurement methods (Table A) Table A: Project Costs by Procurement Arrangements (US$ million equivalent) Procuremenit Method~ 1. Works 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 2. Goods 0.00 0.00 0.00 0.03 0.03 (0.00) (0.00) (0.00) (0.00) (0.00) 3. Services 0.00 0.00 10.26 0.87 11.13 Studies, consulting services (0.00) (0.00) (8.63) (0.00) (8.63) and training 4. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 5. Front-end fee 0.00 0.00 0.09 0.00 0.09 (0.00) (0.00) (0.09) (0.00) (0.09) Total 0.00 0.00 10.35 0.90 11.25 (0.00) (0.00) (8.72) (0.00) (8.72) " Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. 21 Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units. - 46 -  Table Al: Consultant Selection Arrangements (optional) (US$ million equivalent) Selecton Method Consultant Services Expendfture Category QCBS QBS SF8 LCS CQ Other N.Bf. Total CostS A. Firms 9.00 0.00 0.00 0.00 0.70 0.00 0.70 10.40 (7.50) (0.00) (0.00) (0.00) (0.60) (0.00) (0.00) (8.10) B. Individuals 0.00 0.00 0.00 0.00 0.60 0.00 0.10 0.70 (0.00) (0.00) (0.00) (0.00) (0.50) (0.00) (0.00) (0.50) Total 9.00 0.00 0.00 0.00 1.30 0.00 0.80 11.10 (7.50) (0.00) (0.00) (0.00) (1. 10) (0.00) (0.00) (8.60) 1\ Including contingencies Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB Selection under a Fixed Budget LCS Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc. N.B.F. = Not Bank-financed Figures in parenthesis are the amounts to be financed by the Bank Loan. - 47 -  Prior review thresholds (Table B) Table B: Thresholds for Procurement Methods and Prior Review' 1. Works 2. Goods 3. Services Firms >100,000 QCBS All Individuals <100,000 QCBS, CQ Review TOR and short list >50,000 Section V of Guidelines All >20,000 and <50,000 Section V of Guidelines Review TOR <20,000 Sole Source possible Bank's prior agreement 4. Miscellaneous 5. Miscellaneous 6. Miscellaneous Total value of contracts subject to prior review: US$6.7 million Overall Procurement Risk Assessment Average Frequency of procurement supervision missions proposed: One every 6 months (includes special procurement supervision for post-review/audits) Thresholds generally differ by country and project. Consult OD 11.04 "Review of Procurement Documentation" and contact the Regional Procurement Adviser for guidance. -48 -  Disbursement Allocation of loan proceeds (Table C) Table C: Allocation of Loan Proceeds Expenditure Category Anount in US$million Financing Percentage Consulting services, studies and training 100% of contracts without taxes (a) for Parts A, B, C, D and F of the 4.30 Project (b) for Part E of the Project 3.50 Unallocated 0.83 Total Project Costs ____8.63 Front-end fee 0.09 100% Total 8.72 Assessment of the Financial Management Systems and Action Plan Institutional and legal framewok The principles and procedures for financial and budget systems implemented by the MoT are derived from the Public Accounting law. The transactions in terns of comrnitments and payments are recorded in the accounting books, which are maintained manually on a cash basis. The annual budget is defined based on programs and actions agreed between the Ministry of Finance and MoT. Payments of expenditures are executed after authorization of the financial controller. Authorized payments are processed by BAD if they are related to investment in foreign currencies. The authorization process ensures that expenses are eligible, conform, and have been budgeted. Budget control is carried out by the "Inspection Generale des Finances (IGF)" (the specialized auditing body of the Ministry of Finance) and the "Cours des Comptes", which ensures supervision of Public funds and issues the "quitus" (acquittal) to the administrator handling them. The budget and financial departments at the MoT have a competent staff. Project Implementation The Project Management Unit (PMU) will be responsible for procurement, budgeting, financial, accounting and reporting functions, and management of all components of the project. It will ensure that all project-related activities and related documentation are appropriately maintained and recorded. It will consolidate all information generated during the implementation of the project by all concerned parties. In order to be able to efficiently monitor project activities and produce adequate reporting, the PMU (to be created before Board presentation) will set up a Financial Management System (FMS) and a computerized system with proper internal control of data by effectiveness. It will be adequately staffed to handle financial and accounting activities, management of contracts, and prepare the Project Management Reports (PMR). The PMU would be responsible for overall project financial management and accounting. It would maintain cash accounting system for the project, prepare and disseminate Financial Statements (FS) and Financial Management Reports (FMR). The PMU will ensure that the project FS and related reports are timely audited and that audit reports are submitted to the Bank according to loan agreement provision. It will - 49 -  have a correspondent/counterpart, financial officer for the project at the BAD who will be responsible for processing all applications for payment prepared and sent by the PMU. Project Accounting System: Project accounting will cover all sources of project funds (including contributions from beneficiaries), and all utilization of said funds. All project-related transactions would be recorded in the books of accounts. Direct disbursements made by the Bank and from the Special Account, opened at the Central Bank of Algeria (BA) and managed by BAD, on behalf of the project will be included in the project accounting system. Funds received from different sources (World Bank, Government budget and other possible financing sources) would be identified separately and reflected in the project accounts and the FS. FS for the project would be maintained by the PMU using a computerized FMS system. The computerized system to be developed will be capable of producing financial reports for the Project. Project FMS will be defined by the consultant who developed the FMS for the Privatization Technical Assistance Project. During an interim period and with the assistance of MIS staff of the MT, the PMU will adapt the FMS tables I-A 3-A, 3-B) related to use and source of funds and procurement activities. A detailed action plan has been discussed and agreed upon to ensure that the final PMR reporting formats will be available by June 30, 2002. Financial Management System (FMS) The FMS will be designed to capture data and project-related transactions and activities at all stages of project implementation, including commitments, signature of contracts and authorization by financial auditor ("Contr6leur Financier"). A Balance reflecting all transactions for the project would be prepared quarterly and as requested. The data will be captured and classified such as to facilitate financial reporting of project expenditures. The classification will reflect: (i) budget allocations; (ii) project components and sub-components; (iii) contracts; (iv) disbursement categories; and (v) sources and uses of funds indicated in the project documents (Project Implementation Plan, Project Appraisal Document, Project costs). The FMS will be an adaptation of the public accounting system to meet Bank requirements and guidelines regarding project financial management. It will define principles and procedures ensuring a pertinent and comprehensive information flow and centralization of data necessary for monitoring and reporting functions of the PMU. This will include: (i) forecast procedures; (ii) reconciliation of accounts and documents; (iii) recording of data received from Direction des Finances Exterieures (DFE) and Direction des Equipements Publics (DEP) of BAD; (iii) analyzing variations; and (iv) preparation of the PMRs. Flow of Funds The allocation of funds would include both counterpart funds from MoT budget and funds from the Bank and other lenders. Annual budgetary allocations would be based on programmed project activities and expenditures as prepared by the MoT and PMU. A special account (SA) will be opened at BA and managed by BAD. Deposit into and payrnents from the SA will be made in accordance with provisions in the Loan Agreement. Withdrawal applications and replenishment of the SA would be prepared and sent by BAD (in close coordination with the PMU), carrying the authorized signature. Information Flow The PMU would generate and maintain all supporting documentation for expenditures on project-related activities. It will certify the eligibility and the conformity of expenses and send applications, with all supporting documents, to BAD for payment. Copies of all applications will be maintained at the PMU. The PMU would provide monthly summary statements of expenditure based on the FMS system along with other information and documents. This system would be periodically reviewed during implementation and improved as necessary. "Direction des Equipements Publics (DEP)" of BAD will ensure that the expenses are eligible and that the - 50 -  counterpart funds are available in the budget. It will then issue the payment order and transmit it to " Direction des Finances Exterieures (DFE)" for payment. DEP will keep copy of the entire documents for filing. DFE has the responsibility for maintaining the SA and will accordingly ensure that all proposed amounts to be paid out of the SA relate to the project and are eligible. DFE will send the payment order to BA for processing.. DFE will keep the original of all supporting documents for filing. After processing the payment, BA will send a copy of the debit notice to DFE showing the amount paid, the currency and the exchange rate. For each transaction, DFE will transmit to PMU a detailed statement (regarding the project accounts and the SA) along with copy of the statements received from BA. Internal Controls All expenditures related to project components would be respectively cleared the PMU chief and the designated financial officer at BAD. Existing internal controls at the MoT and BAD seem to be adequate and enable: (i) monitoring of actual financial performance with budgets and targets; (ii) adoption and operation of simple, clear and transparent financial and accounting policies which would govern financial management of and accounting for the project; and (iii) ensuring standard internal controls such as monitoring of expenditures, appropriate documentation, authorization level, divergence of duties, periodic reconciliation, physical verification, etc.; Financial Management Reports (FMR) Quarterly, and annually: Each quarter, project FMRs will be generated by the PMU and sent to the Bank within 45 days after the closing of each quarter. These reports will summarize all transactions, including: (i) budgeted and actual expenditures with an analysis of major variances on sources and application of funds by components, expenditure categories, physical parameters and financial targets; (ii) expenditures by disbursement categories; (iii) forecasts for the coming two quarters; and (iv) contracts management. Formats of the reports are in the project file. Annually : Annual audit reports on the project's FS will be submitted to the Bank on June 30 of the following year. The reports will include: (i) a statement of sources and utilization of funds indicating funds received from various sources, project expenditures, and assets and liabilities of the project. This would also include appropriate schedules classifying project expenditures by components, and expenditure categories; (ii) a Special Account Reconciliation Statement; and (iii) a Statement of Withdrawals from the IBRD Loan made on the basis of Statements of Expenditure (SOEs). Auditing Arrangements An independent auditor, under TORs acceptable to the Bank, will be hired to undertake annual audits of all project accounts, including the SA. The auditor will carry on its duty in confornity with international audit standards and on the basis of TORs reviewed by the Bank. The report and the audited project FS would be submitted to the Bank within 6 months of the close of each fiscal year The audit should be comprehensive and cover all aspects of the project. The Terms of Reference of the auditors include both audit of financial transaction, and an assessment of the operation of the FMS (management letter), including a review of internal control mechanisms. Disbursement: The SA would be operated and maintained in the Central Bank of Algeria. The authorized allocation of the SA would be US$870,000 which represents about four months of estimated disbursements from the Bank Loan. The SA would be operated in accordance with the Bank's operational policies. - 51 -  Disbursements would be made against Withdrawal Applications for reimbursements of expenditure with full documentation, reimbursement of expenditures against Statements of Expenditure (SOEs) and fully documented expenditures, and direct payments. The Bank would disburse against SOEs foT the following types of expenditures: (i) contracts for consultants' firms not exceeding US$100,000; (ii) contract for individual consultants not exceeding US$50,000; and (iii) contracts/expenditures for training and study tours that are below the equivalent of US$50,000. Although disbursements would be made using the Bank's existing disbursement procedures (as described above), it was agreed that PMU would operate the project financial management system and produce quarterly Project Management Reports (PMRs) from the system; and that PMU would take necessary steps (especially the adoption of a computerized system and recruitment of a consultant to that end) to be able to produce a reliable PMR on a quarterly basis. Timely preparation and the quality PMRs are essential to effective project management. Disbursements from the Bank Loan will not be made on the basis of PMRs, but will rather be made on the traditional reimbursement basis. PMR will be used for proper management of project expenses, financial reporting and monitoring of project activities. Risks There are two main risks relating to financial management aspects: (i) delay in creating the PMU and difficulties to coordinate project activities; and (ii) delays in preparation and implementation of the FMS, the FMPM and of PMRs. Both risks are considered manageable due to the various risk-mitigation measures taken. Nonetheless, these are highlighted here in view of their potential for adversely affecting project performance. These aspects will be monitored closely as part of project supervision. An action plan for mitigating these risks is outlined below. The above-mentioned risks are mitigated by the following factors: (a) commitment to create and maintain a well staffed PMU by Board Presentation; and designation of representative from each department in the MoT and a counterpart in Bad responsible for handling all disbursement aspects of the project; (b) hiring of a consultant to define procedures which would govem management of project expenditures in particular and to adapt an adequate computerized system for PMR; and (c) implementation of computerized FMS by the PMU. ACTION PLAN The Bank and the MoT agreed to the following actions: PMU The PMU includes a project director, a financial specialist, and an administrative officer. The PMU, under the MoT, will be responsible for consolidating financial and administrative information provided by the participating subsectors for the project. The PMU should have appropriate means and skills and provide training to all staff in charge of project finances to properly record transactions and generate financial reports, and monitor project activities. definition of responsibilities and tasks to be performed by PMU staff. FMS An FMPM will be developed and will include a description of procedures for financial management and internal control, definition of roles and responsibilities of PMU staff, including their counterpart in BAD, and determination of timetable and frequencies for preparing and transmitting financial data. Accounting basis A Chart of Accounts for the project will.be designed based on the project's description, - 52 -  components and its budgetary classification. A manual will support this chart, describing the operation of each account in accordance with the Public Accounting Law. With the assistance of consultant, the PMU will develop or adopt a software enabling automatic breakdown of expenses, by category and component, incurred during project implementation, and build a project database. FMR The PMU will define the procedures for preparation of the PMR based on information and reports prepared by the executing agencies. The computerized model should allow appropriate linkages between all applications to generate information needed for the FMR. The FMR will be submitted to the Bank 45 days after the end of each quarter. Timetable The above described action plan will be executed following the attached timetables. Regarding the implementation of the FMS and building the data base, it was agreed that the PMU will, during the interim period, adapt tables I-A, 3-A, and 3-13, using excel software to monitor and record data related to the project. The MIS of the MT will assist the PMU to set up these tables. In the meantime the PMU will enter into an agreement with the consultant who is preparing the FMS/FMPM for the Privatization Technical Assistance Project to adapt the FMS to the Transport Technical Assistance Project.. Actions Dates ResRonsibility Creation and staffing of the PMU Before Board MoT/BAD Adaptation and preparation of FMS and FMPM 12/31/2001 PMU/Consultant Development of computerized system (FMS) and test 3/31/2002 PMU & Consultant effectiveness Acquisition of needed computers 3/31/2002 PMU Preparation of first complete PMR 6/30/2002 PMU A Bank mission will review the FMS about eight months after effectiveness and make recommendations for improvement, if any. Use of statements of expenditures (SOEs): Special account: NOTE A sample of table 1 (a), 3 (a) and (b) is in the project file (their format did not allow for inclusion in this PAD). - 53 -  The World Bank 1818 H Street N.W. (202) 477-1234 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A December 19, 2000 Republic of Algeria Technical Assistance Project Report on the Assessment of Project of PMR-Based Disbursement [Financial Management System] I have reviewed the financial management system relating to this project. The objective of the review was to determine whether the project has in place an adequate financial management system as required by the Bank under OPAIBP 10.02 My review, which included visits to the project implementing agency, was based on the Bank's guidelines for "Review of Financial Management System", and focused on the assessment of the project's accounting system, internal control, planning, budgeting and financial reporting system, selection of an auditor as well as the format and contents of the Project Management Report (PMR) to be submitted by the Borrower in support of Withdrawal Applications. I confirm that the project satisfies the Bank's minimum financial management requirements. However, in my opinion, the project does not have in place an adequate project financial management system that can provide, with reasonable assurance, accurate and timely information on the status of the project (PMR) as required by the Bank for the PMR-based Disbursements. I have detailed in the attachment the inadequacies that I found in the system together with an agreed action plan by the borrower to remedy the situation. Fathi Ben Slimane Senior Financial Analyst/FMS MNSID - 54-  Letter Assessing Procurement/Contract Management System The World Bank 1818 H Street N.W. (202) 477-1234 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A March 1, 2001 PEOPLE'S DEMOCRATIC REPUBLIC OF ALGERIA TRANSPORT TECHNICAL ASSISTANCE PROJECT Report on the Assessment of the Procurement /Contract Management System I have reviewed the procurement/contract management system relating to this project, including the format and content of the section of Project Management Report (PMR) on procurement monitoring. The objective of the review was to determine whether the procurement/contract management system adopted by the project conforms to the Bank's guidelines for procurement in investment projects. My review was based on the "Assessment of Agency's Capacity to Implement Project Procurement, Setting of Prior Review Thresholds and Procurement Supervision Plan" guidelines issued by the Bank. I certify that the project has in place a procurement/contract management system that can provide the appropriate data on major procurement and contract management as required by the Bank. Claude Archambault Senior Transport Specialist Infrastructure Development Group Middle East and North Africa Region - 55 -  Letter Assessing Physical Monitorable Indicators and Overall Assessment The World Bank 1818 H Street N.W. (202) 477-1234 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A March 1, 2001 PEOPLE'S DEMOCRATIC REPUBLIC OF ALGERIA TRANSPORT TECHNICAL ASSISTANCE PROJECT Report on the Assessment of the Physical Monitorable Indicators and Overall Assessment I have reviewed the project's system for monitoring physical implementation progress, including its monitorable indicators for major outputs, and certify that the system can provide the appropriate data on physical progress (PMR - section 2) as required by the Bank. I also certify that based on the assessments of the FPS-OPR and the Procurement Specialist given above, taken together with my own overall assessment of the project, this project is suitable for consideration under the PMR-based disbursement procedure. Michel Loir Principal Transport Economist Infrastructure Development Group Middle East and North Africa Region - 56 -  Annex 7: Project Processing Schedule ALGERIA: TRANSPORT TECHNICAL ASSISTANCE ProJect Schedule Planned Actual Time taken to prepare the project (months) 6 9 First Bank mission (identification) 09/24/2000 09/24/2000 Appraisal mission departure 11/17/2001 11/17/2000 Negotiations 04/16/2001 06/10/2001 Planned Date of Effectiveness 12/31/2001 Prepared by: NA Preparation assistance: Other than Bank staff listed below, project preparation was assisted by Mr. Richard Lanthier, Consultant, for definition of needs and TA assistance design under the airport component. The Ministry of Transport in Algeria participated actively and effectively in project preparation. Bank staff who worked on the project included: Name ______l_Specl_i_y___ Michel Loir Transport Economics Hubert Nove-Josserand Urban Transport Karim-Jacques Budin Railway management and operations Patrick Fourgeaud Port management and operation Yves Duvivier Private sector development Pierre Vieillescazes Project finance; Bank guarantees Fathi Ben Slimane Financial management Claude Archambault Procurement Hocine Chalal Environmental safeguards - 57 -  Annex 8: Documents in the Project File* ALGERIA: TRANSPORT TECHNICAL ASSISTANCE A. Project Implementation Plan A draft was submitted at negotiations. The final PIP will be submitted as a condition of effectiveness. B. Bank Staff Assessments The Aide Memoires of the Preappraisal mission (October 2000) and of the Appraisal mission (November 2001) contain the project team assessments. C. Other Ministere des Transports. "Note sur la Strategie de Developpernent du Secteur des Transports (Avril 2001) *Including electronic files - 58 -  Annex 9: Statement of Loans and Credits ALGERIA: TRANSPORT TECHNICAL ASSISTANCE Feb-2001 Difference between expected and actual Original Amount in US$ Millions disbursements Project ID FY Purpose IBRD IDA Cancel. Undisb. Orig Frm Rev'd P069947 2000 DZ-TEERP 83.46 0.00 0.00 83.46 23.50 0.00 P070123 2000 OZ-Privatization Assistance (LIL) 5.00 0.00 0.00 5.00 0.00 0.00 P070308 2000 DZ-Telecommunications and Postal Sector 9.00 0.00 0.00 9.00 1.68 0.00 P042940 1998 DZ-LOW INCOME HOUSING 150.00 0.00 0.00 140.00 100.20 1.33 P043724 1997 RURAL EMPLOYMENT 89.00 0.00 0.00 61.79 61.79 13.13 P004978 1996 SOCIAL SAFETY 50.00 0.00 0.00 5.13 5.13 5.13 P004960 1996 IND.POLLUTION CTRL. 78.00 0.00 0.00 66.51 34.59 24.51 P004907 1995 DZ-HIGHWAYSVI 130.00 0.00 0.00 50.12 43.26 0.12 P004974 1994 DZ-WATER SUPPLYAND SEWERAGE 110.00 0.00 0.00 93.10 84.00 11.51 P004954 1993 BASIC & SEC. EDUCATI 40.00 0.00 5.00 6.56 11.56 1.28 Total: 744.46 0.00 5.00 520.67 365.71 57.02 - 59 -  ALGERIA STATEMENT OF IFC's Held and Disbursed Portfolio Feb-2001 In Millions US Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1998 ABCA 0.00 1.88 0.00 0.00 0.00 1.88 0.00 0.00 2000 AIP 0.00 0.30 0.00 0.00 0.00 0.00 0.00 0.00 1999 Aldaph 5.96 1.70 0.00 5.11 0.00 0.00 0.00 0.00 1992 Helios 2.67 0.00 0.00 0.00 2.67 0.00 0.00 0.00 1998 SGA 0.00 1.00 0.00 0.00 0.00 0.19 0.00 0.00 Total Portfolio: 8.63 4.88 0.00 5.11 2.67 2.07 0.00 0.00 Approvals Pending Comrnitment FY Approval Company Loan Equity Quasi Partic Total Pending Commitnent: 0.00 0.00 0.00 0.00 - 60 -  Annex 10: Country at a Glance ALGERIA: TRANSPORT TECHNICAL ASSISTANCE M. Eait Lower- POVERTY ant SOCIAL & Neorlt m&tle. AlWe* Africa inomwne Development diamond 1999 Populatn. mtd-vear lmillions) 30.0 291 2.094 Ufe expectancy GNP Der capita (Atlas method, USS) 1,550 2.060 1-200 GNP (Atlas method, VS billins) 4368 599 2,513 Averags annual growth, 1993-99 Powlation (%- 1.8 2.1 1.1 G Labor force (U) 3.7 3.0 t,2 GNP Gross Moat recent aemaft", (I*t.etyeer tvl#abl.*' II) per primary capita enrollment Povertv LU opopeulation below .ilanlo povent line) 14 Urben coDuation (% of totaltwulation) s0 SS 43 1Le expectancy at birth (vears) 71 69 S