Senegal - Dakar Fishing Port Project

Document of a The World Bank FOR OMFICIAL USE ONLY FILE C O P Y Rqort Ne. 1260a-SE STAFF PROJECT REPORT DAKAR FISHING PORT PROJECT SENEGAL April 5, 1977 This documet bu a resotkted ditIbution *d may be used by reciplents only lu the performne of their ofic du". Its oentents my ot otherwlse be disosed wiKot World Bank authoriuton.  CURRENCY EQUIVALENTS Currency Unit: CFA Franc (CFAF) US$1.00: CFAF 245 CFAF 1 Million: US$4,080 Fiscal Year of PAD: July 1 - June 30 SYSTEM OF WEIGHTS AND M1EASURES: METRIC Metric US Equivalents 1 meter (m) 3 - 3.28 feet (ft) 1 cubic meter (m ) - 35.29 cubic feet (cu ft) 1 kilometer (km) 2 - 0.62 mile (mi) 1 square kilometer (km ) - 0.386 square mile (sq mi) 1 metric ton (m ton) - 2,204 pounds (lb) 1 hectare (ha) - 2.47 acres (ac) ABBREVIATIONS AND ACRONYMS BADEA Banque Arabe pour le Developpement Economique en Afrique BCEOM Btreau Central d'Etudes pour les Equipements d'Outre-Mer (France) CCCE Caisse Centrale de Cooperation Economique CEP Centre des Etablissements Publics DOT Department of Transportation DPW Department of Public Works DSP Directorate of Studies and Programming FAO Food and Agriculture Organization GDP Gross Domestic Product GRT Gross Registered Tonnage MOF Ministry of Finance MOP Ministry of Planning MPWUT Ministry of Public Works, Urban Development and Transport NRT Net Registered Tonnage PAD Port Autonome de Dakar SCET-SONED Societe Centrale d'Equipment du Territoire/Societe Nationale d'Etudes de Developpement (France-Senegal) SOSAP Societe Senegalaise d'Armement a la Peche UNDP United Nations Development Programme  FOR OFFICIAL USE ONLY STAFF PROJECT REPORT DAKAR FISHING PORT PROJECT SENEGAL Table of Contents Page No. INTRODUCTION AND SUMMARY ...... ........... .......... i-xv I. THE TRANSPORT SECTOR ......... . . . . . . .................................... . 1 A. General ........................................... e.............. 1 B. The Transport System ... ............................ 1 C. Transport Planning and Coordination . ............... 4 1I. THE PORT OF DAKAR .................. 6 A. Port Facilities and Traffic ..... ............ 6 B. Port Administration . ...................... 9 C. Accounting, Budgeting, Audit and Finance ........... 10 III. THE SENEGAL FISHING INDUSTRY ............................ 14 A. Marine Resources . ................... * ................. 14 B. Industrial Fishing ............. ..................... 18 C. Government Maritime Fishing Policy ................. 21 D. Fish Processing and Marketing ......... .. ........... 25 E. Fishing Institutions . ............................. . 26 F. Training ........................................... 27 IV. THE PROJECT ............................................. 31 A. The Port Master Plan .............. .. ............... 31 B. Project Objectives and Description ... . . 31 C. Engineering Evaluation Eaat on............ .............. 35 D. Cost Estimates and Financing ....................... 40 E. Execution .......................................... 45 F. Project Preparation and Procurement ................ 46 G. Disbursements ..... ............................ . ....... 47 This report is based on information provided by the Port Autonome de Dakar (PAD), and on the findings of an appraisal mission in April/May 1976 com- posed of Messrs. J. Lethbridge (Port Engineer), J. Pelletey (Economist), D. Screwvala (Financial Analyst), and R. Aubray and W. Goukian (consul- tants, FAO). This document hbu a restrictwd distribution and may be used by recipients only in the porformance of their oMcial dutie. Its contents may not otherwise be disclosed without Worid Bank authorization.  -2- Page No. H. Environmental Impact . ............ . . . . . . . . . . . . . . 48 I. Employment and Urban Impact ......... .............. 49 V. ECONOMIC EVALUATION . .................. .......... . 50 A. General......................... 50 B. Traffic Forecasts ........o .... . ....50 C. Project Benefits .................. .... 55 VI. FINANCIAL EVALUATION .............. ............ 69 A. Impact of the Project on the Government's Finances . 69 B. Past Financial Performance of PAD ................. 71 C. Methods and Assumptions for Financial Analysis ..... 73 D. Forecast Financial Performance 1975-1983 ........... 75 E. Cash Flow and Financing Plan ............... 78 F. Balance Sheets . ....... . . .. ... ......... 79 G. Sensitivity Analysis .......... .............. 80 VII. AGREEMENTS REACHED AND RECOMMENDATION ................... 81 TABLES 1. Fish Landings in Dakar Port (Dakar-based fleets only) 2. Fish Landings for Processing and Local Consumption 3. Utilization of Landings 4. Exports of Fish Products 5. Estimated Total Costs and Benefits Streams 6. Benefits for Senegal ANNEX Detailed Documents and Data Available in the Project File MAPS Location of the Fishing Port - IBRD 12250 Dakar: Proposed Fishing Port Project - Existing Port and Approaches - IBRD 12251R Dakar: Proposed Fishing Port Project - Project Detail - IBRD 12252  INTRODUCTION AND SUMMARY THE TRANSPORT SECTOR 1. Senegal possesses a fairly well-developed transport system concen- trated on the Cap Vert Peninsula (including the capital city of Dakar) and the Groundnut Basin farther to the east, which are the areas with the larg- est population and economic activity. Roads are the principal mode of domestic transport, carrying about 75% of commercial inter-urban passenger and freight traffic excluding phosphates. The railway system consists of a main line from Dakar to Kidira on the Mali border, and several branch lines including connections from Dakar to St. Louis in the north and to the Taiba phosphate mine. Traffic at the Port of Dakar, mainly phosphates, petroleum, general merchandise, and international traffic for Mali and to a limited extent Mauritania, has doubled over the last ten years, and now totals about 5 million tons annually. Aviation centers on the Dakar airport, a major international transit point for Europe-Africa-South America traffic. Three secondary ports and 18 regional airports and airfields are located outside the Cap Vert region. 2. The Governnent's transport strategy aims essentially at: (i) deve- loping local transport infrastructure in support of overall economic growth, particularly in agriculture and fisheries and in the newly developing indus- trial and tourism sectors; (ii) promoting regional integration, especially to develop efficient transport links within rural areas, and connections with East Senegal and the Casamance region in the south; and (iii) assuring adequate maintenance for the already extensive investment in the sector. In addition, Senegal will continue to provide neighboring landlocked Mali with an efficient link to the sea, and to upgrade its own international transport facilities in air, port, and railway services. The Government's ability to do effective sector planning and coordination has been improved by the creation in mid-1975 of the Directorate of Studies and Programming (DSP) within the Ministry of Public Works, Urban Development and Transport. DSP, with technical assistance financed by the Bank Group under the Third Highway Project will execute economic and technical studies, and help to determine strategy and investment priorities in the transport sector. The proposed project for extension of the Dakar fishing port is designed to fit into the Government's overall transport strategy, while at the same time addressing some of the needs for development of the industrial fishing sector which has so far been rather neglected. 3. Bank Group operations in the sector have helped to establish the basic transport infrastructure, and then to ensure its successful maintenance and efficient use; the greatest activity has been in highways, particularly in pavement strengthening and maintenenance operations, as well as feeder road construction and improvement. Total lending in the amount of US$42.3 million equivalent has helped finance four projects in the highway sub-sector, two directed toward improving the physical infrastructure of the railway system and increasing locomotive capacity, one in aviation for major improvements to the Dakar Airport, and one for extension of a mole at the Port of Dakar, reconstruction of two quays, and execution of a dredging program.  - ii - The Port of Dakar 4. The port of Dakar enjoys an excellent sheltered location free from heavy swells and siltation. There are 46 well-equipped berths to handle containers, general cargo, phosphates and groundnuts for export, oil and petroleum products, and fishing traffic. Road and rail access to the port is good. The general layout of the port is shown in Map IBRD 12251R. 5. As a result of the very rapid expansion of the industrial fish- ing fleet over the past ten years, there is now a severe shortage of berth space for fishing vessels and for landing the catches, and commercial opera- tions at the port are becoming seriously affected. Since traffic projections through 1983 indicate a notable increase not only in overall dry cargo but also in fresh fish and fish products, there is an urgent need for the proposed project which provides for extension of the fishing port facilities and the required organization and management services. The Government is studying the possibility of constructing a new port at Sedar, about 80 km north of Dakar, to handle imports of crude oil for a proposed new refinery, and exports of phosphates, petroleum products, and possibly iron ore. These studies are still only at a preliminary stage, but even if the port were eventually built, revenues of the Dakar Port would be affected only minimally. 6. The Port Autonome de Dakar (PAD) was formed in 1959, and since 1960 has been a public enterprise charged with operation and maintenance of the port facilities, and responsible for improvement and expansion works. Separate Government departments control health and immigration services, police, customs, navigation aids, and railways within the port. Executive functions are vested in the Port Director. More substantive decisions of the port's 17-member Board of Directors are subject to joint approval of the Ministers of Finance and of Public Works, Urban Development and Transport; tariffs on goods also require the agreement of the Minister of Industrial Development. 7. Management of the port is good, and technical assistance staff are assigned and used effectively. Personnel, including expatriates, are generally well trained. The port organization is satisfactory and works well. There is however no special unit to manage and control fishing oper- ations, and only recently has a system been instituted for recording the movements of fishing vessels and evaluating landed catches. The proposed project provides for the establishment and staffing of an appropriate or- ganization within PAD to manage the new fishi.ng port. THE FISHERY SECTOR Marine Resources 2 8. The continental shelf off Senegal covers an area of about 24,000 km Oceanographic conditions along the coast are very favorable to marine life, and allow abundant fish resources. The exploitation of these resources is periodically reviewed by a Working Group on resources evaluation of the FAO  - iii - Fishing Committee for the Eastern Central Atlantic. The reports of this Work- ing Group provide up-to-date information on fish stocks, and make recommen- dations on research programs to be undertaken. In addition, extensive studies have been carried out by the Dakar Research Center of Oceanography with assist- ance from the UNDP/FAO to evaluate fish stocks in the waters off Senegal, Gambia, and Guinea Bissau, and to recommend the maximum feasible level of catches. Current estimates indicate that a total of about 900,000 tons of coastal pelagic fish, tuna, demersal and similar exploitable species can be caught annually without depleting the stocks. The Fishing Industry 9. Over the past 20 years, Senegal has become one of the leaders of fishery development in West Africa, and its fishermen among the most active and successful in the region. This development has come about primarily because of the existence within Senegalese territorial waters (recently extended to 150 miles offshore) of a large fishing potential, and because of the Government's efforts to strictly enforce the territorial limits. Until recently, fish stocks off the Senegalese coast were exploited by large foreign fleets not based in West Africa which usually ship directly to consuming countries, and land only a small part of their catches for pro- cessing in Dakar. Exclusive fishing zones are now established in accordance with recent fishing agreements (see para. 15), and foreign vessels must now land a large part of their catches at Dakar, and also pay tonnage fees on volumes of fish landed. Over the life of the existing fishing agreements (an estimated average of about ten years), a total of about US$55 million equiva- lent in loans and credits from various bilateral and multilateral donors is expected to be generated, and a significant proportion of this amount will be made available for investment in the Senegalese fishing industry during the next develpment plan period 1977-81. 10. The fishing sector contributes about 7% of GDP, although only about one-third of the estimated potential catch in Senegalese waters is now being landed. Approximately 75% of this catch results from the operation of about 4,000 canoes employing some 30,000 fishermen; this traditional fishing sector has developed over recent years as a result of operations in various agricul- tural and rural development projects financed by the Government and other bilateral sources, particularly Canada and Denmark. Landings of the Dakar- based industrial fleet account for the remaining 25% of total catch, mostly in high-value species, and contribute approximately 4% of GDP and 9% of total export value. Total landings of the Dakar-based fleet have been increasing at about 18% annually from 16,000 tons in 1964 to about 80,000 tons in 1974. 11. The rapid growth of the industrial fishing industry has resulted in a serious shortage of berth space in the port of Dakar available for fishing vessels. The proposed project would be a major step in expanding port facilities so that Senegal can realize the important potential contri- bution of the industrial fishing sector to the country's economic growth. The Dakar-based fleet currently in operation consists of about 150 vessels, about half of them Senegalese-owned. The net fixed asset value of the fleet is about US$25 million. However, many of the vessels are old and becoming  - iv - uneconomical to operate, and major renewal is required with larger and more expensive vessels with greater fish capacity, but requiring less maintenance and smaller crews. Adequate financing for this renewal effort is expected to become available within the sector from revenues derived from fishing agree- ments with foreign fleets, as well as from profits from commercial fishing, and through local commercial and development banks. Fish Marketing and Processing 12. The total amount of fish landed in Senegal in 1975 was about 300,000 tons (excluding landings by foreign fleets for temporary storage in Dakar before re-export), of which approximately 240,000 tons were marketed fresh for local consumption. About 80,000 tons were landed by the industrial fleet, and almost three-quarters of this amount were processed for export, mostly to Europe. Although there is a considerable demand for imports of fish products in major West African countries, exports from Senegal have so far been limited to about 15,000 - 18,000 tons a year, mainly to the Ivory Coast. The develop- ment of Senegalese exports within the region has been hampered especially by competition from foreign vessels, and by the lack of organization and govern- mental support to Senegalese firms for export promotion. The Government has taken several measures to help remedy these problems. Among the most important is the recently established policy which allows fleets of West African countries to operate in Senegalese waters if they open up their markets to Senegalese fish products. Also, new joint ventures have been created between Senegalese and Ivorian firms for marketing Senegalese products in the Ivory Coast. The proposed project provides consulting ser- vices to establish a plan of action for development of the fishery sector; this is expected to include a study of posible new markets for high-value species particularly in Europe and Japan and for other species of pelagic fish on the West African market, and to recommend measures for assuring development of these markets. 13. There are 23 major fish processing plants with a total raw material capacity more than double their present output. In 1975, net fixed assets of the processing industry amounted to about $14 million, and total turnover of the processing plants at Dakar was about $42 million, of which about 75% in frozen fish, 20% in canned products, and 5% fishmeal. Sectoral Policy 14. The Directorate of Fishery and Oceanography within the Ministry of Rural Development is charged with implementing Government policy in the sector; it is particularly responsible for preparing projects, negotiating fishing agreements, and operating coastal patrol vessels to enforce fishing regulations. The Senegalese Navy is responsible for control of the terri- torial waters, and the Merchant Marine for vessel registration, maritime labor, and safety at sea.  15. In addition to the traditional agreement with Gambia which pro- vides reciprocal fishing rights between the two countries, the Government of Senegal has passed a variety of laws in recent years to permit better preservation of fish resources in its territorial waters, and to promote the development of a dynamic domestic fishing sector through a liberal policy concerning foreign and national private investment. The policies regarding fishing operations in Senegalese waters differ as between develop- ing and developed countries. Fleets from West African countries south of Guinea where fishing is limited are allowed in Senegalese waters on condition that the vessels are based at Dakar and land their catches there, that they invest in processing plants, and that their markets be open to Senegalese fish exports without tariff discrimination. Fishing agreements with developed countries are entered into on a selective basis, with priority given to those which have traditionally participated in Senegal's economic development. Agreements include fees for catches not landed in Senegal, special import tariffs for fish products re-exported from Dakar to the home country, and the creation of joint ventures to develop the Senegalese fishing industry. Since the establishment of this policy, several countries including Japan, Spain, France, Italy, Kuwait, and Poland have entered into agreements, and most of them now have fleets based in Dakar. 16. Agreements now being negotiated with foreign fleets will de-em- phasize the policy of "fishing royalties" and will instead require direct investments in Senegal. Attempts will be made to develop joint venture enterprises in which Senegalese would own a minimum of one-third of the capital, and would be associated with management. Further, a concentrated effort will be directed to developing Senegalese enterprises sufficiently to enable them to compete with foreign corporations in fishing and processing activities, and in marketing of export products. The proposed extension of the Dakar fishing port, and planning and management of its operations, would provide the infrastructure needed to help the Governnent fulfill its primary objective of increasing its share of the value-added of fish caught within Senegalese territorial waters. Training and Technical Assistance 17. Training of fishermen and ship mechanics has increased signifi- cantly over the past 15 years, but existing programs need to be improved and expanded. The Government is alert to the training requirements to service the expected rapid development of maritime fishing over the next decade, and intends to develop training in the sector at several levels: college and university, and post-university training in management and specialized fishery activities which is presently non-existent; professional training at the Nautical College of Dakar (where some technical assistance and equipment purchase are being financed under the Association's ongoing Second Education Project) and at the School of Fisheries Administration; vocational training to develop technicians and mechanics in artisanal fishing activities; and manage- ment training for officers for four or five new secondary fishing ports which the Government is planning to develop.  - vi - 18. For the proposed project, it is planned to establish a separate organization within PAD responsible for management and operation of the fish- ing port, so as to assure adequate control and development of the industrial fishing sector, and to derive as much revenue as possible from activities at the new port. PAD personnel for the various management-level positions re- quired will be trained by technical assistance experts to be provided by FAO. THE PROJECT 19. The first Dakar Port project (Loan 493-SE, US$4.0 million, 1967) was designed principally to restore and expand existing general cargo-handling facilities; the project also included important financial and institutional objectives relating to port organization and operations, and for improvement of the accounting system. The project was implemented satisfactorily and almost exactly as conceived, with final costs approximately 15% lower than appraisal estimates. During final supervision of the project in mid-1973, the proposed operation for extension of the fishing port facilities was identified. Description 20. The project consists of: (i) civil works (including consulting services for supervision) for: (a) construction of about 1,500 m of new berth face; (b) reclama- tion of about 10.5 ha of land; (c) paving of the reclaimed areas and installation of ancillary services; (d) demolition of the existing slipway and associated buildings; and (e) construction of the main access road to the new fishing port (see Map IBRD 12252). (ii) technical assistance for (a) management, operations, and planning for the fishing port; (b) introduction of analytical accounting procedures and preparation of a cost-based tariff structure; and (c) introduction of an "ad valorem" tariff structure for fish traffic. (iii) consulting services to (a) study and define the needs of the port of Dakar for handling container ships, and outline the development of container port facilities and equipment required to handle future container traffic adequately and competitively; and (b) study in depth the current situation in industrial and traditional fisheries and related activities, and then establish a coherent plan of action for development of the sector over the next ten years. Execution 21. Detailed engineering, preparation of tenders, and evaluation of bids for the proposed civil works have been completed by consultants BCEOM (France) with PAD financing. Consultants for supervision and control of the works  - vii - will be selected in agreement with, and on terms and conditions acceptable to the Bank. The consultants will be expected to work in collaboration with PAD's engineering staff so that the latter can receive the maximum training and experience from being closely involved in implementation and supervision of the proposed works. Civil works are expected to start in mid-1977, and to take about three years to complete. 22. Management and operation of the fishing port will be by PAD per- sonnel trained to fill the various positions required. The required train- ing will be carried out during the project construction period and for about one year after the start of fishing port operations by experts provided by FAO and financed under the proposed Loans. Technical assistance for the introduc- tion of analytical accounting, preparation of a cost-based tariff structure, and introduction of an "ad valorem" tariff system for fish traffic will be provided either by a consulting firm or by individual experts selected in agreement with, and under terms and conditions acceptable to the Bank. 23. The proposed project provides about 30 man-months of services over six months for execution of a container study by consultants who would be expected to: (a) study current and projected container traffic for the West Africa coast, and determine what proportion could pass through Dakar port; (b) determine the scope and timing of facilities and equipment required to service this traffic; (c) prepare detailed cost estimates and an economic and financial justification for the proposed facilities, with recommendations regarding management and tariffs; and (d) update the existing port master plan to include the proposed facilities and the areas zoned for the fishing port, containers, and other developments. 24. The proposed project also provides about 60 man-months of consulting services over approximately 15 months to carry out a fishing sector study. Consultants will be required primarily to: (i) identify and define the dif- ferent types of fishing activities in the country and carry out technical and economic analysis of each, as well as a critical analysis of the possibilities for development taking into account particularly available resources, markets, and other relevant technical, sociological and economic factors; (ii) carry out an inventory of equipment used in the fishing sector (ships, freezing equipment, factories, etc.) and analyze their productivity levels; (iii) analyze domestic and export markets for fish products, and study possible new markets for high-value fish for example in Europe and Japan, and for other species in the West African region, and measures required to assure their development; and (iv) study the organization and functioning of different services responsible for the administration, control and planning of fisheries activities, as well as those of research institutes, training centers, and other agencies offering credit or other assistance to the fishing sector. More generally, the consultants will be expected to evaluate the various pro- grams and development projects in the sector either underway or planned, to study the functioning of fisheries cooperatives and propose a system which could work effectively, and investigate the socio-economic context in which both the industrial and the traditional fishing sectors operate. It is ex- pected that the required services will be provided by one or more consulting firms, and will eventually be completed by other specialists on short-term  - viii - assignments as required. On the basis of the broad lines of their analysis as outlined above, the consultants will be expected to make realistic recommenda- tions for the preparation and implementation of a coordinated plan of action for development of the fisheries sector over the next ten years. The above outline terms of reference have been agreed with the Government. 25. Details of all arrangements for project implementation and supervision (in which the Bank will have the principal role), as well as outline terms of reference for all the proposed consulting and technical assistance services, have been agreed with the Government, PAD and the co-financers. Cost Estimates and Financing 26. The total cost of the proposed project is estimated at $24 million equivalent, with foreign costs of about US$10 million (about 40%). The costs include about US$2.7 million equivalent representing two tax elements (turnover tax and licensing fees) which will be paid by PAD as part of its contribution to the project costs; the Government has agreed to exempt the project from all other taxes, as well as from customs duties on imported materials and equipment. PAD will also have to pay interest during project construction estimated at US$3.31 million equivalent. The above cost estimates also include a 10% physical contingency allowance on civil works items, as well as price contingencies averaging 22.5% over the project period based on assumed annual increases applied as follows: 1976, 13%; 1977-79, 12%; and 1980-81, 10%. 27. Costs for civil works are based on consultants' recommendations fol- lowing the evaluation of tenders received in September 1976. The relatively low foreign exchange cost is due to the fact that the contractor submitting the lowest tender is locally based, and also because of the expected predomi- nant use of local materials in the construction works (para. 30). 28. Costs for technical assistance services (about 135 man-months) have been estimated on the following basis: (i) a total of about 48 manmonths for the Fishing Port Manager and the Harbor Master; (ii) up to 21 man-months for the Fishing Port Planning Adviser to prepare the land-use pattern for the reclaimed lands, and to make required adjustments in the paving works and ancillary services; (iii) about 54 man-months of expert services to advise on preparation of analytical accounting and of cost-based tariffs; and (iv) about 12 man-months for an advisor on the application of "ad valorem" tariffs for fish traffic. A cost of about US$8,000 per man-month for expatriate experts (including direct and indirect costs) has been estimated for the proposed technical assistance and consulting services for the studies, based on current costs for similar expert services in other projects in Senegal and in West Africa generally.  - ix - 29. A summary table of cost estimates and the proposed project financing plan is shown below: (in US$ Million) Costs Financing Arrangements on joint basis Local Foreign Total IBRD BADEA CCCE PAD Govt. 1. Civil Works 12.86/1 8.59 21.45 4.51 7.20 6.00 3.74/1 - (including con- tingencies) (3.31) (2.22) (5.53) 2. Construction Supervision 0.37 0.37 0.74 0.37 - - 0.37 - 3. Technical Assistance 0.48 0.48 0.96 0.48 - - 0.48 - 4. Studies 0.16 0.64 0.80 0.64 - - 0.06 0.10 Total 13.87 10.08 23.95 6.00 7.20 6.00 4.65 0.10 Percentage of Total Cost (25%) (30%) (25%) (19.5%)(0.5%) /1 Including US$2.7 million equivalent in taxes. The total cost of civil works will be financed jointly by the Bank, BADEA, CCCE and PAD. The external lenders would cover 90 percent of total project costs net of taxes, and the Bank Loan would finance US$3.68 million of foreign exchange costs and US$2.32 million equivalent of local currency expenditures. The financing of local costs for this project is considered appropriate because of the Government's current difficult public finance situation. Procurement and Disbursements 30. The proposed civil works were split into five lots for tender purposes following procedures of international competitive bidding in accordance with Bank Group guidelines. Of the 25 contracting firms which indicated interest in the project, 21 were prequalified for all or some of the lots. Contractors were invited to tender for all of the lots or for a combination of lots for which they were pre-qualified. Competitive tenders were received which were well prepared; the lowest tender is about 30% below the consultants' estimate at project appraisal. Contract awards will be based on the lowest evaluated combination of bids, and will be made only after the proposed Loan is approved.  - x - 31. Disbursements from the proposed Loan will be made on the following basis: (i) for civil works, 21% of total costs; (ii) for consulting services for construction supervision and technical assistance, 50% of total costs (representing the estimated foreign exchange component); and (iii) for consult- ing services for studies, 80% of total costs (representing the estimated foreign exchange component). Environmental Impact of the Project 32. The configuration of the proposed fishing port includes the creation of a sheltered basin. The entrance to the basin is up-wind of the prevailing winds, and a thermal electricity generating station has its cooling water intake and discharge in the basin; also, a large stormwater canal discharges into the basin. Because of these features, it is essential that water in the basin should be able to circulate with tidal changes, and measures have been taken to assure this. 33. There has been some concern that in the present situation where many fishing vessels use temporary berths in the port area near the phos- phate-loading berths, there may be some contamination of the fish catches; this problem is expected to disappear when all fishing vessels are berthed at the new project site away from the phosphate berths. Employment and Urban Impact 34. The fishing industry based in Dakar now employs about 5,500 people, about half of whom are shore-based employees of the fishing fleet and crews of the fishing vessels. In view of changing patterns in the size and techno- logy of these vessels, the numbers of crew employed will increase only slightly as the fleet develops; however, the number of shore-based employees will double by the end of the 1980's as a result of increased operations generated by the proposed project. The range of employment within the indus- try varies widely from unskilled labor to highly trained technicians and operators. 35. Development of the fishing port is expected to have a beneficial urban impact in the renewal of large land areas near the site. PAD has already started acquiring land and demolishing buildings. The newly ac- quired lands will be leased to companies or organizations associated with the fishing industry which need accommodation near the port. Within these zoned lands is a small area currently occupied by about 100 people engaged in very small businesses for fish-drying and salting, and catering services. Since these people will be displaced by the proposed renewal, PAD has arranged to provide a new building near the entrance to the fishing port where they can be relocated, and where catering services can be undertaken under conditions much more hygienic than at present, and with proper sanitation facilities and other amenities. Construction is expected to start shortly.  - xi - Financial Evaluation Present Financial Position of PAD 36. PAD's audited accounts for the year ending June 30, 1975 show its finances to be fairly sound. However, PAD's cash balance has diminished over the past three years by about CFAF 635 million (approximately US$2.6 million equivalent) due mainly to heavy capital expenditure. Also, its receivables (particularly those concerning Government departments and public enterprises) increased to about 49% of gross operating revenue as against the 15% limit agreed under the First Port Project. This level was reduced to about 36% at June 30, 1976 following PAD's application of specific measures to assure recoveries. Since in view of PAD's obligations under the proposed project it is essential to improve its liquidity, PAD has agreed to the implementation of a plan which prescribes further strict measures to progressively reduce its level of receivables to acceptable limits by December 31, 1977. These limits have been agreed as follows: (i) reduction of ordinary accounts receivable to not more than 15% of gross revenues; and (ii) reduction of special accounts receivable (pertaining particularly to services for lights, buoys, Dakar-Goree ferry, houses for security guards) from the prevent level of about CFAF 200 million to CFAF 50 million. 37. The Loan Agreement for the First Port Project stipulated that PAD should revise the value of its fixed assets in 1967/68 as a one-time measure, and should achieve a minimum rate of return of 6% on the value of such assets from 1970/71 onwards; a corresponding rate of return of 7% was achieved in 1974/75. The existing assets now need to be revalued at least by the end of fiscal year 1977/78, and thereafter as frequently as necessary at intervals not exceeding five years for the purpose of fixing appropriate tariff levels and acceptable rate of return limits. PAD and the Government have agreed that this will be done in consultation and agreement with the Bank. 38. In addition to PAD's need to improve its liquidity, port finances also have to be strengthened by augmenting revenues now and in the future. To help assure PAD's ability to meet its increased financial obligations without having to raise tariffs to unrealistically high levels, the Govern- ment has agreed to exempt PAD from paying income tax till completion of the project. 39. In order to improve its financial control system, the Government recently permitted PAD to have its own internal computer capacity for pre- paring accounts and statistics. PAD has now completed a study of its data processing needs, staff are being trained, and the equipment is expected to be in service by mid-1977. Apart from the relaxation of centralized accounting control which this will offer, however, the Government has not yet found it possible to relinquish a priori control as had been agreed under the First Port Project. However, the Government has provided assurances that it will take all necessary measures, determined in consultation with the Bank,  - xii - to grant broader financial autonomy to PAD by June 30, 1977 or a later date as agreed with the Bank. Tariffs 40. Port tariffs and related regulations authorized by PAD's Board are subject to Government approval. Tariff increases have been effected regularly since 1967 in compliance with agreements reached under the First Port Project. Following the Bank's suggestion for strengthening PAD's fi- nances in 1976/77, tariffs were revised in July 1976 which should result in an overall increase in estimated revenue for that year of approximately 10.6%. 41. PAD's existing accounting system does not allow costing of services, and tariffs are consequently not cost-based. The proposed proj`ect provides technical assistance (including training of Senegalese counterpart personnel) to devise a new analytical accounting system and a cost-related tariff struc- ture, and to introduce them by July 1, 1978. As regards the traffic in fresh fish and fish products, the project provides further technical assistance to implement an "ad valorem" system of tariffs. This is considered more appro- priate than the present per-ton basis, primarily because in determining taxable capacity the value of different species is more significant than their weight. The proposed "ad valorem" system will also be introduced by July 1, 1978. Financial Projections 42. Revenue estimates to 1982/83 have been based on existing tariffs as applied to current traffic forecasts, and on the assumption that, even before project completion, PAD will improve its control of fishing opera- tions sufficiently to increase revenue. Expenditure estimates allow for an annual inflation rate of 6% and an annual increase of 4% on account of traffic growth. Other main assumptions, based on agreements reached under the proposed project, are that PAD will not be subject to income tax until the project is completed, and that it will restrict its non-project capital expenditure to an annual average of CFAF 500 million during the project period. The financial projections, which allow for revaluation of assets in 1977/78 and 1982/83, indicate that PAD must raise additional revenue almost continuously from 1977/78, mainly to meet its increased financial obligations arising from the project. For this purpose, PAD will have to achieve a minimum rate of return on net fixed assets in use of 6% up to 1976/77, of 5.5% in each year until 1980/81 or until completion of the project whichever is later, and from 1981/82 (or the year from which income tax is levied for the first time) a minimum rate of return of 4.75%. PAD will also be expected to maintain a working ratio not exceeding 60% until 1979/80, and not exceeding 55% thereafter. Agreements have been reached on achievement of the above stipulated levels.  - xiii - 43. PAD's ratios of current assets and liquid assets to current lia- bilities will improve with the accumulation of cash representing mainly additional depreciation. As a result of the proposed large-scale borrowing for the project, the debt/equity ratio will increase from 5/95 in 1975/76 to 26/74 in 1979/80, a level which would still be considered acceptable. Nevertheless, PAD has agreed not to incur any additional long-term debt, except in agreement with the Bank, unless its net revenue is at least 1.5 times the maximum future debt service requirement. Economic Evaluation 44. The proposed project has been designed to eliminate the present congestion at Dakar port, and to provide adequate berthing facilities for both domestic and foreign fishing fleets; satisfactory completion of these measures will help the Government fulfill its objective of developing the industrial fishing sector and expanding local processing activities to in- crease exports. Landings by the Dakar-based industrial fleet increased from about 16,000 tons in 1964 to almost 80,000 tons in 1974/75, i.e. at an average rate of 18% p.a. Present forecasts show that these volumes would reach about 125,000 tons in 1979, 200,000 tons in 1983, and possibly a maximum of about 260,000 tons by the end of the 1980s. Landings by foreign fleets are also expected to increase over the same period from their present level of about 30,000 tons to about 80,000 tons; these fleets operate off the West African coast and occasionally call at Dakar to sell their fish catch to processing plants or to use shore storage facilities before re-export. Project Benefits and Risks 45. The proposed project is expected to yield direct benefits mainly from: (a) improvement of existing operations of the fishing fleet, and consequent savings in loading and unloading costs, fish deterioration losses, and time spent in servicing fishing vessels and handling freezer cargo ships; (b) avoidance of existing and future congestion at the commercial berths, half of which would be permanently employed in fishing activities by 1983 if the project were not undertaken. Under such conditions, the berth occupancy rate would reach 80% which would significantly increase ship-waiting time (chiefly during peak traffic periods), while the permanent presence of fishing equipment at the commercial berths would hamper cargo shore-handling operations and thus increase handling costs and ship turnaround times; (c) improvement in productivity of existing fish plants now operating at half capacity, resulting from increased catches by the local fleet and increased landings from  - xiv - foreign fleets attracted by the improved port operations (and the enforcement of international agreements relating to fishing in Senegalese waters). The above benefits represent the minimum that the project will yield. 46. The benefits accruing from the proposed investment in the project (corresponding to the minimal benefits spelled out in para. 45 above) yield an overall economie return estimated at 23%. If, for purposes of a sensitivity test, project costs are assumed to be 15% higher and benefits 20% lower, the project would still yield an economic return of 17%. The economic return for Senegal alone (excluding benefits to the foreign fishing fleets and benefits to foreign-owned fish processing plants transferred abroad) is estimated at 17% which is satisfactory. The economic analysis also indicates that the economie return of the project based on improvement of port operations alone (i.e. excluding benefits from processing plants) is about 16%. 47. The scope for potential benefits is far greater than outlined above. The creation of an integrated fishing port facility will permit a basic expan- sion of the fishing and fish-processing industries with a host of associated activities such as ice-making, bunkering, ship-chandling, ship-repairing, etc. Quantification of such benefits would require parallel assumptions with respect to additional capital investments in vessels, plant, structures, and equipment, which lie well beyond the scope of this project. Finally, there are other benefits which do not lend themselves to quantification in a reliable manner, but which are nonetheless substantial; these include benefits to ser- vices and corporations involved in export activities, reduced risk of pollution in the port area, and improved berthing conditions for the fishing fleet in inclement weather. 48. The economic evaluation confirms that the proposed project is justi- fied primarily by the expected general improvements in port operations; it will also provide the means for the expected important development of shore activities. Since the project provides an adequate rate of return even without considering additional traffic to be generated, there is no real risk element involved. However, in order that Senegal may benefit to the maximum from the project and fully utilize the facilities to be provided, the Govern- ment has provided assurances that it will apply various incentives to assure the growth and modernization of the Dakar-based fleet, and a continued in- crease in fish landings for processing by local industries. These incentives relate mainly to: (i) organization and operations of the various departments involved in the administration, control, and planning of fishing activities; (ii) the exploitation of fish resources; (iii) the effective utilization of credit institutions and agencies involved in promoting fishing; and (iv) vocational training and creation or development of fishery research institutes. 49. The Government will discuss with the Bank in mid-1977 its overall investment program in the industrial fishing sector during the next economic development plan period 1977-81. The proposed project provides for execution  - xv- of a study to establish a plan of action for development of the sector over the next ten years; the study is expected to include a marketing survey of potential exports for Senegalese fish products to major European and African countries. 50. The availability of fish to justify the proposed project construc- tion may be considered a risk, but fish resources off the Senegalese coast are being continuously monitored by competent organizations (para. 8), and the best estimates indicate that existing and potential resources are far more than enough to allow the large annual catch necessary to support a flourish- ing fishing industry without severely depleting the stocks.   I. THE TRANSPORT SECTOR A. General 1.01 Senegal is located primarily in the Sudano-Sahelian zone of Africa, and has a population estimated at about five million in 1975 with a land area of about 196,760 km2. Per capita Gross National Product (GNP) was estimated at about US$370 in 1975, after failing to grow during the first decade after independence (1962) due initially to the loss of Dakar's poli- tical and economic influence as the capital of French West Africa. Later, the economy was under a severe strain by 1972-73, following the worst series of droughts in the century combined with a fall in the export price for groundnuts. Rainfall was satisfactory in 1974 and 1975, and world prices for groundnuts and phosphate rock were at record high levels during those years. However, recent declines in phosphate and groundnut prices have put a serious strain on the balance of payments. 1.02 The Government has taken several positive steps to accelerate development, including increasing national investments from 11% of Gross Domestic Product (GDP) in the mid-sixties to 17% in the early seventies, and shifting the emphasis of investment and development toward the rural sector. In addition, in 1974 the Government sought to lessen the country's reliance on imported foodstuffs (which absorb about 15-20% of export earn- ings) by developing irrigation and substantially reducing consumer subsidies on imported rice and cereals, at the same time increasing domestic producer prices for rice, millet, and groundnuts in order to stimulate domestic pro- duction. Based in part on the availability of sufficient foreign finance to meet future public investment requirements, the Bank Group expects that GDP will increase at about 4.5% through 1980. B. The Transport System 1.03 Senegal has several unique features which shape its transport system, including (i) the concentration of population and economic activity in the Cap Vert Peninsula and in the Groundnut Basin, resulting in short travel distances and a substantial flow of agricultural commodities from rural to urban areas; (ii) the strategic location of Dakar as an interna- tional port and airport, and the use of the port as a point of entry for international traffic to landlocked Mali and to a limited extent Mauritania; and (iii) the partial division of the country by Gambia (see Map IBRD 12250). 1.04 The domestic transport system essentially consists of: (i) a 13,300 km road network which carries about three-quarters of commercial inter-urban freight and passenger traffic, exclusive of phosphates; and (ii) a 1,032 km railway which carries mostly phosphates and international traffic to Mali. The Port of Dakar is the only sheltered deep-water port in the Sahel region, and also serves as a bunkering point for east Atlantic trade routes. Three secondary seaports handle a small additional volume of traffic. Dakar airport serves as a strategic stopover on routes froin Europe  - 2 - to South America, and from New York to East and West Africa. Domestic air transport, river transport, and coastal shipping are not significant trans- port modes. Apart from the location of Gambia within Senegal, there are no major physical barriers to the development of transport in the country. 1.05 Senegal's transport infrastructure was relatively well developed at the time of independence in 1962. With additional investments since that time, it has b come one of the most extensive in West Afric9 with, for exam- ple, 12.8 m/km of paved roads compared with about 6.2 m/km in the Ivory Coast, and similar density relationships for rail and aviation facilities. There still remain, however, regional disparities in the provision of infra- structure, with some enclave areas such as Eastern Senegal having few facil- ities. At the same time, the quality of some services, particularly rail- ways, remains low. Transport investments represented about 1.5% of GDP in the early years following independence, but with the Second Pl