Benin - Cotonou Port Project

Document of The World Bank ZlE Yi a` FOR OFFICIAL USE ONLY Report No. 1983-BEN STAFF APPRAISAL REPORT COTONOU PORT PROJECT PEOPLE'S REPUBLIC OF BENIN May 22, 1978 Western Africa Project Department Ports, Railways & Aviation Division This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = CFA Franc (CFAF) US$1.00 C CFAF 245 CFAF 1 Million = US$4,081 FISCAL YEAR January 1 - December 31 SYSTEMS OF WEIGHTS AND MEASURES: Metric Metric British/US Equivalents 1 meter (m) 3.28 feet (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 3 2.47 acres 1 cubic meter (m ) 1.308 cubic yards ABBREVIATIONS AND ACRONYMS AfDB African Development Bank BADEA Arab Bank for Economic Development in Africa BCEOM Bureau Central d'Etudes pour les Equipments d'Outre-Mer ROAD Banque Ouest Africaine de Developpement CCCE Caisse Centrale de Cooperation Economique CIDA Canadian International Development Agency EDF European Development Fund FAC Fonds d'Aide et de Cooperation GDP Gross Domestic Product NTF Nigerian Trust Fund OBEMAP Office Beninois des Manutentions Portuaires OCBN Organisation Commune Benin-Niger des Chemins de Fer et des Transports PAC Port Autonome de Cotonou PPF Project Preparation Facility SNTN Societe Nationale des Transports Nigeriens SOTRACOB Societe de Transit de Consignation du Benin UNCTAD United Nations Conference on Trade and Development UTSAID UL.S. Agency for International Development  FOR OFFICIAL USE ONLY STAFF APPRAISAL REPORT PORT OF COTONOU PEOPLE'S REPUBLIC OF BENIN Page No. I. THE TRANSPORT SECTOR .......... . ......................... . I A. General ......... ......... ....1 B. The Transport System ........................ 1 C. The Transit Function .... 3 II. THE PORT OF COTONOU ................................ 6 A. General ..................................,... 6 B. Port Characteristics ....... ................... . .. 6 C. Port Administration ........................ . ..... * * * 7 D. Port Operations and Maintenance .. ........ ......... 8 E. Port Capacity . ... . ........ .0. ......... 10 F. Port Planning ........ ......... ,...... 10 G. Tariffs ............................ 11 H. Accounting, Budgeting, Audit, Insurance .......... 12 III. THE PROJECT ... . .... . ............. . 13 A. Background................. 13 B. Objectives .........13 C. Engineering Aspects: Scope, Engineering and Investigations... ....... 14 D. Description .......O.... .*....15 E. Cost Estimates ... ............. . ...... 18 F. Financing ..............19 G. Implementation ....... . ................. 20 H. Procurement . .... . .......... a .................. 20 I. Disbursements .*........ *........21 J. Environmental Aspects 22 K. The Railway System, OCBN.. 24 This report is based on the findings of an appraisal mission which visited Benin in October-November 1977, the members of which were Messrs. J. Leth- bridge (port engineer) and J. Pelletey (economist) and Ms. M. Saukel (administrative assistant). Messrs. D. Screwvala, A. Krishnan and H. Apitz (financial analysts) also participated in the preparation of this report. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  -2- Page No. IV. ECONOMIC EVALUATION ................................... 25 A. General .......................................... 25 B. Traffic Analysis ....... .......................... 25 C. Project Benefits ................................. 28 D. Project Risks .. ......................... .......... 36 V. FINANCIAL EVALUATION ...... ............................ 37 A. Past Financial Situation .................. ....... 37 B. Future Financial Performance of PAC .............. 41 C. Increase in Net Government Revenues from the Project ........................................ 46 VI. AGREEMENTS REACHED AND RECOMMENDATION .............. ... 47 ANNEXES: 1. Summary of Principal Tariffs 2. Supporting Tables and Charts 3. Related documents and data available in the Project File Table 1 Traffic: Recent Trends, recapitulative table. Table 2 Forecasts, potential traffic by commodity groups. Table 3a Cost/benefits streams: Benefits from (i) cut-off breakwater and silt-sand trap (ii) access channel dredging. Table 3b Costs/benefits streams: Benefits from berth construction. Table 4 Economic return and first year benefit of the proposed project. Table 5 Balance Sheets as of Dec. 31 Each Fiscal Year (1974-76) Table 6 Income Statements for Fiscal Years 1974-76 Table 7 Income Statements for Fiscal Years 1977-84 Table 8 Balance Sheets as of Dec. 31 Each Year (1978-84) Table 9 Source and Application of Funds for Fiscal Years 1977-84 Table 10 List of Grants and Credits/Loans Chart Implementation Timetable. MAPS: IBRD 13125 - Benin IBRD 13126 - Changes in Coastal Regime Following Construction of Port IBRD 13127 - Existing Facilities and Project IBRD 13304 - Main Transport Corridors  PEOPLE'S REPUBLIC OF BENIN COTONOU PORT PROJECT I. THE TRANSPORT SECTOR A. General 1.01 Located on the southern coast of the bulge of West Africa, Benin lies between Togo to the west, Upper Volta 2and Niger to the north, and Nigeria to the east. It has an area of 112,600 km and a population of about 3.3 mil- lion growing at about 2.8% a year. The country is long and narrow, stretching about 700 km north to the Niger border, and less than 350 km at its widest point. The terrain is relatively flat or rolling, except for the Atakora mountain chain in the northwest, thus creating a natural transport corridor from land-locked Niger to the sea. Benin has scarcely any known mineral resources. 1.02 Benin's economy is based on agriculture, which supports about 80% of the population and accounts for one-third of gross domestic product (GDP) and 90% of foreign exchange earnings. The main commercial crops are palm products, cotton and groundnuts (providing about 80% of the value of exports but only 10% of agricultural production). The main domestic food crops are maize, sorghum, yams and cassava, of which only 15% to 20% is marketed. Insufficient and irregular rainfall limits the production of high value tree crops. While the estimated nationwide per capita GDP in 1975 was about US$140, the per capita GDP for the rural sector was only about US$50. The Government hopes to increase production of both food crops and commercial crops. B. The Transport System 1.03 Benin has a reasonably well-developed transport system. The focal point of the system is Cotonou 1/ where the country's only deep-water port is located. The port of Cotonou is the starting and finishing point for the most important element of the transport system -- the Benin route, the prin- cipal artery for carrying goods to and from Niger. In addition to the port, the Benin route includes the Cotonou-Parakou Railway (Central Line) and the paved road from Parakou to Malanville (Map IBRD 13125). 1.04 Rail and trucking services on the Benin route, for the most part, are run by the Organisation Commune Benin-Niger des Chemins de Fer et des Transports (OCBN) which is a financially autonomous agency, established in 1/ While Porto Novo remains the official capital and administrative center, Cotonou, the major commercial center, is slowly becoming the de facto capital. The presidential palace and many government departments are already located there.  1959 by the governments of Benin and Niger. However, since 1967, Niger has restricted its interest in OCBN to matters such as tariffs and the allocation of freight between truckers from Benin and Niger. OCBN not only operates the Central Line but also charters the trucks which carry freight between Parakou and Niger, thus giving OCBN a near monopoly on Niger transit traffic. After goods have been transferred to truck at Parakou, in principle two-thirds of the goods destined for Niger are to be carried by Niger truckers and one-third by Benin truckers. Excluded from this arrangement are goods (including petroleum products) to and from the uranium mines in Niger, which are carried exclusively by the Societe Nationale des Transports Nigeriens (SNTN). 1.05 I'he principle components of Benin's domestic freight traffic are: (i) local traffic -- mainly agricultural products; (ii) exports -- vegetable oil, seed-cake and cotton (seed and fiber); (iii) imports -- building materials, machinery and equipment, grain and other food products, and petroleum pro- ducts;and (iv) transit traffic to and from Niger and Nigeria. Total transport demand in the next decade is expected to grow at about 6% to 7% annually. Railways 1.06 The railway network consists of the Central Line (Cotonou-Parakou, 438 km) and two secondary lines -- the western coastal line (Cotonou-Segboroue 34 km) and the eastern coastal line (Cotonou-Pobe, 107 km). Between Cotonou and Parakou, OCBN bears the main responsibility for transporting goods to and from northern Benin and Niger. The two shorter lines (Cotonou-Segboroue and Cotonou-Pobe) carry passengers almost exclusively. In 1976 OCBN carried about 288,000 tons of freight, of which about 181,200 tons (or 63%) were destined for or originated in Niger. Tonnage has hovered around 300,000 tons for the past five years. Highways 1.07 Benin's road network totals about 7,200 km. Of this, 759 km are paved and 2,592 km are all-weather laterite roads. The rest of the network consists of partly improved earth roads and tracks. The most heavily travelled roads are those along the coast connecting Cotonou with Nigeria and Togo and the road north to Niger. While the distribution of roads appears sufficient for the country's need, their poor condition curtails their useful- ness. Only about two-thirds of the paved roads are in satisfactory condition, and only about half of the laterite roads are well enough maintained to permit all-weather travel. Two recently approved Bank Group projects--a highway rehabilitation project and a feeder roads project--are part of a program to improve roads and to build up Benin's maintenance capacity. 1.08 Until recently, the Government curbed competition from road trans- port by discouraging construction of the Bohicon-Parakou road beyond gravel standards and generally restricting traffic to cars and light trucks. Doing so gave the railway a near monopoly on freight traffic. The Government re- cently changed this policy as part of an attempt to capture as much Niger  - 3 - transit traffic as it can. At the Government's request, the European Develop- ment Fund (EDF) has agreed to finance paving of the first section (Bohicon- Dassa Zoume) of the unpaved link between Bohicon and Parakou. The agreement with EDF also includes feasibility and final engineering studies of the Dassa Zoume-Parakou section which will probably be constructed under the Fifth EDF replenishment, i.e. in the early 1980's and will complete a bituminous road parallel to the OCBN railway over its entire length. While this will permit direct shipment from Cotonou to Niamey and thereby most likely result in reduced transport costs, it will also result in a loss of traffic for the railway. The Government, therefore, is keeping its railway investments at prudent levels, and the proposed project includes a study of future railway demand. Air Transport 1.09 The only international airport is located in Cotonou and is used by some of the major airlines serving the region. Total passenger traffic, excluding transit traffic, averaged about 45,800 per year between 1972 and 1974. During the same period, freight traffic averaged slightly less than 2,700 tons per year, but reached about 3,200 tons in 1975. There are five small secondary airfields, but the country's size and poverty makes domestic air transport rather unimportant. Transport Investment and Financing 1.10 Investments in the transport sector averaLged about CFAF 1.5 billion (US$6.1 million) annually between 1970 and 1975, amounting to about 25% of total public investment. Of this amount, about CFAF 1.3 billion (US$5.3 million) per year was spent on highways. Major investments in the port and the airport were completed before 1972, and no significant investments in them have been made since. One of the Government's priorities for transport investment is improving Cotonou port. Investments now under way, covering the most urgent needs of the Benin route, amount to about $70 million, about 15% of the Government's total investments over the next three years. In addition to the proposed project, these investments include new motive power and rolling stock for the railway, improvements at the port and railway terminal at Parakou, and new open storage areas. C. The Transit Function 1.11 gince Niger, one of the largest land-locked countries in Africa (1.3 million km ), is about 1,000 km from the sea, it must depend on neighboring countries, primarily Benin, for access to ocean transport. Both Niger's popu- lation (estimated at 5.3 million in 1977) and GDP (CFAF 93 billion in 1973) are larger than Benin's. Between 1959 and 1967 the GDP grew at 10% p.a. but slowed thereafter due mainly to drought in the Sahel region. The economy, however, should again grow substantially because of agricultural projects and development of the mining sector. By 1990 Niger exports via Cotonou should be about one-quarter of Benin's, while the two countries' imports through the  port will be nearly equal (600,000 tons to 650,000 tons). In 1976 Niger exports through Cotonou were about 17% of Benin's and its imports were about 42% of Benin's. 1.12 Nigeria, Benin's neighbor to the east, is the most populous country in Africa (70-80 million) and potentially one of the richest, already deriving important revenues from oil. The income from oil which has enabled Nigeria to import massive quantities of goods coupled with the damage resulting from the civil war to the ports and railways have created extraordinary congestion in Nigeria's ports. Ship waiting time is counted in months, and ships are frequently diverted to neighboring ports, including Cotonou. 1.13 The prospects for substantial growth in traffic of the port of Cotonou are favorable for two main reasons: (i) The Benin route is by far the cheapest access to the sea for western Niger. Revenue from the expected growth of Niger uranium production should increase imports significantly. (ii) S:ince 1975, the port of Cotonou has been used increasingly by Nigerian importers wishing to avoid congestion in Nigerian ports. It is possible they will continue to use Cotonou until tthe congestion is eliminated. 1.14 Most major Beninese transporters and associated activities have been nationalized since 1975. Thus the greater part of the substantial revenues generated by transit traffic goes to the Government. The Government intends to improve transport infrastructure to encourage the development of the transit traffic to and from neighboring countries, since the growth of Benin's economy relies largely on the development of this traffic, mainly with Nigeria. As the table below indicates, the annual real growth rate of Benin's GDP can be divided into two distinct phases: (i) 1972-74 when all sectors grew very little or not at all, and (ii) the last three years which registered a boom in transit traffic and an associated growth of GDP of about 9% p.a.  GROWTH OF GDP AT FACTOR COSTS IN CONSTANT 1975 PRICES (CFAF, billion) Rate of Growth (%) 1972 1973 1974 1975 1976 1977 1972-75 1975-77 Commerce 17.5 17.1 16.0 19.0 23.7 28.5 2.8 21.5 Transport 5.3 4.9 4.9 5.4 5.9 6.7 - 11.0 Industry (modern) 4.6 6.1 5.9 6.0 8.5 9.7 9.2 18.0 Other Sectors 67.0 72.7 66.6 70.2 70.9 75.4 1.6 4.2 of which: Agriculture 41.3 41.5 39.1 41.2 40.8 43.9 - 3.9 Construction 3.3 3.3 3.8 4.7 4.7 5.0 12.4 9.6 Services, Tradi- tional industry 22.4 27.9 23.7 24.3 25.4 26.5 2.9 2.2 GDP 94.4 95.9 93.4 100.6 1p9.0 120.3 2.1 8.8 1.15 The leading sectors were those related tc trade or transport activi- ties with neighboring countries, i.e. commerce, transport, modern industry and to a certain extent the transport infrastructure. The sharp growth of these sectors is due to Benin's increasing importance as an entrepot and supplier for its dynamic neighbor, Nigeria. Direct transit trade with Lagos and western Nigeria via the port of Cotonou, only 120 km from Lagos, has increased sharply in the past three years as the demand for port facilities has far surpassed Nigeria's capacity. There is also a large indirect transit trade for western Nigeria. Goods such as luxury items and textiles are imported by Beninese trading firms and subsequently find their way--by truck, by pirogue on the coastal lagoons or by head-loading--to Nigeria. Value added in commerce is now second only to that of the agricultural sector, and in market prices (adding in net indirect taxes) commerce contributes over three- quarters as much to GDP as agriculture. 1.16 Benin's small modern industrial sector has also expanded very rapidly in the recent years in response to Nigerian demand for such items as printed cloth, beverages and food products. Relatively low inflation, the availability of cheap labor, good transport facilities, the traditional interest of Beninese in commercial activities, a convertible currency (the CFAF) and a good relationship between Benin and Nigeria all make Benin an ideal manufacturing and trading base for the Nigerian market. 1.17 The port of Cotonou, which was initially designed to satisfy the demand of traditional traffic of Benin and Niger, has become inadequate. Congestion at Cotonou has already caused diversion of a significant amount of Niger traffic to Lome (60,000 t in 1977) despite higher costs and has caused a  -6- dramatic increase in ship waiting time and service time. As a consequence, surcharges of 20% to 35% have been imposed on Cotorou traffic by shipowners. As the proposed project will not be completed befc-e the end of 1980, the Port Autonome dje Cotonou and the Office Beninois des Manutentions Portuaires are implementing an intermediate project to increase port capacity through the purchase of handling equipment and the creation of new storage and stacking areas with the assistance of the Banque Ouest Africaine de Developpement (BOAD) andl the United Nations Conference on Trade and Development (UNCTAD). II. THE PORT OF COTONOU A. General 2.01 The coastline of Benin is a low sandy beach with no natural harbors. It is typical of many West African countries in that there is a strong pre- dominait littoral transport from west to east; rates as high as 1.5 mil- lion m oi- sand per year have been recorded. The first facility for handling cargo for ships was a steel-piled wharf built at Cotonou in 1891. Studies were made between 1955 and 1959 for a single new port for both Benin and Togo; the site Selected was at Cotonou. The port was built from 1959 to 1965. While the site chosen was probab.ly as good as any available, the location has a number of underlying weaknesses, the most important of which are: (i) the constraints to development caused by its proximity to the town of Cotonou and the main roadway, and (ii) the downdrift erosion problems which affect the entrance to the Cotonou Lagoon and the valuable lands to the east of the port. Since 196'; no additional works have been carried out, and until recently maintenance was poor. A major extension of the industrial fishing port was studied under EDF financing, but implementation has been delayed due to the negative growth rate of the local fishing fleet and the delay in the start-up of a national fishing enterprise. B. Port Characteristics 2.02 The concept of the harbor is very simple. Two breakwater arms stretch out from the sand beach to enclose an area of protected water. The breakwaters are massive rock fill structures armored with heavy rock and tetrapods.. They are effective in reducing swell wave activity within the port to very low levels and have proved to be almost maintenance free. The break- waters cause accretion of sand updrift from the west breakwater and erosion downdrift from the! east breakwater. Because of the interruption of transport of the large volume of sand, the zone of coastline affected by the port is very long, extending seven km downdrift (Map IBRD 13126).  - 7 - 2.03 The accretion of sand to the west of the port is causing the shore- line to advance steadily seawards, which will contirnue until an equilibrium is reached and sand then bypasses the breakwaters. This point was almost reached in late 1977. The area of land created by the advancement of the shoreline will allow the port to expand to the west. The 1975 port master plan shows future expansion of the port facilities iLn this area but recommends the construction of a cut-off breakwater projecting seawards from the west breakwater to continue the accretion, thereby providing additional land neces- sary to complete the master plan. This cut-off breakwater would also delay the date when the sand would begin to bypass the breakwaters and postpone for several years the need for maintenance dredg-ng of the port= Maintenance dredging of the present port entrance was necessary once in 1974. 2.04 Inside the harbor are 640 m of marginal berths (four berths) for general cargo vessels, with four transit sheds and open storage areas; a small fishing port for industrial fishing vessels with an ice plant and cold store; and a beach used by traditional fishing pirogues. About 30 m of the berth cannot be used because it is the extreme west end corner with shallow depths. The maximum operating drafts within the port areas are 9.45 m and 9.14 m, with a tidal variation of 1.2 m. As originally planned, the eastern breakwater was to have berths 11 m deep on both sides for use by bulk vessels and tankers for imports and exports. However, excessive swell wave activity has made it impossible to use the outside face. A small area used for the storage of bulk clinker for cement manufacture is located at the root of the breakwater together with a 200-ton synchrolift tvne dry-dock for port tugs, service vessels and fishing vessels. Navigation in and out of the port area is simple with no buoyed channels, hazards or obstructions. Vessels berth with the aid of the port's 1400-hp tugs. 2.05 On shore there are not enough open areas available for stacking cargo and for general access. The port has adequate office buildings for the administrative and technical services, and some space (although insuffi- cient) for the port's users and freight forwarders. There is a shortage of office accommodation close to the port area. The road access and railway network are adequate but need maintenance. Within the port is a servicing center for the cargo-handling equipment; this is a poor, only partly completed facility needing better management. C. Port Administration 2.06 The port of Cotonou is run by the Port Autonome de Cotonou (PAC), an autonomous public agency. The decree governing PAC was extensively revised to its present form in October 1976 (Ordinance No. 76--SS). Although financially independent of the Government, PAC is administratively under the Ministry of Transport. The Minister of Transport takes an active interest in the manage- ment and activities of the port. It has 336 permanent employees and 68 tempo- rary employees. All cargo handling and stevedoring operations are the respon- sibility of another government agency, the Office Bleninois des Manutentions Portuaires (OBEMAP) (paras. 2.17 and 2.18).  -8- 2.07 A 25-member board of administration sets the policy for PAC. Of these 25 members, 7 represent the legislature and the ministries; 5, port workers; 7, public and private agencies having direct interest in the port; and 6, neighboring countries using the port (Niger 3, and 1 each from Togo, Upper Volta and Nigeria). The board is headed by a president; he and four board members (including one of the representatives from Niger) constitute a committee of administration to deal regularly with port matters. The managing director, assistant managing director, harbor master and chief accountant handle the day-to-day operation of the port. The recently appointed PAC general manager has had no previous experience in port management. Both he and his deputy need additional training, which they would receive under the proposed project (para. 3.19). D. Port Operations and Maintenance 2.08 Port operations and maintenance are carried out by PAC and OBEMAP with no overlap. Both are government agencies and could be merged to form one unit. Although this has been proposed on a number of occasions, the Government prefers to retain two separate organizations, a position which causes no overriding problems. 2.09 PAC is responsible for pilotage and berthing of vessels and for providing and maintaining port facilities, i.e., the berths, sheds, fencing, weighbridges, floodlights and services. In recent years the maintenance of the port has been poor because PAC lacks a qualified technical staff to initiate, control and manage the work. As a consequence there has been a substantial backlog of urgent maintenance items; work on these items is underway with FAC financing the US$400,000 cost. 2.10 The 24-hour pilotage, tug and other marine services are operated by PAC through the harbor master who is also the senior pilot. Vessels awaiting berths anchor in the roadstead offshore from the port entrance and are allocated berths according to their status. Recently an average of 17 or 18 vessels have been waiting for berths or services. Priority berth assignment is accorded to conference vessels, regular callers, or ships carrying cargo urgently needed by the governments of either Nigeria or Benin. The number of pilots available (four in October 1977) is insufficient. PAC employs both local and expatriate pilots, but low salaries make it difficult to retain new pilots and it is difficult to recruit expatriates. Considerable improvements in the service could be made by changing administrative procedures for the documentation for vessels, particularly enabling a vessel to sail immediately after discharging cargo. In many cases there is a delay of two to three hours. These problems will be studied under the port operations segment of technical assistance to the project. 2.11 The port operates two identical 1400-hp tugs, one of which has just been acquired and is equipped for fire-fighting. The small dry-dock  -9- in the port is of sufficient capacity to maintain the hulls of the tugs. The posts of captain and chief engineer for the tugs have been difficult to fill and some expatriates are employed. 2.12 There are insufficient open storage and circulation areas within the port. One zone is reserved solely for cargo to or from Niger. Included in this zone are silos for the storage of cereals, a large warehouse/transit shed and a railway spur. An elevated pipeline leads to the berths so that bulk grain and fertilizers can be discharged directly from the ship to the zone. 2.13 During the preparation of this project a detailed study of the port highlighted the operating problems and deficiencies and recommended productivity targets, management improvements and new equipment. More recently, the Government invited the UNCTAD "Port Congestion Task Force" team to visit the port and to advise on how the present throughput problems could be resolved. 2.14 These studies found that, omitting the question of berth space, the following were the principal causes of port congestion: (a) delay in removing cargo from the port area, due to: (i) the complexity of the documentation and paymetnt of charges and taxes on the cargo, (ii) the very slow manner in which the consignees and the freight-forwarding companies work, and (iii) the overgenerous free storage periods for goods; and (b) the lack of sufficient open storage areas and transit sheds. A committee has been set up under the Minister of Transport to study and improve items (a)(i) and (a)(ii) above. BOAD is fiLnancing increased open storage areas and a mobile crane at Parakou and at the port, two barges, a new tug (already delivered) and a transit shed. The total cost of the project is CFAF 1.380 billion (US$5.3 million) of which BOAD will lend CFAF 1 billion (US$4.08 million). 2.15 As a step to relieve congestion PAC has constructed a large open storage area for Nigerian goods on the east side of the Cotonou lagoon at Akpakpa. An area 185 m by 300 m with good road and rail access was due to be completed in February 1978. It will later be expanded as funds permit. Another measure to relieve congestion has been to load Niger cargo directly onto the railway wagons, dispatch it to the Parakou terminal, and document and clear the goods from there. While this helps to relieve port congestion, it simply transfers the congestion problem to Parakou. 2.16 Five items essential to improving port operations are: (a) physical improvements within the confines of the port; (b) training and management of the cargo-handling personnel; (c) additional equipment and much improved maintenance; (d) charges levied on badly loaded vessels; and (e) removal of unacceptable, damaged cargo from the port after the free storage periods. The proposed project will address items (a) and (b); PAC and OBEMAP will be responsible for items (c), (d) and (e), with technical assistance for item (c).  - 10 - 2.17 OBEMAP, created as an autonomous government agency in 1969 under the Ministry of Transport, is responsible for practically all cargo handling and stevedoring within the port. Freight-forwarding companies can, if neces- sary, use their own resources to load trucks or wagons. OBEMAP is headed by a 15-member board and a management team assisted by a committee of administration. The staff numbers 2,300, of whom 1,500 are dockworkers. The entire management staff is new and inexperienced. There is a serious shortage of qualified and skilled personnel from top to bottom, and technical assistance and training are badly needed. Apart from the chief of cargo-handling operations, all the supervisory staff need additional training, which will be provided under the proposed project (para. 3.19). E. Port Capacity 2.18 At Cotonou, productivity depends largely on the efficiency of OBEMAP. The port is operating at about its maximum capacity for general cargo, but with some spare capacity for bulk materials. In order to maintain the present throughput, PAC and OBEMAP have instituted 24-hour shift opera- tions which are poorly supervised and controlled and consequently expensive. The productivity of the gangs in handling general cargo is about seven tons/ hour, but often this is not achieved because the ship's gear is very old or poor (50% of the vessels calling at Cotonou fall into this category) or because the vessels have been badly loaded. 2.19 The general cargo capacity of the port is estimated at 720,000 tons per year, of which 160,000 tons is traffic discharged on the east breakwater. The berth occupancy rate is more than 90% under these conditions and the throughput can be stated as 850 tons per year per meter of quay. The project would provide an additional 660 m of berths and increased open and covered storage areas. When the project is completed, it will be possible to revert from the expensive 24-hour operations to a system of two 8-hour shifts plus overtime when necessary. With the increased berth length, plus improved productivity due to technical assistance and training, the throughput achiev- able under normal working conditions (two shifts) should be 830 tons per meter of quay giving a new theoretical port capacity of 1,050,000 tons for general cargo only. This cargo figure does not include roll-on/roll-off (ro-ro), con- tainer vessels, bulk carriers and vehicle carriers which can be accommodated on the east breakwater berths. In terms of productivity per gang/hour, the proposed project should increase the present average rate of 7.1 tons/gang/ hour for general cargo to at least 10.0 tons/gang/hour, and the Government has agreed to ensure that this goal will be met within six months after the civil works included in the project become fully operational. F. Port Planning 2.20 A master plan for the development of the port of Cotonou, prepared by BCEOM and completed in early 1975, was accepted by the Government, PAC and the Association. The master plan can only be realized if sufficient land is  - 11 - up to accommodate the new basin. Consequently the proposed cut-off breakwater extending seawards from the existing west breakwater arm is essential to continue the present accretion and is included in the project. 2.21 Roll-on/roll-off cargo is increasing rapidly, and the port is unable to handle such vessels efficiently. Such a facility is necessary snd PAC has been considering how to provide it. Possibly the best solution would be to acquire a concrete decked barge with a bridge leaf to the quay. The barge would be equipped with pumps to enable its deck level to be changed with tides and varying types of vessel sill/ramp levels. A study of the facility will be made and implemented during the project (paras. 3. 10 and 3.17(f)). 2.22 Two other important considerations in planning the development of the proposed project are: (a) the location of the equipment repair and maintenance workshop for PAC and OBEMAP, which occupies valuable land area and badly needs rebuilding; and (b) the location of the bulk sulphur and clinker stockpiles which also occupy valuable land, the discharge and stockpiling of which also need to be improved. Both are the joint responsibility of PAC and OBEMAP and recommendations on them have been made by the UNCTAD team. It is possible that these works will be carried out by PAC and OBEMAP before the project starts. G. Tariffs 2.23 PAC's tariffs for the use of its installations and services are authorized by its Board and are basically classified according to the nature of charges. General tariffs, fixed initially on the port's commissioning in 1965, were increased by an average of 25-30% in April 1974. The charges on fishing vessels based at Cotonou have remained at the 1965 level; consequently, fish traffic is subsidized by other traffic. Rental charges were revised effective July 1, 1977. The tariffs are generally not cost-based, they have not kept up with inflation and PAC's financial needs, and they require ex- tensive revision. According to consultants BCEOM, PAC's charges on ships are comparable to Lome's but substantially lower than those at Abidjan, Pointe-Noire and Douala. PAC's tariffs on goods are on a par with those at Lome and Pointe-Noire but lower than those at Abidjan and Douala. However, Cotonou enjoys the economic advantage of being closer to Niger and Nigeria. 2.24 OBEMAP's tariffs for cargo handling operations must be approved by the Minister of Transport and were last revised in September 1974. Tariffs are classified by the type of service and appear adequate. However, they may not remain so due to inflation and increases in depreciation when assets are revalued and new equipment is acquired. Tariffs are not cost-related and need revision and rationalization. A summary of PAC's and OBEMAP's tariffs is appended as an Annex to the report.  - 12 - H. Accounting. Budgeting, Audit, Insurance Accounting 2.25 PAC's accounting is broadly based on commercial principles, but has serious shortcomings. Receipts and expenses are classified according to their nature and not according to port functions. In the absence of analytical or cost accounting, the profitability of various services cannot be determined in relation to costs. Legislation does not clearly define the financial objectives. The purposes of two statutory reserve funds, built up by the transfer of 50% of the net surplus, are not clear. The funds could be used to meet unforeseen contingencies and development expenditure. Furthermore, suitable limits of accumulation for these funds need to be prescribed. Further, as the accountant and his staff require training in modern commercial accounting methods, and the accounts preparation needs expediting, technical assistance to improve the situation is provided under the project. 2.26 OBEMAP's accounting deficiencies are similar to PAC's. Since it plays a key role in the functioning of the port, its management and operations must be improved. Budgetint 2.27 PAC's budget format does not permit functional budgeting and budgetary control. Analytical accounting would help to frame more realistic estimates and permit management to monitor more efficiently the port's financial position by department and activity. Improvement in the budgeting procedures should also include long-term forecasts. Budgetary control should continue to vest in the Accountant. The above remarks apply also to OBEMAP. Audit 2.28 PAC's internal audit is restricted to annual stock-taking and verification of expense vouchers and pay sheets. The Commercial Department prepares bills and verifies these before issue. The latter function could better be exercised independently by internal audit. The method for collec- tion of demurrage charges offers scope for leakage, which is possibly taking place. There should be a full-fledged internal audit section, possibly within the Accounts Department to exercise extensive documentary and physical checks. OBEMAP should also strengthen its internal audit in anticipation of expansion in its activities, and technical assistance has been included in the project for this. 2.29 External audit is conducted by two external auditors who verify PAC's annual cash and other accounts. The accounts for 1974 were audited by a qualified accountant, and those for 1975, by the same accountant and the civil administrator. The audit was financial in character and some accounting irregularities, like non-reconciliation of balances, under-provision for doubtful fdebts and faulty presentation, were pointed out. However, PAC was not criticized for the considerable increase (200% in 1974) in receivables  - 13 - with a preponderant share owed by OBEMAP and other public concerns nor for the impact of omission of substantial fixed assets from the accounts and of the valuation of assets at historical costs. TbLe Government agreed that PAC would arrange for qualified independent auditors to comment on wider accounting and financial issues and to include financial management perform- ance within the scope of their audit. Insurance 2.30 Insurance coverage has been increased in recent years. The Govern- ment agreed that PAC would maintain adequate insuriance coverage for all of PAC's structures, machinery and equipment, allowing for regular revaluation of the existing assets and including the assets to be constructed or acquired under the proposed project. III. THE PROJECT A. Background 3.01 The Association reviewed the master plan and the recommended first stage of development with PAC and the Government in April 1975. As the pro- posed project began to develop and co-financing organizations became inter- ested, an alternative solution for phased development was offered by the Arab Bank for Economic Development in Africa (BADEA). Since this approach appeared to have merit for the first phase of development, an additional study was undertaken by BCEOM and a report issued on the advantages and disadvantages of the alternative solution. The results reaffirmed the original master plan, with some modifications, as the most realistic and economical. The study was financed by the Project Preparation Fac-Llity (PPF) (50%) and by BADEA (50%), and the report issued in November 1976. B. Obiectives 3.02 The objectives of the project are: (a) To increase the capacity of the port to handle break-bulk and general cargo. Capacity will increase from 720,000 tons per year to about 1,100,000 tons per year by increasing berth length and storage areas. This increased capacity should suffice until 1985. (b) To improve the efficiency of PAC and CIBEMAP operations through training programs, technical assistance and scholarships abroad. (c) To improve the operations of OCBN through technical assis- tance programs.  - 14 - (d) To ensure that Benin derives maximum benefit from the use of the port of Cotonou for the transit of goods destined to neighboring countries, while keeping the operational efficiency and tariff structure of the Benin route sufficiently competitive to attract 70% of Niger imports through Atlantic ports. (e) To augment knowledge of the erosion problems occurring downdrift from the port so the Government can control erosion and plan and construct necessary shore protection works. C. Engineering Aspects: Scope, Engineering and Investigations 3.03 The project has been prepared by consulting engineers (BCEOM, France), who have been closely involved with the port of Cotonou. They were responsible for the original design and layout, the preparation of the port master plan, a suggested first phase of development and various other studies. The consultants arranged for detailed hydrographic and topographic surveys, borings and other soil tests necessary, and designed and drew up the proposed extension in accordance with the most recent master plan. All of the works included in the port extension are similar to those in the original port and consequently no special circumstances or problems should arise. 3.04 The dredging works have been split into two elements. The first will provide for deepening the entrance channel to the port and dredging a silt/sand trap within the channel, thus delaying the need for future main- tenance dredging. The second element consists of dredging the basin to accommodate the extended length of marginal berths. The basin will be dredged to accommodate a future berth length of 790 meters. This is longer than required for the proposed extension of the berths under the project, but the additional basin will allow for handling ro-ro and other small vessels, and future expansion at minimal cost. 3.05 Since the master plan for the port requires increased land to the west, accretion must continue. Therefore a cut-off breakwater seawards from the present west breakwater must be built. 3.06 The port congestion, the inadequacy and insufficient numbers of trained personnel, and the need for some remedial action, required a study on port operations and cargo handling. This was financed by FAC and undertaken by the Port of Marseilles (France) and a port operations expert of FAC. The engineering consultants have incorporated many of the the recommendations of the study for improving port efficiency and cargo handling.  - 15 - D. Description 3.07 The project can be divided into three sections, project preparation, civil engineering works, and technical assistance. Project Preparation 3.08 The project cost includes US$500,000 from IDA and US$100,000 from BADEA for various studies necessary for preparation of the project. Civil Engineering Works 3.09 The civil engineering works have been split into six separate contract lots to simplify the parallel and joint financing of the project by the various co-financers. The six lots are: 3.10 Lot 1 - Berth Construction. The existing marginal berths will be extended by 610 meters with a depth of 11 meters alongside. Then there will be a further 50 meters, with a depth alongside varying from 11 meters to zero, which will be used as a service berth for the port's tugs, pilot boats and launches. In preparing the tenders, the consultants considered a number of possible variations before deciding on sheet piling as the most economic method. However, a number of the tenderers submitted a variation for an in situ concrete quay wall which may be adopted fol:Lowing further study by the consultants. The fendering system and bollards are similar to the pre- vious installation. Also included within this lot is the provision of a simple roll-on/roll-off facility. The most suitable and economic solution will be studied under the technical assistance items (para. 3.17 (f)) of the project and procured within the financing for Lot. 1. In all probability the facility will be as described in para. 2.21. 3.11 Lot 2 - Dredging and Filling. This lot is divided into two sections since the dredging of the port entrance channel demands the use of floating dredging equipment which can cope with the swell wave conditions, whereas the dredging of the new basin can be carried out using land-based plant or with simple floating equipment. Surplus material from the channel dredging will be deposited close to the shore downdrift to the east of the port, and surplus from the basin dredging and filling will be deposited ashore to the west of the basin area. 3.12 Lot 3 - Breakwaters. Practically all of the works included in thfs lot involves the handling of heavy rock and br,takwater units. In order to gain access to the new basin to be dredged to the west of the port it will be necessary to remove 320 m of the west breakwater. The materials for the construction of the cut-off breakwater will come from the demolition of the 320 m of the existing breakwater, an existing stock of rocks and tetrapods and by the quarrying of new rock and tile casting of new tetrapods. 3.13 Lot 4 - Paving, roadworks, railway trackwork, services and fencing. The services to be extended and provided are storm water drainage, foul drainage, water distribution, fire hydrants, ropdways, sidewalks, entrances  - 16 - and exits, public sanitary facilities, a weighbridge, the railway trackwork, and extension of the existing customs fencing to enclose the new works. The Hotel du Port, which will fall within the confines of the port customs area duiring the extension, will be taken over by PAC. 3.14 Lot 5 - Transit sheds. Two transit sheds will be constructed, each of 120 m x 50 m as clear span portal structures, with partially translucent roof sheeting and central ridge ventilation, eight sliding main doors and walls of concrete with a louvred ventilation section at high level. 3.15 Lot 6 - Electrical works. This comprises all of the electrical works involved in the extension of the port facilities and other essential electrical works. Technical Assistance and Training 3.16 The project will provide technical assistance, training programs and overseas training to PAC, OBEMAP and OCBN. Because of the importance of the Benin route and the increasing competition, both domestic and international, the tariff studies for each of the three agencies included in the proposed project should be co-ordinated or, preferably, carried out by the same con- sultant or expert. The cost of the technical assistance is estimated at US$8,000 per man-month based on recent costs for technical assistance in the region. In addition to the man-month costs, which amount to $1.46 million, an additional sum of $0.35 million has been allowed for international travel and transportation, small items of training equipment, expenses for Benin staff selected for training overseas, and the costs of printing reports. The broad outlines of this element of the project are as follows: 3.17 For PAC: Four experts (60 man-months) who will: (a) advise the management in port operations and control; (b) reorganize the accounting system, introduce cost control and cost-based tariffs, strengthen internal audit, revalue the assets, and train staff; (c) implement a maintenance program in the engineering section; (d) set up training programs in the port for lower level employees who handle and berth vessels, and for mechanics and technicians who run the tugs, pilot boats and other vessels, and the port's mechanical equipment; (e) advise on the training of pilots, their conditions of employment and pilotage charges; and  - 17 - A consulting engineering firm (40 man-months) who will: (f) study the need for a simple but economic form of roll-on/ roll-off facility for the port, develop and design the facility agreed upon, and will assist PAC in implementing and cofmissioning it. The Government has agreed to appoint experts to assist PAC, on terms and conditions acceptable to the Association, and has agreed to ensure prompt and appropriate implementation of their recommendations. 3.18 For OBEMAP: Three experts (60 man-months) who will: (a) work with the present chief stevedore to develop training programs for all levels of staff; (b) select and recruit candidates to fill the vacant positions of 2 assistant ;hief stevedores, 6 berth superintendents, 12 transit shed supervisors, and 15 berth gang foremen; (c) institute a program of regular equipment maintenance and renewal including training and recruiting of workshop personnel and supervisors; and (d) reorganize the accounting system, introduce cost control, strengthen internal audit, revalue assets, train staff, and rationalize and revise tariffs. The Government has agreed to appoint these consultants or experts to assist OBEMAP, on terms and conditions acceptable to the Association, and has agreed to ensure appropriate implementation of their recommendations. 3.19 Most training for PAC and OBEMAP staff will be in the port; short overseLas training missions could be included for senior personnel. 3.20 For OCBN: Two experts (22 man-months) who will: (a) design a new layout for the railway terminal at Parakou to improve the marshalling yard and the transshipment facilities; (b) re.ommend and implement improvements in operations at the Parakou terminal, including staff training; (c) review the traffic forecasts and determine the invest- ments that may be needed to cope with expected demand in the next 10 years; (d) recommend improvements in operations and management; ('t) recommend iruprovementt in traini-ig and staff de:.'e'opMent policies; and (f) study and desigr. ti ntw tarifi structure fcr rail traffic between Cotonou and Parikou and foa road traffic betweer between Parakou and Niger.  - 18 - The Government has agreed to appoint the experts to assist OCBN, on terms and conditions acceptable to the Association, and has agreed to ensure appropriate implementation of their recommendations. E. Cost Estimates 3.21 rhe total cost of the proposed project is estimated at US$46.09 million ,quivalent, with foreign costs of about US$34 million (about 73%), excluding taxes and duties. The Government has agreed to exempt the project from ail identifiable taxes and customs duties. Local Foreic Total Local .. eign 00 (CFAF- =illion) (US0$ illion) 1. Preliminary udim -financed by IDA ceder Praect Preparation F-cility (PFF) (a) Study of phased de.alop-mt .ltereative-, bulk handling, etc. 7.4 19.6 .27.0 0.03 0.08 0.11 (b) Study of coastal regice by DlIft L.aboratorie -- 7.4 7.4 - 0.03 0.03 (c) Detailed engi.eering, preparation of tender doconeota, econo dic nd finanoi.1 studies - 88.2 88.2 - 0.36 0.36 Preliminary studiea financed by A8D1A (a) Study of phbaed drreiopment alter-ctive, bulk handling, etc. 2 04.5 24.5 --- 0.10 0.10 Tot.l 7.4 139.7 147.1 0.03 0.57 0.60 2. Civil woris Lot 1 - Berth coostrution., 660 a. 640.0 1919.0 2559.D 2.61 7.83 10.44 Lot 2 - Drcdging and filling 1/ 490.0 1470.0 1960.0 2.00 6.00 8.00 Lot 3 - Demolitioo of breakwater and con- struction of cot-off brea.t.ktr 250.0 750.0 1000.D 1.02 3.06 4.08 Lot 4 - Roadtay=, railway tr-ck sook, setYiCe=, open storage mar 325.0 975.0 1300.0 1.33 3.90 5.31 Lot S - TwO tr-nit =hedn 150.0 450.0 600.3 0.61 1.64 2.45 Lot 6 - tlectric-1 work= 125.0 375.0 500.0 0.51 1.53 2.04 Total 1980.0 5939.0 7919.0 8.08 24.24 32.32 3. Sp-ervi.oi. of .o..truction of CiVil work= 169.0 252.4 421.4 0.69 1.03 1.72 4. Teohnical aniataoc, trmining, and atudy of the roll-on/roll-off facilitios (a) PAC 38.8 86.0 144.8 0.24 0.35 0.59 (b) OE108P 58.8 86.0 144.6 0.24 0.35 0.59 (c) OCB0 18.9 29.4 48.3 0.08 0.12 0.20 (d) R.oll-o/roll-off =tudy 41.7 63.7 105.4 0.17 0.26 0.43 Total 178.2 265.1 443.3 0.73 1.08 1.81 5. Detaile. =tudy and coat forecooro for coastal protection torkt 24.5 100.5 125.0 0.10 0.41 0.51 6. Co-ting-ncie= (a) Physic=l contingncy for civil tork. (108) 198.0 593.9 791.9 0.81 2.42 3.23 (b) Pric= co-ting=nci== 382.2 1063.3 1445.5 2.56 4.34 5.90 TOTAL PROJECT COSTS 2939.3 8353.9 11293.2 12.00 34.09 46.09 1/ This lot will in all probability, bh finan..d in parallel by CIDA .siog their own pro-c-ceot proc-dur==. 80i.cthlco will li ot the tonderoc to nly cthose of Ca.adiad origi, ic it 010000 certain that this atisated cos t will he lcw end the t-oa co.sI perhapa moh highe.-  - 19 - The costs for the civil engineering works shown above are from the consultants' preliminary report on the evaluation of the tenders rieceived on April 15, 1978 for Lots 1, 3, 4, 5 and 6. When the report is completed and the final recom- mendations made, the contract figures may change but probably not signifi- cantly. The estimate used for Lot 2, dredging andd filling, was provided by CIDA. The estimated costs include physical and price contingencies7 The physical contingencies for each of the lots vary; however, the consultants have recommended that 10% physical contingency be applied to each lot since the cost figures are still provisional. The price contingencies are based on the project implementation timetable and assume annual increases as follows: 1978, 8%; 1979, 7.5%; 1980 and onwards, 7%. The preparation of detailed cost estimates for this project and particularly for the civil engineerings works was difficult as there have been no major civil engineering works of any similar nature or magnitude since the construction of the original port. F. Financing 3.22 A considerable number of international and national financing organizations were approached by the Government of Benin in 1976-1977 and seven co-financers have agreed to participate in the project. During the appraisal mission, four of the co-financers were present and some took part in the discussions with the Government. 3.23 A co-financers meeting was held in Paris April 27 and 28, 1978 and was attended by representatives from IDA, seven co-f-inancers and the Government of Benin. The following financing plan was agreed upon: Tentative Financing Plan for a 660-Meter Berth Project (US$ million) Technical Total by Lot 2: Lot 3: Lot 4: Lot 6: Super- assistance Coastal co-financers, Organization PPF Lot 1: Dredging, Break- Shore Lot 5: Electri- vision and protection Government Berths filling waters works Sheds cal works of works training study and PAC IDA 0.50 5.50 1.00 1.70 1.79 0.51 11.00 Norway 2.50 5.80 8.30 Abu Dhabif Fund 2.62 2.62 BADEA 0.10 4.50 4.60 CIDA 10.00 10.00 CCCE 3.12 3.12 FAC 1.50 1.50 AfDB (NTF) 2.94 2.94 Governmen t 0.32 0.09 0.41 PAC 0.60 0.70 0.30 1.60 Total 0.60 13.04 10.00 5.20 6.80 3.12 2.62 2.00 2,11 0.60 46.09 Benin's contribution to the project is $2.01 million.  - 20 - 3.24 Lots 1 and 4 will be financed jointly by the Association, Norway, FAC, the African Development 3ark (AFDB) as agent for the Nigerian Trust Fund, and PAC; procurement will be in accordance with the Association's practices. Lot 2 will be financed ' parallel entirely by CIDA, under their own procure- ment procedures. Lot 3 will be financed in parallel jointly by BADEA and PAC and Lot 6 by the Abu Dihai Fund, under their own procurement procedures, but using the tender documents prepared under the project. Lot 5 will be financed by the CCCE in parallel under their own procurement procedures but using the tender documents prepared under the project. The effectiveness of the pro- posed credit would be contingent upon the effectiveness of the BADEA and AfDB loan agreements, the CIDA, FAC and Norway grant agreements, and the authoriza- tion of the Abu Dhabi and CCCE loans by these two institutions. 3.25 The cost of supervision of the civil works will be financed by the Association and the Government. 3.26 All studies, technical assistance and training will be financed by the Association and the Government. No charges will be imposed on OCBN and OBEMAP for the cost of this assistance. G. Implementation 3.27 The proposed project will be implemented by the Ministry of Trans- portation under the supervision of an ad hoc commission specifically set up to execute the project, following the timetable set forth in this report. They will be assisted by engineering consultants and a project coordinator to be recruited specifically for the task; UNDP financing has been requested for the latter. A Benin counterpart, acceptable to the Association, will be seconded to work with the project coordinator and will be financed under the project. A condition of effectiveness of the proposed credit would be the appointment, on terms and conditions acceptable to the Association, of the engineering consultants and the project coordinator. Because of the large number of cofinancers and the complexity of the project, it is desirable to have a fulltime project coordinator. le will be based in Cotonou for two years and will assist the Government and PAC in implementing the project, keep the co-financing organizations fully informed, deal with the day-to-day problems, and will assist in recruiting technical assistance experts, setting up training programs, and preparing terms of reference and contract documents. To train and improve the quality of the PAC's engineering staff, suitably qualified engineer employees acceptable to the Association will be seconded to the consultant supervising the civil works. The proposed timetable for the project, agreed upon by the Government and PAC, is shown as Chart 1 of Annex 2. H. Procurement Civil Works 3.28 On the basis of Bank guidelines for international competitive bidding, the civil works were advertised internationally; 72 contracting  - 21 - organizations expressed interest and 57 were retained following pre-selection. Tenders were invited December 15, 1977 and were to be returned by noon on April 14, 1978. Following a request by CIDA, Lot 2 was not included in the tender documents as CIDA intends to finance this lot in parallel using Canadian contractors and their own procurement procedures. Similarly, Lot 5 will be financed in parallel entirely by the CCCE, and the tenders open only to French contractors. The tenders were opened in public on April 15, 1978; 24 contractors had submitted bids. Consultants BCEOM immediately evaluated the tenders and issued a preliminary report on April 25 which showed that the tenders were generally much lower (30%) than the estimates used in project preparation. Several alternative methods of berth construction were submitted and are being studied. Civil works will take about 23 months to complete from the date of the contract award, with a 12-month guarantee period to follow. Supervision of Civil Works 3.29 The Government is in the process of appointing, on terms and condi- tions acceptable to the Association and the other co-financers, a suitably qualified firm of consultants to supervise the construction of all of the civil works. Studies of Coastal Protection Works 3.30 Following effectiveness of the proposed credit, a firm of consult- ants will be selected and appointed in accordance with the Bank guidelines to carry out a detailed study of the coastal protection works necessary. Terms of reference for the study will be prepared by the Government with the assis- tance of other interested Government agencies and the Association. I. Disbursements 3.31 Disbursements from the proposed credit will be made on the follow- ing basis: For the civil works, the Association will finance $6.50 million for part of Lot 1 and Lot 4 only, which represents, including some local costs, 33% of the total cost of $19.84 million for these two items. For the technical assistance items and studies, the Association will finance about 85% of the total costs. The estimated schedule of disbursements from the credit account is as follows:  - 22 - Association fiscal year and Quarterly Total cumulative disbursements quarter ending disbursements at end of quarter -----------(in US$ million equivalent)---------- 1977/1978 0.50 0.50 1978/79 December 1978 0.38 0.88 March 1979 0.38 1.26 June 1979 0.38 1.64 1979/1980 September 1979 0.38 2.02 December 1979 2.38 4.40 March 1980 2.38 6.78 June 1980 2.08 8.86 1980/1981 September 1980 1.50 10.36 December 1980 0.32 10.68 March 1981 - 10.68 June 1981 10.68 1981/1982 September 1981 - 10.68 December 1981 0.32 11.00 March 1982 - - June 1982 J. Environmental Aspects 3.32 As a consequence of the port's construction, the marine conditions at the seaward outlet of the Cotonou Lagoon changed considerably (map IBRD 13126). This lagoon acts as an overflow channel for Lake Nokoue and during periods of heavy rainfall the lagoon had an outlet to the sea which would close naturally as soon as the water level fell again and the sand transport system closed the temporary outlet. With the construction of the port, sand transport was blocked by the updrift port breakwater; for the first time the mouth of the lagoon remained permanently open to the sea. This resulted in serious ecological changes in the lagoon and, more important, in Lake Nokoue.  - 23 - 3.33 The Government appointed consultants (financed by USAID) to study the situation and design a barrage to be built across the lagoon to prevent the ingress of the saline wedge and yet enable the excess waters of the lake and lagoon to discharge when necessary. (Consultants' studies also included a badly needed new road bridge across the Cotonou Lagoon.) The barrage has been completed and the lake will begin to return to its original state. However, the losses in terms of fishing employment and property damage have been considerable. 3.34 Farther to the east, erosion continues for several kilometers and considerable loss of land has taken place (map IBRD 1.3126). Some coast protection works have been carried out since the port was built to control shoreline erosion, notably the construction of a stone revetment to the west bank at the seaward end of the lagoon and two groynes about 3.5 km east of the port. The Government appointed Delft Laboratories, The Netherlands, to carry out an independent study of the problem. Their final report was received in April 1977 and the major comments and recommendations are summarized below: (a) The cut-off breakwater will prevent the bypassing of sand for the next 10 years. After this maintenance dredging will be necessary. 1/ (b) The beach immediately east and dowudrift of the lagoon entrance owes its presenS stability to the fact that it received about 300,000 m of sand per year from the lagoon. However the recently completed barrage will prevent this and erosion will begin to take place. A secondary consequence of the barrage may be that, as a short-term effect, the lagoon entrance will be blocketd by sand; but in the long term, after erosion of the bar and the beach, the barrage itself will be threatened by wave action, and the construction of a new breakwater arm at the mouth of the lagoon is proposed. (c) After project completion, erosion to the east of the port will increase but this will be a consequence of the barrage construction, which itself was a consequence of the original port construction. 3.35 The results of this study have been discussed at length with the Government, PAC, and USAID staff. The Government also requested comments from the consulants BCEOM. 1/ Consultants BCEOM do not agree with this point, and a compromise period has been used in the preparation of this report.  - 24 - 3.36 In view of the implications of the erosion problem and the high costs of coastal protection works, it is proposed under this project to finance an additional study which would: (a) Propose alternative measures for coastal protection, and compare the advantages and disadvantages of each Eor cost and effectiveness. (b) Prepare a detailed plan of action and program. (c) Estimate costs of civil engineering works proposed. The Government has agreed to appoint consultants or experts by March 31, 1979, on terms and conditions acceptable to the Association, to carry out this study, and to have completed the study by March 31, 1980. K. The Railway System, OCBEN 3.37 The railway is essential to the Benin route. Therefore, the opera- tion of OCBN and the plans for improving the Cotonou-Parakou road parallel to the railway line, which will result in road/rail transport competition, were reviewed as part of the project preparation. 3.38 The factors limiting the capacity of the route Benin outside the port are: (a) insufficient motive power and rolling stock of OCBN; (b) inefficient cargo handling by the majority Government-owned forwarding com- pany, Societe de Transit de Consignation du Benin (SOTRACOB) at the rail/road transshipment point in Parakou; and (c) low freight rates paid the trucking companies which transport cargo from Parakou to Niger; the low rates result in lack of competition, low standards and poor maintenance of vehicles. So far as (a) is concerned, OCBN's capacity is being increased by about 50% or 150,000 tons p.a. until 1980 to enable it to handle between 450,000 and 500,000 tons p.a. through a project of CCCE. The CCCE project includes equipment for ballast production; 125 freight cars; motive power (4 loco- motives, 4 railcars with 24 trailers, and 5 shunters); track maintenance equipment; track material for 24 km of track; and a breakdown crane. The Government will improve SOTRACOB operations item (b). Item (c) will be studied under the proposed project. 3.39 To complement the CCCE project, the Government has agreed to prepare by June 30, 1979 a plan of action, acceptable to the Association, covering operations and cargo handling. The objective of the plan would be to improve the average time for transshipment and to increase the capacity of the trans- shipment facilities at the rail/road terminal at Parakou in accordance with traffic demand. The Government has agreed to implement this plan, following review by the Association, by December 31, 1980.  - 25 - IV. ECONOMIC EVALUATION A. General 4.01 The proposed project, part of the Benin's 1977-80 Economic Develop- ment Plan, is given high priority by the Government. It has been designed (i) to reduce handling and shipping costs and (ii) to stimulate transit traf- fic of Niger and Nigeria. The project will help the Government to achieve its objective of about 7% annual growth in GNP in real terms between 1980 and 1985 since Benin's leading sectors -- commerce, transport and modern industry--rely largely on the development of transit traffic (paras. 1.14 and 1.15). B. Traffic Analysis Recent trends and future prospects 4.02 There has been an unprecedented increase in the general cargo traffic handled at Cotonou Port during the last three years. This traffic increased by 36,000 tons (11%) in 1975, 108,000 tons (25%) in 1976 and 156,000 tons (30%) in 1977, in contrast with an average growth of about 5% during the early 1970's. Total general cargo traffic, including cereals and sulphur handled at the main quay, reached 689,000 tons in 1977 (383,000 tons in 1974). Clinker imports for the cement plant at Cotonou also registered a significant increase (8.5% per annum) during the same period. Liquid bulk traffic showed a more moderate increase; oil imports grew at 5% while bulk vegetable oil exports (mainly palm oil), stabilized at about 30,000 tons (see Table 1, Annex 2). 4.03 The major cause of the rapid growth of traffic is Nigerian imports which transit (directly or indirectly through Benin,ese importers) via Cotonou. As the port was initially designed to satisfy the demand of traditional traffic of Benin and Niger, it is inadequate to handle all the potential demand for transit traffic. The present congestion of the port and the resulting freight rate surcharge of between 20% and 35% imposed on Cotonou traffic have already caused significant diversion of Niger traffic to Lome (60,000 tons in 1977) despite higher land access ccosts to the sea. Without diversion of Niger imports to nei'hboring ports, tbhe growth of traditional imports (Benin and Niger), throusgl` Cotonou would halve probably reached about 15% p.a. In addition, because o.1 the lack of bertbLing facilities, the port had to limit Nigeria transit traffic (direct and indirect) to about 330,000 tons despite a potential demand of about 600,000 tons for direct transit. 4.04 The rapid development of this transit traffic combined with the decline of Niger exports of groundnut products to Europe has accentuated the dramatic imbalance between in-bound and out-bound traffic of general cargo at the port. Exports now represent only 9% of general cargo traffic as opposed to 36% in the early 1970's.  - 26 - Basis for traffic projections 4.05 T'he Ministry of Transport commissioned BCEOM (France) in 1974 to prepare a forecast of traffic through the port up to 1990 and a master plan for the port. BCEOM and the appraisal mission updated the forecast in 1977 to take into account the higher-than-anticipated growth of Nigeria transit traffic in the years 1975-77. Detailed forecasts by commodity group and country are available in the project file. (a) Traditional traffic (Benin, Niger) 4.06 Traffic forecasts of imports and exports were made for each major commodity group on data collected from major industries and from the Govern- ment. Due to the lack of data projections, estimates for some general cargo items were made on the basis of growth factors used in the national account or aggregate national foreign trade projections prepared by the Association. For example, overall traffic forecasts for Benin have been adjusted to take into account GDP and foreign trade growth through 1985; Niger's foreign trade forecasts were mainly based on sectoral studies recently prepared by the Government and BCEOM. The proposed forecasts of imports of intermediate and consumer goods generated by the growth in uranium exports were cross-checked with trends observed in Gabon, Ivory Coast and Nigeria which have registered rapid growth in the value of exports. 4.07 The allocation of Niger foreign trade between routes through Benin and Togo was based on a gravity model relating traffic to transportation costs of major commodity groups. Empirical adjustments were then made in order to take into account non-quantifiable elements such as a possible future improve- ment of the port and inland transport system in Nigeria, and the willingness of the Niger Government to maintain some diversification of its access to the sea. The analysis shows that after the completion of the proposed project and elimination of the present congestion, the port of Cotonou should accommodate about 73% of Niger imports as against only 63% in 1977. In the long run, however, this percentage could decline slightly as some imports for eastern and southeastern Niger (about 30% of import traffic) might transit through Nigeria by rail, if, as now planned by the Grande Commission Mixte Niger-Nigeria, the Nigerian railway line is extended 130 km northwards to Maradi in southern Niger, or if containerisation by road becomes a more practicable operation. (b) Upper Volta and Mali 4.08 This traffic is negligible. It has been estimated at 5,000 tons in 1985 and 10,000 tons in 1990. (c) Nigeria transit traffic 4.09 Forecasts for this traffic are tentative and largely depend on (i) relationship between Nigeria and Benin, (ii) retention of some features of an open market system in Benin, (iii) improvement in operations of Nigerian ports, and (iv) the future growth of Nigerian imports.  27 - 4.10 It is likely that in the medium and even long term, significant Nigeria import traffic will continue to transit through Cotonou, as evidenced by the willingness of the Nigerian Trust Fund to participate in financing the project. Benin intends to continue its policy of creating joint venture industrial and commercial projects to supply the Nigerian market from Benin. Since 1975, Nigerian policy has been to work more closely with neighboring countries, mainly Benin, to develop regional projects, e.g. the Cotonou and Onigbolo cement plants, Save sugar plant complex, food industries, and con- struction of new "interstate transversal roads." The Lagos-Seme expressway, financed by Nigeria, was comple'ted in 1977 and the port of Cotonou now has dirert access to Western Nigeria and to the new :Lndustrial areas near Lagos which are about 120 km from Cotonou. 4.11 The economic evaluation of the project has been based on a possible Nigerian transit traffic of about 300,000 tons, i.e., a figure half-way be- tween the present traffic demand by Nigerian importers (about 600,000 tons) and the most pessimistic case which assumes a complete disappearance of the traffic. On the basis of recent trends, it is assumed that about 50% of traffic (150,000 tons) will be direct transit. This will represent about 1.5% of the total break-bulk cargo traffic expected to be handled at Lagos in 1983/84 and possibly 5 to 6% of break-bulk cargo imports destined for Western Nigeria. Traffic projections 4.12 Traffic projections by commodity group and country are presented in Table 2, Annex 2. The estimates project an increase in general cargo traffic of about 42% by 1981 (689,000 tons in 1977 and 978,000 tons in 1981). Most of the increase will occur immediately after completion of the proposed proiject, as an expected 420,000 tons (326,000 tons in 1977) of Nigerian imports will transit through Cotonou even with increased capacity and improve- ments in Lagos port. 4.13 After the early 1980/81 increase immediately after completion of the project, traffic should stabilize until 1986, assuming, (i) the situation in Nigerian ports significantly improves and Nigeria transit traffic declines to about 320,000 tons, and (ii) some Nigerian ports might start to compete with Cotonou for transit traffic for eastern Niger if rail transportation in Nigeria improves. After 1985, traffic growth will be provided only by tradi- tional traffic (Benin and Niger), mainly import:s.  - 28 - 4.14 T'hese projections are summarized below: Projected general cargo traffic through Cotonou (000 tons) Actual Forecast 1972 1975 1977 /1 1981 1986 1991 1) Benin imports 152 130 174 207 294 392 exports 110 66 49 80 93 112 Total 262 196 223 287 387 504 2) Niger imports 75 120 130 240 333 481 ea;ports 31 14 10 31 38 43 Total 106 134 140 271 371 524 3) Upper Volta, Mali imports - - - - 6 12 4) Nigeria direct transit - 68 190 250 150 150 indirect transit 21 26 136 170 170 170 Total 2I 94 326 420 320 320 5) Total general cargo 389 424 689 978 1,084 1,360 /1 Based on extrapolation of the first eight months. *C. Proect Benefits 4.15 Prolects benefits can be grouped under three headings corresponding to the three major components of the project: (a) d;redging savings and new land creation resulting from the dredging of a siltation trap at the entrance of the port and the construction of the cut-off breakwater; (b) freight savings for clinker imports resulting from deepening the access channel to the port to accommodate larger ships; (c) savings from the extension of the main quay: savings in ship waiting time and service time, reduction of handling cost, reduction of land access cost to the sea for Niger, and benefits accruing to Benin port and transport operators from avoidance of traffic diversion.  - 29 4.16 The economic rate of return of the project has been calculated by comparing the cost of the proposed investment wiLth the benefits which will accrue to "captive traffic", i.e. traffic in the "without" case. However, this is not a "do nothing" solution, because even without the project, congestion will force the PAC and OBEMAP to improve port operations. Benefits from the Extension of the main guay (a) Ship waiting time savings 4.17 In 1977 the total- -Rting time of the 460 ships which called at Cotorou to load or unload general cargo was 83,000 hours, an average of about: 180 hours per ship. The cost was about US$19 million for the year, based on an average cost of ship in port estimates of $180 per hour for tramp vessels and chartered ships (40% of traffic) and $250 per hour for liners (60% of traffic). Since ship waiting time is twice the total ship service time, the shipping conferences having applied a freight surcharge of 35% on ships calling at Cotonou, As a result, some companies divert an inc:reasing proportion of Niger traffic to Lome. The ship waiting time savings from the extension of the berthing facilities Elre based on results provided by a port simulation model. These estimates assume that (i) the present sea- sonality of traffic will continue and about 41% of break-bulk cargo traffic will be handled during the four peak months; (ii) a maximum of about 150,000 tons per year of general cargo will continue to be handled at the eastern breakwater in the without case despite high hanidling costs; and (iii) these benefits will be shared between Benin, Niger and Nigeria in proportion to the traffic in the without case. From the analysis of the recent situation at Cotonou and surveys conducted among shipping companies, it is estimated that diversion of Niger transit traffic to Lome will occur when ship waiting time exceeds about two days on annual basis (4 to 5 days during peak period of traffic), i.e. when the cost of waiting time in Cotonou is approximately equal to the additional land transport cost of cargo destined to the Niamey region. 4.18 For charter and tramp vessels, which are competitive along the West African coast, freight rates are sensitive to port conditions and the major part of ship waiting time savings (about 78%) for this traffic will be passed to the country through improved voyage and time rates. it has been estimated from surveys undertaken by consultants that only 53% of liner time saving will pass to Benin, Niger or Nigeria through freight rate adjustments. This estimate takes into account the various shipping conditions (CIF or FOB) applied to import or export traffic. 4.19 Total benefits from reduction oI sn'bp waiting time can be summariced as follow:  30 - 1981 1983 1986 1991 % of ship service time Without case 60 40 40 40 With case 6.3 7.3 10 20 Hours saved (000) 13.5 8.3 8.2 5.7 Benefits (CFAF million) Benin, Niger, Nigeria 463 284 281 195 Foreigners 27 167 165 115 735 451 446 310 (b) Ship service time savings 4.19 The shortage of storage areas within the confines of the port is a major cause of the decline of the productivity. Considerable delays occur in finding storage space for goods, for reorganizing cargo or for moving goods in the port. The proposed extension of the main quays will provide additional storage areas behind the new berths and will eliminate the shortage of space behind the existing berths. In addition, the proposed technical assistance will permit PAC and OBEMAP to implement better working methods and improve supervision and control over labor. These benefits and underlying assumptions are summarized below: Without Case With Case (1981/82) (1983 & after) A. Productivity Ton/hour/gang 9.35 9.35 11 % time/gang effectively worked 78 78 80 No. hatches/ship 3.2 3.2 3.2 Working hours/day 22 20 18.4 Ton/hour when ship alongside 21.4 19.4 21.6 B. Savings on ship service time 1981 1983 1986 1991 Break/bulk cargo traffic (000 t) 515 483 475 445 Aours saved (000) /1 - 0.8 2.6 2.9 Savings-Berin, Niger, Nigeria (CFAF million) /2 27 89 80 Savings-foreign beneficiaries (CFAF million) - 16 52 50 43 141 130 1/ Negligible in 1981/82. The higher working hours/day in the without case would compensate the lower level of productivity. /2 Same assumption as for ship waiting time savings (para. 4.10).  - 31 - (c) Handling and storage cost savings 4.21 Shore congestion increases handling cost, and specific operational improvements are expected from the proposed extens-Lon of the port and techni- cal assistance program such as (i) improved turnaround time of goods in the stacking yards; (ii) better utilization of handling equipment and labor; and (iii) reduction of the use of the Eastern jetty where handling costs are 40% higher than on the main quay. These improvements will reduce by about 18%--CFAF 300/ton--the costs for handling and storage of break-bulk cargo at the main quay and by about CFAF 1,200 for the avoidance of the use of the eastern jetty. These cost savings will benefit Benin, Niger and Nigeria in proportion to traffic in the without case. Part of these savings (about 30% for on-board operations) will accrue to ship owners. Total Cost Savings (CFAF million) 1981 1983 1986 1991 Traffic (000 tons) 515 483 475 445 Total cost: Without 1,339 1,236 1,230 1,169 With 1,091 1,018 1,004 1,039 Savings Benin, Niger, Nigeri4 174 153 158 91 Foreign Ship-Owners 74 65 68 39 Total 248 218 226 130 (d) Benefits for Benin from avoidance of trLffic diversion 4.22 Without the project Cotonou port will not be able to handle all estimated potential traffic; the result will be that part of that traffic for Niger will be diverted to Lome. In addition, western Nigerian importers will cease using Cotonou if conditions in the Nigerian ports, mainly Lagos, improve but Cotonou remains congested. From a survey of regional ports, it appears that the best criteria to use for defining capacity of the port of Cotonou and the volume of potential traffic likely to be diverted to other ports in the "without" case is ship waiting time. A waiting-time limit equal to about 40% of service time can be used as a normal indicator. This ratio has been applied after 1983; before then, a higher ratio has been applied: 70% i- 1980, 60% in 1981 and 50% in 1982 as the ratio is expected to decrease when the situation of the neighboring ports improves. 4.23 The following table shows the volume of potential transit traffic which will be diverted to other ports in the without case. It is assumed that Benin will give priority to the traditional Niger traffic at the expense of NigeriLan traffic.  -32- Break-bulk.cargo diversion (000 tons) Total Upper Volta Traffic Benin Niger Mali Nigeria 1981 Potential 873 257 216 - 400 Diverted 348 - - - 348 Port traffic -525 257 216 - 52 1986 Potential 899 342 251 6 300 Diverted 424 - 168 6 250 Port traffic 475 342 83 - 50 1991 Potential 1,080 449 319 12 300 Diverted 635 4- 319 12 300 Port traffic 445 445 - - - 4.24 The diversion of transit traffic to other ports v-ill cause the Government of Benin to lose significant revenues since most of tlhe port and transport operators in Cotonou port are Beninese who must tranwsfer the major part of their profits to the Government. A comprehensive survey and analysis of accounts of each corporation involved in the port and tran sport system was made by consultants in order to estimate the benefits which wil1l accrue to the various operators and the losses to Niger resulting from th.e use of the more expensive Togolese route. Benefits for Benin include the real profits of the corporations, taxes to Benin and additional wages paid to unskilled local labor0 Shadow pricing of labor has been applied when necessary. As indicated below the economic benefit per ton for Benin is important. Tlhese benefits, which include additional PAC revenues from proposed tariff increases, range from CFAF 4,953 per ton (US$20.20) for Nigeria tra. ffc to CFAF 64164 (US$25.20) for Niger traffic. Benefit for Benin from one ton of transit traffic (CFAF per ton) Niger Ni a 1. Consignee 160 160 2. PAC 1,300 15300 3. OBEMAP (Handling) 1,606 1,606 4. Forwarding Agents 934 1,073 5 OCBN (railways) 332 6. Road carriers 1,073 654 7. Expenses of foreign road carriers in Benin 724 125 8. Others 35 35 6,164 4,953  - 33 - (e) Transport cost savings for Niger 4.25 Niger will also benefit from the project since it will permit Niger to avoid diversion of traffic on the Togolese route where land transportation costs are, as indicated below, considerably higher than on the Benin route particularly for central and south-eastern Niger. Additional transportation costs on the Togolese route (CFAF/ton) Central and Weighted Niamey Southeastern Niger Average 1977 7,000 18,000 13,400 1981 5,680 16,600 10,900 1985 and after 4,550 14,550 10,450 4.26 Assuming that traffic diverted to Lome in the "without" case will increase from 65,000 tons to 174,000 tons from 1983 and after (para. 4.22), transport cost savings will amount to CFAF 692 million in 1983 and CFAF 1,818 million in 1986 and after. Total benefits from avoidance of diversion of traffic are as follow: Benefits from Avoided Diversion (CFAF million) 1981 1983 1986 & after A. Benefits for Benin On Nigeria Traffic Avoided diversion (000 t) 348 350 250 Benefits 1,724 1,734 1,238 On Niger traffic 1/ Avoided diversion (000 t) - 65 174 Benefits - 400 1,073 Total benefits for Benin 1,724 2,134 2,311 B. Transport costs savings for Niger - 692 1,818 (additional transport costs on the Togolese route) 1/ These benefits will accrue to Lome in case of diversion of Niger traffic to the Togolese route; the benefits of port operators in Lome and Cotonou are similar.  - 34 - Dredging savInRs add4tional land creation 4.27 Dredging savings. The construction of the 300 meter cut-off break- water and the silt/sand trap will eliminate at least 20 years' expensive periodic dredgingt, Studies on the siltation prob:lems 5f the p-.t indicate that without the proposed wo-rks the volume of sand, which will bypass the western jetty and progessivel- filll up the access Ctannel3 wili rapidly increase from about 3830000 m- in 1980 to a possible 850,000 m at the end of the 1990's. Benefits 5rom avoidance of dredging have been calculated at a cost of about CFAF 330/m and mobilization cost of about CFAF 60 million per dredging campaign- Annual savi-is Till in-crease from CFAF 136 million in 1979 to CFAF 278 million at the end of the 1990's (see table 3a in the Annex). Benefits from dredging savings have been allocated proportionately between Benin, Niger and Nigeria according to the total traffic of these three countries in the without case, as without the proposed works, PAC would probably charge port users to recover maintenance dredging costs. 4.28 Creation of additional land. The shortage of land for storing and stacking goods is a maaor cause of port congestion and decline in productivity of shore-handling operations. Without the cut-off breakwater, the extension of berthing facilities will remain limited to th.e northern face of the basin and the land available for shore handling operations and storage will be limited to a narrow stretch of land enclosed between the basin and the Boulevard de France (see map IBRD 13127). Construction of the breakwater will permit the accretion of sand to create ne- land, nllowing the use of the southern face of the basin when needed. It is estimated that about 50 ha of new land will be available by 1991. Wzit the price of undeveloped land in the port area assumed to be CFAF 3,500/m4, PAC estimated the total value of the new land created during the 1980/91 period will amount to at least CFAF 1.8 billion (US$7.3 miliion), i.e. about CFAF 150 mill-on per annum. Freight Saviigs clinc mL_ imoDorts) 4.29 The deepening of the access channel will permit larger clinker carriers to be accommodated--42,000 dwt instead of a maximum of 39,000 dwt now--and with an increase in the average cargo from 29,000 to 33,000 tons. Benin will benefit throtugh a reduction of freight rates of about CFAF 185/ton (US$.76). Assuming that only two-thirds of clinker imports (400,000 tons p.a.) will be carried by the 42,000 dwt -hips category, savings on clinker freight will be about CFAF 50 mil'lion. Total piLoiect benefI ts 4.30 Total quantified benefit streams attributable to the project adopted for calculating the economic return are given in Table 3 of the Annex. Benefits corresponding to the t"best estimate" of traffic can be summarized as follows:  - 35 - Benefit Streams from the Project Best Estimate of Traffic (CFAF million - 1978 prices) 1981 198:3 1986 1991 Dredging savings 175 218 251 281 Additional Land 150 1510 150 150 Clinker freight savings 50 50 25 - Ship time savings 735 494 587 440 Handling cost savings 248 218 226 130 Avoided diversion 1,724 2,826 4,129 4,129 Benefits to all users 3,082 3,956 5,368 5,130 Benefits to Benin alone 2,367 2,783 3,064 3,057 Other, non-qualified benefits 4.31 The scope for potential benefits is greater than outlined above. The deve:Lopment of transit traffic to Nigeria will permit a basic expansion of services and industries associated with this traffic. Quantification of such benefits would require parallel assumptions with respect to the additional capital investment needed which are beyond the scope of the analysis. Finally there are other benefits which do not lend themselves to reliable quantification on the basis of available information but which, nevertheLess, are important: improved handling operations, more rapid delivery of goods, and improved qualificatons of labor from the general development of the transport sector. Project costs 4.32 The detailed project cost streams (1978 prices) used for the economic evaluation are presented in tables 3a and 3b of the Annex. These costs exclude customs duties, local taxes and price contingencies. They include (i) civil works and supervision; (ii) after 1981, PAC capital expenses for routine and periodic maintenance for 25 years; aLnd (iii) technical assis- tance and training, as benefits from improved port productivity have been quantified in the project benefit streams. Costs whLich will occur during project implementation period (i.e. excluding maintenance) are as follows: Cut-off Dredging Berths Breakdwater Access Technical Sand Trap Channel Assistance Total --------------------(CFAF million)------------------ 1978 49 - 205 254 1979 1,083 194 3,655 4,932 1980 - 43 4,037 4,080 1981 - 52 52  - 36 - ECONOMIC RETURN 4.33 The project as a whole and for all users, i.e. foreign ship owners, Benin, Niger and NiSaria, will yield an excellent economic return of 37% for the best estimate of traffic and costs and a first year benefit (FYB) of 29%. 4.34 The economic return for Benin alone will be about 25% with a FYB of about 22% assuming the proposed PAC tariff increases materialize (see paras. 5.10 and 5.11). This return is considered excellent, taking into account that the project will help develop local activities such as storing, repacking or reprocessing goods re-exported to neighboring countries. 4.35 The economic return of the project at the overall regional level, including Togo, will be 19% (FYB, 13%). This excludes the benefits accruing to port operators in case of diversion of Niger traffic to the Togolese route since these benefits would accrue to Lome port operators instead of Cotonou (para. 4.26). 4.36 The high return expected from the project can be explained by the following: (i) The bids tendered by contractors for the civil works were low, which is possibly related to a temporary decline in development projects in Nigeria. (ii) Under the "best traffic estimate", it is expected that important, additional transit traffic for Nigeria will be diverted to Cotonou immediately after the completion of the project as some port and urban congestion might continue at Lagos at least until 1983/84. (iii) Port and transit operations are very profitable, and since most port, transit and transport operators have been nationalized, most of these benefits will accrue to Benin Government budget. (iv) The project will permit Niger to reduce considerably (at least US$7 million per annum) its land transportation costs on foreign trade as the Benin route is the shortest link to the sea for West and Central Niger. D. Project Risks 4.37 Tests of the sensitivity of the economic return of the project as a whole and for each item to changes in capital costs, maintenance cost, traffic and benefits were carried out. The results (Table 4, Annex 2) indicate that for the traffic best estimate projection, even with a combined 15% increase in costs and a 20% decrease in benefits (cost savings/ton, tariff, ship time costs, etc.), the overall return of the project for all users would be very good -- (27x). Under the same assumptions, the economic return for Benin alone would still yield an acceptable 17% IRR.  - 37 - 4.38 Sensitivity tests have also been carried out in the most unfavorable event that Nigeria's direct transit traffic using Cotonou disappears. In this case the overall economic return for all users is only 25% (FYB 10%) and the return for Benin alone falls to 13%, which still remains acceptable. However, the FYB will be only 4%. This reflects a risk of about 25% over-capacity in the proposed berth extension project until the mid 1980's. But considering the traffic congestion at Lagos, the participation of the Nigerian Trust Fund in the financing of the proposed project and the willingness of Nigeria to implement regional projects in Benin and to use Cotonou port facilities, this traffic is not likely to disappear. 4.39 The Government will discuss with the Bank in mid-1978 its investment program in the transport sector scheduled for the 1978-81 economic development plan, and specify its sectoral objectives for the next planning period. The Government should also keep the Bank informed of any new agreements regarding the future development of the transit traffic. V. FINANCIAL EVALUATION A. Past Financial Situation PAC 5.01 PAC's audited balance sheets are shown in Table 5 of Annex 2 and summarized below. (CFAF million) 1974 1975 1976 (Provisional) Net Fixed Assets in Use 779 799 619 Other Long-Term Assets 1 1 1 Total Net Fixed Assets 780 800 620 Net Current Assets 129 147 442 Total Net Assets 909 947 1,062 Financed from: Long-term Debt 442 371 308 Equity 467 576 754 Total 909 947 1,062 Ratio of Current Assets to Current Liabilities 2.3 1.9 4.5 Debt/Equity Ratio 49/51 39/61 29/71  - 38 - 5.02 The costs of the old port works, completed in 1965, totalled about CFAF 8 billion, CFAF 7 billion for infrastructure and CFAF 1 billion for superstructure. However, as PAC does not account for land and assets financed from subsidies, the above balance sheets do not incorporate the net book value of these old port works. Capital expenditure for additional assets is shown in the above balance sheets and has been financed through borrowing, prin- cipally from the Benin Development Bank, or from PAC's own resources. All the fixed assets in use shown in the audited balance sheets represent depreciable assets including paved roads, etc. The Government agreed that PAC would incorporate into its accounts for the year ending December 31, 1979, based on a physical inventory, the value of all fixed assets which are in use and are not in the existing accounts. The question of asset valuation is dealt with later in this report (para. 5.12). 5.03 Among the current assets, receivables showed a marked increase from CFAF 164 million at the end of 1974 to about CFAF 365 million as of December 31, 1976 (40% and 53% of gross operating revenue, respectively), while cash also increased appreciably during the same period. Substantial recoveries of outstandings were made in 1977. The Government agreed that PAC would reduce the balance of PAC's receivables by December 31, 1979 to about two months' average gross operating revenue, or not more than 20% of gross revenue, and to introduce, if necessary, deterrents such as recovery of advance deposits from users. 5.04 PAC's audited income accounts for the last three fiscal years (Table 6, Ainex 2), are misleading because most assets and the corresponding depreciation are not accounted for. If, based on BCEOM's estimates, the requisite adjustments were made for the non-accounted assets but without revaluation at replacement costs, the following picture would emerge showing a weak but improving position: 1974 1975 1976 (Provisional) ----in CFAF million---- Operating Revenue 409 526 686 Working Expenses 274 313 362 Depreciation i89 189 189 Provision (for doubtful debts) - 15 10 Operating Expenses 463 517 561 Net Operating Revenue (Deficit) (54) 9 125 Interest, etc. (22) (28) (37) Net income (Loss) (76) (19) 88 Working ratio (%) 67 59 53 Operating ratio (%) 113 98 82 Return on average net fixed assets (%) - - 1.7 Times interest covered by NOR - 5.4  - 39 - 5.05 Of the operating revenue, charges on goods constitute the largest item (40%), followed by rents (31%) and levies on vessels (29%). The increase in revenue is due to the revision of tariffs in 1974 and increase in traffic, particularly in 1976. The largest element of the working expenses is staff costs (63%), the other important item being works, materials and supplies (24%). Staff costs increased by 50% during the period due to additional staff and wage increases. However, the proposed technical assistance is expected to achieve administrative efficiency and better utiliz;ation of staff. The ratios have improved generally with the proportionately larger increase in operating revenue than in expenditure and consequently better net operating revenue. The negative results are due to taking into account depreciarion on tne previously omitted assets, and these would have been considerably worse if revaluation of the fixed assets had been done. Because of the net operating deficit for 1974 and the negligible net revenue for 1975, no return is earned on the net fixed assets in those years, while the return on an estimated net asset base of CFAF 7.5 billion for 1976 is low. OBEMAP 5.06 OBEMAP's original capital has remained unchanged at the statutory level of CFAF 50 million but it can be altered by the Government if proposed by its board. OBEMAP has also received some loans from the Government. OBEMAP's financial contributions to the Government have been quite substan- tial. Its gross revenue collections are subject to a turnover tax (about 19%); iL has paid income tax since 1974/75 at the rate of 40%; and its net surplus after the statutory transfer (at present 10%) to reserves is handed over to the Government. In total, the Government receives, therefore, 94% of the surplus before tax. The magnitude of the contributions can be gauged from OBEMAP's financial data cited in para. 5.07. 5.07 The following are summary income accounts and balance sheets for the last three years:  - 40 - As of June 30 1974 1975 1976 (Provisional) --------(CFAF million)------ Income Accounts Operating Revenue 797 1,032 1,505 Working Expenses 498 630 874 Depreciation 36 36 90 Provision 69 91 120 Operating Expenses 603 757 1,084 Net Operating Revenue 194 275 421 Interest etc. 11 22 17 Net Income 205 297 438 Income Tax - 95 175 Net Surplus 205 202 263 Working Ratio (%) 62 61 58 Operating Ratio (%) 76 73 72 Average Net Value of Fixed Assets in Use 133 132 262 Return on above (after tax) (%) 146 136 94 Balance Sheets Net Fixed Assets in Use 121 143 381 Other Long-Term Assets 1 92 48 Total Net Fixed Assets 122 235 429 Net Current Assets 456 503 728 Total Net Assets 578 738 1,157 Financed From: Debt (medium term) - - 150 Other Liabilities 84 129 459 Equity 494 609 548 Total 578 738 1,157 Ratio of Current Assets to Current Liabilities 5.7 3.1 2.5 Debt/Equity Ratio - 21/79 5.08 Charges for handling cargo on shore are higher than those for handling cargo on board vessels. Tariff revisions in 1974 and increases in traffic account for the higher revenues. Staff costs represent about 60% of the operating expenditure and have been mounting. However, the position is expected to improve with the operational and organizational reforms the proposed technical assistance should bring about. The financial return on average net fixed assets is substantial because of high tariffs, the low  - 41 - asset base and its valuation at historical costs. If the financial return (after tax) is computed on average capital employed, i.e. average net fixed assets Ln use and net current assets, it would still be substantial, ranging from 35% in 1973/74 to 28% in 1975/76. A separate annual provision is usually made for major renewals and replacements by way of an appropriation from the net operating rtvenue; the total as of June 30, 1976 was CFAF 100.3 million. B. Future Financial Performance of PAC Income Accounts 5.09 PAC's hitherto small cash generation from operations shows that only a small share of past capital investment has been recovered by PAC from its users. For this reason, PAC is not now in a position to make a substantial contribution toward financing the proposed project from accumulated cash and current cash generation. There is, however, considerable scope for changing this unfortunate situation now and in future years through improving the efficiency of operations and, more importantly, through periodic port tariff increases on an expanding volume of cargo. 5.10 The timing and extent of tariff increases must be determined under several aspects: substantial benefits will accrue to port users from planned port investment, and a significant part of these benefits can be recaptured directly for PAC through tariff increases. Specifically, the purchase of port equipment in 1978 will benefit users through improved port productivity and shorter ship waiting and service times. Port tariffs should increase by an average of 30% by June 1979. This would allow cost inflation to be offset for 1978 and 1979, expected to run during the forecast period at an annual rate of 6%, and to generate annually additional revenue in real terms of about 15%. During the subsequent period of about 18 months until completion of the project, tariff increases should be only moderately in excess of inflationary cost increases to avoid the risk of traffic diversion. An annual rate of tariff increase of 10% appears adequate for this purpose. 5.11 At completion of the project in late 1980, the competitive position of Cotonou, compared to other ports will improve substantially, in particular if, as expected, the present congestion surcharge for Cotonou is abolished as the new berths come into use and ship waiting time is reduced. The exact scope for tariff increases, in any event considerable, will largely depend on the competitive situation of Cotonou at that time with regard to the efficiency and reliability of port services and inland transport, the available capacity of neighboring ports, the preference of shipping lines and total transport costs for using different ports and transport corridors. The traffic analysis (see Chaper IV) indicates that Nigeria traffic is less sensitive to port tariffs than transit traffic for Niger, where a risk of diversion to Lome exists.. Since traffic diversion from Cotonou would entail high economic costs for Benin (cf. para. 4.36), the 1981 tariff increases must be carefully assessed and prepared with the assistance of PAC's consultants. The  - 42 - present estimate is that no traffic will be diverted from Cotonou if PAC's tariff increases at completion of the project are limited to $5/ton of general cargo and $1/ton of oils and clinker (for which benefits from the project are much smaller), corresponding to an average increase of about 75% of the 1980 tariffs, and if OBEMAP's tariff increases will be limited essentially to offset inflation. The latter would also apply to PAC after 1981, when 10% annual increases have been assumed. Since shipping lines are highly sensitive to charges to be borne by them in selecting their ports of call, most of the higher charges must be borne by the landed cargo, subject, however, to the findings of the costing study. 5.12 Since PAC is and will remain a very capital intensive undertaking, a yardstick to adequately measure its financial performance must take into account the replacement value of assets. The Government agreed that PAC would do the following: (i) revalue its assets by December 31, 1979 and thereafter at appropriate intervals determined as a function of inflation rates, but in no case exceeding five years; and (ii) achieve a minimum financial rate of return before income tax (para. 5.15). 5.13 PAC's forecast income accounts and other financial forecasts, shown below, are in addition, based on the following assumptions: 1. Estimates for 1977 take into account the available actuals for part of the year and budget figures. 2. Operating revenue projections from 1978 onwards have been computed in proportion to the annual growth in traffic and the above tariff increases, an increase of 5% p.a. being allowed for miscel- laneous receipts. 3. Operating expenditure forecasts generally allow for an increase of 10% p.a.: 6% for inflation and 4% for expansion in activity following traffic growth with variations where applicable to allow for the impact of better organization and operations following technical assistance. Non-operating expenses mainly represent interest charges including those on the increased debt for the project. The grants portion of the project financing has been treated as the govern- ment's equity contribution to PAC (para. 5.17 below). 4. The estimated cost of the new project facilities debit- able to PAC (CFAF 10.9 billion, US$44.4 million) has been taken into consideration in projecting the cash flow and fixed assets. A nominal yearly amount has been assumed for non-project or ordinary capital expenditure. All project related fixed assets would be capitalized after completion and commissioning, i.e., in 1981.  - 43 - 5. Net debit or credit for old structures demolished or re- constructed in project execution, after allowing for the cost of any usable materials salvaged, would be taken in the project. Scrap value of other assets to be demolished during project construction has been assumed to be insignificantD 6. Depreciation has been calculated on the estimated cost of project fixed assets other than land by the straight- line method and according to their estimated lives based on broad categories. The existing assets, incliiding those omitted from PAG's accounts, have been revalued for 1979 and depreciation provided according to the estimates of consultants BCEOM. The impact of a revaluation of the fixed assets in 1984 has been separately estimated and incorporated into the tables. Expenditures on technical assistance and training are capitalized and amortized as intangible assets over ten years. 7. The entire project cost, debitable to PAC, will be financed by the relative contributions as shown in the financing plan. 5.14 On the basis of the foregoing assumptions, the summary forecasts of revenue and expenditure accounts are the following (Table 7, Annex 2): (CFAF million) 1980 1981 1983 1984 Operating Revenue 1,845 3,317 4,256 4,727 Working Expenses 506 551 653 711 Depreciation and Amortization 599 869 889 1,149 Operating Expenses 1,105 1,420 1,542 1,860 Net Operating Revenue 740 1,897 2,714 2,867 Interest, etc. 450 530 528 523 Income Tax and Dividend 1/ 203 957 1,530 1,641 Net Surplus 87 410 656 703 Average Net Fixed Assets in Use 15,200 19,900 23,600 27,600 Rate of return on above (%) 2/ 4.9 9.5 11.5 10.4 Debt service coverage 2.8 5.0 5.2 4.6 1/ See oara 5.16. 2/ Before tax.  - 44 5.15 The proposed tariLff increases, aggregated over the 1978-1984 period, amount to about 110% in real terms. This may prima facie appear excessive, but it is feasible in the particular case of PAC, due to the large cost advantage of Cotonou and the Benlr. oute vis-a-vis neighboring ports (para. 4.24) and Justified by the need to quickly recover a sub- stantiaL part of port investment. Moreover, the proposed tariff increases represent only about 2.5% of the total transport cost from Western Europe to Niger estimated at about $300/ton for general cargo. The Government agreed that PAC would achieve a minimum rate of return before income tax on net fixed assets in use, as revalued from time to time, of 5% in 1980 and 8% thereafter. 5.16 PAC's future cash needs will essentially consist of debt service requirelaents, since no major investment outside the project is planned. Thus, the bulk of PAC's cash generation will be t-ransferred to the Government through existing mechanisms, which are adequate. This leaves PAC sufficient cash to service its debt and cover its current needs. Balance Sheets and Cash Flow (Tables 8 and 9, Annex 2) 5.17 To create a reasonable structure in PAC's balance sheet, project financing takes the form partly of equity and partly of long-term debt. CFAF 2.8 billion of project financing will be in the form of grants to Benin and CFAF 7.7 billion in form of loans or cred'iis- The probable terms for the loans will be: Abu Dhabi and BADEA loans to the Government--20 years in- cluding 4 years' grace with interest at 4?. and 6% p.a., respectively; CCCE loan to PAC--15 years including 3 years' grace with interest at 6.5% (includ- ing commission); and AfDB (NTF1 loan to PAC--25 years including 5 years' grace with interest at 4% (Tdble i0 Annex 'The co-financers appear to want to make their funds available to PAG on .the sane conditions they are being given to the Government. Tnis would result in a reasonable debt/equity structure for PAC. However, due to the concessiona' conditions of certain loans, the resulting debt service for PAC would be somewhat light. It was agreed, therefore, that the the part of IDA funds directly benefitting PAC, US$9.70 million, will be onlent to PAC by tie Governinent at 7.5% interest for a period of 20 years, including 5 years of grace. The conclusion of an onlending agreement between the Government and PAC is a condition of effectiveness of the proposed credit. The grant from Norway will also be onlent to PAC by the Government on the same terms as the IDA funds. 5.18 The following financing forecast for the project period (1978-81) shows that PAC's contribution toward financing the project will be relatively small. This forecast and the following one regarding balance sheets assume cash transfer from PAC to the Gover-nment of most of PAC's net surplus.  - 45 - US$ million CFAF million Equivalent Percentage Source of Funds Internal 2,143 Less: Debt Service 1,307 Net Internal 836 3.4 7 Borrowing for Project IDA Credit I/ 2,379 ABU DHABI Loan 1/ 642 BADEA Loan 1/ 1,127 CCCE Loan 764 Norway Grant 1/ 2,034 AfDB (NTF) Loan 720 7,666 Other Borrowing 400 8,066 32.9 69 Grants for Project CIDA 2,450 FAC 367 2,817 11.5 24 Total 11,719 47.8 100 A2pliation of Funds Capital Expenditure 11,670 47.6 100 Project 10,870 Other 800 Increase in Working Capital 49 0.2 - Total 11,719 47.8 100 1/ ReLending by the Government to PAC. 2/ Government equity contributions.  - 46- 5.19 The following is a summary of the projected balance sheets: as of December 31 1979 1981 1984 Net Fixed Assets in Use 15,460 24,751 32,000 Work-in-Progress 3,558 - - Total Net Fixed Assets 19,018 24,751 32,000 Net Intangible Assets 295 278 161 Net Current Assets 1,274 .2,795 6,697 Total Net Assets 20,587 27,824 38,858 Financed from: Long-Term Debt 2,880 8,120 7,514 Equity 17,707 19,704 31,344 Total 20,587 27,824 38,858 Ratio of Currents Assets to Current Liabilities 7.8 15.0 45.6 Debt/Equity Ratio 14/86 29/71 19/81 5.20 The value of the net fixed assets at historical costs, including those omitted from the accounts will approximately double in 1979 on revalua- tion. The value will rise again substantially when there is another assumed evaluation in 1984. The main reason for the increase in current assets, and consequently in the ratio of current assets to current liabilities, is the accumulation of cash representing chiefly the provision for depreciation. The increase will be curtailed from 1984 onward with the end of grace periods and much higher debt service payments. The debt/equity ratio is acceptable, but the Government agreed that PAC would not incur non-project capital expenditure exceeding CFAF 100 million per year until December 31, 1985 except in agree- ment with the Association. C. Increase in Net Government Revenues from the Project 5.21 Although the port sub-sector alone accounts for only about 2.3% of Benin's GDP, it makes a significant contribution to public revenues in the form of direct and indirect taxes and fees. Therefore the sub-sector is quite important to the Government. The proposed project will directly contribute substantially to increase Government revenues as estimated below.  - 47 - Additional Direct Government Revenues from the Project -(CFAF million at 1978 constant prices)-- Organization from which derived 1981 1982 1983 1984 Total Consignees 41 40 49 48 178 PAC 534 1,212 1,353 1,348 4,447 OBEMAP 435 430 519 513 1,897 Forwarding Agents 283 279 330 322 1,214 Road Carriers 177 175 309 237 898 OCBN - - 9 15 24 Total 1,470 2,136 2,569 2,483 8,658 The table shows that over the period 1981-84 the government is likely to earn significant gross additional revenues of about CFAF 8.7 billion (US$35 million equivalent) from the development of the activities of' Cotonou port and trans- port operators, who since their recent nationalization have to transfer most of their benefits to the government. These can be expected to increase further until the full capacity of the extended port is reached. VI. AGREEMENTS REACHED AND RECOMMENDATION 6.01 Agreement has been reached with the Governmnent on the following principal. items: (i) that the Government will: (a) ensure that productivity of the general cargo handling operations within the port will be increased from the present 7.1 tons per gang/hour to a minimum 10.0 tons per gang/hour within six months after the civil works included in the project become fully operational (para 2.19). (b) appoint the necessary consultants or experts, on terms and conditions acceptable to the Association, to assist PAC, OBEMAP and OCBN and ensure appropriate implementation of the recommendations made by them (paras. 3.17, 3.18 and 3.20); (c) second suitably qualified engineer employees to the staff of the consultants in charge of supervising the civil works and a Beninese counterpart to the project coordinator, all of whom must be acceptable to the Association (para. 3.27); (d) appoint consultants or experts by March 31, 1979, on terms and conditions acceptable to the Association, to study the coastal protection study and to complete the study by March 31, 1980 (para. 3.36); and  - 48 - (e) prepare by June 30, 1979 a plan of action, acceptable to the Association, to improve the average time of trans- shipment and to increase the capacity of the transship- ment-facilities at the rail/road terminal at Parakou in accordance with traffic demand and to implement the plan, following review by the Association, by December 31, 1980 (para. 3.39). (iii) that the Government assures that PAC will: (a) have its accounts audited by qualified independent auditors in accordance with appropriate auditing principles (para. 2.29); (b) maintain adequate insurance coverage for all struc- tures, machinery and equipment, allowing for regular revaluation of existing assets and assets to be con- structed or acquired under the proposed project (para. 2.30); (c) incorporate in its accounts by December 31, 1979 based on a physical inventory the value of all fixed assets in use, and revalue such assets at replacement costs by December 31, 1979 and thereafter at appropriate intervals not exceeding 5 years (paras. 5.02 and 5.12); (d) reduce its receivables to 20% of annual gross operating revenue by December 31, 1979, and take adequate measures, including, if necessary, the introduction of a system of advance deposits, to restrict its receivables (para. 5.03); (e) take necessary measures, including tariff increases, to achieve a minimum rate of return before income tax on average net fixed assets in use, as revalued from time to time, of 5% in 1980 and 8% thereafter (para. 5.15); and (f) not incur non-project capital expenditure exceeding CFAF 100 million per year until December 31, 1985, except in agreement with the Association (para. 5.20). 6.02 The effectiveness of the proposed credit would be subject to: (a) the effectiveness of the BADEA and AfDB loan agreements, the CIDA, FAC and Norway grant agreements, and the authorization of the Abu Dhabi and CCCE loans by these two institutions (para. 3.24); (b) appointment, on terms and conditions acceptable to the Associa- tion, of qualified engineering consultants to supervise con- struction of civil works and a full-time project coordinator (para. 3.27); and  - 49 - (c) conclusion of an onlending agreement for US$9.70 million equivalent of the proposed IDA credit between the Government and PAC, on terms and conditions spelled out in para. 5.17. 6.03 The proposed project is suitable for a credit to the Government of Benin in the amount of US$11 million on standard IDA terms, of which US$9.70 million will be on-lent to PAC on the same terms as a conventional Bank loan, i.e. 20 years including a 5-year grace period at an interest rate of 7.50%.  - 50 - Annex 1 Page 1 SUMMARY OF PRINCIPAL TARIFFS PAC A Commercial Activities I Charges on Vessels a) Daily anchorage charge Per net registered ton at berth or buoy 5 CFAF (minimum 4,000 CFAF) in roadstead 2 (minimum 1l500 " ) b) Pilotage Per net registered ton Day-time(6 to 18 hours) in or out movement 5 CFAF (minimum 4,000 CFAF) Movement within port 4 CFAF (minimum 23000 " ) Night-time (18 to 6 hrs) 50% more Penalties for delays or cancellations 8,000-16,000 " ) (minimum) c) Mooring ot* Berthing Day-time Vessels of below 5.000 n.r.t. 4,000 "1 of 5.000 n.r.t. or above 5,000 Night-time and closed days 50% more d) Towage_ Slab rates ranging from 10,800 CFAF for vessels of 501 to 1,000 g.r.t. to 46,000 CFAF for those of 9001 to 10,000 g.r.t. For larger vessels, 330 CFAF for each slab of 100 g.r.t. Night, closed day and exceptional operations incur a surcharge of 25%. II Charges on Passengers (Wharfage) These range from 300 to 1000 CFAF for the four classes of passengers.  -51 - Annex 1 Page 2 III Charges on Goods a) Wharfage Exports Per metric ton (CFAF) Cotton fiber 250 Groundnuts 50 Oil-cake and seeds 60 Vegetable oils (in casks) 130 (in bulk) 350 Miscellaneous (unspecified) 400 Imports Cement, 200 Cereals,salt and sugar 100 Clinker, fertilizer and insecticide! 130 Drinks, alcoholic, packaged 1,300 ft "t in bulk 2,000 Liquids, combustibles in bulk, bitumenous products and sulphur - 300 Materials, construction (iron, and steel) 250 Vehicles, touring, packed or unpacked 1,300 Vehicles, othervand spares 700 Miscellaneous (unspecified) 550 Transshipment 300 b) Storage Charges A free storage period of 10 days is allowed for'experts and imports and 20 days for transahipment. Niger and Nigeria cargo - one month or as negotiated. After the free period, the following charges per ton per day are levied: Exports Imports and Transshipment Hazardous All Goods Goods in other Goods Goods packed and condition- (Inc. charges construction for watch- keeping) materials, unpacked (CFAF) (rFAF) (CUAF) QQFAF) Ist t_ 0thday ^30 30 100 200 llth to 20th day 45 45 150 350 Beyond 20thday 60 60 200 500 B. Fishing Activities I. Charges on Vessels based at Cotonou Per month (CEAF) Vesssels of less thah 15 n.r.t. 15,000 "t it more " 15 n.r.t. but less than 50 n.r.t. 2 " of 50 or more n.r.t. 25,000  - 52 - Annex 1 Page- 3 II. Charges on Vessels not based at Cotonou For operational calls - the daily anchorage dues payable for commercial activities (as in A I (a) above). C. Rentals I. For Sheds and Stacking Areas a) Yearly occupations Per square meter per year (CFAF) Sheds classed as warehouses 1250 Transit sheds 1100 Stacking areas in first zone & container park 800 it it in second zone 300 t it" in third zone 150 it it in fourth zonie 125-300 b) Casual Occupations Per metric ton Sheds classed as warehouses 200 Stacking areas in first zone 75 (for occupations not exceeding 10 days; thereafter normal storage charges as in A III (b) above) Warehouses (for a minimum period 100-150) per square Stacking areas (of one month 50-60 ) meter II. For Equipment, Sale of Water and Miscellaneous Rates for hire of tug (CFAF 80J000 per hour),launch (CFAF 8000 per hour), weigh-bridge, mobile crane and motor-pump; for sale of water; and for hawker licenses,are prescribed. III. For Fish Traffic Facilities (CFAF) a) Market hall and offices per month 300,000  - 52 - Annex 1 b) Boat-lift (repair facility) Page 4 Vessels Vessels less than 20.1 20 m. long to 32 m. long (CqFAF) (CFAF) Fixed charge for raising and lowering operations 150,000 200,000 Occupation par day of 24 hrs 20,000 25,000 - hour 800 1,000 OBEMAP I. Charges for handling cargo on shore (payable by owners of goods or their agents) III. Charges for handling ' a on board vessels (payable by owners of vessels or their agents) I II Per metric ton(exc. government tax (CFAF) TCFAF) EUxorts Cotton fiber 1,040 495 (445 (in bags) Groundnuts 540 (935 (in bulk) Oilcake and seeds 480 445 (in bags) Vegetable oils (in casks) 660 615 Miscellaneous (unspecified) 1,930 (445 (in bags) (615 (in casks) Imports Cementh c 830 350 (for clinker) " ( for direct delivery within 555 2 days) Cereals, salt 540 445 (in bags) Hazardous goods 2,210 Not specified Materials, construction (iron and steel) 2,100 450/500 Sugar,packed 1,150 445 (in bags) Vehicles, unpacked, less than 1 ton 1,895 (340 per Vehicles, unpacked, more than C cu.m. 1 ton 3,080 ( Mines in casks. etc 1,580 615 Miscellaneous (445 (in bags) (unspecified) 1,895 (615 (in casks) III. Overtime Charges The charges per gang hour range according to periods, as follows: On Board On Shore (CFAF) zAL Night work on working days 2,650 5,300 ( .1,740 ( 3,480 Work on Saturdays ( to ( to ( 3,120 ( 6,240 ( 2,340 ( 4,680 Work on Sundays and Holidays to ( to ( 2,650 ( 5,300  Annex 1 Page 5 IV. Detention Charges (per gang hour) On Board On Shore (CFAF) (CFAF) Working days 1,560 3,120 Nights, Sundays and Holidays 3,120 6,240 V. Charges for Opening and Closing of hatches 'E CFAF 2090 per operation. VI. Charges are prescribed for supply of supplementary labour and material, VII. Charges on containers a) Stevedoring (Per operation,loading or unloading) (CFAF) Containers, 40 feet.-long, weighing more than 25 tons 18,000 Containers, 40 feet long, *eighing less than 25 tons 16,000 Containers, 20 feet long, weighing more than 15 tons 12,000 Containers, 40 feet longj.empty it 20 " " weighing ) less than 15 tons ) 8,000 Containers, 6 1/2 feet long, weighing ) more than 8 tons ) Containers, 6 1/2 feet ,long, weighing less than 8 tons ) 4,750 Containers, 20 feet long,empty ) "1 6 1/2 feet long,empty ) 2,000 b) Shifting from hold to hold, involving surface transport - lhal_ of single operation charge. c) Handling on shore - charges as applicable to goods packed in containers. d) Charges are also prescribed for regrouping and stacking. VIII Other charges prescribed for a) Covering and watching cargo b) Handling scrap iron c) Handling clinker and gypsum d) Handling sulphur e) Handling uranates (chemical) in casks f) Hire of equipment  - 54 - ANNEX 2 COTONOU PORT PROJECT Table 1 Traffic: Recent trends, recanitulative table (000 tons) 1972 1973 1974 1975 1976 1977 1' 1. Oil products Benin 92 88 88 97 108 120 Niger 58 71 66 75 62 70 N150 159 154 172 170 190 2. Vegetable oil Benin 30 28 28 28 42 19 3. Clinker 104 110 177 123 158 160 Gypsum 9 12 5 13 9 10 113 122 182 136 167 170 4. Sulphur Niger 4 10 10 12 17 26 5. Cereals Benin 12 26 5 8 38 40 Niger 19 35 70 24 42 30 31 61 75 32 80 70 6. Miscellaneous break cargo Benin imports 140 112 132 122 102 134 Indirect transit 21 17 13 26 82 136 Exports 110 108 96 66 67 49 271 237 241 214 252 319 Niger imports 52 65 54 84 53 74 Exports 31 6 3 14 19 10 83 71 57 98 72 84 Total Miscellaneous imports 213 194 199 232 238 344 Exports 141 114 99 80 86 59 354 308 298 312 324 403 Total traditional Benin & Niger 682 688 747 692 800 879 General cargo Benin 262 246 233 196 208 223 Niger 106 116 137 134 131 140 368 362 370 330 339 363 Nigeria direct transit - - - 68 111 190 Indirect transit 21 17 13 26 82 136 Total general cargo 389 379 383 424 532 689 Grand total break & bulk cargo 682 688 747 760 911 1068 Estimate based on traffic data of 8 months.  COTONOU PORT PROJECT FORECASTS. POTENTIAL TRAFFIC BY COMMODITY GROUPS .77 A977 1978 - 1979 - 1980 - 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1) Oil products imporLi, Benin .Z0 130 145 162 171 180 190 200 210 221 233 245 257 270 285 Niger 62 70 80 94 108 112 116 121 126 132 137 143 148 154 160 170 170 190 210 239 270 283 296 311 326 342 358 376 393 411 430 455 2) Vegetable oil exports 42 19 40 49 54 65 68 70 71 71 75 78 79 79 79 80 Benin B Benin 158 160 170 380 380 380 380 380 380 380 190 190 - - _ _ -