Cameroon - Forestry Project

Document of The World Bank Cli, py FOR OFFICIAL USE ONLY Report No. 3448-CM STAFF APPRAISAL REPORT CAMEROON FORESTRY PROJECT December 22, 1981 Western Africa Region Agriculture 2 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 A^ US$1 = CFAF 270 CFAF 1,000 = US$3.70 r Weights and Measures 1 hectare (ha) 2.47 acres 1 kilometer (km) = 0.624 miles 1 kilogram (kg) = 2.205 lbs. 1 litre (1) = 1.057 US quarts Abbreviations CDC : Commonwealth Development Corporation Cellucam : Societe Cellulose du Cameroun S.A. CTFT : Centre Technique Forestier Tropical DEFC : Direction des Eaux et Forets et des Chasses FNFP : Fonds National Forestier et Piscicole IRA : Institut de Recherche Agronomique MINAGRI : Ministere d'Agriculture SEMRY : Societe d'Expansion et de Modernisation de la Riziculture de Yagoua SNI : Societe Nationale d'Investissement Fiscal Years FNFP: January 1 - December 31 Government: July 1 - June 30  FiO O CICAIL USE ONLY CAMEROON FORESTRY PROJECT Staff Appraisal Report Table of Contents Page No. I. INTRODUCTION ................... ............................. 1 A. Background ............................................. 1 B. The Forestry Sector and the Economy. 1 (a) Contribution to the Economy. 1 (b) Forest Resources and Industries. 2 (c) Financing the Sector. 4 (d) Institutions and Training.. 5 (e) Objectives, Strategies and Policies. 7 (f) Bank and other External Involvement ............... 7 II. THE PROJECT AREA. 8 III. THE PROJECT. 9 A. Objectives .. 9 B. Detailed Features .. 10 (a) Edea Plantation .10 (b) SEMRY Plantation .12 (c) Ngaoundere Plantation .12 (d) Tree Seed Production Unit. 13 (e) Strengthening FNFP .14 (f) Strengthening DEFC .14 (g) Studies and Preparation of Possible Follow-up Project. 14 IV. ORGANIZATION AND MANAGEMENT . . .14 A. General ..14 B. Plantation Arrangements ..15 C. Strengthening FNFP ..16 D. Strengthening DEFC ..17 E. Training ..17 F. Monitoring and Evaluation ..18 G. Seed Production and Liaison with Research . .18 This document has a restricted distribution and may be used by recipients only in the performance of their officia] duties. Its contents may not otherwise be disclosed without World Bank authorization.  Table of Contents (Cont'd) Page No, V. COSTS AND FINANCIAL ARRANGEMENTS ..... ....................... 19 A. Project Cost Estimates .............. .. ................. 19 B. Proposed Financing .................. ................... 21 C. Onlending Arrangements .. 21 D. Procurement ..23 E. Disbursement.. 23 VI. PRODUCTION, MARKETS AND FINANCIAL RESULTS . . ................. 25 A. Production ..25 B. Markets and Marketing Arrangements . .26 C. Financial Results ..27 VII. BENEFITS, ECONOMIC JUSTIFICATION AND RISKS . .29 A. Benefits ...29 B. Economic Justification . . 30 (a) Economic Analysis and Rate of Return . .30 (b) Sensitivity. 32 C. Risks ...32 VIII. ASSURANCES AND CONDITIONS .33 ANNEXES Tables Table 1: Estimated Schedule of Disbursements Table 2: Illustrative Government Cash Flow Edea Plantation, Silviculture Unit Organigram Table of Contents: Project File MAP IBRD 15692 - Cameroon, Forestry Project Zones  I. INTRODUCTION A. Background 1.01 The Government of Cameroon has requested Bank assistance in financing a five-year forestry project in the South Central and Northern Provinces, at an estimated cost of US$35.5 million. The project would include three planta- tion components, an improved tree seed production unit, technical assistance for Fonds National Forestier et Piscicole (FNFP) which is responsible for Governnent s reforestation programs, and logistical and technical support for Direction des Eaux et Forets et des Chasses (DEPC) which is responsible for tax assessment and collection from the forestry sector. The project would be the first Bank assisted project devoted entirely to the forestry sector in Cameroon. 1.02 The project was identified by an FAO/World Bank Cooperative Program sector mission in February/March 1979, with a follow-up identification mission in November 1979. The project was prepared by a mission from the Cooperative Programme which visited Cameroon in May/June 1980. This report is based on the findings of a Bank appraisal mission comprising Messrs. John Russell, Robert Fishwick, Robert Crown and Christopher Ward which visited Cameroon in January/February 1981. Messrs. Sean Magee and Frank Dorward (CDC) partici- pated in the appraisal of the Edea Plantation Component. B. The Forestry Sector and the Economy (a) Contribution to the Economy 1.03 The United Republic of Cameroon extends northward from the Gulf of Guinea 1,200 km to Lake Chad. Covering 475,000 km2, the country embraces a wide range of climatic conditions, from Sahelian in the extreme north to tropical rain forest in the south. This permits a well diversified agricul- tural sector and there is presently near self sufficiency in food production. Of this area about 33 million ha are forested. Although the country's reserves of petroleum and bauxite are to be increasingly exploited, industrial development is still largely based on agriculture and forestry and involves domestic processing of primary commodities, such as cocoa and palm kernels, and the conversion of logs into lumber, veneer, plywood and wood pulp. Food processing industries account for 45% of total industrial turnover. On the other hand, in spite of the size of the forestry resource base, and of the fact that cutting licenses have been issued for 7.7 million ha, in 1977/78, value added in the sector was estimated to be only 8% of agricultural net output and 4% of GDP. 1.04 Cameroonian infrastructure investments have included improvement of the road network, particularly rural roads critical for the movement of agricultural produce, modernization of the Trans-Camerounais railway system,  -2- expansion of port facilities at Douala and plans for crea-ion of a new port at Rocher du Loup between Kribi and Campo. These would facilitate the movement of large bulk commodities like forestry products which for the present are strongly oriented towards export in raw form. On the other hand, development of transportation facilities in the south east, which contains many of the country-s richest forests, has lagged. 1.05 The population, estimated at 8.3 million in 1979, is currently growing at about 2.3% per year, and over 40% is under 15 years of age. Of the adult population of 5.0 million, 74% or 3.7 million, are engaged in the rural sector and about 25% are in urban employment. Population density varies widely between regions. It is highest in the Western Province and in parts of the Northern Province, where it reaches 200 or more per km2, and lowest in the Eastern Province (3 per km2). Forecasts to the year 2000 project a population of 16 million, with almost 50 percent living in towns. This growth will create a considerable demand for building materials and for fuelwood, particularly in areas of rural population concentration where access to other energy sources is limited and costly. 1.06 The GNP, currently estimated at US$4.4 billion, represents a per capita income .of US$518. GNP grew at about 4.5% per year between 1970-75 and 7.1% per year 1975-80. Per capita incomes grew at about half these rates. During 1980/81, however, GNP grew by only 3.5%. The drop is due to a decline in export commodity prices, notably for coffee and cocoa, and to a slowdown in investment. The inflation rate, which averaged 6.2% during 1969-73, rose to 11.8% during 1974-78 and is now about 12%. Government set itself the objec- tive of re-establishing a 6% growth rate under the Fourth National Plan (1976/77-1980/81) and increased the investment budget during the period from an originally planned CFAF 685 billion (US$2.5 billion) to CFAF 930 billion (US$3.4 billion). During the first four Plan periods only about 14% of realized investments (Government and private) have been for agriculture and rural development. However, the proportion has risen to about 16% recently, and the allocation for agriculture is expected to rise still further in the Fifth Plan, currently being prepared. (b) Forest Resources and Industries 1.07 The total forest area of Cameroon is estimated at 33 million ha or two thirds of the country. Of this, 18 million ha are dense forest, and 15 million ha are savanna and riverain. However, knowledge of the quality and exploitable volumes present in these forests is very limited as only 700,000 ha have been inventoried. An inventory of 176,000 ha carried out by the FAO in the Deng-Deng forest indicated that the commercially exploitable volumes might run as high as 160 m3/ha, and surveys of the wet tropical high forest around Edea and experience during the st-art-up of the Cellucam mill showed that the volume usable for the pulp project is about 190 m3/ha. But the diversity of the forest makes small samples unreliable indicators, and current logging operations on average harvest only about 10 m3/ha.  -3- 1.08 In 1978/79 an area of 7.7 million ha was licensed for exploitation by some 100 concessionaires working in some 200 concessions concentrated in the three provinces: Centre-South (3.3 million ha), East (2.8 million ha) and Littoral (1.0 million ha); the remaining 0.6 million ha are in concessions in the West and Southwest provinces. About half of the concessions were under 50,000 ha, which are smaller than average in West Africa, and about 10% of the concessions were between 200,000 and 250,000 ha which are considered large. About 10% of the forestry enterprises were mixed or Government enterprises. Despite government policy encouraging local participation, 70% of the conces- sion areas are licensed to foreign companies. Production of logs in 1978/79 was 1.6 million m3, a substantial increase over the 1.3 million m3 of the previous year. An annual production of 2 million m3 could be achieved with little or no new investment by the industry. 1.09 There is a high degree of vertical integration between logging, processing and marketing, an arrangement promoted by government legislation requiring holders of cutting licenses for more than 10,000 ha to carry out some primary processing. Some 75 mills produced about 250,000 m3 of sawnwood in 1977/78, of which 75,000 m3 was exported. There are two veneer factories in Cameroon currently operating and a further two are under con- struction. Veneer production in 1977/78 was 40,000 m3, 90% for export. Particle board and plywood production of 30,000 m3 was mainly for the domestic market. 1.10 In line with government policy for increasing domestic value added in the sector and with a view to eventually supplying the domestic market with paper products, a pulp mill was opened at Edea (Map, IBRD 15692) in 1980 by Societe Cellulose du Cameroun SA (Cellucam). Cellucam is a mixed enterprise in which the Cameroon government, through its Societe Nationale d'Investissement (SNI) and 4 smaller agencies is the majority shareholder (67% of equity). The other share-holders include the Banque Islamique de Developpement (12%), Voest-Alpine (6%), Societe Luxembourgeoise de Financement pour l'Afrique (5%), Societe Europeenne d'Investissement Industriel en Afrique (3%), and two private individuals (7%). Voest-Alpine (Austria) installed the plant and is providing technical assistance in its operations. Svenska Cellulosa AB, Sweden's largest pulp and paper manufacturer is providing marketing outlets. The mill has a capacity of producing 122,000 tons of bleached sulphate pulp per annum, and production is presently based on a natural hardwood concession of 160,000 ha to the north of Edea containing about 100,000 ha of harvestable forest. Technical aspects of logging and pulping operations have been of high calibre and the plant produced its first bleached pulp in January 1981. This output has been of acceptable quality in world markets for short-fibre pulp, and it is likely that Cellucam will begin showing an operating surplus in 1983 when it reaches 100% of effective capac- ity. However, in spite of its technical strengths and good quality produc- tion, Cellucam has been faced with financing difficulties. Rising costs increased the level of investment from about US$165 million to US$350 million by late 1980, the increase being financed through short term supplier and commercial bank credit. As repayment of these credits will fall due during  -4- the next five years, Cellucam has recently negotiated refinancing arrangements with stock-holders and commercial banks. Cellucam's participation in the proposed project would be governed by an execution contract, a draft of which was discussed at negotiations (para 4.02). 1.11 When project plantings reach maturity, Cellucam would purchase the wood produced. This would offer Cellucam several advantages over the continued pulping of mixed tropical hardwoods which would include having a supply of wood of uniform density and sizes, standing within reasonable distances froia the mill, growing in regular patterns. With such plantations, the cost of harvesting and transporting wood to the mill could be reduced by about 33% S relative to costs of harvesting the natural forest, and processing costs per ton of pulp would be reduced by about 20% as a result of lower processing time and chemical requirements. In addition, the proposed plantations would produce pine which is not found naturally in the tropical forest and which i's a source of long-fibre pulp. Long-fibre pulp is essential for paper production and is sold in world markets at an 8% premium over short-fibre pulp such as that which Cellucam currently produces. Therefore, the policy of Cellucam's eventually using plantation grown wood instead of natural forest would increase domestic value added, and would be consistent with Government's sectoral strategy (para 1.19). (c) Financing the Sector 1.12 In general, funding for forest enterprises has been readily avail- able in the private sector and to date, exploitation has been dominated by foreign companies. The SNI has, however, made equity investments in a number of wood processing companies in addition to its investment in Cellucam. Projected investment in forestry during the five-year plan, 1976/77-1980/81, was CFAF 21.7 billion (US$80 million), of which 80% was provided by the private sector. Government's contribution was mainly for reforestation and enrichment plantation executed by FNFP. 1.13 Revenues are recovered from the forestry sector by Government through: (i) two annual taxes assessed on concessionaires to support local Government (redevence communale) and reforestation (redevence de reforesta- tion); (ii) a licencing fee for issuance or renewal of concessions (charges codifiees); and (iii) royalties charged per m3 of wood either exported, or processed further within the country. Of these taxes, 100% of the reforesta- tion taxes and licencing fees and 55% of the royalties charged on cut wood are earmarked by law to support Government's reforestation effort. However, while the size of the forestry industry--in terms of the number of concessionnaires and hectarage in concessions--has remained relatively constant since 1977, and the volume of wood processed and exported has increased, taxes and royal- ties collected from the sector have declined. This has been due to poor assessment of royalties on wood being cut which has left as much as half of the harvest unrecorded for tax purposes, and poor administration of annual and five-year tax and licencing regulations. As a result, by June 30, 1980, about CFAF 1.5 billion (US$5.6 million) of the assessed taxes and royalties were unpaid. This is an amount approximately equal to the revenue actually  - 5 - collected in 1979/80, and is about double the arrears as of June 30, 1978. Moreover, over 64% of the outstanding amount was owed by the one-third of concessionaires with concessions in excess of 100,000 ha. This situation arose since legal sanctions open to Government to collect arrears were not vigorously pursued. Moreover, lack of material and financial resources for tax and royalties assessment and collection efforts, and cumbersome administrative procedures also reduced the effectiveness of the responsible agencies. Since April 1981, however, Government has made a determined effort to recover arrears and by the time of negotiations, had recovered about CFAF 500 million (US$1.9 million). Moreover, government is in the process of establishing new administrative procedures and lines of authority which would prevent the recurrence of such a state of arrears. During negotiations Governnent agreed to take all necessary actions to collect by December 31, 1982 the remaining taxes and royalties that were overdue as of July 31, 1980. They further agreed to ensure that in future appropriate actions would be undertaken so that forestry taxes and royalties would be properly assessed and collected within 12 months of their respective assessment. Financing would be made available to a strengthen the Direction des Eaux et Forets et des Chasses (DEFC) logistically and materially (para 3.13). Covernment would employ consultant specialists if necessary to further strengthen the application of the new procedures, and to continue to employ a senior DEFC officers soley responsible for the assessment and collection of forestry taxes and royalties in each of the five provinces where major forestry exploration occurs. (d) Institutions and Training 1.14 The Ministry of Agriculture (MINAGRI) is responsible for all policy formulation and surveillance of the forestry sector. It exercises its respon- sibilities through two agencies: (i) DEFC which is a governmental department is responsible for sector planning--including overall direction of replanta- tion programs, for management of state forests and for supervision of all forestry exploitation. Although DEFC is charged with assessment and collec- tion of sectoral taxes and royalties, it depends on annual government budget allocations to fund its recurrent costs, and on FNFP to fund its investment budget. This leaves DEFC chronically short of operating funds and with little scope for improving its material support. It has a staff of 880. The head- quarters in Yaounde comprises three services: Studies and Programs (dealing with planning and statistics), Production and Forest Industries (maintaining day to day supervision of production and assessing and collecting taxes and royalties) and Wildlife and Environment. Considering its overall responsi- bilities, DEFC headquarters is insufficiently equipped and housed, which accounts in part for its lack of fiscal control of the sector. DEFC is being given appropriate authority to assess penalties for late payment of taxes and royalties. DEFC is represented in each province. The lowest echelon in the structure is the Poste Forestier, manned by a technical agent with one year's training, being responsible for measuring and marking logs leaving the concessions. Normally, there is one post per arrondissement. This, however, does not provide adequate coverage in areas where several concessions are operated. Posts are grouped into sections headed by technicians with two year's training, which broadly coincide with departments, each with about  - 6 - eight concessions on average. The Section Head s respsib1L for gatherin,g and tabulating information from the concessions on the volume of wood being taken. However, Section Heads lack the means of transportation necessary to visit and verify, on-site, the volumes of wood being reported by the post/ concessionaire, which results in poor control. At the provincial level, the DEFC office--headed by the Provincial Conservator--is responsible for moni- toring the work of the Section Heads, calculating the taxes and royalties payable on the harvested wood, and monitoring their payment. However, pro- vincial headquarters have neither the means for travel, nor facilities to be able to function efficiently. Measures to be undertaken under the project would rectify this situation (para 3.13). 1.15 (ii) FNFP is responsible for carrying out the replantation program. Constituted as an autonomous public entity, it receives about 90% of its funding directly from the taxes and royalties collected from the conces- sionaires by DEFC. FNFP has a Board of Directors of which the Director of DEFC is a member, but FNFP operates with considerable autonomy. The structure of FNFP is largely regionalized under the direction of a small Yaounde head office, dividing the country into chantiers, which correspond largely to provinces. In each chantier, a regional chef de chantier supervises a number of chefs de bases who are responsible for actually carrying out the planting programs. FNFPs planting program has, to date, been modest in scope, around 2,500 ha per annum, of which 60% has been enrichment planting in the tropical high forest. The balance of its plantations have been established in the savanna zone. The technical performance of FNFP has been poor, as shown in high rates of loss recorded in new plantations, low levels of maintenance undertaken and generally slow and high cost work. The slump in revenues received from taxes and royalties, from a peak of CFAF 1.1 billion (US$4.1 million) in 1978 to CFAF 0.7 billion (US$2.6 million) in 1980 has also caused severe budgetary problems for FNFP. However, with the proposed reinforcement of its technical, financial and administrative capabilities (para 3.12), FNFP is expected to become an effective instrument for executing Government-s regeneration policies. 1.16 Within both DEFC and FNFP there is a serious shortage of manpower with field experience at the professional and technical level, which con- strains efficient administration and development of the sector. Professional staff education needs are being supplied by the Ecole Nationale Superieure Agronomique at Nkolbisson. This school has the capacity to produce 16 graduates a year, which is sufficient for Cameroon's future requirements. At the technician level, the college at Mbalmayo currently produces 10 tech-- nicians a year which is also adequate to meet foreseeable needs. However, the need is to offer these graduates--as well as those already employed--the opportunities to participate in practical and technically well-managed operations, which would be one of the objectives of the proposed project. 1.17 Some production of hybrid pine and eucalypt seed is currently carried out within research trials and plantations. However, there is pres- ently no institution with overall responsibility for importing, certifying, selecting and multiplying tree seed of good quality. As a result, the vigor  -7- of presently available hybrids is beginning to weaken as the best provenances of exotic trees are not being found and spread. The proposed project would begin to centralize this responsibility in FNFP. 1.18 The interests of the forestry exploitation industries are repre- sented to Government by a trade federation, the Syndicat des Exploitants Forestiers, which participates in regular information meetings with DEFC, and MINAGRI. (e) Objectives, Strategies and Policies 1.19 Government objectives in the forestry sector, as defined in laws passed in 1973 and 1974, are: - to extend the area of gazetted state forest; - to ensure rational planned exploitation of forests; - to regenerate forests by enrichment planting in the dense forest and by reforestation in the savannas; and - to increase domestic value added through processing. These goals are considered reasonable given the present state of forestry industries and resources. However, there has been only mixed success in attaining them. Gazetting of new areas is progressing slowly, the rate of forest regeneration is less than half of targets, and survival rates are low. The percentage of domestic value added is 20% below desired levels. These achievements are all the more disappointing since the targets themselves have been modest and the budgets committed to their attainment have been consider- able. The principal factor that is now perpetuating this situation is a general lack of field-level, technical expertise in the FNFP cadres who should organize and monitor the execution of programs. (f) Bank and Other External Involvement 1.20 The proposed project would be the Bank's first direct involvement in Cameroon s forestry sector in a project exclusively for the sector. However, two rural development projects--Western Highlands Rural Develop- ment Project (Cr. 784-CM), and Northern Province Rural Development Project (Cr. 1075-CM, Ln. 1919-CM)--have forestry components with the objectives of promoting small-scale reforestation and erosion control. The Western High- lands programs have been progressing well, and the Northern Province re- forestation component is just beginning. The proposed project is in line with the Bank-s Forestry Sector Policy Paper which confirms the view that industrial-scale wood plantations, such as those proposed here, have an equal place with small-scale social forestry components in countries overall forestry strategies, and that strengthening sectoral institutions is vital.  -8 - 1.21 The Cameroon forestry sector has also benefited from bilateral assistance in the training of forestry engineers at Nkolbisson, and in forestry research. An ongoing pilot forestation program in the SEMRY zone (Map, IBRD 15692) is providing valuable experience and identification of species on which the proposed project would build in the same region. Under another bilateral agreement, technical assistance is being provided in forestry sector policy, aerial photography for forestry survey, classifi- cation and inventory work which would complement the proposed project. II. THE PROJECT AREA q 2.01 Location: The proposed project would involve tree planting in three separate, ecologically different areas, and reinforce improved forest tree seed production on four sites. Project plantings would cover 11,000 ha. Of this 8,800 ha would be planted at Edea in the south-west to supply the Cellucam pulpmill with plantation grown pulpwood. Another 1,000 ha would be planted for utility timber and transmission poles near Ngaoundere in the Adamaoua Plateau to complement an existing 600 ha plantation; and 1,200 ha would be planted near Maga in the north, as a continuation of the fuelwood plantation of 600 ha already being established by SEMRY (para 1.21). In both of these latter zones, land is available for aforestation and considering the scarcity of wood in the region, aforestation is an economically desirable use of land. All the proposed sites, indicated on the map (IBRD 15692) are served by good quality roads, regular internal flights to the Ngaoundere and Maga (Maroua) areas and regular communications. 2.02 Topography and Soils: Each of the three areas have distinctive topographies and soils. The terrain at Edea is about 75% plantable, the remainder being rocky hills, swamps or steep river and stream banks. The forest soils are deep and well-drained,. frequently highly leached and acid. At Ngaoundere, the terrain of the 1,500 m high plateau is gently undulating with occasional rocky valleys. The soils are generally deep with occasional outcrops of granites from which they are derived. At Maga, the sites are flat and before the construction of the control dike by SEMRY, the area had been frequently inundated during the rains, except for occasional islands on which villages were sited. The soils vary from heavy compacted silts overlying sands to sandy areas overlying compacted silts. 2.03 Vegetation: The southern Edea area carries evergreen tropical high forest which has been selectively exploited. The Ngaoundere vegetation is tree savanna with an undergrowth of perennial tussock grasses. At Maga, the flood plains carry only annual grasses, with a very sparse tree savanna vegetation on islands of higher land. 2.04 Climate: At Edea, the annual rainfall amounts to an average of over 2,500 mm with high humidities and a dry season of only two months. Ngaoundere has an average annual rainfall of about 1,600 mm with a six month dry season. Maga has about 750 mm rain annually, with a six month dry season. Temperatures do not limit vegetative growth. Maximum mean annual temperatures vary from 400C at Maga to 240C at Ngaoundere. The lowest relative humi- dities are recorded at Maga with 10% at the height of the dry season.  - 9 - 2.05 Infrastructure: All three plantation areas are located close to existing facilities. At Edea, the Cellucam logging roads, workshops, offices and social and other services would be utilized (para 4.02). At Ngaoundere, the FNFP nursery, store and offices would be upgraded under the project. At Maga, the existing SEMRY workshops and services are of good standard, and the existing nursery would be maintained (para 4.05). 2.06 Population: Edea has a population of about 55,000 and there are many villages on the outskirts of the 160,000 ha Cellucam concession area. The town of Ngaoundere has a population of about 45,000. At completion of SEMRY II, it is expected that about 60,000 people will be living in new villages within the area. Cellucam has been able to date to recruit suffi- cient labor from the Edea labor pool at the industrial wage rates it is required to pay. The additional 525 man-years of local labor required for project plantations, which would account for about 33% of the total Cellucam labor force at peak implementation periods, would also be paid at the indus- trial wage rate, and would be available. There would be adequate labor available at Ngaoundere and Maga for the proposed planting programs. III. THE PROJECT A. Objectives 3.01 As its principle objectives, the project would: (a) expand the contribution of the forestry sector to the national economy through the establishment of plantations of about 11,000 ha of pine and eucalypts not found natively in the country; and (b) enhance the capabilities of the responsible Government agencies to maintain continuous regeneration of the forests through an improve- ment of their technical capacities to execute reforestation and their abilities to recover revenue by the efficient application of existing forestry tax and royalties regulations. 3.02 Plantations would be of two types: the first would involve refore- station of the areas of natural high forest cut by Cellucam for its pulping operations to allow this enterprise to take advantage eventually of plantation grown wood (para 1.11); the second would be afforestation of areas in the savanna regions where wood is in short supply, both in block plantations, and in pilot village woodlots. 3.03 Institutional development would be closely linked to the execution of the plantations proposed. The improvement of Government's technical capacity would be achieved, in part, through the participation of FNFP (para 1.15) operating staff in the reforestation programs which would give them inservice experience, and the establishment of improved tree seed gardens. Capacity would also be raised through direct reinforcement of FNFP head- quarters operations, planning, and monitoring capabilities. The improvement in  - 10 - Government's ability to recover taxes and royalt;es from the forestry sector would be achieved through a direct reinforcement of the operational capabili- ties of the DEFC (para 1.13) which is responsible inter alia, for these functions. This reinforcement would focus on the immediate improvement of DEFC's ability to assess and collect taxes and royalties. 3.04 Over five years, project finance would be provided for: (a) establishment of a plantation of about 5,200 ha of pines and 3,600 ha of eucalypts in the Edea project site. This would be done by Cellucam as contractor and supervised by FNFP, with the aim of providing uniform, high-quality pulpwood for the pulpmill; (b) establishment of a plantation of about 1,000 ha of eucalypts in blocks of between 50 ha and 200 ha, and 200 ha in pilot village woodlots near Maga (SEMRY). This would be undertaken by SEMRY for the eventual use as household firewood and building poles; (c) establishment of a plantation of 750 ha of pines and 250 ha of eucalypts at Ngaoundere by FNFP, for eventual use as utility saw-logs and transmission poles; (d) establishment of a unit within FNFP responsible for setting-up Il ha in four sites as improved tree seed production gardens; (e) provision of 16 man-years of specialist services not currently available in Cameroon in areas of plantation management and finan- cial control for FNFP and SEMRY; (f) provision of necessary logistical, material, and operational support for DEFC to improve its tax and royalties assessment and collection capacity; and (g) provision of funds to undertake specialized studies, including preparation of a possible follow-up project, and to support appro-- priate overseas training of selected personnel. B. Detailed Features (a) Edea Plantation 3.05 The 8,800 plantation program at Edea would establish pine and eucalypts in the tropical forest zones logged out by Cellucam for its pulping operations. Cellucam would, thus, complete primary land clearing, and establish basic roads which would be later used in plantation work. The costs of windrowing and burning of residues not suitable for pulping would be financed under the project. This would be done with appropriate mechanical means, leaving a plantation site equal to about 85% of the area originally logged. Preparation and replanting would follow with a minimum time delay to minimize the cost of removing natural regrowth of weedy species. The joint  - il1 - logging, land clearing and preparation, and planting program over the five- year period would be as follows: PYl PY2 PY3 PY4 PYS Total --(ha)