Mauritania - Nouadhibou Port Project

Document of The World Bank FOR nFFICIAL USE ONLY Report No. 4837 PROJECT PERFORMANCE AUDIT REPORT MAURITANIA NOUADHIBOU PORT PROJECT (CREDIT 588-MAU) December 19, 1983 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the _ -rformance of their official duties. Its contents may not otherwise be disclosed without World Bank authoriastion. FOR OFFICIAL USE ONLY GLOSSARY seiner - a fishing vessel that captures pelagic fish by surrounding a school with a large cylindrical net. A cable then draws the bottom of the net together (pursing) after which the captured fish can be brought aboard with a smaller dip net called a brail. trawler - a fishing vessel that captures demersal fish by dragging or trawling a scoop shaped net along a sandy sea bottom. The shape of the net and its associated hardware force the fish into a net bag called the cod end which is used to bring the captured fish aboard the veseel. long liner - a fishing vessel which is used primarily to capture large pelagic fish by means of baited hooks on branch lines attached to a main long line that may be several miles in length. As the long line is hauled aboard, the captured fish are removed from the hooks manually. pelagic - fish that live and are caught at or near the surface of of the sea. demersal - fish that live and are caught at or near the sea bottom. cephalopod - a class of mollusks that includes octopus, squid and cuttlefish. 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. PROJECT PERFORMANCE AUDIT REPORT MAURITANIA - NOUADHIBOU FISHING PORT PROJECT (CREDIT 588-MAU) TABLE OF CONTENTS Page No. Preface ..............*... ............ . . . . . . . . . . . . . . . Basic Data Sheet ..................................... ... ii Highlights .................................................* *... iv PROJECT PERFORMANCE AUDIT MEMORANDUM I. BACKGROUND ...................... ...... .. ...... a... . 1 II. IDENTIFICATION, PREPARATION, APPRAISAL AND SUPERVISION ......... .................... ......... 4 III. PHYSICAL DESIGN OF PROJECT ............#.................. 11 IV. POTENTIAL MARKET AND PROJECT BENEFITS .................... 13 V. USE OF PROJECT FACILITIES ...................... * ......... 16 VI. FINANCIAL PERFORMANCE OF PROJECT ......................... 18 VII. ECONOMIC PERFORMANCE OF PROJECT .......................... 19 VIII. CONCLUSIONS ......................... ..........&........ . 21 Annex Observations on Mauritania's Fisheries Policy ............ 25 Tables: 1. Ship Calls at Nouadhibou .. .................. 28 2. Transshipment in Anchorage ....................... . ............. 29 3. Cargo Discharges in Nouadhibou .................. 30 4. Import Traffic Comparison ...... . .............. 31 5. Fish Export Comparison ................... # ................... 32 6. Balance Sheets ...................... . . .............. .. ...... . 33 7. Income Statements .............................34 8. Comparative Income Statements ...... ................................ 35 9. Comparative Balance Sheets ............................ 37 Attachment Borrower Comments . ...... ................. 39 TABLE OF CONTENTS (Continued) PROJECT COMPLETION PROJECT Page No. I. introduction ........... . . . . . . . . . . . ......... 41 II. Project Preparation and Appraisal ........................ 41 III. Project Implementation and Cost .......................... 42 IV. Traffic and Operations .................................. 47 V. Financial Performance of PAN ............................. 50 VI. Economic Reevaluation of the Project ..................... 54 VII. Institutional Development ................................ 59 VIII. The Role of the Association .............................. 60 Annex Agreement Covenants *. ........ ....... ......... 61 Tables: 1. Actual and Appraisal Estimates of Project Cost ................ 63 2. Actual and Appraisal Estimates of Cumulative Credit Disbursements ................... ....... 64 3. Comparison of Actual and Original Financing Plans .......... 65 4. Traffic ..................................................... 66 5. Income Statements for Fiscal Years Ending December 31 . 67 6. Balance Sheets for Fiscal Years Ending December 31 ............ 68 7. Statement of Changes in Financial Position (Source and Application of Funds) for Fiscal Years Ending December 31 ............................. 69 8. Composition of Fishing Fleets Expected to be Authorized to Operate in Mauritania Waters in 1983 ............... 70 9. Government Tentative Objectives for Landings and Transshipment Operations at Nouadhibou ...................... 71 10. Revised Traffic Forecasts ....................................... 72 11. Actual Investment Costs Used for Economic Reevaluation 73 12. Operating Cost and Profits From Freezing Operations 74 13. Cost, Benefits and IRR Fishing Port Investments ............... 75 14. Cost and Benefits -- Commerical Port Investments ........... 76 Chart Map - i - PROJECT PERFORMANCE AUDIT REPORT MAURITANIA - NOUADHIBOU FISHING PORT PROJECT (CREDIT 588-MAU) PREFACE This report represents a performance audit of the Mauritania Nouadhibou Fishing Port Project, for which Credit 588-MAU for US$8 million equivalent was approved on October 28, 1975. The last disbursement under the Credit was made on September 29, 1980 and an undisbursed balance of US$51,231.38 was cancelled as of December 31, 1981. The report consists of a Project Completion Report (PCR) prepared by the Western Africa Regional Office and a Project Performance Audit Memo- randum (PPAM) prepared by the Operations Evaluation Department (OED). OED has reviewed the PCR against the Appraisal and President's Reports, the legal documents and the transcripts of the Executive Directors' meeting which considered the project. Project files and documents have also been reviewed and discussions held with Bank operational staff. An OED mission visited Mauritania in September/October 1982 and discussed the project with the Mauritanian authorities whose cooperation is gratefully acknowledged. The report was sent to these authorities for their comments. The reply is reproduced as an attachment to the PPAM. The audit finds that the PCR provides a comprehensive review of most aspects of project experience. The audit supplements the PCR on certain points, particularly regarding operations of the fishing industry. - ii - PROJECT PERFORMANCE AUDIT BASIC DATA SHEET MAURITANIA NOUADRIBOU PORT PROJET (CREDIT 588-MAU) KEY PROJECT DATA Appraisal Item ExRectation Actual Total Project Cost (US$ million) 27.55 26.36 /a Underrun (%) - 4.40 7a Credit Amount (US$ million) - 8.00 7 Disbursed - 7.95 Cancelled - 0.05 Repaid ) as of August 31, 1983 - 0.00 outstanding) - 7.95 /b Date Physical Components Completed 09/30/77 10/31/80 Proportion Completed by Above Date (%) 100 84 Proportion of Time Overrun (%) - 150 Economic Rate of Return (%) Fishing berths 30 28 /c Commercial cargo 18 13 7i berths and approach way Financial Rate of Return (%) Up to 1977 6 1977 11.2 Thereafter 2.5 1978-1980 n.a. Cumulative Estimated and Actual Disbursements (US$ Millions) FY75 FY76 FY77 FY78 FY79 (i) Estimated 2.07 6.45 7.54 8.00 8.00 (ii) Actual - 4.30 6.69 7.78 7.95 % of (ii) to (i) 0 66 89 97 99 OTHER PROJECT DATA Original Plan Actual First Mention in Files 09/69 Government's Application - 09/69 Negotiations - 11/74 Board Approval - 10/75 Credit Agreement Date - 10/75 Effectiveness Date - 06/76 Closing Date 03/79 12180 Borrower Islamic Republic of Mauritania Executing Agency Ministry of Construction Fiscal Year of Borrower January 1 - December 31 Follow-on Project Name None - Iii. - 14ISSION DATA Month/ No. of No. of Date of Item Year Weeks Persons Manveeks Report Identification/ Preparation 05-06/73 0.5 2 1 07/73 12/73 2 1 2 01/74 Appraisal 03/74 3 3 9 10/75 Supervision I 06-07/75 1 2 2 07/75 Supervision II 10/75 1 1 1 10/75 Supervision III 04/76 1 1 1 05/76 Supervision IV 07/76 1 1 1 07/76 Supervision V 02/77 1 2 2 02/77 Supervision VI 07/77 1 2 2 09/77 Supervision VII 02-03/78 1 2 2 05/78 Supervision VIII 05/78 1 1 1 06/78 Supervision IX 11/78 1.5 3 7.5 02/79 Supervision K 05/79 1.5 3 4.5 07/79 Supervision KI 11/79 2 3 6 01/80 Supervision XII 06/80 2 2 4 07/80 Total: 16 23 34 COUNTRY EXCHANGE RATE Name of Currency (Abbreviation) Ougulya (U14) Appraisal Year Average (1974) US$1 = UN 41 Intervening Years' Average (1975) US$1 = M 43 (1976-1979) US$1 = UN 45 Completion Year Average (1980) US$1 = UM 45 /a In terms of Ouguiyas, there is a cost overrun of 4.8% because of differences in currency conversion rates used. /b Exchange adjustment not applicable. /7 This is the rate of return in the PCR which the audit is unable to substantiate due to unavailability or inconsistencies of data; in the view of the audit the rate of return in the PCR seems very high; the audit believes the rate of return is uncertain. /d This is the rate of return in the PCR; the benefits on which the PCR calculations are based will very likely be reduced; moreover, the data on which the PCR calculation is based appear to be inconsistent; however, in the absence of alternative data the audit accepts the rate of return in the PCR. - iv - PROJECT PERFORMANCE AUDIT REPORT MAURITANIA - NOUADiIBOU FISHING PORT PROJECT (CREDIT 588-MAU) HIGHLIGHTS The project proposed an expanded fishing port at Nouadhibou, with ancillary facilities, to improve operations and to provide added capacity to service projected increased fish landings. The expanded port has been built at a total project cost slightly below appraisal estimates. There was a large underestimate in the volume of dredging but the added cost was covered by a reduction dredged depth, savings and cancellations in other project components and application of cost contingencies (PPAM, para. 24). Development of port activities was seriously hindered by the Polisartio War and the associated economic, political and commercial disloca- tions. The war could not be foreseen at appraisal and it is unlikely that any efforts by the Association could have mitigated the effects of the war on the port (PPAM, para. 38). The utilization of the port is presently greatly below expectations and economic and financial performance is substantially below projections. Activities at the port, both fish landings and general cargo imports, are not only substantially below the projected level but also the level of traffic at appraisal (PPAM, paras. 39-55). The present low volume of fish landings is due primarily to the major change in fisheries policy that was promulgated by the Government in 1979 (PPAM, para. 41). All fishing rights were cancelled and the Government has since attempted to negotiate new agreements based on joint ventures and shore based processing. As a result, several operators have withdrawn from Mauritanian waters. While the new policy is still evolving and has had some short term positive results, it is unclear whether the policy will be a long term success. Unless and until it is, the port of Nouadhibou will continue to perform at a fraction of projected levels (PPAM, paras. 22 and 23). Whereas the drop in fish landings resulted from the change in Government policy, the increase in fish landings projected at appraisal was predicated on diversion of fish traffic to Nouadhibou from Las Palmas or Dakar or from transshipment operations at sea rather than on increased catches from an already fully exploited resource (PPAM, para. 33). The financial reports of the port authority show a loss for all three most recent years, though 1981 indicates an improving trend (PPAM, para. 45). It was not possible to reestimate the economic return for the fishing berths because of the problems of projecting future fish 1andings (PPAM, para. 53). While the project is considered a success in the PCR and has achieved its physical objectives, it seems not so far to have succeded as an economic venture (para. 62). - v - Points of special interest and lessons learned include the fol- lowing: (a) the need for both Government and the Association to analyze any major proposed changes in fisheries policy, and the nF.ed to base this analysis on an appreciation of the alternatives for fisheries fleets, including the relative profitability levels of the fleets for any given policy alternative (PPAM, paras. 23 and 36); (b) the need for ensuring that the fish which provide the basis for a fisheries project will not be exploited by another competing facility and that the project being supported does in fact have a competitive advantage (PPAM, paras. 32 and 33); (c) the need to provide adequate repair facilities to make a fishing port attractive to operators (PPAM, para. 15); (d) the need for adequate infrastructure and ancillary facilities for an effective fishing port (PPAM, paras. 27 and 34); (e) the need to ensure finance for all ancillary facilities deemed essential to the success of a project (PPAM, para. 14); (f) the need for Association staff with expertise in the fisheries sector (PPAM, para. 13); and (g) the similarity observed in many respects and the differences in some others when contrasting this project with another fisheries harbor project which was financed by the Bank in Panama (Loan 1114-PAN) and for which a Project Performance Audit Report was issued earlier this year (PPAM, paras. 1-5). PROJECT PERFORMANCE AUDIT MEMORANDUM MAURITANIA - NOUADHIBOU FISHINO PORT PROJECT (CREDIT 588-MAU) I. BACKGROUND 1. The Bank Group has financed fisheries related projects in the two broad categories of aquaculture, in which fish or shellfish are raised and harvested in proprietary enclosed ponds, and offshore fishing, in which fish or shellfish are captured in their natural habitat in the sea or in lakes or rivers. The Bank Group has assisted offshore fisheries projects in three ways: (a) finencing of direct investment by Governiaent or parastatal entities in vessels, shore facilities, and training and technical assis- tance; (b) financing of private investment in vescels through onlending by development institutions; and (c) financing construction of fishing ports. Thus far, projects under (a) have been handled by agricultural units in the Bank Group, projects under (b) have been handled by IDF or agricultural units, and projects under (c) have been handled by transportation units. The recently issued fisheries policy paper ("Fisheries Development: Sector Policy Paper", Report No. 3915 of May 1982) addresses policy issues surround- ing fisheries projects of the type usually associated with agricultural units, and it makes no mention of fisheries projects of tne type usually associated with transportation units of the Bank Group. Thus far, only pro- jects of the former type have been audited.1/ This audit and another issued in June 1983 (Panama Fishing Port Project; Loan 1114-PAN) are Lhe first audits of projects devoted exclusively to fishing ports. 2. The audit zonsiders that all offshore fisheries projects, whether they emanate from a transportation unit or an agricultural unit, should address, at a minimum, six related issues: (a) The resource - is there a body of fish of one or more species of sufficient abundance to support the proposed development? (b) The market - is there a local or world market for the resource Ylith a price structure and demand function consistent with the cost of catching the fish and processing and transporting it? I/ An emergency rehabilitation project for fisheries harbors also was audited (Iceland Fisheries Harbors Rehabilitation, Loan 941-IC, Report No. 1960 of March 10, 1978, SecM 78-211). - 2 - (c) The fleet - does there exist or will there be provided a domestic or international fleet of vessels able to catch and, if needed, process the fish in an economic mainer? (d) The port - does there exist or will there be provided a port suit- able to the needs of the fleet and related processing, service, and transport vessels? (e) The other infrastructure - does there exist or will there be pro- vided other infrastructure necessary to support the fleet and its personnel? (f) Government policy - does the government have in place or under development a realistic marine resources policy and the institu- tional frawework to administer that policy? 3. In general, Bank Group financed fisheries projects that have per- formed below expectation have done so because one or more of the above six issues was inadequately addressed or not addressed at all at the time of appraisal. The reasons for the deficiency vary from one project to the next but there appears to be a tendency to concentrate on those issues which cor- respond most closely to the other major skills of the unit handling the pro- ject. Thus, an agricultural unit may tend to concentrate more on the resource and the market while a transportation unit may tend to concentrate more on the port and physical facilities. 4. The project being audited here and the Panama project have many parallels as well as some contrasts which serve to underscore the main issues of each project and the conclusions to be drawn from them about future Bank Group activities in the fisheries sector. These parallels are the basis for joint preparation of the two reports for fisheries harbors in Panama and Mauritania. Among the areas of closest parallel are: (a) Fleet Both projects were directed in a major way at international fleets of fishing vessels. In the Panama project, it was the interna- tioaal tuna fleet consisting primarily of American tuna seiners and Japanese longliners. In the case of the Mauritania project, it was the Spanish, Portuguese, and Japanese trawler fleets fishing mainly for cephalopods and other premium demersal species as well as several European fleets rigged for mid-water trawling or seining of pelagic species. 'b) Competition Because of the physical mobility and freedom of operation of inter- national fishing fleets, both ports are subject to competition from other nearby ports. The port of Vacamonte in Panama faces internal competition from the Taboga anchorage for transshipment operations and from the port of Balboa for bunkering and other shoreside services. In addition Panama as a whole faces competition - 3 - from MexJ o, Costa Rica, and other tropical Eastern Pacific countries, though none yet offers the breadth of services available in Panama. The port of Nouadhibou in Mauritania faces direct competition from Las Palmas and Dakar, both of which are substantially more developed and offer many more attractions both in Vt,e ports and in the surrounding infrastructure. (c) Transshipment Role of Port Both ports were intended primarily as transshipment ports in which the majority of fish landed would move on to the world market rather than being consumed locally. In Panama, the tuna were to be reexported after on shore storage but with no on shore processing and the shrimps were to be reexported after minimal processing such as heading, peeling, packing and freezing. In Mauritania, the demersal 'sh and the pelagic food fish were to undergo only minimal processing, gutting and freezing, before being reexported and the balance of the pelagic fish were to be processed to meal and oil for reexport. Domestic consumption in both cases was expected to be minimal. (d) Port as Necessary but not Sufficient Condition The appraisal for each of the two projects correctly recognized that a new or expanded port was necessary to further expansion in the fisheries sector, but neither project carried the analysis forward to the point of determining what other investments or actions would be sufficient to assure further development of the sector. (e) Emphasis on Port Facilities and Administration Both projects were handled by transportation units and both emphasized the design and construction of the physical facilities, port tariffs and finances, and technical assistance and institution building efforts in the area of port administration. (f) Lack or Weakness of Sensitivity Analysis In both projects, sensitivity analysis was focussed on global variables rather than individual factors crucial to the economic viability of the project particularly those which would affect the decision of potential port users to put into the port. (g) Limited Number of Fisheries Personnel At the time of appraisal of both projects the Bank Group had only limited personnel resources in the fisheries area and even these were not used very effectively. The other staff associated with appraisal and supervision did not have in-depth expertise in the fisheries sector to fully assess the work of fisheries consultants who were engaged for this work. 5. Among the areas where the two projects were in relatively sharp contrast are the following: (a) Fishe,les Policy At the time of appraisal, Panama had a well defined fishery policy and regulations covering the catching of the main domestic species of shrimp. There was no policy with regard to tuna, but none was necessary since tuna are a highly migratory species and very few were or are caught in Panamanian waters. By contrast, Mauritania had a liberal fisheries policy dealing with the catching of the species indigenous to Mauritanian waters. The country collected license fees which were based on gross tonnage of the vessels. The licenses did not address catch levels and sometimes had conditions obligating licensees to employ some Mauritanian sailors and to land fish in Nouadhibou. (b) Changes in Fisheries Policy The Panama loan agreement contained a covenant requiring consulta- tion with the Bank prior to any significant policy changes that might affect the viability of the project. The Mauritania credit agreement contained no such covenant. There have been no signifi- cant changes in policy in Panama, while in Mauritania the opposite is the case. (c) Suitability of Physical Facilities The physical facilities at Panama which were redesigned during con- struction are not completely suitable for one of the major intended purposes, docking of tuna seiners and transporters. The facilities at Nouadhibou, as designed and built, are fundamentally suitable for the intended uses. (d) Infrastructure Panama provides all of the physical and institutional infrastruc- ture needed to service an international fleet. By contrast, Mauritania has very limited infrastructure, supplies and atti.ctions. II. IDENTIFICATION, PREPARATION, APPRAISAL AND SUPERVISION A. Identification and Preparation 6. The original concept for expanding the fishing port at Nouadhibou originated with the Government of Mauritania. Consultants financed by the French Fond d'Aide et de Cooperation (FAC) carried out a feasibility study and detailed engineering in 1972/73. The Bank Group found the consultants' recommendations to be too elaborate and expensive, and it was eventually - 5 - appraised in modified form in which the proposed breakwaters to the cast were eliminated. 7. Serious concern about the quality of the feasibility study, including the physical design of the project, was expressed by Association staff. Despite this the Association recommended that the consultants be considered for supervision of construction, according to Association staff, because there was still confidence about the engineering capability of the company and because of the Association's preference for the same consultants to carry out the design and supervision of construction components.2/ Another considertion may have been that FAC financed most of the project preparation activities, including this consultant, and therefore, the Association felt obliged to consider the company for the supervision contract. Ultimately, different consultants were selected by the Government for the supervision works. Subsequently, problems with the engineering design did emerge during construction, particularly gr )ss underestimation of total dredging volume and rock volume although the Association staff is now uncertain as to the extent to which the blame for this can be put on the consultant (para. 24). B. Appraisal 8. The project was presented to the Board in October 1975 after an appraisal in March 1974. Appraisal of the project was based on the consultants' feasibility study for the engineering, financial and port management aspects of the project; analysis of the fishing sector was based on various other sources of information. 9. At the time of appraisal, Mauritania claimed territorial waters to a limit of 55 km from its shores, though the limit of 12 miles had been claimed until 1972. (In 1980, the limit was further extended to 200 miles in accordance with the pending Law of the Sea Treaty). There were no purely Mauritanian industrial fishing activities in operation, though climatic and marine conditions have resulted in the waters off Mauritania being relatively rich in marine resources. The only traditional Mauritanian fishery was an artesanal fishery operated by about 200 Imraguen fishermen in islands offshore between Nouadhibou and Nouakchott. 10. The fish resources in Mauritanian territorial waters and waters later claimed by Mauritania were exploited almost exclusively by foreign fleets. Fish processing in Mauritania was limited and was supplied mainly by 2/ The Region notes that Bank Group policy favors the selection of the design consultant for supervision because, among other reasons, under that arrangement the consultant has a strong incentive to execute the works in accordance with the design and to make the least amount of changes. The audit observes that this policy has the drawback, however, that tt may give the consultant during the early design phase an incentive to make a finding of feasibility for the project. In any event, the policy may need to be open to moderation in cases where there were significant deficiencies in the design work of a consultant. - 6 - the Spanish-Canarian vessels in the case of salting and drying; Japanese vessels in the case of freezing; and Dutch vessels in the case of reduction to meal and oil. Foreign fleets operating in Mauritanian waters paid a license fee to Mauritania and commonly had agreements to base certain numbers of vessels in Nouadhibou or to land certain tonnages of fish in Nouadhibou. In general, these agreements were not fully honored by the foreign fleets, nor were they enforced by Mauritania. Discussions with some foreign fleet representatives lead the audit to conclude that these agreements were viewed by the foreigners as part of the license fee. Their preference from the points of view of operations and economics would have been to make very limited use of Nouadhibou for either landings or vessel provisioning. However, Association staff indicated that in discussions which took place during appraisal of the project no such preference was indicated by foreign fleet representatives. 11. Even with the limited use of the port by foreign vessels at the time of appraisal, however, the port facilities were barely adequate and the appraisal correctly concluded that some measure of port expansion and modernization was a necessary condition to growth of the shore based fishing industry and further contribution of fisheries to the economic development of Mauritania. Accordingly, the appraisal recommended a project consisting of: (a) extension of the fishing berths; (b extension of the commercial cargo berth; (c) reconstruction of the causeway to the commercial cargo berth; (d) construction of a sewerage system; (e) construction of various port buildings; (f) procurement of navigation equipment; (g) technical assistance; and (h) studies of a repair facility. Items (a), (b), (c), (g) and (h) were co-financed by the Association, the Kuwait F.id for Arab Economic Development, (KFAED) and the Caisse Centrale de Cooperation Economique (CCCE). Items (d), (e) and (f) were covered by KFAED and CCCE through parallel financing and the Government covered local costs for all items. 12. The appraisal estimated that total fish landings in Nouadhibou would rise from 80,000 tons in 1973 to 126,000 tons in 1981 without the project, but would rise to 256,000 tons in 1981 if the project were to be implemented. The corresponding figures for general cargo show a rise over the same period from 74,000 tons to 153,000 tons without the project or to 176,000 tons with it. In addition, exports of fish products were assumed to rise from 35,000 tons to 56,000 tons without the project and to 122,000 tons with the project. The above forecasts appear to have been taken mainly from - 7 - the feasibility study and the indications are that the basis for the forecasts was a combination of the availability of the resource, the potential attraction of the improved port facilities, the intentions and goals of the Government and the proposed expansion of the fishmeal processing plant in Nouadhibou. The appraisal report contains no reference to the operating corts of the fishing fleets or a cor-parison of the costs of on shore processing versus factory ship processing, no consideration of the market economics of the species and products that could come out of Mauritania (other than occasional mention of some spot prices), and only a minimal consideration of the relative operational and economic merits of Nouadhibou versus Dakar and Las Palmas from the point of view of the operators of vessels. While some of the above issues were apparently studied by FAQ consultants and Association staff during preparation and appraisal, data is not now available in the file to evaluate how fish landings at the port were projected. Also, operating costs on factory ships which were in direct competition tth the port may not yet have been available as they had just begun operations in the area. 13. The Nouadhibou project was appraised and supervised by a ports division as a port project. Given that expertise in fishing operations was very limited in the Bank Group at the time, the appraisal mission depended on various outside sources of expertise, including several experts from FAO, the fishing experts of the consultants, a fishery expert from FAC and several others. According to Association staff, the appraisal mission also held discussions with the fishing companies based in Nouadhibou and Dakar, and information was obtained by the consultants on fishery operations in Las Palmas. Not all of this information is documented in the Association's files, once again making it difficult to evaluate whether the appraisal mission had sufficient information to evaluate the future prospects for fish landings at the port. In retrospect, a better approach might have been to have had an overall assessment of the operations of the foreign fishing companies and the relative attractions of competing ports, especially since the quantity of fish to be landed after improvements had been made at the port was of critical importance to justification of the project. 14. The location that was selected for the extension of the fishing berths was contiguous to the existing berths. The site was then occupied by a rudimentary fishing boat repair facility, the only such facility in Nouadhibou. The extension of the fishing berths required the demolition of this facility and, though the project contained a technical assistance component to prepare a feasibility design for a new ship repair facility, no new facility was funded in the project or elsewhere and none had been built as of the time of the audit mission (Fall 1982). The reason that a ship repair facility was not included in the project as presented to the Board was the desire of the Government for a facility that the Association thought was more extensive and costly (US$ 10 million or more) than the port could support. The study of a facility under the project was the compromise struck between the parties. The audit concurs with the appraisal judgment as to the appropriate scale of the facility, as the Eastern Central Atlantic region then already had sufficient large repair installations to serve the market and it would have been risky for Nouadhibou to compete with large facilities at Dakar and Las Palmas which additionally had better ancillary services in recreation, international banking and so forth. - 8 - 15. Nouadhibou did have a need for a more basic repair station for routine repair and maintenance of the local fleet and for some emergency repairs for the international fleet such as propellers and rudder work which would avoid expensive towing charges. The audit concludes that the compro- mise adopted entailed the immediate loss of the only repair facility in Nouadhibou and made no firm provision for its replacement, thereby substan- tially detracting from the attractiveness of the port. However, Port Autonome de Nouadhibou (PAN) has acquired independently of the project a floating dry dock but this facility is not operative yet. The Association has recommended PAN to lease the dock to an experienced ship repair organiza- tion which would be completely responsible for its operation. 16. The appraisal contains several sensitivity analyses of the benefits and economic returns of the proposed project. Unfortunately, the variables subjected to sensitivity analysis were global variables such as total traf- fic, total investment cost, total tax revenue, and so forth. When such global variables are analyzed over a relatively narrow range of +30%, it is not surprising that the resulting variation in rate of return is also nar- row. A sensitivity analysis of more local variables might have shown that the rate of return was considerably more sensitive to such factors as the cost of fuel in Nouadhibou versus Las Palmas, the port charges in Nouadhibou, processing costs in Nouadhibou, the price of frozen octopus ta Tokyo, and so on. Such local variables frequently exhibit a multiplier effect when sub- jected to sensitivity analysis, where a relatively small change in the vari- able can cause a very wide swing in the global variables and the resulting rate of return. In some cases, a local variable such as fuel cost can act as a switch in the sense that nearly all traffic in a given category could be lost if fuel prices rise above a threshold level. 17. The Appraisal Report (para. 2.07) makes only brief mention of Government fisheries development policy and contains no mention of any organization to deal with fisheries policy. The paraphrasing of Government policy lacks specifics as to goals, methods, or possible modifications. Likewise, the Development Credit Agreement contains no references to Government policy and all covenants are in the area of port finance, port facilities, and port operations. The Association also had requested and the Government agreed at the time of identification, to make orgaaizational changes for the port by the establishment of an autonomous port authority, PAN. 18. The appraisal projected significant benefits from the project due to expansion of fishing by Mauritanians who would base their operations in Nouadhibou. These benefits were included not on the basis of any particular action of the project itself but as the result of the Government's policy to promote the local fishing fleet. However, during the course of the project there was very little expansion of the local fishing industry or numbers of Mauritanians employed on fishing vessels. Given the cultural problems associated with encouraging a predominately nomadic desert population such as the Mauritanians to undertake the totally different life of a deep sea fisherman, more emphasis should have been put on the evaluation of Government programs to train local people in fishing operations and a longer time span allowed for such programs to be effective. -9- C. Supervision 19. There were twelve supervision missions for this project over the period June 1975 to June 1980. On average there were two persons on each mission and the PCR indicates that the average of person weeks per mission was nearly three. In principle, this level of supervision should have been adequate for the project, but the audit questions whether the level of super- vision was, in fact, adequate. Many of the supervision missions were com- bined %,ith missions to other African nations and many of the missions to NouadhiLou required meetings en route in Paris. In view of the technical and administrative difficulties associated with this project and the political and military dislocations of the Polisario War and its aftermath, the project implementation may have been assisted by more intensive supervision, had bud- getary constraints and staff availability permitted. Discussions with Bank staff involved in the project indicate that supervision also was hampered by the relative lack of fisheries expertise available in l! Bank during much of the project implementation period and the insufficient use of the expertise that was available. 20. Most of the supervision effort was directed to the very real economic and administrative problems that occurred in the execution of the physical components of the project. As mentioned in para. 16, Mauritania's fisheries policy was only briefly mentioned in the Appraisal Report and no covenant was included in the credit documents. It was thought at the time that, with territorial waters extending to only 30 miles from shore, there was limited scope for managing the fish resources and that the port would operaLe in the context of a liberal, laissez-faire policy on fisheries. Also, according to Association staff, the Association was extremely reluctant to be directly involved in the formulation of a maritime fishing policy for Mauritania, given the delicacy of the negotiations between the Government and foreign fishing fleets, many of them members of the Bank Group. Neither Mauritania's fisheries policy nor the fisheries sector studies which had been carried out by FAO and in connection with proposed private foreign invest- ments in the sector were mentioned in the first five supervision reports. However, in the second half of the decade attention to this matter in- creased. The Bank Group's (First) Mauritania Technical Assistance Credit (Credit 665 of November 1976), which was closed in June 1982 and for which a Project Completion Report will be available in the near future, included provision for one plarning advisor concerned with industry and fisheries. A similar position is foreseen in the second such project (Credit 1292 of September 1982) which is not yet effective, however. There also were several bilaterally financed studies of the sector including one financed by the French Government (1978) and another financed by the Kuwait Fund (1979). The consultant in the latter study also assisted the Mauritanian Government with the formulation of its fishing policy. Finally, technical studies for the port which resulted from the project such as the Feasibility Study for a Ship Repair Facility at Nouadbibou (1978) contained general material on the sector. 21. The audit notes that the Nouadhibou port has been Mauritania's only significant fishing facility throughout this period and that, in practice, its development was intimately tied to the country's national fisheries - 10 - policy. Thus whatever dialogue took place between the Bank Group and Mauritania on fisheries policy would desirably have considered the effect of this policy on the port and vice-versa and would, If possible, have linked the project discussions to the wider context. However, this seems to have occurred only to a limited degree, as is illustrated below in connection with the; introduction of a new fisheries policy. 22. After the Law of the Sea Conference in 1976 which, among other things, broadly recognized the concept of a 200-mile exclusive economic zone, Mauritania apparently decided to reconsider its fisheries policy. It established a fisheries ministry in 1977 and then promulgated a patrolled zone of up to 70 miles of shore. Under the new policy, all existing fishing licenses were cancelled and the Government proposed to negotiate entirely new agreements based on joint ventures between Mauritanian and foreign partners with required levels of fish landings in Nouadhibou and required investments in -a shore processing facilities in Nouadhibou. This was a significant change in the Government's posture towards foreign fishing operators forcing a number of them to withdraw from Mauritanian waters and it was clear or should have been clear to Bank Group staff that it would have a significant impact on the performance of the port, both operationally and economically. Before the Government's change in fishery policy, Association supervision missions held discussions with FA0 and Ministry of Fishery officials but little information on these meetings is recorded in Association files. The project files thus do not indicate clearly what position the Association took with regard to this major policy change, nor whether the Association took any position, but some of those interviewed indicated that the Association was relatively passive on the question of a new fisheries policy, while others indicated that the role was more one of approval or active encouragement of that policy. 23. Whichever view is correct, the audit feels that the Association's role was not totally appropriate. The Association's staff noted that the change of policy presented a delicate situation as the rescinding of fishing licenses directly involved member countries of the Bank Group and the Association did not want to be seen taking sides. Moreover, the Association staff felt it had limited leverage as the change in policy took place near the end of the project and there was no covenant covering fishing policy changes. However, since a fisheries policy change of this magnitude was destined to have significant short-term and long-term effects on the port, neither passive acceptance nor active encouragement of the policy was prudent, especially without any consideration of the nature and scope of the policy's effects on the port. The audit has been unable to determine the reasoning which underlay the Government's decision to change its policy or what alternatives were considered by the Governmeint before making the change.3/ It is not clear whether the Government's actions were based on 3/ The Region notes that reviews of fishing policies were undertaken by consultants for the Government from 1977-80, one of whom also assisted the Government in formulating a fishing policy. These studies should provide the necessary information on the reasons for the policy finally adopted in 1980. The audit has not been able to substantiate this. - 11 - protecting the resource from over fishing, or increasing the country's rev- enues from foreigners fishing in its waters, or on providing work and entre- preneurial opportunities for Mauricanians, or all three; nor is it clear which action was intended to serve what policy objective. These matters are considered at somewhat greater length in the Annex to this Memorandum. The audit notes, 1-Nwever, that a systematic analysis of policy alternatives at:.11 remains to be developed and particularly a set of realistic objectives for negotiations with major foreign fisheries enterprises wishing to operate in Mauritanian waters. III. PHYSICAL DESIGN OF PROJECT 24. Based on the traffic forecasts at preparation and appraisal and on the physical characteristics of the site, the port facilities built under the project are appropriate. As the PCR points out (paras. 3.02-3.04) there were design and construction flaws in the port but they have been corrected. The main result of the flaws was some schedule slippage and considerable cost overruns for the dredging. Indications are that the main fault for these problems lies with the design consultants, though some persons interviewed felt that the culpability of the design consultants should be mitigated because the level of funding was not sufficient to the task. In particular, the volume of rock to be dredged and the total dredging volume were grossly underestimated (PCR, para. 3.04), in large part because only two borings were carried out, a decision based on the morphology of the site and the limited funds available. The funding constraints were well known to the consultants before they started their work and therefore, they must bear significant re- sponsibility for the error. Additionally, the lack of provision for jointing material in concrete structures and apparently insufficient armor on the causeway appear to be design flaws that cannot be explained on the basis of limited design funds. 25. Discussions with fleet operators reveal no unusual operational pro- blems arising from the layout of facilities or the approach to the port, though the area near the lighter berth on the south side of the causeway can become extremely rough in some wind directions, apparently due to unforeseen diffraction effects. There have been some problems with berth congestion at the fishing berth recently, but these are related to the inappropriate use of the berths for dead storage of seized vessels rather than exceptionally heavy traffic or underdesign of the facilities. 26. The main operational problem that follows directly from the facility design relates to the relative lack of handling equipment for quickly and efficiently unloading frozen fish from the vessels and moving it to cold storage. In part, this lack of handling facilities arises from the greater emphasis on fish for meal and oil than was foreseen at the time of appraisal. Actual landings for meal and oil production have fallen to zero, and even though the levels of landings of frozen fish are still below appraisal projections, the facilities have proved inadequate. In the Nouadhibou climate and without cold storage, frozen fish can deteriorate in quality or spoil in a very short time. This is especially true of octopus - 12 - and the other cephalopods, and fleet operators have reported several instances of losses of these valuable cargoes due to excessive unrefrigerated storage and handling. The fact of these losses and the knowledge of the problem may have contributed to the poor reputation of Nouadhibou and has been a factor in holding port traffic down. 27. Outside the port itself, there are many elements of infrastructure that are missing or inadequate and these all contribute to the general unattractivess of Nouadbibou to the international fleet. Supplies and equipment are generally not readily available for either the vessels or their fishing gear. There are ship chandlers in the port area but they have extremely limited inventories and must specially order much of what the fleets need, acting more as freight forwarders than chandlers. Many items are brought in on an emergency basis by air with obvious increases in cost. Telex and telephone communication, both domestic and international, are difficult and expensive and internatLorial communications are simply aot possible for significant periods of the day. Banking facilities are also limited and not up to international standards. 28. Customs procedures were a major impediment to the development of the port at the time of appraisal and, while some improvements have been made since the expansion of the port, customs remains a major problem. Regulations are restrictive and import duties are viewed as excessive but the main area of complaint from port users is the inflexibility of customs personnel, the lack of cooperation and understanding of the needs of the users, and the capricious and sometimes harsh application of regulations. 29. Outside the port, the city of Vouadhibou, offers little or no attraction to the crews of fishing vessels and, as a result, the creurs pressure the owners to call at other more attractive ports such as Las Palmas and Dakar. Nouadhibou has only two small hotels and almost no recreational opportunities for the visiting crews. The appraisal correctly recognized the necessity of making a port at least tolerable if ot attractive to foreign, fishing crews and included a sailors' residential club Ln the project. While the Kuwait Fund provided finance for construction of the club, the project did not include the relatively modest funds needed to furnish and equip the facility nor did it include a plan for management and operation of the facility. Since appraisal the Association has attempted to assist the Government in finding funds to furnish the facility and an or8anization to manage and operate it, but those efforts have not beea successful. At the end of the project a Prench organization was discussing with the Government the terms of an agreement to operate the club, but to date the club has still not been opened. 30. Few foreign fishermen spend any time in Nouadhibou and thus the local economy gets none of the crew related benefits that have proved to be quite significant in other international fishing ports. Rany crews go directly from the fishing vessel to a chartered flight home or to a commercial flight to a recreation port such as Las PaInas or Bakar. Fishing and other ships' crews rarely even stay overnight in Nouadhibou itself, preferring to stay on board the vessels when they are in port. The older of the two hotels in the city is almost never full. The newer hotel averages - 13 - 50%-60% occupancy and is at full capacity only once or twice a month when the scheduling of a crew rotation charter flight requires overnighting in Nouadhibou. (At such times, the hotel is actually over capacity with crew members two or three to a room). Though current circumstances do not indicate a strong need for the sailors' residential club from a strict occupancy point of view, the audit concurs that the r'ecreational aspects of the facility could be a benefit to the port and every effort should be made to complete the facility and put it into operation. 31. Though the improvement of navigational aids that was envisioned under the project has not been accomplished, discussions with port users indicate that this has not of itself presented major impediments to using the port. The channel is broad and stable and relatively well known and the markers that were in place are thought to be adequate for those captains who have at least some familiarity with the port. The need for navigational aids for strangers, as recognized at the time of appraisa., remains unfulfilled and should be addressed by PAN. Near the port area and on the edges of the anchorage area there are a number of sunken derelicts of both recent and more remote origin and, while the majority are outside the port traffic lanes and unlikely to affect port operations, some are in locations that could constitute potential hazards to navigation. Whatever problems the derelicts represent, there are now no funds available to salvage them or remove them. IV. POTENTIAL MARKET AND PROJECT BENEFITS 32. The appraisal states (para. 2.06) that, although the waters off Mauritania are rich in marine resources, there were indications at the time of appraisal that these resources were being exploited at or near the maximum sustainable yield. (The maximum sustainable yield (MSY) of a fishery is the maximum catch per year that the stock can sustain over an extended period. It is essentially the level at which recruitment of young fish of catchable size, i.e. birth and growth, is balanced by the combination of capture by fishing vessels and natural mortality. The catch of fish per unit of fishing effort will rise to a maximum at MSY and then decline as the fishery is further exploited). Annex 2 of the Appraisal Report states that the resources are intensely exploited and gives specific examples in the 1972 catch figures. Therefore, at the time of appraisal it is clear that, in view of the level of exploitation of Mauritanian marine resources, the fishery derived benefits for this project would have to arise not from greater catch but only from a greater percentage of the same catch being landed at Nouadhibou as opposed to other ports such as Dakar or Las Palmas or as opposed to transshipment at sea. Studies carried out since appraisal have now indicated that over fishing was not such a problem as envisaged at that time. 33. In view of the foregoing, the question arises whether it was appropriate for the Association to fund a project that would have as a major goal direct competition with ports of other nearby Association members. The question is especially germane in the case of Dakar, located only 400 nautical miles from Nouadhibou. At the time of the issuance of the appraisal - 14 - report for this project, a similar project in Dakar (which eventually became. the Dakac Fishiug Port Project, Loan 1405-SE) had already been identified and was in the preappraisal phase. The appraisal mission for that project was in the field only six months after the issuance of the appraisal report for this project and was combined with a supervision mission for this project and most of the supervision missions for the Nouadhibou project were combined with missions for the Dakar project. The Association staff has pointed out that the object of the Dakar Project was not so much tu significantly increase landings of fish but to avoid the disturbance of cargo ships' operations by fishing vessels since the loading of fish was dispersed all over the commercial port; better berthing facilities were also provided for the fishing fleet. Nevertheless, it would have been apparent that the two projects were competing to a substantial extent for the same limited international group of fishermen. This raises the question whether it was reasonable for the Association to have funded both projecta unless it was quite sure that there were sufficient landings for both ports to operate at projected levels. The Association staff notes, however, that it could hardly refuse one country a port project on the ground that only the other country could have one. 34. A review of fish processing activi.ties described in Annex 2 of the Appraisal Report indicates that there were severe shoreside limitations on the expansion of Nouadhibou even if all investments were made as proposed under this project. For example: (a) The effective capacity of freezing plants was about 100 tons per day and, allowing for fluctuations in landings, that capacity was nearly fully utilized. (b) The fishmeal plants were working at a level close to full capacity during the catching season. (c) Ice production was a major bottleneck for the Russian trawlers that were already using Nouadhibou and the new plant was barely sufficient to cover the needs of the additional Russian trawlers that were being added to the Nouadhibou fleet. From these points it is clear that substantial additional shoreside investments, beyond those which were covered by this project, would be required if landings were to be substantially increased above 1972 levels. The absence of such facilities would have severely decreased the attraction of the port to international fishing operators, even after it had been expanded. 35. Unlike most other special purpose or entrepot ports, the traffic through an international fishing port bears little relation to the needs and consumption of the country in which the port is located or the hinterland it serves. Such a fishing port is not so much a terminal as a transshipment point. The amount of traffic the port sees will depend to a very large degree on the economic and operational advantages it offers over other nearby ports or high seas operations and government policy is extremely limited in the impact it can have on such port traffic. Domestic fleets can be forced - 15 - to use one port over another by governwent action, but international fleets can simply leave if government actions make a port economically or operationally unattractive. 36. There is little or no indication in the project files that the consultants, -he Government, or the Association conducted any analyses aimed at determining what the sufficient conditions for expansion of port traffic and port revenues might be. According to the Association's staff, in view of the expansion of shore facilities during the early 1970's by the fishing companies themselves, the appraisal team may have assumed that future expansion would also be done privately and that Government policy having been adequate to draw in private investment previously did not need to be analyzed or changed. The body of the Appraisal Report deals with the questions of increased future fish landings in a single qualitative paragraph (para. 5.05) which states that future landings will depend to a large degree on Government policy. In view o. the importance of Government policy to achieve targeted fish landings, this policy should have received more attention during project preparation and appraisal. 37. Despite the importance to fishing fleets of economic and operational factors when deciding whether to choose Nouadhibou over other fishing ports, there was little analysis of the cost structure, catch potential, cash flow, or market conditions faced by the various fleets that were operating or might operate in the waters off Mauritania. Without such analyses, neither the Association nor the Government could have any assurance that the traffic patterns assumed at the time of appraisal would ever develop. The analyses should have considered the options available to the fleets to land at Dakar or Las Palmas or to transship at sea; to fish in adjacent waters outside Mauritanian jurisdiction; or to operate in a different area entirely. Likewise, consideration should have been given to the current and projected market conditions for the various species that could be taken from Mauritanian waters. For example, the ability of the Japanese trawler fleet to operate in Mauritania is a function of, .mong other things, the wholesale price of octopus in Tokyo, the freight costs between Nouadhibou and Tokyo, fuel and crew costs, maintenance and other operating costs for the vessels, average catch per day, port charges, and license fees and royalties. According to Association staff, some of the shore data was collected and analyzed during appraisal, but little of this information was put into Association files. Given the importance of such analysis it would have been preferable to have included such analysis in the Appraisal Report showing a breakdown of the factors that were to attract international fishing fleets to land more fish at Nouadhibou. 38. While the inherent shortcomings of Nouadhibou were not adequately addressed in the project, it is possible that the port could have been a financial success anyway were it not for the effects of the Polisario War and the shift in Government policy towards foreign fleets referred to in para. 22. The Association clearly could not have foreseen nor played any role in the events that flowed from the Polisario War. In the case of Government fisheries policy, the near term results were a large drop in fish landings but the long term effects remain to be seen (para. 23). - 16 - 'V. USE OF PROJECT FACILITIES 39. As the PCR (para. 4.01) points out, the activities at the port in terms of both fishing traffic and commercial traffic have declined subtantially from the levels at the time of preparation and appraisal. Indeed, the data provided to the audit mission by PAN indicate that 1980 fish landings were less than was estimated by the PCR (23,000 tons reported versus 30,000 tons estimated) and the 1981 landings were lower yet at 19,000 tons (Table 3). General cargo traffic has also declined from levels that were being achieved at the time of appraisal (73,000 tons in 1981 versus 87,000 tons in 1973). Total ship calls declined from 3,047 in 1973 to 1,732 in 1980, but show a dramatic rise to 3,653 in 1981. The 1981 figure may be suspect, however, since it is inconsistent with the modest increase in the total of fish landings plus imports from 92,000 tons in 1980 to 112,000 tons in 1981. Other port data, including the tonnages of fish reported, suggest that the 1981 ship calls may include some calls to the anchorage area for transshipment only. 40. As Table 4 shows, the overall level of fish landings in 1981 stood at only 8% of the level forecast by the appraisal. A more detailed comparison with appraisal forecasts is not possible since the appraisal grouped all fish into three categories of demersal, pelagic, and fish for canning. The audit notes that this grouping in the Appraisal Report does not conform with categories which are analytically useful and accepted in the fisheries business since it does not take account of the relative economic importance of different species and different product forms. The iish exports reported by PAN and shown in Table 5 present a more encouraging picture in that fish exports as a percentage of forecasts seem to be rising in 1981. These data are not consistent with landing data, however, and it is possible that some flsh that are transshipped at sea or in the anchorage have been erroneously counted as handled in the port. 41. The overall results are clearly disappointing and indicate that, at least through 1981, the project has not been a success. The PCR notes two major factors that contributed to the reduced traffic volumes: (a) the problems associated with the Polisario War; and (b) "the considerable amount of time necessary for the formulation by the Government of an adequate fishing policy, and for implemen- tation of new fishing agreements." The audit concurs that these were the two major factors that contributed to the decline in traffic. The first factor is explained in para. 38 while the latter factors are discussed in paras. 22 and 23. 42. The PCR also mentions (para. 4.04) seven more specific reasons for the poor performance in fish landings, and several of these reasons merit further comment. - 17 - (a) The closure by the Government of the major fishmeal plant because of poor management and later delays in finding a new partner clearly contributed to the declines. The audit feels, however, that this problem could have been at least mitigated had the proj- ect included some provision for technical assistance and institutional development in fisheries rather than just in the area of port administration, even though there already were several technical assistance programs for fisheries financed by bilateral aid agencies. (b) The audit mission could find no evidence that fish processors with affiliated plants in Las Palmas were deliberately slowing activities at Nouadhibou, except insofar as Las Palmas offered economic and operational advantages. Nouadhibou, if it is to become a successful international fishing port , must compete freely in the market place and must offer prices, cubts, and services that will attract business. (c) Fish prices have been lower in Nouadhibou than in Las Palmas. This is not surprising in view of the higher costs of Nouadhibou processors, In addition, however, the Government has set some prices at lower than market levels and this policy has had a serious negative effect on fish landings. Fleet operators who have landed fish at these below market prices are forced to treat the difference between the market price and Lhe set price as a de facto license fee for fishing in Mauritanian waters. (d) The lack of workshops and repair facilities has been a factor, as has been mentioned in para. 14. (e) Excessive taxes and custom duties on spare parts and fishing equipment, as well as the manner of their application, have made the port unattractive, as indicated in para. 28. (f) Excessive prices for supplies raise the cost of doing business in Nouadhibou and make the port unattractive to fleets that have the option of going elsewhere. (g) The audit questions whether insufficievt control of territorial waters has been a major factor in reduced landings. Control of territorial waters is better now than at the time of appraisal and the Government has adopted the very effective tactic of outright seizure of vessels that violate Mauritanian territorial waters. Though the probability of capture is low because of the extent of Mauritanian waters and the very limited patrol capacity, the potential cost to an operator has been made unacceptably high. Though some violations do occur, it is the opinion of the audit that the extent of violations has not been a majoi factor in the decline in landing3. - 18 - VI. FINANCIAL PERFORMANCE OF PROJECT 43. Table 6 presents the recent balance sheets for the port in essentially the form in which the data were received from PAN. Some of the PAN data have been combined for brevity, and put in a more conventional format than the one used by PAN. It should be noted that PAN ca.ries the amounts lent under the Credit as long term debt. This is not consistent with the Appraisal Report or the Credit Agreement which both indicate that the new additions to the port under this project would be treated as a capital contribution by the Government. The income statements of Table 7 have also been adapted from data supplied by PAN and seem to indicate an operating surplus in all three years and a profit after depreciation in 1980 and 1981. However, these income statements show neither payment of dividends to the Gove-nment nor repayment of debt. 44. Table 8 shows the comparison of the appraisal estimates of balance sheets with actual performance. The actual performance data are drawn from current PAN reports but the data have been rearranged to conform to the format of Table 19 of the Appraisal Report for comparison purposes. In addition, the cost of the project, which is shown as long term debt in the PAN reports, is shown in Table 8 as part of the Government equity in conformance with the Credit Agreement. The data show that, while the balance sheet is not in a dangerous condition as of 1981, the current ratio and the liquid ratio are far below appraisal expectation. Current assets in 1979 and 1980 were less than half of appraisal estimates and current liabilities were nearly seven times these estimates in 1980. Of perhaps greater concern is the large and growing receivables account, of which almost all is attributable to SAMA (Societe d'Acconage et de Manutention de Mauritanie, the local stevedoring company). The financial health of SAMMA has been seriously affected by the fall of fish traffic and the postponement of the Guelba Iron Ore project. PAN must be aware of the possibility that its financial health may become too closely dependent on the financial condition of a single creditor over which it has inadequate control. 45. Table 9 shows the comparison of the income statements projected by the appraisal with the actual performance. For purposes of Table 9, the data have been rearranged to correspond to Table 18 of the Appraisal Report and the "actual" data have been modified to include several items which PAN does not currently carry (such as amortization of intangible assets, provision for doubtful debt, and dividends to the Government). When the data are presented in this manner, the port shows a loss for all three years reported here, though the loss in 1981 appears to be substantially less than in the earlier two years. The working and operating ratios are well above appraisal estimates and the other financial indicators are also below appraisal expectations. 46. The Borrower has not conformed with several financial covenants of the Credit Agreement. Section 3.07 of the Agreement provides for prompt transfer of project facilities and equipment to PAN and an increase in the capital of PAN corresponding to the cost of such facilities and equipment. According to the balance sheets provided to the audit mission by PAN, the - 19 - capital improvements covered by this project and the parallel and co-financing are still being carried as long term debt rather than equity. While this may be little more than an error in accounting procedure, nonetheless, it does mask the true condition of PAN and may lead to erroneous conclusions on the part of the port administration. 47. A more substantial instance of noncompliance exists in the case of Section 5.05 of the Credit Agreement, which calls for tariffs sufficient to cover all expenses and still achieve the rate of return defined by the Credit Agreement. Section 5.05 further states that PAN should consider its resulting competitive position compared to other ports, but without limitation on the requirement to cover expenses and meet the required rate of return. Inasmuch as the required rate of return has not been achieved, PAN is not meeting its obligation under Section 5.05. The audit questions the reasonableness of e covenant, however, in that it gives only secondary consideration to the competitive position of the port and to the fact that an international fishing port exists in a competitive market in which potential users have many alternatives available to them. Despite the second part of Section 5.05, the rate covenant could lead to the assumption that the demand curve for the port is inelastic or nearly so. While this may be approximately correct for a port which deals primarily with import or export cargo, it does not apply to an international fishing port dealing mainly in transshipment cargoes and facing a highly elastic demand curve in which port tariffs can be a major marginal cost component. Accordingly, the covenant of Section 5.05 might have been more reasonably stated in conjunction with some traffic goals. 48. In large part due to the fall in port traffic, the rates of return specified in Section 5.06 of the Credit Agreement have not been achieved and in view of the preceding paragraph, it is unlikely that the goals will be achieved in the immediate future. The rate of return was negative in 1979 and 1980 and rose to only 1.6% in 1981 versus the required 2.5%. Likewise the goal of a 30% working ratio has not been achieved. The actual working ratios recently have been 73% in 1979, 40% in 1980, and 36% in 1981. The trend in both cases is improving, though performance is still short of expectations. 49. Contrary to the covenant of Section 5.08, PAN has not distributed any profits to the Borrower. Indeed, there have been no profits to distribute and in any case the equity base on which profits would be computed is incorrect because the project costs are still being carried as debt rather than being converted to equity. VII. ECONOMIC PERFORMANCE OF PROJECT Fishing Berths 50. In Table 13 of the PCR it -ippears that the revised best estimate of the rate of return of the new fishing berths will be 28%. This calculation is based on the assumption that fish landings at the new berths, except for - 20 - the products for the fish meal plants, rise from nothing in 1981 and 1982 to 10,000 tons annually in 1983 and go up further to 50,000 by 1985 and continue thereafter at that volume. Such landings at the old berths were projected to rise concurrently from 15,000 tons in 1981, to 30,000 tons in 1982 and to 40.000 tons in 1983 and thereafter. The total of these landings was thus to rise from 15,000 tons in 1981, to 30,000 tons in 1982, to 50,000 tons in 1983 and to 90,000 tons in 1985 and thereafter. Actually such landings were about 11,000 tons in 1979, 5,000 tons in 1980 and 13,000 tons in 1981 and their historic high was 30,000 tons in 1974; no information is available on 1982 landings but it is unlikely that they reached the target of 30,000 tons. 51. Whether landings will rise in the future depends on whether the explicit and implicit costs of the licenses make the licensees' operation in Mauritania waters comparably attractive to fishing opportunities elsewhere in the world. A reduction in the costs Mauritania imposes on the licensees would likely help increase landings but the benefits to Mauritania would correspondingly also be reduced (for instance, reduced license fees, reduced employment, etc.). The PCR does not permit an evaluation of this trade-off. Unfortunately no specific study has been carried out on when the license conditions would become sufficiently attractive to regenerate the level of landings. Such an analysis not only would be needed to recalculate the ERR but to establish when the fisheries facilities at Nouadhibou would return to their appropriate level of use. The Government would be well advised to make and keep up-to-date such an analysis for these purposes as well as for general guidance of its fisheries policy. 52. The bulk of the benefits from the fishing berths, both in the appraisal and the PCR, is represented by landings of octopus. According to Table 12 of the PCR, more than half of the octopus related benefits are based on the profit from the sale of the product and most of the rest on a percentage of the export price. The price of the octopus thus is crucial to the generation of benefits; if, for instance, the price falls by US$350 per ton or more there will be no profit. The PCR uses a price of $2,500 per ton, based on prices quoted in France. However, most of the world consunption of octopus -t in Japan and other East Asian countries (about 75% of world total) and most of the Mauritanian octopus is frozen and destined for this market while France only consumes less than 2% of the world total. The CIF prices per ton of frozen octopus in Tokyo was US$1,375 in October 1982, the average for all of 1982 was US$1,437 and the recent historic high in this market was about US$2,500. If CIF charges are deducted, the price for octopus exported from Nouadhibou is correspondingly lower. Similarly, the PCR assumes a price for other demersal fish, frozen and ready to export from Nouadhibou, equal to US$1,250 per ton. If this price is put in perspective against world prices of related marine products, the price on the East Coast of the United States, for example, for headed and gutted demersal species in October 1982 was US$800 to 900 per ton. If allowance is made for loss of weight in heading and gutting and for processing and delivery costs, the corresponding price in Nouadhibou would be only about US$400 per ton. 53. If these lower prices are used for the calculation shown in Table 12, most of the benefits in that table would disappear and the r.ca based on these lesser benefits would be greatly reduced. The price - which the - 21 - Nouadhibou plants could operate profitably is not known. In any event, if prices are lower, the volume of landings becomes far more important in determining the ERR of the project. As indicated above, landings are currently very low and the time and conditions when landings will regenerate are uncertain and, therefore, the benefits are equally undetermined. In particular, the audit cannot substantiate when incremental landings could be attributed to this project. Under these circumstances, the audit is unable to establish a reevaluated ERR for the fishing berths. Commercial Port 54. The benefits for the commercial port will also be reduced due to reduced fish traffic, though it is not possible to state quantitatively what the reduction will be. The data presented in Tables 10 and 14 of the PCR and the notes in Table 14 do not appear to be consistent and do not permit a detailed analysis. However, in the absence of alternacive data, the audit accepts the PCR ERR for the commercial berths. Total Project 55. The appraisal projected an ERR for the project as a whole (both fishing and commercial berths) of 26%. In view of the problems noted above, the audit is unable to recalculate this ERR but it will very likely be greatly reduced. The audit notes the decisive effect of fish prices on the ERR in this case, an effect which was not fully brought out in the PCR's sensitivity analysis. To be most useful sensitivity analysis needs to concentrate on the most critical input variables of a project. The PCR (para. 6.12) concluded that the ERR is more sensitive to the level of future benefits accruing to Mauritania per ton exported rather than the volume of fish landings. The audit disagrees with this consideration and believcsr that other variables such as fish prices are far more important, given the interrelationships of fish prices, fish landings, and fish plant profit levels. VIII. CONCLUSIONS 56. At the time of appraisal, the port of Nouadhibou was nearly fully utilized by foreign fleets then fishing in Mauritanian waters. The project proposed an expanded fishing port with ancillary facilities designed to service substantially increased fish landings. After some difficulties arising from a large underestimate in dredging volumes, an expanded port has been built at a total project cost that is slightly below appraisal estimates. The cost overrun in the dredging component was covered by a combination of a reduction in dredged depth, savings and cancellations in other project components, and application of physical and price contingencies. However, utilization of the port is presently greatly below expectations and economic and financial performance are substantially below projections. - 22 - 57. Development of port activities was seriously hindered by the Polisario War and the associated economic, political, and commercial dislocations. The war could not be foreseen at the time of appraisal and it is unlikely that any efforts by the Association could have mitigated the effects of the war on the port. Hostilities have ceased and no longer are a factor in port performance. However, activities at the port, even in the post-war era, are substantially below both actual levels and projections at appraisal. In 1981, fish landings stood at 8% of the tonnage projected by the Appraisal Report for 1981 and also greatly below actual landings at the time of appraisal. General cargo imports stood at 49% of projected levels in 1981 and at 83% of the 1973 level. 58. The present continued low volume of fish landings is due primarily to the major change in fisheries policy that was promulgated in 1979. All fishing rights were cancelled and the Government has since attempted to negotiate new agreements based on joint ventures and shore based processing. As a result, several operators have withdrawn from Mauritanian waters. While the new policy is still evolving and has had some short term benefits, it is unclear whether the policy will be a long term success. Unless and until it is, the port of Nouadhibou will continue to perform at a fraction of projected levels. The Association's role was either passive acceptance or an active encouragement of the new policy. Neither role was appropriate in view of the lack of analysis of the implications of the policy change for the performance of this project.4/ With completion of the project the Association's opportunity to contribute to policy development and to the successful outcome of the project has become more limited. However, the Mauritania (Second) Technical Assistance Credit (Credit 1292 of September 1982) provides for financing technical assistance in the industry and fisheries sectors, which can include a review of future fisheries policy if considered necessary. 59. The financial performance of the port falls short of appraisal projections, though not as seriously as in the case of fish landings. When presented consistently with the Appraisal Report, financial reports of PAN show a loss for all three most recent years, though 1981 indicates an improving trend. The Borrower did not conform with several covenants of the Credit Agreement; however, market factors limit the actions it can take to correct the situation. Additional increases in tariff levels in order to raise more revenue could further reduce traffic levels and total revenue. 60. The success of the port through increased fish landings was predicated on diversion of fish traffic to Nouadhibou from Las Palmas or Dakar or from transshipment operations at sea rather than on increased catches from an already fully exploited resource. There was no financial analysis of fishing fleet operations to determine whether this diversion would occur and, in the case of Las Palmas and Dakar, the audit questions whether the Association gave sufficient consideration to the competing interests of these ports. Such a question may be especially germane in the 4/ The Region notes that several studies prior to adoption of the policy provided the necessary analysis. - 23 - case of Dakar in view of the concurrent fishing port project (Loan 1405-SEN). 61. Several significant failings occurred during project appraisal, all relating to the fact that construction of an expanded port was a necessary but not on itt own sufficient condition for the growth of the fisheries sector in Mauritania. These included: - the appraisal projections of growth in fish landings and other cargo movements through the port of Nouadhibou were drawn mainly from the feasibility study and were primarily based on the availability of fish and the goals and intentions of the Government Insufficient attention was given to financial and operational needs of the intended port users. According to the Association staff this is because they observed the rapid increase of use by the international fleets and concluded that this would continue and because they were unable to obtain data on fishing fleet operations and costs; - the design of the project included the removal of the only repair facility in the port and funds for technical assistance to prepare a feasibility study for a new and larger ship repair yard; the project included no funds to build the new facility and it has not been built. The failure to provide an operating repair yard seriously detracts from the usefulness and drawing power of the harbor; - the economic analysis of the project showed that the economic return of the project was relatively insensitive to variations in underlying assumptions. However, sensitivity analysis of global variables obscured the effect of those variables that were both most uncertain and most likely to affect port traffic and revenues such as fish prices; - all of the institutional and organizational goals of the project were directed towards port finance and administration to the detriment of fisheries policy development and fisheries institution building. In retrospect, more emphasis should have been put on the development of a coherent fisheries policy and an institutional structure to implement it; - weaknesses in the infrastructure and ancillary facilities available at Nouadhibou have contributed to the poor performance of the port, both before and since this project. In addition to repair facilities, problem areas include supplies, communications, banking, and crew recreation. Cumbersome and inflexible customs and immigration procedures have also served to make the port relatively unattractive to potential users; - 24 - - the Appraisal Report indicated the need for substantial investment in shoreside facilities by private or public Mauritanian investors or foreign investors if the port were to achieve the projected levels of traffic. However, the project provided no funds or the promise of funds for such investments. Association staff indicated that they had relied on the private sector which had made the necessary investments near the port during the years before the project; and - some of the failings may be explained by the fact that the project was appraised and supervised by a ports division with limited knowledge of fisheries operations. This meant that Association staff were somewhat limited in their ability to evaluate the analysis provided by outside experts and this contributed to the weaknesses in project design and economic analysis. This raises the issue as to how fisheries projezts can most suitably be handled by the Bank Group, how such operations are best staffed, and how various units in the Bank Group may best collaborate on such projects. 62. While the project achieved its physical objectives, it has not succeeded so far as an economic venture. The experience demonstrates the need for a thorough analysis of all systems affecting a project and of designing policies and facilities to conform to the potential market. - 25 - ANNEX Page 1 PROJECT PERFORMANCE AUDIT MEMORANDUM MAURITANIA - NOUADHIBOU FISHING PORT PROJECT (CREDIT 588-MAU) OBSERVATIONS ON MAURITANIA'S FISHERIES POLICY Fisheries by local persons fully occupied in that trade off the Mauritania coast have been limited to a small group of Imraguen fishermen (presently about 500) and to a few immigrants from Senegal and Benin. Since 1965, there has also been fishing by Societe Mauritan.enne d'Armement a la Peche, a mixed Mauritanian company and, more recently, by some other vessels owned by Mauritanian investors. Foreign fishermen have been operating in these waters since the end of the 19th century. However, except for a small salt and dried fish operation, foreign fisheries related business began in Mauritania only in 1965. Some dozen processing facilities were established at Nouadhibou between 1965 and appraisal of the Nouadhibou port project, in- cluding several with Mauritanian private or public participation. As a result of bankruptcies and reorganizations this number was considerably reduced by the time of appraisal and was then estimated to have an annual processing capacity (drying, freezing, meal production) of about 140,000 tons. As indicated in the Appraisal Report, the Government's fisheries policy had the following four objectives: (a) protect the resource; (b) develop the national fishing fleet; (c) encourage the foreign fleets to land their catch at Nouadhibou to supply the local procesEing plants; and (d) improve facilities at Nouadhibou to attract more foreign fishermen. The size of the resource had been variously estimtated and it is not clear whether estimates were based only on catches in territorial waters (extended in 1972 to 30 miles off shore) or whether catches were at or below maximum sustainable yield (MSY) levels. Reliable estimates of the actual size and seasonal location of the resource are of considerable importance, since the potential source of raw materials for Nouadhibou's processing plants and port services extend well beyond Mauritania's waters and is delineated primarily by economic considerations. The appraisal mentioned annual catches of some 0.5 million tons of demersal and 1.0 million tons of pelagic fish in the waters of the continental shelf, reaching about 130 km offshore at Nouadhibou and a lesser distance further south. The appraisal report suggests that this - 26 - Page 2 is close to HSY but several subsequent studies consider the MSY level for all species to be considerably less, of the order of 800,000 tons per year. The appraisal placed no value on this 1.5 million tons of fish but it is clear that the per ton value ex vessel ranges widely and includes large amounts worth as little as US$35 per ton and certainly the average value is much below US$1,000 per ton equivalent mentioned in a number of reports. Annual landings of fish for processing at Nouadhibou were about 80,000 tons at the time of appraisal and for reshipment (that is frozen at sea and transferred to carriers at Nouadhibou) about 25,000 tons. Landings thus were greatly below reported catches and also below the capacity of processing facilities. The Government's policy at appraisal was to require licenses to fish within Mauritania's waters. Such licenses required payment of fees (whose annual volume was then about US$5 million equivalent) and in some cases other conditions such as employment of some Kauritanian sailors in the licensee's vessels or landing of specified volumes of catches at Nouadhibou to supply to processing plants. The licensing system thus was used to implement points (b)and (c) of the Government's policy. Other conditions agreed with foreign fishing fleets included assistance for the fisheries laboratory, construction of a fishing complex and training school, and assistance to the artisanal fishing sector. The appraisal made only limited references to the Government's policy but the project was undoubtedly designed to implement points (c) and (d) of that policy: (i) the main investment under the project was extension of the landing quay to overcome congestion of existing facilities and thus permit greater landings for better supply to the processing plants and increased usage of the port for transshipment; (ii) other investments such as the sailor's club and technical assistance in operations were to make the port more attractive to fishermen. It is thus apparent that the project, though nominally a port project, was wholly tied to the economics of the fishing fleets and fisheries enterprises operating in Mauritania. The project design does not appear to make any direct contribution to points (a) and (b) of the Government's policy. In fact, it could be argued that if overfishing was indeed a problem, the project objectives might be considered neutral, if not undesirable, in relation to conservation. The subsequent change in Government fisberies policy retained the licensing system but greatly increased the fishing area to which it would be applicable and the costs which would be incurred. In addition, licensees were subject to new and much more burdensome conditions, particularly the obligation to invest in processing plants. Although reports spoke of pillage of Mauritania's resources, it is not clear whether the main concern was conservation, of the resource or enhanced receipts to the country. Measures to be adopted would be quite different depending on the circumstances. In either case a prerequisite for effective polLcy formulation would be a cow- prehensive and detailed analysis of the operational characteristics, costs and profit opportunities of the fleets frequenting Mauritanian waters and the fisheries enterprises which operated these fleets and the processing plants - 27 - ANNEX Page 3 in Nouadhibou. Such an analysis is still needed now and must be continued indefinitely as long as the Government chooses to rely on detailed negotia- tions with individual fisheries operators. The analysis needs also to consider whet'er the licensing system can feasibly serve several policy objectives at once, whether investment programs in processing plants need not be designed on the basis of inherent profitability rather than assigned markets resulting from fishing licenses, and whether some objectives such as conservation do not require separate implementing programs. - 28 - TABLE 1 PROJECT PERFORMANCE AUDIT MEMORANDUM MAURITANIA - NOUADRIBOU FISHING PORT PROJECT (CREDIT 588-MAU) Ship Calls at Nouadhibou 1980 1981 Fishing Vessels 1,602 3,495 Cargo Vessels 98 128 Others 32 30 Total 1,732 3,653 Source: PAN - 29 - TABLE 2 PROJECT PERFORMANCE AUDIT MEMORANDUM MAURITANIA - NOUADRIBOU FISHING PORT PROJECT (CREDIT 588-MAU) Transshipment in Anchorage 1979 1980 1981 Metric Tons of Fish 21,311 64,994 85,792 Source: PAN - 30 - TABLE 3 PROJECT PERFORMANCE AUDIT MEMORANDUM MAURITANIA - NOUADHIBOU FISHING PORT PROJECT (CREDIT 588-MAU) Cargo Discharges in Nouadhibou (Metric Tons) 1979 1980 1981 General Railway Equipment 4,045 17,069 6,559 Construction Material 9,345 10,891 23,193 Mineral Oils 3,338 5,127 3,736 Gas 570 223 582 Foodstuffs 16,508 23,011 21,725 Chemical Products 5,292 3,802 2,281 Miscellaneous 9,030 9,102 15,498 General Cargo Total 48,128 69,225 73,574 Fish Octopus 5,002 1,711 5,173 Squid 131 120 175 Cuttlefish 549 632 832 Misc. for Freezing 5,630 2,873 6,469 Fish subtotal 11,312 5,336 12,649 Misc. for Fishmeal/a 42,322 18,000 6,039 Fish total 53,634 23,336 18,688 /a Imapec fishmeal plant closed December 1979. Comapop fishmeal plant closed September 1981. Source: PAN -1- TABLE 4 PROJECT PERFORMANCE AUDIT MEMORANDUM MAURITANIt - NOUADHIBOU FI1HING PORT PROJECT (CREDIT 588-MAU) Import Traffic Comparison ('000 Metric Tons) 1979 1980 1981 Forecast Actual Forecast Actual Forecast Actual Railway Equipment 30 4 30 17 30 7 Construction Material - 9 - 11 35 23 Oil and Gas - 4 - 5 - 4 Foodstuffs 35 17 41 23 46 22 New Industries 21 - 23 - 26 - Chemical Products - 5 - 4 - 2 Miscellaneous 10 9 12 9 13 15 Total Gen. Cargo 96 48 106 69 150 73 % of Forecast 50 65 49 Fish Landings: Octopus /a 5.0 /a 1.7 /a 5.2 Squid /a 0.1 /a 0.1 /a 0.2 Cuttlefish /a 0.5 /a 0.6 /a o.8 14isc. Foodfish /a 5.6 /a 2.9 /a 6.5 Subtotal 11.2 5.3 12 ' Rise. Meal Fish /a 42.3 /a 18.0 /a 6.0 Demersal 64 /a 65 /a 65 /a Pelagic 150 /a 153 /a 156 /a Fish for Canning 7 /a 7 /a 7 /a Total Fish 221 53.5 225 23.3 228 18.7 % of Forecast 24% 10% 8% la Data not shown because of different grouping in the two sour:es. Source: Forecasts - .Appraisal Report Actuals - PAN - 32 - TABLE 5 PROJECT PERFORMANCE AUDIT MEMORANDUM MAURITANIA - NOUADRIBOU FISHING PORT PROJECT (CREDIT 588-MAU) Fish Export Comparison ('000 Metric Tons) 1979 1980 1981 Forecast Actual /a Forecast Actual /a Forecast Actual /a Frozen Fish 59 14.2/b 70 8.2/b 72 53.0/b Fishmeal 29 7.5 32 5.6 32 0.7 Dried, Salted Fish 5 0.3 5 0.4 6 0.6 Oil 7 0.0 8 0.0 8 0.0 Canned 3 0.0 4 0.0 4 0.0 Totals 103 22.0 119 14.2 122 54.3 % of Forecast 21% 12% 45% /a Annual data prorated from data for first nine months of each year. /b The data for actual frozen fish exports are inconsistent with landing data and appear to include a substantial portion of the fish that was transshipped at the anchorage without being landed in the port. Official PAN data for transshipment are: 1979, 21,300 tons; 1980, 65,000 tons; 1981, 85,800 tons. If the above frozen fish export figures are replaced by actual landings of foodfish, the total landings as percentage of forecast become: 1979, 18%; 1980, 9%; 1981, 11%. Source: Forecasts - Appraisal Report Actuals - Unpublished data of Ministry of Fishing - 33 - TABLE 6 PROJECT PERFORMANCE AUDIT MEMORANDUM MAURITANIA - NOUADHIBOU FISHING PORT PROJECT (CREDIT 588-MAU) Balance Sheets (000's of Ouguiyas) Assets 1979 1980 1981 Cash 10 54 54 Bank Deposits 23,308 70,833 92,968 Accounts Receivable 41,593 33,048 66,238 Prepaid Expenses 218 5,259 4,801 Accrued Income 4,086 1,744 1,343 Loans and Advances 75 - 2,239 Security Deposits 72 72 72 Total Short-Term 69,361 111,010 167,715 Land 18,000 18,000 18,000 Buildings & Civil Works (Net of Depreciation) 1,061,477 1,110,769 1,085,100 Marine & Transport Equip. (Net of Depreciation) 26,726 31,769 36,072 Furniture & Equip. (Net of Depreciation) 4,508 4,324 4,166 Misc. Fixed Assets (Net of Depreciation) 48,520 47,281 41,097 SAMMA Equipment 6,017 6,017 6,017 Total Long-Term 1,165,248 1,218,160 1,190,452 Total Assets 1,234,610 1,329,170 1,358,167 Liabilities & Equity Accounts Payable 5,079 7,234 9,020 Long-Term Debt 1,084,940 1,171,855 1,171,855 Statutory Reserves 19,300 19,300 19,300 Retained Earnings (Accumulated Losses) (6,540) (1,050) 26,261 Paid In Capital 130,226 130,226 130,226 Other Capital Contrib. 1,605 1,605 1,605 Total Liabilities & Equity 1,234,610 1,329,170 1,358,167 - 34 - TABLE 7 PROJECT PERFORMANCE AUDIT MEMORANDUM MAURITANIA - NOUADHIBOU FISHING PORT PROJECT (CREDIT 588-MAU) Income Statements (000's of Ouguiyas) Operating Revenue 1979 1980 1981 Rent from SAMMA 18,000 18,000 18,000 Other Rents & Services 5,272 5,504 10,525 Port Charges on: General Merchandise 3,400 7,956 8,155 Fresh Fish Landings 2,104 866 1,658 Fish Exports 1,821 5,877 5,908 Wharfage 6,464 15,462 30,100 Transship,ment 831 5,629 8,021 Utilities, ice, fuel, misc. 1,426 2,759 10,302 Interest Income 2,031 2,490 6,880 Total Revenues 41,349 64,543 99,549 Operating Expenses Staff 10,986 10,914 15,512 Maintenance 4,598 3,230 5,088 Fuel, Stores & Utilities 6,430 7,259 9,256 Taxes & Bank Charges 4,314 594 791 Misc. Management & Travel 2,206 2,707 2,675 Total Operating Expenses 28,534 24,704 33,322 Net Operating Surplus 12,815 39,839 66,227 Depreciation 34,927 35,772 37,382 Profit/(Loss) (22,112) 4,067 28,845 Source: PAN - 35 - TABLE 8 PROJECT PERFORMANCE AUDIT MEMORANDUM MAURITANIA - NOUADHIBOU FISHING PORT PROJECT (CREDIT 588-MAU) Comparative Income Statements (000's Ouguiyas) 1979 1980 1981 Operating Revenue Forecast Actual Forecast Actual Actual Wharfage on: Fish Landings 6,840 2,104 7,590 866 1,658 Fish Exports 5,150 1,821 5,900 5,877 5,908 General Cargo 4,560 3,400 5,080 7,956 8,155 Transshipment 2,700 - 3,000 - - Dues on Vessels 5,530 6,404 5,950 15,462 30,100 Rents 18,000 18,000 18,000 18,000 18,000 Utilities & Supplies 3,600 1,426 3,940 2,759 10,302 Additional Revenue 28,000 5,272 31,000 5,504 10,525 Total 75,420 39,318 81,530 62,053 92,669 Operating Expenses Staff 5,357 10,986 5,893 10,914 15,512 Maintenance 4,147 4,598 4,977 3,230 5,088 Fuel, Stores, Utilities 5,266 6,430 6,172 7,259 9,256 Miscellaneous 2,196 2,206 2,416 2,707 2,675 Taxes & Bank Charges - 4,314 - 594 791 Cash expense total 16,966 28,534 19,458 24,704 33,322 Depreciation 27,918 34,927 27,978 35,772 37,382 Amortization of Intangible Assets 2,870 2,870/a 2,870 2,870/a 2,870/a Provision for Doubtful Debts 150 150 /a 150 150 la 150 /a Total 47,9O4 66,481 50,456 63,496 73,724 Net Operating Income (deficit) 27,516 (27,163) 31,074 (1,443) 18,945 Interest Revenue 8,690 2,031 10,725 2,490 6,880 Other Revenue 276 - 276 - - Dividend to Government 31,101 31,101 /a 31_$101 31,101 /a 31,101 fa (22,135) (29,070) (20,100) (28,611) (24,221) Net Income (deficit) 5,381 (56,233) 10,974 (30,054) (5,276) - 36 - Table 8: Comparative Income Statements (cont.) 1979 1980 1981 Forecast Actual Forecast Actual Actual Working Ratio % 23 73 24 40 36 Operating Ratio % 63 169 62 102 80 Average Net Value of Financial Assets in Use 923,109 1,191,704 884,623 1,204,306 1,190,452 Turnover 8 3.3 9 5.2 7.8 Return on Assets % 3.0 '0 3.5 -0 1.6 Dividend Covered by Operating Revenue 0.88 '0 1.00 *0 0.61 /a Items not carried in PAN accounts but included here for accuracy and consistency with Appraisal Report. Source: Forecasts - Appraisal Report Actuals - PAR - 37 - TABLE r PROJECT PERFORMANCE AUDIT MEMORANDUN MAURITANIA - NOUADBIBOU FISHING PORT PROJECT (CREDIT 588-MAU) Comparative Balance Sheets (000's Ouguiyas) 1979 1980 1981 Assets Forecast Actual Forecast Actual Actual Fixed Assets Land 144,500 18,000 144,500 18,000 18,000 Net Depreciable Assets 765,050 1,141,231 737,572 1,194,143 1,166,435 Net Fixed Assets in Use 909,550 1,159,231 882,072 1,212,143 1,184,435 Current Assets Cash at Bank & on Hand 180,345 23,318 221,807 70,889 93,022 Receivables & Pre- payments 3,200 41,811 3,000 38,307 71,039 Inventories 140 - 150 - - Others 15 4P233 15 1,816 3,654 Total 183,700 69,362 224,972 111,012 167,715 Current Liabilities Payables 225 5,079 225 7,234 9,020 Provisions 915 - 865 - - Total 1,140 5,079 1,090 7,234 9,020 Net Current Assets 182,560 64,283 223,882 103,778 158,695 Intangible Assets 21,525 - 18,655 - - Investment in SAMMA 6,017 6,017 6,017 6,017 6,017 Total Net Assets 1,119,652 1,229,531 1,130,626 1,321,938 1,349,147 - 38 - Table 9: Comparative Balance Sheets (cont.) Capital and 1979 1980 1981 Liabilities Forecast Actual Forecast Actual Actual Equity Equivalent Government 1,036,710 1,216,771 1,036,710 1,303,686 1,303,686 Reserves & Returned Earnings 82,942 12,760 93,9L6 18,250 45,461 1,119,652 1,229,531 1,130,626 1,321,936 1,349,147 Current Assets/Current Liabilities 161.1 13.7 206.4 15.3 18.6 Liquid Assets/Current Liabilities 161.0 12.8 206.2 15.1 18.2 Source: Forecasts - Appraisal Report Actuals - PAN - 39 - ATTACHMENT TRANSLATION JULY 17, 1983 MINISTRY OF FISHING AND MARITIME ECONOMY NOUAKCHOTT SHIV S. KAPUR DIRECTOR OPERATIONS EVALUATION DEPARTMENT 1818 H STREET NW WAHSINGTON DC 20433 TO NR 7001/MAEC DU 16/7/83 STOP WITH REFERENCE TO THE PROJECT PERFORMANCE AUDIT REPORT DATED JUNE 15, 1983, I HAVE THE HONOR TO INFORM YOU THAT THE REPORT DOES NOT REQUIRE ANY FUNDAMENTAL COMMENTS. HOWEVER, THE DRAFT REPORT DOES NOT TAKE ACCOUNT OF THE IMPLICATIONS OF THE LANDING [OF FISH] WHICH WAS DECIDED BY THE NATIONAL DIRECTORATE AND ITS IMPACT ON THE INCREASE OF PORT TRAFFIC IN REGARD PARTICULARLY TO THE STATISTICS OF FISH [LANDING] AND THEIR FORECASTS. IF YOU NEED FURTHiER DETAILS, SOME SUGGESTION COULD BE GIVEN YOU LATER. (UNSIGNED] ータ乞、一 メ乙32的cさ24加グ - 41 ISLAMIC REPU31,TC OF MAURITANIA NOUADHTBOU PORT PROJECT (Credit 588 NAU) PROJECT COMPLETION REPORT I. Introduction 1.01 Nouadhibou, Mauritania's only deep-water port for commercial and fishing activities, lies on the inside of a peninsula jutting southward into the Atlantic Ocean; it is well protected from the prevailing trade winds blowing froin the -north. Another port, Point Central, is located 10kni south of Nouadbibou on the inside of the peninsula but is used P clusively for export- ing iron ore. Thus all regional imports and other exports (mainly fisn products) must pass thritigh Nouadb'bou. The country's only other port is at Nouakchott, where a new port is currently under construction. (See Map No. IBRD 1109 IRI (PCR)). 1.02 Because of favorable oceanographic conditions, fish are abundant along the northwest coast of Africa, particularly oEf the coast of Mauritania. Mauritania's exclusive economic zone now extends to 200 miles, and cover the entire area over the adjacent continental shelf. In 1978 about 560 foreign fishing vessels were operating in Mauritanian waters; total catches of these fleets were estimated at about 1.2 million tons of Eish with a commercial value of about US$l billion. The catches are generally landed in Nouadhibou, the Canary Islands, and Senegal or transshiped at sea in reefers to be directly sbi.pped to the importing countries. Since Nauritania has few fisher- men and the domestic market for fish is very small, the opportunity for the development of fisheries lies mainly in processing and preparing for export the fish caught in its waters. The fish-processing industry developed in the early 1960s, following agreements signed with foreign fishing companies which were expected to land part of their catches in Wouadbibou. The growth of the sector was relatively high during the early 1970's (para. 6.02). However, poor administration of the sector combined with insufficient port facilities, including inadequate fishing berths, weal-, port management and inadequate con- trol of fishing in Mauritanian waters kept Mauritania from reaping the full expected benefits from its proximity to fish resources. 1.03 The Bank Group has lent Mauritania to date a total of US$194 mil- lion. of thisf US$20,7 million was used for infrastructure projects including one road construction project, two highway maintenance projects and the pre- sent port project. 11. Project Preparation and Appraisal 2.01 In 1971, the Government of Mauritania asked the Association to help finince a project to expand Nouadhibou's fishing port facilities to accom- modate increased fish landings. Thereafter, French consultants with financ- - 42 - ing from Fonds d'Aide et de Cooperation (FAC, France) carried out a feasibil- ity study in 1972/73. The consultants' plan called for a breakwater to protect fishing berths from strong east winds, extension of the commercial and fishing berths, and replacement of the existing, inadequate approachway to the commercial berth. This plan was found to be too elaborate and economi- cally unsupportive and, therefore, the breakwater was dropped and the size of the overall project reduced. It was on the basis of this changed plan that the project was appraised in March 1974. Negotiations took plac- in November 1974, board presentation in October 1975 and credit effectiveness in June 1976 (delayed by cross effectiveness condtions between co-donors). 2.02 Total project costs were estimated at US$27.55 million equivalent (including taxes) with foreign exchange costs of US$18.09 million, or about 65%. The Association provided a credit of US$8.0 million. Joint and parallel finnncing was provided by two co-donors and the Government (para. 3.18). 2.03 The port of Nouadhibou was a part of the hinistry of Equipment until 1973 when, at the suggetion of the Association's identification mission, the Port Autonome de Nouadbibou (PAN) was established as an autonomous public body with authority for planning, building and operating all port facilities. As agreed with the Association, the Government amended port legislation in early 1975 to strengthen PAN and to establish a sound financial organization. At appraisal, it was apparent that the new organization's staff lacked experi- ence and needed training and that its accounting and financial systems needed to be reorganized, and the project included technical assistance for these purposes. For its part, the Government was to provide a full-time port director. 2.04 Major covenants called for PAN to earn an annual rate of return of not less than 6% up to FY1977 and not less than 2.5% thereafter, maintain a working ratio of not more than 35% in FYs1975-76 and 30% in FY1977 and thereafter, and pay to the Government a dividend of at least 3% p.a. on its total equity starting from FY1977. PAN was also required to implement an agreed plan of action and to arrange finalization of a master plan for the development of the port with the help of consultants. The Annex shows the stacus of compliance. III. Project Implementation and Cost 1. The Project 3.01 As approved by the Association, the project consisted of the fol- lowing: (i) Civil Engineering Works (a) Construction of an extension to the fishing berth (300 m) and the general cargo berth (48 m), replacement of the approachway to the commercial berth, and associated dredging works. - 43 - (b) Ionstruction of a sewerage system and treatment plant for the industrial fishing plants and other buildings within the port area. (c) Construction of administrative buildings for PAN, an office for the harbornaster, a police and health station, a sailors' residential club and three houses for port officers. (d) Consulting services for supervision of construction for the above works. (ii) Equipment (a) Procurement of a harbornabrers' launch. (b) Procurement of equipment for maintenance of naN;gational aids (buoys, lights and lighthouses). (iii) Technical Assistance (a) Expert services to assist PAN in port administration, in accounting and finance, and in the study and reorganiza- tion of pott operations. (b) Preparation of a feasibility study for a small ship repair facility. (c) Training of port personnel in foreign fishing ports. The project was scheduled for completion by the middle of 1978. 2. Implementation A. Civil Engineering Works (i) Marine Works 3.02 The marine works started ahead of schedule and were substantially completed in November 1977. Construction encountered certain difficulties as is normally the case during execution of port projects of this magnitude. The extensions to the fishing and general cargo berths were carried out satisfactorily, and were put into use immediately on completion. However, because no jointing material was provided for in part of the precast concrete superstructure of the commercial berth extension, sand fill slowly leached out from beneath the berth surfacing as a result of swell and tidal action. Thus, a series of depressions appeared in about two-thirds of the surface area. Although the contractor was not convinced that he was liable for making repairs, he carried them out appropriately. The borrower, assisted by the supervising consultants, and the contractor have exchanged letters on this subject and are continuing to do so. Following the last set of repairs carried out by the contractor, the problem has not worsened for several months. - 44 - 3.03 The old piled approachway was replaced by a new causeway capable of carrying considerably heavier loads. Shortly after its completion, it was damaged by a storm (December 25, 1977), unusual in its direction and inten- sity. Some of the finer elements of the core fill leached out and certain parts of the causeway surface subsided. The contractor made the necessary repairs quickly. The supervising consultants advised that heavier rock armor should be placed on the slope. This was done to the southeast corner of the causeway (at PAN's expense) and there have been no further problems. 3.04 Because of the limited funds made available to the design con- sultants, only two borings were carried out in the area to be dredged for the extension to the fishing berth. Both borings indicated that the rock was below the -6m dredging depth level and implied that the area was easily dredgeable. Rock was reported only at the commercial berth dredging area. The result was that the volume of rock to be dredged, as well as the total volume of dredging was grossIf underestimfted. The volume of rock to be dredged increased from 18,000 m to 80,200 m , while part of the fishing berth was dredged to -5 m instead of -6 m. The cost overrun f-om the additional dredging was financed by re-distributing the available funds. 3.05 Since the dredging works were well ahead of schedule, no extension of the contract period was necessary. In addition, the sub-contractor had adequate equipment on site to carry out the rock dredging satisfactorily. (ii) Sewerage System 3.06 Work on this project item began late because of a delay resulting from negotiations on import duties on materials; further delay was caused by long delivery times for electrical and mechanical equipment. Work was com- pleted by the end of 1978, but was not yet in operation in mid-1980 because the main transformer for the power supply to the pumping station and the settling tank, to be provided by the Government utilities company, were only then being installed. (iii) Building Construction 3.07 Construction of the residential sailors' club has been considerably delayed. Following tendering, the contract was awarded to a local contractor, but because of the delays the original site was no longer available. A new considerably better site was finally chosen and work began in July 1977, and was satisfactorily completed in October 1980. 3.08 The issue of financing the furniture and equipment for the sailors' club was still pending at the time of drafting the PCR. The Ministry of Finance intends to include the sum of UM20 million (about US$450,000 equiva- lent) in the next budget, but this would mean additional delay in getting the club operational. To speed matters, the Ministry of Equipment and Transport was requested to seek alternative sources of funds, perhaps from the fishing companies, under the new agreements. 3.09 Work on office buildings for PAN and three houses for port staff began in March 1977 and was completed by the end of 1979. Plans for the - 45 - buildings were prepared by a local architect and the local contractor was barely able to cope with the complexity of the office buildings. Constant assistance from the supervisory consultant was needed to maintain the work- nanship at an acceptable level. B. Equipment 3.10 The procurement of the harbormaster's launch and equipment for maintenance of navigational aids were to be the subject of a study to be carried out by the Direction des Phares at Balises/Association Internationale des Aides a Navigation (France). However, the study could not he carried out until Mauritania ratified a cooperative agreement with France, and the agree- ment was not ratified until 1980. The only efforts carried out in this respect involved sending three PAN technicians to the TDBB center in Dakar for nine months' training. Funds for this equipment (which was to be financed by Kuwait) have now been applied to the cost overrun, and bilateral aid will be sought to finance its purchase. 3.11 The harbormaster's launch has been ordered from France but has not yet been delivered. C. Technical Assistance 3.12 A joint consultant firm was selected to assist PAN in improving port operations, administration and accounting. They were also to prepare a master plan for the port of Nouadhibou. 3.13 The consultants carried out their tasks satisfactorily despite the difficulty resulting from lack of reliable data and bureaucratic administra- tive procedures. PAN generally feels and the Association concurs that the assistance in port management and operations, statistics, tariff revisions, cargo handling methods and other procedures has been useful and many of the consultants' recommendations have been successfully implemented. The draft master plan for the port was well prepared by consultants and was acceptable to both PAN and the Ministry of Equipment. The latter is expected to take necessary action to acquire valuable areas of waterfront land in the port zone to avoid later problems in port expansion and development. 3.14 A British consultant firm was selected to conduct a study for a small ship repair facility. The draft final report adequately defines the size and scope of a ship repair facility at Nouadhibou that could be economi- cally and financially justified; it will be used to seek sources of funds, tie Kuwait Fund being a likely first choice. Pending the construction of a shore- based ship repair facility, PAN has bought from its own funds a 300-ton floating dock as an interim measure. 3. Costs, Disbursements and Financing Costs 3.15 The physical contingency allowed was insufficient to cover the cost overrun for dredging; necessary funds were found by utilizing the provision - 46 - for an abandoned project element that had not been procured (navigation aids, para. 3.10) and appropriating the available savings under the sewerage system and under technical assistance. Thus the original project financing plan was revised and the changes agreed upon by the Government and the co-financiers (para. 3.18). The loss of available funds due to the fall in the value of the US dollar was somewhat covered by the increase in the value of the Kuwaiti Dinar. The actual project cost was about 5% less than the appraisal estimate. 3.16 A summary cost table is shown below. A more detailed table is included at the end of the report (Table 1). Comparison of Appraisal Estimates and Actual Project Costs (US$ million) Actual Estimate I. Civil Works A. Commercial berth 6.70 4.94 Fishing berth 10.20 8.15 Approachway 3.10 2.21 B. Sewerage scheme 1.49 2.00 C. Buildings 3.141/ 2.81 D. Supervision of construction 0.772 0.84 II. Equipment A. Harbormaster's launch 0.12 0.05 B. Navigational aids - 0.50 III. Technical Assistance to PAN 0.54 0.70 IV. Ship Repair Facility Study 0.30 0.30 V. Contingencies A. Physical at 5% - 1.05 B. Price at 18.2% - 4.00 Total project cost 26.36 27.55 1/Including the cost of the sailors' residential club which is incomplete; therefore, the cost is estimated. 2/Estimated. Note: The actual total cost in Ouguiyas is 1,186 million as against 1,129 million estimated at appraisal. - 47 - Disbursements 3.17 Disbursements lagged only slightly behind the appraisal estimates due to the timely implementation of the civil engineering works (Lot I con- tract). As a consequence of staff constraints in the Ministry of Equipment, some withdrawal applications took a long time to prepare. The actual and estimated disbursements are detailed in Table 2. Financing 3.18 The project was financed jointly by the Government, the Caisse Centrale de Cooperation Economique (CCCE, France), the Kuwait Fund for Arab Economic Development (KFAED), and the Association. In addition, parallel financing was provided by CCCE and KFAED for certain project items. As originally designed, the total contributions by the financing agencies were: KFAED, US$8.3 million; CCCE, USS5.7 million; IDA, US$8.0 million; and the Government, US$5.5 million. As shown in Table 3, some revisions (para. 3.15) had to be made during the course of project implementation, in agreement with all co-donors in order to cover some cost over-run in the dredging works and in some other items while keeping the total project cost within the limits of available funds. 4. Performance of Consultants and Contractors 3.19 The performance of consultants for the supervision of the civil works and the consultants providing technical assistance for port operations, administration and accounting was generally satisfactory. Consultants' recommendations for operational and administrative reforms, including strengthening of PAN's organization and replacement of the obsolete handling equipment of the stevedoring company, Societe d' Acconage et de Manutention de Mauritanie (SAMMA), will have greater relevance once traffic increases and finances improve rather than during the recent period of reduced traffic and weakened finances. The recommended scheme of accounting reforms rightly laid stress on simplicity and the use of manual procedures in preference to automa- tion, having regard to local conditions. Constraint of time and the inade- quate basic qualifications of the port accounting staff militated against the imparting of full training. 3.20 Performance of design consultants and contractors has been dealt with in paras. 3.02 to 3.10. IV. Traffic and Operations 4.01 Contrary to expectations, commercial and fishing traffic at the port of Nouadhibou has declined, as detailed in Table 4, and lags far behind appraisal forecasts. Two major factors explain these disappointing results: (i) the uncertain political and economic climate created by the war with the Polisario which partly paralyzed COMINOR's (iron ore mining company) activities and delayed construction of - 48 - the Guelbs project (new iron ore/mine) and the operation of a new oil refinery; and (ii) the considerable amount of time necessary for the formulation by the Government of an adequate fishing policy, and for implementation of new fishing agreements. General Cargo Traffic 4.02 General cargo traffic at the commercial wharf declined from 148,000 tons in 1977 to only 70,000 tons in 1979. This decline is mainly due to the following: (i) As a result of the political uncertainties, including sabo- tage operations against both COMINOR mining installations and the railway, the production of the iron mine declined from 10/11 million tons in an average year to about 7.5 million tons in 1979. This caused serious financial difficulties to COMINOR and in 1978, the company had to postpone all main- tenance and renewal works on its 750 km railway track and to practically stop all imports of mining equipment and locono- tives and rolling stock. This affected both the volume of imports and exports which transit through Nouadhibou com- mercial berths. (ii) The exports of fish products have been very much lower than expected due to the decline of the fishing activity at Nouadhibou. (iii) The import and export traffic which was expected from the new oil refinery did not materialize since this plant, completed at the end of 1977, has not yet started oDerations. (iv) The Guelbs iron ore mining project was delayed for more than two years. 4.03 The situation can be expected to improve in 1981/82 when the envi- saged Guelbs project will be under construction. This project is expected to generate a minimum of 90,000 to 100,000 additional tons of imports which will transit through the port. In addition, the maintenance program of the iron mine and of the railway equipment should start again as well as the renewal program of the railway track (additional traffic of 30,000 tons). The new oil refinery is also expected to be put into operation. Fish Traffic 4.04 The situation is more critical for the fishing port. For 1977 and 1978, fish landings stabilized at about 62,000 tons, i.e. at a level about 16% lower than in 1973 when the project was being prepared, but then fell to 54,000 in 1979 and 30,000 tons in 1980 as against a forecast traffic of 214,000 tons (including 150,000 tons of low grade fish for fishmeal produc- tion). - 49 - Reasons for this poor performance can be summarized as follows: (i) closure by Government of COMAPIC, the major fishmeal plant, which was managed inappropriately and delays longer than anticipated to find a new partner (COMAPOPE of Portugal), to undertake modernization works and resume activities; (ii) since most of the processing plants based at Nouadhibou also have affiliated plants at Las Palmas, they have a tendency to deliberately slow down their activities at Nouadhibou in order to encourage the development of their Las Palmas plants; (iii) fish prices paid by the processing plants were too low and unattractive for the foreign fishing 'leets which preferred to Aelt theLe production at Las Palmas where prices are fre- quently at least twice those offered at Nouadhibou; (iv) lack of workshops and ship repair facilities at Nouadhibou; (v) excessive taxes and custom duties on spare parts and fishing equipment; (vi) excessive prices of the supplies for the fishing vessels (water, ice, diesel oil and food supplies); (vii) insufficient control and surveillance of Mauritanian fishing waters; (viii) military operations and sabotage during the war with Poli- sario which discoul ed investments as well as normal fishing operations; and (ix) cancellation of all fishing agreements by the Government in 1979 in order to permit the negotiations of new contracts, which under the new fishing policy of the Government will stipulate the creation of joint ventures. Although the new policy is expected to lead, in the future, to a better utili- zation of shore installations and increase landings, it con- tributEd temporarily in 1980 to disturb the activity of some of the existing fishing companies during the period of rene- gotiation of their contracts. 4.05 However, the Government has taken, or is taking, steps to remedy these problems. First, the Government ended armed strife with the Polisario which immediately reduced the resultant political and economic uncertainty. Second, there is at last not only a coherent fishing policy but also a dynamic and forceful interest in implementing it as shown by the 21 new fishing agreements (paras. 6.04 and 6.05), which have been negotiated in 1979/80. 4,06 The decline in traffic has facilitated operation at both the newly extended commercial and fishing berths. The real test of the efficacy of the - 50 - consultants' recommendations for improvements in operations and equipment will not come until traffic revives. V. Financial Performance of PAN A. Rates and Charges 5.01 Port tariffs in existence from 1966 were maintained after PAN was established in mid-1973 and remained virtually unaltered till October 1978, when a general revision took effect. However, the authorized rate increases were appreciably less than those recommended by the consultants and proposed by PAN's director, and were not cost related. A significant omission was the failure to increase the rent/license fee charged to the cargo handling com- pany. This was last revised in April 1974 and then accounted for about 50% of the revenue. The overall revision was therefore inadequate. Despite urging by the Association as well as the Inter-Ministerial Committee for improving the para-public sector for further tariff revisions to provide for paying a dividend to the Government, additional selective tariff increases ranging up to 150% were effected only in July 1980. Objectionable features of the revision pointed out by the Association are (i) non-justifiable exemption of Nouadhibou-based trawlers from port dues, (ii) the failure to revise the rent/license fee charged to SAMMA to cover at least the impact of inflation, and (iii) the inappropriate assumption that the dividend on the Government's equity could be paid from the provision for depreciation rather than from net profits. The Government has been requested to see that PAN reviews tariffs at least annually and effects the maximum increases possible in keeping with the broad costs of the services and traffic conditions and with the objective of earning some net income after paying a dividend of at least UM 20 million to the Government in the short-term and the full dividend of about UM33 million in the longer term. 5.02 The revised port tariffs include specific rates for the floating dock to be implemented on its commissioning. This did not take into account the substantial cost of an expatriate technician proposed to be engaged. The dock may become unprofitable if its use and revenue turn out to be over- estimated. In that case, the tariffs must be increased. The authorities' attention has been drawn to the consultants' recommendation that a permanent ship repair facility should eventually replace the floating dock. B. Income Statements 5.03 Details of PAN's actual and forecast revenues and expenses for FY1975-80, contained in Table 5, are summarized below: - 51 - --------000 Ouguyas-------- 1975 1977 1979 Actuals Forecasts Actuals Forecasts Actuals Forecasts Operating Revenue Rent/license fee charged to SAMMA 18,000 18,000 18,000 18.000 18,000 18,000 Other revenue 14,235 18,640 20,034 26,880 21,414 29,420 Additional revenue through tariff increase - - - 10,000 - 28,000 Total 32,235 36,640 38,034 54,880 39,414 75,420 Operating Expenses Working Expenses 14,997 9,000 18,234 12.q72 28,695 16,966 Deprp-i:tion. etc. 8.362 7.635 8416 1q,344 27,500 30,938 Total 23,35P 16,635 26,650 32,316 56,195 47,904 Net Operating Revenue/ (Deficit) 8,876 20,005 11,384 22,564 (16,781) 27,516 Net Finance and Misc. Revenue/(Deficit) (8,493) 2,146 2,902 (10,105) 1,213 (22,135) Net Income 383 22151 14,286 12,459 (15,568) 5,381 Working Ratio (%) 46 24 48 24 73 23 Return on av. net value of fixed assets in use 7.5 17.1 11.2 6.9 - 3.0 5.04 The income statements prior to 1977 based on imperfect records were rectified, and those for 1977 and 1978 prepared by PAN with consultants' assistance. The shortfalls in the actual receipts from the appraisal fore- casts, accentuated by the serious decline in traffic and the delayed and inadequate revision of tariffs, ranged from 12% in 1975 to 48% in 1979. The position will improve in 1980 due to the tariff increases of July 1980. On the other hand, actual working expenses are considerably higher than the forecasts. Actual staff expenses have more than doubled since 1975, and were in 1979 about 100% above the forecast. This is due to the engagement of more staff, reclassification of personnel, and increases in salaries to compensate the higher cost of living and to attract and retain reasonably qualified staff. Expenses on purchases of materials and maintenance also increased substantially because of inflation and expanded needs. The provision for depreciation conformed broadly with the forecasts till 1977, when the project assets were expected to figure in PAN's books but did not due to delayed implementation. Only a half-year's depreciation provision for the new assets was made in 1978, and the 1979 provision will further increase in 1980 when the project is completed. As a result, actual net operating revenue till 1977 has been a fraction of that anticipated at appraisal on the basis of traffic - 52 - and revenue growth and controlled expenditure, and net operating deficits have been realized in 1978 and 1979; 1980 is also expected to close with a deficit. Overall, PAN's control of expenditure was insufficient. 5.05 PAN's actual working ratios were 46% and 58/ in 1975 and 1976, respectively, as against the maximum of 35% stipulated in the Credit Agree- ment, and ranged from 48% to 73% during 1977-79 as against the stipulated ceiling of 30% from 1977 onward. The ratio is expected to improve to some extent in 1980. PAN was also required to earn a minimum return of 6% on its net fixed assets in use up to 1977 and 2.5% thereafter against which it earned rates ranging from 5.1% to 11.2% till 1977 and none thereafter. PAN was expected to comnence paying a dividend to the Government on its capital contribution from 1977 at a minimum rate of 3%. However, this has not been possible due to the inadequacy of the net operating revenue in 1977 and net operating deficits in subsequent years. C. Balance Sheets 5.06 Actual and forecast balance sheets for 1975 to 1978 are detailed in Table 6. They are summarized below: -----------------------'000 Ouguiyas------------------------- 1975 1977 1978 Assets Actuals Forecasts Actuals Forecasts Actuals Forecasts Net Fixed Assets 114,852 219,064 100,186 964,380 967,946 936,668 Intangible Assets - - - 27,265 23,060 24,395 Investments and Other Long-term Assets 6,028 6,017 6,028 6,017 6,038 6,017 Net Current Assets 27,342 52,618 62,271 115,332 81,970 147,191 Total 148,222 277,699 168,485 1,112,994 1,079,014 1,114,271 Capital & Liabilities Government's Capital Contribution 131,830 237,830 131,830 1,036,710 1,033,862 1,036,710 Reserves and Retained Earnings 16,392 __39,869 36,655 76,284 45,152 77,561 Total 148,222 7699 168,485 1,112,994 1,079,014 1,114,271 Ratio of Current Assets to Current Liabilities 99.3 74.6 60.0 134.3 38.8 146.0 5.07 The actual value of the net fixed assets decreased between 1975 and 1977 due to the limitation of capital expenditure and the accumulation of funded depreciation. The figures conform broadly with those estimated at appraisal except that the anticipated impact of the project assets took place later due to delay in completion of certain project items. The values of the completed new project items were initially included in the balance sheet for 1978, but depreciation thereon was charged only for a half-year as indicated above to minimize the financial burden. Of the total revised estimated project cost of UM 1,186.09 million computed in collaboration with the - 53 - Ministry of Equipment and Transport, UM 980.19 million is allocable to PAN as against UM 904.88 million estimated at appraisal. The bulk of the additional allocable cost should figure in the balance sheet for 1979, which was expected to be finalized in July 1980. The total net fixed assets (including the project assets) as of December 31, 1979 are estimated at about UM 980 million, and the net intangible assets (technical assistance) at about UM 20.6 million. The full allocable project cost will be reflected in the balance sheet for 1980 if the harbornmaster's launch is commissioned by the end of December 1980. 5.08 While the ratio of current assets to current liabilities has been satisfactory, commercial receivables have increased considerably. The prin- cipal debtor has been the stevedoring company, which has experienced finan- cial difficulties due to the fall in traffic and delayed payments of its dues by the iron mining company, its main client. The balance as of December 31, 1979 represents over 90% of the gross operating revenue, SAHMA's share being over 85%. SAMMA is expected to make more payments, and it is hoped that PAN would also be able to recover some compensatory interest from SAMMA and other debtors. D. Changes in Financial Position 5.09 Following is a summary of the statement of the actual and forecast changes in financial position over the period 1975-78, detailed in Table 7: (In million Ouguiyas) Source of Funds Application of Funds Actuals Forecasts Actuals Forecasts Cash generation from Capital expenditure 908.1 905.7 operations 63.6 153.6 Net increase in Finance and non-cash working miscellaneous revenue 4.6 18.5 capital 31.7 0.1 Total from own resources 68.2 172.1 Dividend on Government's Government's capital equity - 46.7 contribution 902.0 904.9 Net decrease in non-cash working Cash increase 31.1 L24.9 capital 0.7 0.4 Total application of Total source of funds 970.9 1,077.4 funds 970.Q 1,077.4 5.10 The reasons for the shortfalls in the actuals of the net operating revenue from the forecasts also apply to the lesser cash generation from operations. The lesser cash flow, in turn, implied lower interest revenue. The Government's capital contribution to the project cost is virtually iden- tical to the forecast. However, it will increase, when the balance of the contribution is accounted for in 197( and 1Q80. The actual capital expendi- ture is slightly higher mainly because of the increased project cost in terms of Ouguiyas, and the difference will widen when the full cost figures in the accounts. The increase in non-cash working capital is more than that antici- pated due to the considerable enlargement of the balance of receivables, which also constitutes a partial reason for the lower actual cash balance. - 54 - Financial Outlook 5.11 The provisional income statement for the period January to May 1980 showed the receipts lagging behind the proportionate budget estimate by UM 1 million. More recent traffic statistics indicate that the tonnages of fish landings and exports assumed for the budget estimates of 1980 are rather optimistic. However, transshipment fish traffic shows an improving trend. Overall, the operating receipts may just match the operating expenses. As regards the future, only an increase in traffic, particularly fish landings and transshipments, and appropriate tariff revision can help to improve the present critical state of PAN's finances. Assuming that in 1982-83 the traffic levels forecast in Section III above are approximately reached, it should be possible to generate additional annual revenue of UM40-50 million after tariff revision, including the rent/license fee charged to SAMMA. Allowing for a small increase in operating expenditure, there would be suffi- cient net income available, to pay almost the full dividend of about UM 33 million on the Government's total equity. In case traffic growth is slow, PAP should, as indicated in para. 5.01, aim at making such tariff adjustments as would enable it to retain some net income after paying a dividend of at least UM 20 million to the Government. VI. ECONOMIC REEVALUATION OF THE PROJECT A. Background 6.01 The project was designed to provide Nouadhibou, the only well pro- tected deep-sea port of the country, with adequate port facilities in order to allow Mauritania to participate more actively in the exploitation of fish resources, the country's most important renewable natural resource. 6.02 During preparation of the project in 1973-74, rapid development of fishing activity was observed at Nouadhibou. Landing of fresh fish by foreign fleets reached 74,000 tons in 1974 as opposed to only 22,000 tons in 1968 -- an average increase of 22% p.a. The project was appraised on the assumption that appreciable growth would continue since the Government's policy was that foreign fishing fleets land about 30% of their catches (i.e. 200/250,000 tons p.a.) to encourage the development of the local processing plants. Unfor- tunately this did not materialize because of the guerilla activity and the abrogation of fishing contracts. 6.03 In 1976, after Spain relinquished its control over the Spanish Sahara, the Polisario (Front for the Liberation of Spanish Sahara) waged intensive guerilla operations against both Mauritania and Morocco which had divided the administration of the territory between them. The war activity severely strained Mauritania's already limited resources, both financial and human and very likely contributed to discourage investments in the Nouadhibou area as well as fish processing activities. In August 1979, Mauritania signed a peace accord with the Polisario ending its involvement in the conflict. Foreign fishing companies can now operate under peaceful conditions. - 55 - 6.04 In mid-1979 the new Government cancelled all fishing agreements and required fishing fleets interested in operating in Mauritanian waters to enter into contracts more favorable to Mauritania. Under these new contracts, most of the catches of the fleets will now have to be landed for processing in existing or new processing plants to be built at Nouadhibou (demersal fish) or transshipped in the port (sardinella). This resulted in a decline in fish landings at Nouadhibou in 1979/80 since major fishing companies were reluc- tant temporarily to accept the Government's new policy. In the coming years, however, the Mauritanians expect to derive increased benefits from new con- tracts negotiated with the fleets and to improve the control of catches in Mauritanian waters. The new contracts call for the payment of an export tax ranging from 7% to 11% of the FOB value of exports of fish products. At the same time a new investment code has been promulgated which is intended to encourage new fishing companies (in joint ventures) to invest in Nouadhibou, and public utiliti s will adjust their tariffs to match those of major compet- ing ports (Dakar and Las Palmas). Duty-free stores will also be opened for the fishing companies. 6.05 At the end of 1980, 21 foreign fishing fleets (representing a total of 426 fishing vessels) had signed fishing agreements for the creation of joint venture corporations. According to those agreements, investments in Nouadhibou by these new fishing companies should reach about $210 million over the 1981-83 period. Corresponding landings are expected to reach 123,000 tons in 1983 and 223,000 tons in 1985 for high value demersal fish and 250,000 tons in 1983 for low grade pelagic fish for production of fishmeal. In addition, according to Government objectives, about 300,000 tons of sardinella will be allowed to be transshipped onto freezing trawlers or factory ship anchored at Nouadhibou. This policy will have two advantages; first to use existing berthing facilities for landing of high value species which will have to be processed in the local plants, and second to allow Mauritania to better control the volume of catches since transshipment operations of low value pelagic fish (sardinella) should take place in the port area. However, additional patrol capacity will be needed to permit an adequate enforcement of this policy. The Government is fully aware of this necessity and is in the process of increasing and strengthening the present small coast guard fleet. B. Economic Return of the Fishing Port Project Revised Landing Forecasts 6.06 It is not yet possible to assess precisely to what extent the fishing companies will effectively fulfill the conditions of the new fishing agreements since this will depend on Mauritania's enforcement of the agree- ments. However, the numerous precautionary measures taken by the Government to ensure respect of the new fishing agreements suggest that after a reason- able transition period, landings at Nouadhibou should significantly increase. Among these measures are: (i) the fact that fishing agreements with industry are backed up by master agreements with foreign Governments or regional organ- izations such as EEC; (ii) the immediate cancellation of fishing licenses in case of non respect of fishing agreements; and (iii) the fishing companies' obligation to undertake important investments in shore processing activities. In addition, the adoption of a relatively liberal code of investment and - 56 - improved conditions for the repatriation of funds, as well as the creation of new ship repair facilities, should improve the working conditions at Nouadhi- bou. It can then be conservately assumed, for the reevaluation of the project that fish traffic at the port will by 1985 be, at least, half of what is expected by the Ministry of Fishing. Under this assumption, fish traffic at the port can be forecast as follows: (000 tons) 1978 1979 1980 1981 1982 1983 184 1985 ------ Actual-------------------Forecast------------ Landings: Demersal, octopus 21 12 5 15 30 50 70 90 Pelagic 40 42 25 40 60 80 100 100 (fishmeal plants) 61 54 30 55 90 130 170 190 Transshipment Frozen sardinella - - 80 80 90 90 100 .100 6.07 Since adequate supply of low grade pelagic fish to the existing fishmeal plants can be effected through fish pumps located on the old fishing wharf, the only traffic which has been considered for the calculation of the I.R.R. of the fishing port investments is the traffic of demersal species landed on the new wharf, the capacity of which under normal operating condi- tions is estimated at 50,000 tons. The revised forecast assumes conserva- tively a utilization of the new berth increasing progressively from 20% (10,000 t) in 1983 to a normal utilization (equivalent to 165 t/year/meter of berth) in 1985 as indicated below. Demersal fish landings at the fishing wharf (000 tons) Landings 1981 1982 1983 1984 1985 & after Old berth 15 30 40 40 40 New berth - - 10 30 50 Total landings 15 30 50 70 90 New Berth t/meter/year - - 33 100 165 The proposed forecasts for 1985 correspond approximately to the capacity of the existing three major freezing plants plus the additional capacity of one new plant now under construction. - 57 - Construction Cost 6.08 Actual costs (in 1980 prices Table 11) include all. the elements of the project which can be considered to be directly related to operations of the fishing port, i.e. civil works (berth extension and dredging), plus other components such as: sewerage system, sailors' club, administrative building (50%), port launch (50%), supervision (90%), technical assistance (50%), ship repair center study. Project Benefits 6.09 Benefits for Mauritania (Table 12) include: (i) 50% of wages of presently unemployed labor; (ii) port dues; (iii) export taxes; (iv) cor- porate income tax and (v) Mauritania's share of net profit (51% according to the new joint venture policy). 6.10 These benefits are now considerably higher than those envisaged by the appraisal mission since, under the new fishing policy, Mauritania will levy an export tax averaging $200 per ton on exports of demersal fish. This tax plus the increased share in the benefit of freezing operations going to Mauritanian partners should allow Mauritania to double its net benefits per ton exported. This has a considerable impact on the economic return of the project since when the full utilization of the new berth will be reached, Mauritania would recover, very rapidly (Table 13) the total cost of all the investments of the project which are related to the development of fishing. Economic Return - Sensivity Tests 6.11 Assuming that the full capacity of the new berth will be reached only in 1985, the TRR of the investments in the fishing port will be 28%, i.e. similar to the IRR estimated by the appraisal mission after inclusion of the cost of components of the project related to fishing operations (sewerage system, sailor club, buildings, etc.). Even if the benefits for Mauritania such as export taxes, profits etc. are 50% lower than expected, the IRR will be 20%, which is still very satisfactory. If Mauritania succeeds in imple- menting its new fishing policy more rapidly so that the new berth can be fully utilized in 1982, which is quite possible considering the limited size of the investment (300--meter berth), the economic return will be 35%. In this latter case, it will fall to 27% if Mauritania recovers only half of the expected benefits. 6.12 The sensivity analysis (Table 13) shows clearly that the economic return of the project is more sensitive to the level of benefits accruing to Mauritania per ton exported than to the date of full utilization of the new berth. These results confirm that the Government is right when it considers that priority should not be given to volumes of fish landed now but in the choice of competent and reliable foreign partners who will agree to implement fairly, in the future, the Government's new fishing policy. - 58 - Conclusion 6.13 The present sharp decline of traffic should not be considered as a weakness or a failure of the Government's fishing policy. On the contrary it reflects the strong willingness of Mauritanian Authorities to abandon a former inequitable system and renegotiate all fishing agreements on terms more favorable to Mauritania. In this respect, the fact that the Mauritanian Government is now able to offer to its new partners adequate port infrastruc- tures should be considered as a key factor for the implementation of the new fishing policy. Under the new fishing policy, the project appears even more important for Mauritania than it was at the time of the appraisal. Economic Return of the Commercial Port Investments 6.1 P The limited infrastructure investments proposed at the commercial wharf (48 meters extension of the wharf, dredging and reconstruction of the access causeway) were basically designed to reduce lighterage and facilitate handling operations. In addition, occasional savings in ship waiting time were expected from the speeding up of unloading operations and the proposed extension scheme. Since actual traffic at the wharf has been significantly lower than anticipated, ship waiting time savings (about 10% of the expected benefits) did not materialize, even though the project helped improve signi- ficantly handling operations. In particular, lighterage operations have been almost completely eliminated since completion of the project. 6.15 New traffic forecasts, significantly lower than anticipated at appraisal, have been adopted for the recalculation of the economic return of this component of the project. These forecasts (Table 10) take into account: (a) lower export traffic due to delays already observed in the development of the fishing activities at Nouadhibou; (b) uncertainty about the future acti- vity of some major industrial projects such as the new oil refinery and activities induced by the development of the fishing sector; and (c) delay observed in the construction of the Guelbs project. 6.16 On the basis of these new traff4c forecasts and actual (1980 prices) handling cost, ship time costs and new characteristics of ships now calling at Nouadhibou, the economic return of investments realized for the commercial port (civil works and other investments) will fall to 13% (Table 14) instead of 18% as envisaged at appraisal. 6.17 The major reason why the return is lower than estimated at appraisal is that traffic being lower, ship waiting time savings will be negligible, until traffic recovers significantly. However, this reduction of the ship waiting time savings has been partly compensated by the fact that the value of ship time, due to exceptionally high fuel and labor cost increases during the period, has been higher than the observed price escalation for the project. 6.18 In addition, it appears that shipping lines have rapidly adapted themselves in order to serve the port with ships which fit the new character- istics of the commercial wharf. As a result, the need for compulsory but expensive lighterage operations for large ships of 8 m draft or more has been eliminated. - 59 - 6.19 During the coming years, a lower utilization of the commerciel wharf by cargo ships does not appear to be a major handicap for the success of the project, since the port of Noundhibou might very soon face significant shortage of berthing facilities for fish landing operations. Very likely, the commercial wharf will be occasionally used, when available, for demersal fish landings. As indicated in Table 14, landings of only 1,000 to 2,000 addi- tional tons of fish at the wharf will permit to improve the rate of return of the investments at the commercial port by about 2 points. Conclusion 6.20 The project, which was well conceived both in its objectives and technical characteristics has suffered underutilization since its completion, largely because of unforeseable political events which have slowed down the COMINOR mining activities and traffic and distracted the Government from giving adequate attention to the development of the fishing sector. However, since the Government, aided by competent technical assistance, is now giving high priority to the development of fishing activity in Nouadhibou, the pro- ject is an essential element for the successful implementation of the new fishing policy. VII. Institutional Development 7.01 From what was achieved in laying a foundation for the future development of the Mauritanian fishing industry, the project was a success. Because of the infrastructural, administrative and operational improvements effected by the project, Mauritania has signed fishing agreements with 21 different joint venture companies (involving 14 countries) to fish in their territorial waters. Had these improvements not been made, it is highly unlikely these agreements could have been concluded. Government officials seem confident that by the end of 1983 considerable landings of fish will be registered, despite rather unpromising recent statistics. 7.02 Although the spirit of the new fishing agreements is that all catches must pass through the port of Nouadhibou (except for temporary exceptions for freezing trawlers agreed by Government) and pay the appropriate landing and export taxes, there are major loopholes which seem to be taken advantage of by the companies: (i) On the ground that there are insufficient freezing and pro- cessing plants at Nouadhibou to cope with all fish caught, the new companies are permitted to use freezing ships and to transship catches at sea. Thus although the companies are obliged to construct plants on shore, since the control over transshipment is relatively lax, it is felt the companies will be inclined to delay construction of the plants as long as possible. (ii) The monitoring of the quantities and value of fish landed, processed and transshipped at sea is carried out by two customs men stationed aboard each freezing or factory ship. Such a system is open to abuse and evasion. - 60 - It is now up to the Government to enforce the agreements so as to take full advantage of the port facilities available. The desirability of tightening the surveillance over transshipment and high sea fishing operations has been repeatedly stressed to the Government. It is also expected to act on the recommendations concerning PAN made by the Inter-Ministerial Committee in FY1979/80 for study of measures for improving the financial situation of the parapublic sector. VIII. The Role of the Association 8.01 During the project preparation cycle, the Association strongly sup- ported the Government proposal to create an autonomous port authority for Nouadhibou and assisted the Government in drafting a statute (Decree 73.107 of April 24, 1973). The Association also brought out during appraisal defi- ciencies observed in the management of the new organization, mainly staffing, operations, accounting, finances and tariffs and secured the Government's agreement to include a suitable technical assistance package in the project. Its satisfactory implementation has strengthened PAN's capabilities gener- ally, and PAN will derive the benefit of the recommended operational improve- ments when busy traffic conditions return. The legislation governing PAN was improved in 1975, also through the Association's initiative. The Associa- tion's reporting requirements were reasonable and were largely fulfilled. 8.02 The number and frequency of supervision missions were adequate. Most of the problems encountered could not have been avoided or remedied by more frequent missions. 8.03 In the case of the additional dredging, the contractors should have been alerted to a potential problem by the fact that only few test borings had been carried out during project preparation. From the start, the project division in charge, having only one port engineer, was unable to review in depth tender documents as prepared by the design consultants. The supervising consultants and contractors did not detect certain deficiencies in the design consultants' plans for the extension to the commercial berth, which resulted in some settlement in the paved surface (para. 3.02). 8.04 A problem was created for the port when the existing slipway was demolished to make way for the extension of the fishing port. The slipway was used to service small vessels. While no replacement was included in the project, a study on the need, scope and management of a small ship repair facility was included. However, a facility of this type should have been replaced prior to the demolition of the old one. The 300-ton floating dock bought by PAN as an interim measure was not in operation in mid 1980. The Association advised, in view of the complexities of operation, that it would be preferable to lease the dock to an experienced ship-repair firm at an adequate rent. - 61 - ANNEX Page 1 ISLAMIC REPUBLIC OF MAURITANIA NOUADIHIBOU PORT PROJECT (Credit 588 MAU) PROJECT COMPLETION REPORT Agreement Covenants Section and Covenant Status 3.07 Upon completion of construction In the process of being of facilities and purchase of achieved; 1980 accounts should equipment, these shall be trans- reflect these costs fully. ferred to PAN and its capital increased by the corresponding cost of the facilities and equipment. 4.02 The Government and/or PAN shall The draft master plan prepared take action to adopt a port mas- by consultants is acceptable as ter plan within 12 months of the final and will be used by the date of the Credit Agreement Government and PAN. 4.03 During implementation of the PAN purchased a 300-ton float- project the Government shall ing dock without prior consul- consult with the Association on tation with the Association, its and PAN's investment program but this is felt to be an omis- for port facilities. sion rather than a deliberate violation of the Agreement. 4.04 The Government and/or PAN shall Largely fulfilled. The implement a plan of action in a Government and PAN are working manner satisfactory to the Asso- to implement the remaining pro- ciation. visions of the plan of action, namely for an overall manpower plan and improving customs pro- cedures. 5.02 PAN shall take out and maintain Fulfilled. insurance against risks taking into account asset values shown on its books. - 62 - ANNEX Page 2 5.04(b(i)(ii)(iii)) The Government shall The Association never received causea satisfactory audit report on accounts and financial state- PAN's accounts, due mainly to acconts andfinacia stte- the unavailability of the Gov't. ments audited annually by inde- auditor. However, qualified consul- pendent auditors; (ii) furnish tants financed under the project the Association with copies of rectified imperfect accounts for the audited statements and the yearprior to 1977, & preparedPAN4s auditors' report; and (iii) accounts for 1977 and 1978 which furnish the Association with any appear satisfactory. Audit reports financial information it may for 1976 & following years are request. still being awaited. 5.05(a) The Government and/or PAN shall Tariffs were revised in October establish tariffs and charges 1978 and July 1980 but sufficient to cover all costs not sufficiently to meet and achieve the prescribed rate requirements. of return (Section 5.06). (b) in revising tariffs, considera- The Association has asked PAN tion shall be given to the port's to revise tariffs annually, as competitiveness there is scope to do so, to meet the requirements to the maximum extent possible. 5.06 The Government and/or PAN shall PAN's rate of return for 1977 take measures to ensure that PrN was 11.2%; for both 1978 and earns an annual rate of return of 1979 PAN showed a net operating not less than 6% to 1977 and not deficit, and one is expected less than 2.5% thereafter. for 1980. 5.07(a) The Government and/or PAN shall During the years 1975-79, the take measures to ensure that PAN working ratio has ranged from maintains avorking ratio of not 46% to 73% Improvement is more than 35% in 1975 and 1976 expected in 1980. and 30% in 1977 and thereafter. 5.08 PAN shall take measures to en- This requirement hS been sure that an annual dividend is relaxed in light of the steep paid to the Government on its decline in port traffic. equity from 1977 at a minimum rate of 3r r foP.a. MALRITANIA PROJECT CCMPLET1ON REPORT NOUADH IBOU PORT PROJ ECT Actual and Appraisal Estimates of Project Cost ----------------UM Mill on----------------- -------USS MIllion----------------- Actual Cost as a Local Foreign Total Local Foreign Total Proportion of Appraisal Actual Estimate Actual Estimate Actual Estimate Actual Estimate Actual Estimat- Actual Estimate Estimate of Cost I. Civil Works: A. Commercial berth 106.62 72.86 195.02 129.52 301.64 202.38 2.37 1.78 4.33 3.16 6.70 4.94 136 Fishing berth 162.31 120.31 296.89 213.89 459.20 334.20 3.60 2.93 6.60 5.22 10.20 8.15 Approachway 49.33 32.69 90.23 58.11 139.56 90.80 1.10 0.0 2.00 1.41 3.10 2.21 B. Sewerage scheme 103.73 46.12 37.53 69.18 141.26 115.30 2.30 1.12 0.84 1.69 3.14 2.81 125 C. Buildings-V 19.54 29.52 47.40 52.48 66.94 82.00 0.43 0.72 1.06 1.28 1.49 2.00 140 0. Supervision of construc0ion of civil wark,2 13.99 3.45 20.50 31.05 34.49 34.50 0.31 0.08 0.46 0.76 0.77 0.04 74 If. Equipment: A. Harbormaster's launch - 0.41 5.20 1.62 5.20 2.03 - 0.01 0.12 0.04 0.12 0.05 240 8. Navigational aid3 - 4.10 - 16.20 - 20.30 - 0.10 - 0.40 - 0.50 - ali. Technical Assistance 7.81 2.87 16.56 25.83 24.37 28.70 0.17 0.07 0.37 0.63 0.54 0.70 77 IV. Ship Repair Facility Study 0.80 1.83 12.63 10.34 13.43 12.17 0.02 0.05 0.28 0.24 0.30 0.30 - V. Contingencies A. Physical at 5% - 15.24 - 27.71 * 42.95 - 0.37 - 0.68 - 1.05 B. Price at 18.2% - 58.27 - M05.91 - 14.1% - 1.42 - 2.58 - 4.00 Total Project Cost 464.13 587.67 721.96 741.84 1,186.09 1,129.51 10.30 9.45 16.06 18.10 26.314/ 27.55 Ilincluding the Sailors residential club, the actual cost of which Is Stimated. Z/Actual cost is estimated. S/This item was dropped from the project and the funds applied tot he cost overrun. t/At UM45.00 = USS.0. The project was appraised at UM1.00 = USS1.00 at which rate the amount would be USS28.93 million. - 64 - Table 2 MAURITANIA PROJECT COMPLETION REPORT NOUADHIBOU PORT PROJECT Actual and Appraisal Estimates of Cumulative Credit Disbursements (Us$ million) Actual Disbursement Bank Actual Appraisal as a Percentage of Fiscal Year Total Estimate Appraisal Estimate 1975/76 0 2.07 0 1976/77 4.30 6.45 66 1977/78 6.69 7.54 89 1978/79 7.78 8.00 97 1979/80 7.95 - 99 1980/81 * - 100 (till Dec. 1980) *The balance of US$0.05 million is expected to be disbursed by April 30, 1981. MAURITANIA NOUADHIBOU PORT PROJECT, CREDIT 588-MAU COMPARISON OF ACTUAL AND ORIGINAL FINANCING PLANS (US$ million) -----Cost------ ------------------------ Joint Financing------------ -------Parallel Fiancing------- RPAED CCCE IDA GOVERNMENT KFAED CCCE Actual Original Actual Original Actual original Actual Original Actual Original Actal Original Actual Original I. Civil Works A. Commercial and fishing berths; approachway (inc. contingencies) 20.00 18.99 4.41 2.70 5.15 5.09 7.22 7.06 3.22 4.14 - - B. Sewerage scheme (including contingencies) 1.49 2.48 - - - - - - 0.31 0.54 1.18 1.94 - V C. Buildings (including contingency) J.14 3.49 - - - - - - 0.66 0.76 2.48 2.73 - - D. Supervision A 0.77 0.79 0.46 0.28 0.13 0.22 0.18 0.29 - - - - - - B&C 0.25 0.25 11. Equipment A. Harbourmaster's launch 0.12 0.05 - - - - - - - 0.01 - - 0.12 0.04 B. Navigational aids - 0.50 - - - - - - - 0.10 - 0.40 - - 111. Consulting Services 0.54 0.70 - - 0.26 0.35 0.28 0.35 - - - IV. Ship Repair Study 0.30 0.30 - - - 0.30 0.30 -- - - Total 26.36 27.55 4.87 2.98 5.54 5.66 7.98 8.00 4.19 5.55 3.66 5.32 0.12 0.04 PAURITANIA PROJECT ()MLETION REPORT NORADHIW8U PORT PROJECT Traffic V000 tons) 1973 1974 1975 1976 1977 1978 1979 1980 tActual) Actual Forecast Actual Forcast Actual Forcast Actual Forecast Actual Forecast Actual Forecast Estimate /1 Forecast A. Fish Landings (Fishing Wharf) Demrsal, octopus 21 30 16 24 19 19 22 25 33 21 43 12 53 5 64 Sandinetia for ftshmeal i3 35 57 to 67 14 68 38 94 40 118 42 139 25 150 Total 74 5 73 34 T5 33 30 65 127 61 161 54 192 30 214 B. General Cargo Traffic iscellaneous 66 72 70 78 97 76 95 107 123 48 TOB 48 96 is :06 Guelbs project - - - 5 - - 30 3- - - 8 Subtotal 66 2 78 102 76 125 107 153 48 138 48 96 74 106 Froze fish 18 18 19 20 22 17 25 24 39 22 49 11 59 5 T0 Fishmal 8 8 13 2 15 3 15 10 19 8 25 7 29 5 32 sulted/dried fish 4 2 3 2 3 1 3 1 3 1 4 1 5 1 5 OtWr fish products I 5 4 - 5 - 5 1 7 1 6 1 10 1 15 Subtotal 31 33 39 24 45 21 48 36 6 32 ad 20 103 12 119 Other exports 12 it 2 22 4 15 f3 5 14 1 16 Z r8 2 ZI Subtotal 43 44 41 46 49 36 61 41 82 33 102 22 121 14 140 Total general cargo 109 116 111 124 151 112 186 148 235 at 240 70 217 8 246 Total A & B 183 181 184 158 237 145 276 211 362 142 378 124 409 118 460 C. Supply FishlMYtsls- 41 53 - 38 - 50 - 56 - 52 - 18 - 19 - a. Transshipent fish Products 25 6 - a - 19 - 21 - - - 21 - 0Q - Grand Total 247 240 184 204 237 204 276 285 362 194 3718 63 409 217 450 I 1980 traffIc estimate extrapolation tased on 7 months fig,res /2 Include food Imports and COMIN9 Iron mine Imports (20/30,000 tons p.a.). Excluding oil Imports nor diverted to the COMINOft mineral port. including exports oil twoo srap from the MaIlNCR mine trals and wheel of ore wagons) during the 1973/76 period. Ra At iable date not aval table at the flue of project preparation. MAURITANIA PROJECT O LETION REPORT NOUACOU PORT PROJECT (CREDIT 506-MAU] inconse Statements for Fiscal Years ending December 3) (1000 Ougulyas) 1975 1976 1977 1978 1979 1980 Provisional Budget Aictuals Forecasts Actuals Forecasts Actuals Forecasts Actuals Forecasts Actuals torecasts Estimates forecasts OPERATING REVENUE Rent/license fee charged to SAMMA 1,000 18.000 18,000 18000 18000 18,000 18,000 16,000 18,000 16,000 18,000 18.00 Wb*arfage on fish (fresh and processed) 5,540 1,868 5,870 2,980 7,990 3,725 10,060 3,925 11,990 7,500 13.490 Wharfage on general cargo 5,040 3,674 6,280 4,372 7,080 2,666 6,960 3,400 4,560 6,400 5,080 Dues on vessels 14,235 3,200 5,288 3,660 9,699 5,040 6,901 5.390 6,469 5,530 6,000 5,950 Other revenue 4,860 2,971 5,260 2,983 6,770 3,381 6,570 7,620 7,340 14,085 6,010 Additional revenue through tariff increase - - - - - 10.000 - 24000 - 2- 31,000 Total 32,235 36,640 31,801 39,070 38.034 54,880 34,673 70,980 39,414 75,420 53,985 81,530 o OPERATING EXPENSES Staff 4,488 3,500 4,833 3,850 6,093 4,427 9,114 4,870 10,851 5,557 10,950 5,893 Maintenance 5,526 2.000 7,100 2,400 4,415 2.880 3,727 3,456 4,728 4,147 4,200 4,977 Fuel, stores, utilities, etc. 1,785 2,000 2,059 3,300 1,059 3,850 2.037 4,499 2,012 5%266 1,300 6,172 Miscellaneous 3,198 1,500 4,519 1,650 6,667 1.815 6 1,996 11,104 2,176 10,750 2,416 Subtotal: WoriIng expenses 14,997 9,000 18,511 11,200 18,234 12,972 21,386 14,821 28,695 16,966 27,200 19,458 Depreciation 7,491 7,489 7,613 7,505 e,036 19,194 14,35 30,782 27.500 30,788 28,346 30,848 Provision for doubtful debts 871 150 - 150 350 150 346 150 - 150 100 150 Total 23,359 16,635 26,124 18,855 26,650 32,316 36,Oe5 45,753 56,195 47,904 55,646 50,456 NET OPERATING REVENUE/(DEFICIT) 8,876 20,005 5,677 20,215 11,384 22,564 (1,412) 25,227 (16.781) 27,516 (1,661) 31,074 NET FINANCE & MISC./REVENUE/(0EFICIT) (Including dividend payable to Government) (8,493) 2,146 300 3,741 2,902 (10,105) 9,909 (23,950) 1,213 (22,155) 1,651 (20,100) NET INCOME (LOSS) 383 22,151 5,977 23,956 14,286 12,459 8,497 1,277 15,568) 5,381 - 10,974 Working Ratio ) 46 24 58 29 48 24 62 21 73 23 50 24 Operating Ratio (5) 72 45 82 48 70 59 104 64 143 63 103 62 Return on average net value of fixed assets in use () 7.5 17.1 5.1 18.5 11.2 6.9 - 2.6 - 3.0 - 3.5 Source; PAN, Consultants, Bank Missions August 1980 - 68 - Table 6 MAURITANIA PROJECT COMPLETION REPORT NOUADHIBOU PORT PROJECT (CREDIT 588-MAIU) Balance Sheets for Fiscal Years Ending December 31 ('000 Ouguiyas) 1975 1976 t 1977 107 Actuals Forecasts Actuals Forecasts Actuals- Forecasts Actuals- Forecasts ASSETS Gross Value Land 18,000 18,000 18,000 18,000 18,000 144,500 18,000 144,500 Depreciable Assets 115,687 113,893 114,465 114,093 115,387 863,973 996,286 864,173 .'ess: Accumulated depreciation 18,835 18,829 25,165 26,334 33,201 44,093 46,340 72,005 Net Depreciable Assets 96,852 95,064 89,300 87,759 82,186 819,880 949,946 792,168 Net Fixed Assets in use 114,852 113,064 107,300 105,759 100,186 964,380 967,946 936,668 Work-in-Progress - 106,000 - 542,180 - - - - Net Fixed Assets 114,852 219,064 107,300 647,939 100,186 964,380 967,946 936,668 Net Intangible Assets - - - 16,040 - 27,265 23,060 24,395 Investment in SAMMA and other long-term assets 6,028 6,017 6,028 6,017 6,028 6,017 6,038 6,017 Current Assets Inventories 387 122 289 122 - 125 - 130 Receivables and payments in advance 7,841 3,300 8,468 3,200 18,106 3,000 32,977 3,100 Cash at Bank and on hand 19,392 49,900 33,645 81,411 45,220 113,057 51,161 144,961 Other - 11 - 1f - 15 - 15 Total 27,620 53,333 42,402 84,744 63,326 116,197 84,138 148,206 Current Liabilities 278 715 1,531 865 1,055 865 2,168 1,015 Net Current Assets 27,342 52,618 40,871 83,879 62,271 115,332 81,970 147,191 Total Net Assets 148,222 277,699 154,199 753,875 168,485 1,112,994 1,079,014 1,114,271 CAPITAL AND LIABILITIES Equity Equivalent Government 131,830 237,830 131,830 690,050 131,830 1,036,710 1,033,862 1,036,710 Reserves and Retained Earnings 16,392 39,869 22,369 63,825 36,655 76,284 45,152 77,561 Total 148,222 277,699 154,199 753,875 168.485 1,112,994 1,079,014 1,114,271 Ratio of Current Assets to Current Liabilities 99.3 74.6 27.7 98.0 60.0 134.3 38.8 146.0 1/Adjusted for purposes of analysis Source: PAN, Consultants, Bank Missions August 1980 MAURITANIA PROJECT COMPLETION REPORT NOUADHIBOU PORT PROJECT (CREDIT 588-MAU) Statement of Changes in Financial Positio (Source & Application of Funds) for Fiscal Years Ending December 31 ('000 Ouguiyas) 1975 1976 1977 1978 Actuals Forecasts Actuals Forecasts Actuals Forecasts Actuals Forecasts SOURCE OF FUNDS Net Operating Revenue/ (Deficit) 8,876 20,005 5,677 20,215 11,384 22,564 (1,412) 25,227 Depreciation 7,491 7,485 7,613 7,505 8,06 19,194 14,353 30,782 Provision for doubtful debts 871 150 - 150 380 150 346 150 Cash generation from operations 17,238 27,640 13,290 27,870 19,800 41,908 13,287 56,159 0 Net Finance & Misc. Revenue/(Deficit) (8,493) 2,146 300 3,741 2,902 5,446 9,909 7,151 Subtotal - Own resources 8,745 29,786 13,590 31,611 22,702 47,354 23,196 63,310 Government capital contribution - 106,000 - 452,580 - 346,300 902,032 - Net decrease in non-cash working capital - 236 663 100 - 43 - - Total 8,745 136,022 14,253 484,291 22,02 393,697 925,228 63,310 APPLICATION OF FUNDS Capital expenditure 1,994 106,200 - 452,780 922 346,500 905,183 200 Dividend on Government's equity - - - - - 15,551 - 31,101 Net increase in non-cash working capital 7,437 10,205 - 14,104 105 Total 9,431 106,200 - 452,780 11,127 362,051 919,287 31,406 Cash surplus for the year (686) 29,822 14,253 31,511 11.575 31,646 5,941 31,904 Cash balance at start of year 20,078 20,078 19,392 49,900 33,i45 81,411 45,220 113,057 Cash balance at end of year 19,392 49,900 33,645 81,411 45.220 113,057 51,161 144,961 Source: PAN, Consultants, Bank Missions August 1980 -70- Table 8 MAURITANIA PROJECT COMPLETION REPORT NOUADHIBOU PORT PROJECT Composition of fishing fleets expected to be authorized to oBerate in Mauritania waters in 1983 (No. of vessels) Freezing Ice Pelagic Trawlers Trawlers Seiners Total Total 69 237 41 347 of which: Landing in Nouadhibou - 207 41 248 Transshipment Nouadhibou 22 - - 22 Total 22 207 41 270 Authorized to land in other ports/l 47 30 - 77 /1 Temporary authorization until completion of shore plants. - 71 - Table 9 NOUADHIBOU PORT PROJECT Government Tentative Objectives for Landingsand Transshipment Operations at Nouadhibou (demereal species: '000 t) Octopus Deme:sal Total 1981 20 23 43 1982 45 51 96 1983 83 90 173 1984 103 110 213 1985 106 117 217 Source: Ministry of Fisheries and Mauritania affairs. Tentative estimates. - 72 - Table 10 NOUADRIBOU PORT PROJECT Revised Traffic Forecasts (000 tons) Actuals Forecasts 1978 1979 1980 1981 1982 1983 1984 1985 1. Fishing Whar*, Fish Landings: Demersal 21 12 5 15 30 50 70 90 Pelagic (fishmeal) 40 42 25 40 60 80 100 100 61 54 30 55 90 130 170 190 Supplies Fishing Vessels (fish, water, ice) 52 18 19 30 60 80 100 120 Total fishing wharf 113 72 49 85 150 210 270 330 2. Transhipment Fish Products -- -- 80 80 90 90 100 100 3. Comercial Wharf Food 19 17 24 25 26 27 29 30 SNIM/COMINOR 20 24 35 35 35 35 35 35 Other imports 9 7 7 8 9 10 11 12 48 48 66 68 70 72 75 77 Guelbs project -- -- 8 30 40 20 5 -- New industries 3 4 6 8 10 48 48 74 101 114 98 88 87 Exports Frozen fish 22 11 5 12 25 40 50 70 Fishmeal 8 7 5 8 12 16 20 24 Fish-oil 1 1 1 2 3 4 5 5 Other fish product 1 1 1 1 1 1 1 1 32 20 12 23 41 61 76 100 Miscellaneous 1 2 2 2 2 2 2 3 33 22 14 25 43 63 78 103 Total commercial port 81 70 88 126 157 161 166 190 Total port teaffic 194 142 217 291 427 461 536 620 Total exclud. transshipment 194 142 137 211 307 371 426 520 - 73 - Table 11 NOUADHIBOU PORT PROJECT Actual Investment Costs used for Economic Reevaluation (million UM) 1976 1977 1978 1979 1980 Total I. Fishing Port 1. Fishing berth & dredging 253 206 -- -- -- 459 2. Sewerage -- 7 53 7 -- 67 3. Sailor club -- -- 18 36 36 90 4. Other buildings (50%) -- 10 1 -- -- 26 5. Supervision (50%) 3 5 3 3 3 17 6. Launch (50%) -- -- -- -- 3 3 7. Technical assistance (50%) -- -- 6 5 1 12 8. Ship repair center study -- -- 6 7 -- 13 Total cost (current prices) 253 228 102 58 43 687 Cost 1980 const. prices 377 297 120 64 43 901 II. Commercial Wharf 1. Wharf extention, dredging 190 112 -- -- -- 302 2. Access jetty -- 140 -- -- -- 140 3. 3uildings (50%) -- 10 15 -- -- 25 4. Supervision (50%) 4 5 4 4 1 18 5. Launch (50%) -- -- -- -- 2 2 6. Technical assistance (50%) -- -- 6 5 1 12 Total cost (current prices) 194 267 25 9 4 499 Cost 1980 const. prices 289 347 29 10 4 679 II. Total Project Total cost (current price) 447 495 127 67 47 1186 Total cost 1980 const. prices 666 644 149 74 47 1580 - 74 - Table 12 MAURITANIA PROJECT COMPLETION REPORT NOUADHIBOU PORT PROJECT Operating Cost and Profits From Freezing Operations ($ per ton of frozen fish) Benefits for Other Benefits for Octopus Mauritania Demersal Fish Mauritania Sale price 2,500 1,250 Cost Raw material 1,500 690 Manpower local 30 15 27 13 Manpower expatriate 20 15 Fuel, electric, water 30 30 Maintenance 25 25 Storage Packing 22 18 Hnndling, port dues 17 8 15 5 Overhead, other costs 15 15 Depreciation 20 20 Total cost 1,679 855 Gross margin before export t , 821 395 Export tax- 275 275 122 122 Gross margin after export ta7 546 273 Income tax! 153 153 76 76 Profit 393 197 Mauritania share of profit (51%) 200 100 651 316 Equivalent UM 29.295 14,220 1/11% of FOB sale price for Octopus and 9.75% FOB sale price for other demersal. 2/Assuming that some corporations will request to benefit of tax excavation have been assumed to increase from $75/ton to $153 during the 1980-85 period for Octopus species and from $40/ton to $76 for other demersal species. MAURITANIA PROJECT COMPLETION REPORT NOUADHIBOU PORT PROJECT Cost, Benefits and IRR Fishing Port Investments (million 000) Full Utilization Full Utilization Full Utilization Revised Best Estimate New Ber-i in 1990 New Berth in 1987 New Berth in 1982 Tons-- IRR Tons IRR Tons IRR Tons IRR Cost)' (000) Benefits (%) (000) Benefits () (000) Benefits (%) (000) Benefits (M) 1976 377 - 1977 297 - 1978 120 - 1979 64 - 1980 43 - 1981 - 1982 -10 220 10 220 50 1,100 1983 10 220 10 220 10 220 50 1,100 1984 30 660 10 220 10 220 50 1,100 1985 50 1,100 10 220 10 220 50 1,100 1986 50 1,100 10 220 10 220 50 1,100 1987 50 1,100 10 220 50 1,100 50 1,100 1988 50 1,100 10 220 50 1,100 50 1,100 1989 50 1,100 10 220 50 1,100 50 1,100 1990 50 1,100 50 1,100 50 1,100 50 1,100 & after 50 1,100 With estimated benefits 28 21 24 35 W Benefits per ton reduced 50% 20 15 18 25 Benefits per ton reduced 30% 24 18 21 30 1/Total investment cost for the fishing port activity I.e. berth construction dredging out other component related to fishing activies. 2/Tons additional tons landed at the new berth. Assuming full utilization with 50,000tlyear. 3/Assuming that 50% of landings are octopus and 50% other. MAURITANIA PROJECT COMPLETION REPORT NOUADHIBOU PORT PROJECT Cost and Benefits -- Connercial Port investments (million UM) Costs Savings Savings Savings Cargo Savings Possible Civil Ship Service Stevedoring Losses During Savings Shore Savings Approachway Revenues From Works Others Total Time Costs Lighterage Handling Costs Shore Loses Maintenance Total Fish Landings 1976 289 - 289 -10 10 - 1977 334 13 347 - - - - - 15 15 - 1978 29 29 9 5 8 10 14 20 66 - 1979 10 10 a 5 7 8 12 15 55 - 1980 4 4 9 6 9 10 15 10 59 - 1981 13 9 14 15 22 10 53 - 1982 17 11 17 19 28 10 102 - 1983 t8 11 17 19 28 10 103 46 1984 18 it 18 19 29 10 105 46 1985 20 13 20 21 32 10 116 46 1986 21 13 21 22 23 10 120 46 1987 22 14 21 23 34 10 124 46 1988 22 14 22 23 35 10 126 23 1989 24 15 23 24 37 10 133 23 1990 25 15 24 25 38 10 137 23 1991 27 16 25 26 40 10 144 - t 0 1992 27 17 26 28 41 10 149 - oo 1 1993 28 18 28 29 43 10 156 - M 1994 28 18 29 30 45 10 160 - F 1995/2005 30 19 30 31 47 10 167 - 0-M Basic assumptions made are conlained In the note on pages 2 and 3. - 77 - Table 14 Page 2 of 3 Basic Assumptions Used tor the mecaiculation of the ERRof Investment at the Cormercial Wharf Project costs (1980 prices) - Civil works: Wherf extension, dredging and reconstruction of the access causeway. Total UM 623 million. - Other costs: 50% of costs for supervision, administrative build- ings technical assistance and launch, the remaining 50% being allocated to the fishing port extension. Ship time savings Savings resulting from extension of the wharf and possibility to increase the number of hatches worked simultaneously for larger ships (2,000 GRT or more) i.e. 65% of general cargo traffic; assuming that average number of hatches worked will increase from an average of 2.5 (without project) to 2.9 (with project); assuming an unloading rate increasing from an average of 6 to 8 tons/gang/hour of ship berthing (or 10 to 13 tons/gang/working hour) and a weighted average of ship cost in port of UN 10,575 per hour (US$235). For the calculation of theERR , it has been assumed that only 75% of savings will effectively accrue to Mauritania. Savings on stevedoring costs Includes elimination of shifting operations for longer ships (from extension of the wharf) and reduction of lighterage operations for heavy lifts (resulting from the access causeway reconstruction) and for large ships which can now operate along side the wharf (resulting from dredging). Stevedoring cost savings estimated at UH 225/tons for lighterage avoidance and UM 40/tons for along side operations (mainly shifting). - 78 - Table 14 Page 3 of 3 Savings on cargo losses during lighterage Losses during lighterage estimated about 1.2% of cargo handled. Average value of cargo about tM 58,500/ton ($1,300). Reduction of shore handling costs Use of trucks and trailers on the approachway instead of moving cargo to the storage facilities with small carry cranes of 2 to 3 ton maximum capacity. (The rehabilitation of the approachway has eliminated weight restrictionsfor shore handling operations). Savings estimated of about UK 166/ton, and assuming that 70% of traffic at the wharf will benefit from this improvement. Savings on cargo losses during shore handling operations Saving from the improved circulation conditions and handling methods on the widened approachway. Savings estimated of about UM 175 per ton (0.3% of traffic handled. Average value of cargo of UM 58,500). Savings on maintenance costs of the approachway Assuming that without the project about UM 60 millions (i.e. one third of the rehabilitation cost of the access causeway) would be needed during the 1976-79 period just to maintain the structures of the causeway in the 1975 conditions and about UM 10 million per annum thereafter. Possible additional benefits from utilization of the commercial wharf for fish landings operations Assuming that about 2,000 tons p.a. of demersal fish will be landed at the wharf when it will not be utilized by cargo ships during the 1983-1987 period. This will represent the utilization of about 50 meters of berth about 30% of the time during the 1983/87 period. Landings estimated to be reduced to only 1,000 tons during 1987-90 period. Benefits for Mauritania UM 23,000/tons ($500/tons). MAURITANIA NOUADHIBOU PORT PROJECT PROJECT COMPLETION REPORT REVISED PROJECT IMPLEMENTATION SCHEDULE 1975 1976 1977 1 78 1979 1990 21 2 3 4 1 2 3 4 1 2 3 4 1 2 4 1 213 4 ENGINEERING PRELIMINARIES Completion of Tender Documents. CONSTRUCTION: OF WORKS Invitation to Bid I Tender Period Report on Tenders to Bank M Board Presentation Award of Contract Mobilization Dredging Works Commercial Berths Construction Fishing Berths Construction Approachway Reconstruction Buildings Sewerage Scheme EQUIPMENT Procurement of Launrh TECHNICAL ASSISTANCE implementation SHIP REPAIR STUDY mImplementation World Bank - 22007 ISLAMIC REPUBLIC OF MAURITANIA PORT OF NOUADHIBOU EXISTING INSTALLATIONS AND PROJECT Apici STACKING YARDS 61 EGA QRy SH PLA RBORFRAMA L\GHITE RAG AR Co"IL¯p.ANT RAM?$ FIOR F UM FiSHING CRAET C edged tO 700 C. Dredged ' IBRD11099R1(PCR) AUGUST 1980 9 A LGE R IA - 20- 20 Nouckchofl - \%,M A L l - «' 1 Doklr /-\.-- --l -. BnP PER.NGE - -VOLTA 7-1 P p -C Custors Boundory PRcESdr FC'ýAN Exstsing Facilities Facilifties Constru,;ed under Proiect L ý•1 Areas Dredged under PrOject Railways Barhymnetric L.ines in Meters - -- EENT evel is below low water ordinory spring tides rojeC shown in red r,, / This map, s based n 18R D , 10991. 1HPANTtorf tteprsnstuto -PO 0 ç 20 60 100 140 ' METERS 0 100 2 0 300 40 50 \ FEE T D. e . o - •resnDiedgedBundry 1b L~~4 s/re CF~4 Bae de tr ine nMtr Thissis m 60 has beennpreparOJ lyu of heteaorsofthireorttohr prisettseeThtdSomntton iitdandth bounOnesshoniortham7p oCnoiunry.ert he prt o th WrliBrr,anadt ofsoe n og eto h ea ' ttu atan ten0r o2nyen0se e 0 10 0 10 40 acenplanc or suchboundane tM EERS ' .,0 ~ C0 0 20 30 40 -pmf or .. b~ ~EETj - - - ~KILOMF TERS