AFRICAN DEVELOPMENT BANK Language: English Original: French

REPUBLIC OF TUNISIA

RAILWAY INFRASTRUCTURE

MODERNISATION PROJECT (PHASE II)

APPRAISAL REPORT

INFRASTRUCTURE DEPARTMENT ONIN NORTH, EAST & SOUTH REGION September 2003

TABLE OF CONTENTS

Page

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS (i) - (viii) 1. INTRODUCTION 1 Project Origin and Background 1 2. THE TRANSPORT SECTOR 2 2.1 The Transport System 2 2.2 Sectoral Overview 2

2.3 Donors’ Interventions and Sectoral Constraints 3 2.4 Transport Policy, Planning and Co-ordination 4

3. THE RAILWAY SUB-SECTOR: SNCFT 5 3.1 Institutional Framework 5 3.2 Organisation and Management 6 3.3 Staff and Training 6 3.4 Accounting and Audit 7 3.5 Retrospective Financial Analysis 8 3.6 Operating Resources 12 3.7 Railway Investments 14 4. THE PROJECT 15

4.1 Project Design and Justification 15 4.2 Project Area and Beneficiaries 16 4.3 Strategic Context 16 4.4 Objectives 16 4.5 Description of Project Outputs 17 4.6 Market and Tariffs 18 4.7 Environmental Impacts 20 4.8 Project Cost Estimate 22 4.9 Sources of Finance and Disbursement Schedule 23

5. PROJECT IMPLEMENTATION 24

5.1 Executing Agency 24 5.2 Institutional Arrangements 24 5.3 Implementation and Supervision Schedule 25 5.4 Procurement Arrangements 26 5.5 Disbursement Arrangements 27 5.6 Monitoring and Evaluation 27 5.7 Audit and Financial Reports 28 5.8 Aid Co-ordination 28

TABLE OF CONTENTS (contd.)

Page

6. PROJECT SUSTAINABILITY AND RISKS 28

6.1 Recurrent Costs and Sustainability 28 6.2 Major Risks and Mitigating Measures 29

7. PROJECT BENEFITS 30

7.1 Financial Analysis 30 7.2 Economic Analysis 30 7.3 Social Impact Analysis 32 7.4 Sensitivity Analysis 32

8. CONCLUSIONS AND RECOMMENDATIONS 32

8.1 Conclusions 32 8.2 Recommendations and Loan Conditions 33

This report was prepared by Messrs. M.D. SANGARE (Principal Transport Engineer, ONIN.3, Ext. 2281), A.T. DIALLO (Principal Financial Analyst, ONIN.2, Ext. 3225), A.S. BA (Principal Transport Economist, Ext. 2621), M. V. JOGOO Environmentalist, PDSU, Ext. 2252) and Mrs. A. FOUICH (Gender Expert, PDSU, Ext. 3229) following their mission to Tunisia in September 2003. Any question relating to this project should be referred to the authors or to the Transport Division Manager (Mr. J. RWAMABUGA, ONIN.3, Ext. 2181) or the Department Director (Mr. K. BEDOUMRA, ONIN, Ext. 2040).

CURRENCY EQUIVALENTS, ACRONYMS AND ABBREVIATIONS

Financial Year 01 January - 31 December

Currency equivalents (September 2003)

Currency Unit = Tunisian Dinar (TND) 1 UA = TND 1.79436 1 TND = UA 0.557302 1 UA = USD 1.37727 1 UA = EURO 1.26043

Units of Measure 1 metric tonne = 2204 pounds (lbs) 1 kilogram me (kg) = 2.200 lbs 1 metre (m) = 3.28 feet (ft) 1 millimetre (mm) = 0.03937 inch (") 1 kilometre (km) = 0.62 mile 1 square kilometre km2) = 0.39 square mile 1 hectare (ha) = 2.471 acres

Acronyms and Abbreviations

ADB = African Development Bank CPG = Compagnie des Phosphates de Gafsa CSM = Commission supérieure des marchés (High Procurement

Committee Commission) DCDF = Direction centrale du domaine ferroviaire (Central Railways Department) DCERF = Direction centrale de l’exploitation du réseau ferroviaire (Central Railroad

Network Operating Department DDI = Department of Infrastructure Development DGPE = General Directorate of Planning and Studies DGTT = General Directorate of Land Transport DPCG = Département de la planification et du contrôle de gestion (Planning and Management Control Department EIB = European Investment Bank EURO = European Currency Unit (€) FBU = Freight Business Unit FD = Finance Department FRR = Financial Rate of Return GCT = Tunisian Chemical Group GDP = Gross Domestic Product IBRD = International Bank for Reconstruction and Development ICB = International Competitive Bidding IERR = Internal Economic Rate of Return KP = Kilometre Point LCB = Local Competitive Bidding MTC = Ministry of Communication and Transport Technologies MTND = Million Tunisian Dinars OACA = Office of Civil Aviation and Airports PBU = Phosphate Business Unit SNCFT = Société nationale des chemins de fer tunisiens (Tunisian National Railways Corporation) SOTRAFER = Société des travaux ferroviaires (Rail Works Company) TSP = Transport Sector Project (Programme) UA = African Development Bank Unit of Account UABS = Sahel Suburb Business Unit UABT = Tunis Suburb Business Unit

LIST OF TABLES

3.1 Summary of Operating Accounts 3.2 Summary of SNCFT Balance Sheet 3.3 Provisional Income Statement of SNCFT 3.4 Financing of the Maintenance of Fixed Installations 3.5 Investments under the 9th Plan 4.1 Traffic (1998-2002) 4.2 Tariff Increase of 2002-2006 Performance Contract 4.3 Summary Cost Estimate Net of Taxes 4.4 Financing Plan by Source, Component and Category of Expenditure 4.5 Disbursement Schedule by Source of Finance 5.1 Provisions for the Procurement of Works, Goods and Services

LIST OF ANNEXES

1. Map of Tunisian Railway Network 2. SNCFT Operating Accounts and Balance Sheets 3. Summary of Estimated Project Cost 4. Detailed Cost and Procurement Methods Adopted 5. Implementation Schedule 6. Assumptions for Financial Projections 7. Environmental and Social Management Plan 8. List of Documents Consulted.

i

AFRICAN DEVELOPMENT BANK TEMPORARY RELOCATION AGENCY (ATR-TUNIS)

Tel: (216) 71.333.511, Fax: (216) 71. 333.680 BP 326, 1002 Tunis Belvédère, Tunisie

PROJECT INFORMATION

Date: September 2003

The information given hereunder is intended to provide some guidance to prospective suppliers, contractors, consultants and all persons interested in the procurement of goods and services for projects approved by the Boards of Directors of the Bank Group. More detailed information and guidance should be obtained from the Executing Agency of the Borrower. 1. COUNTRY AND NAME OF PROJECT: Republic of Tunisia: Railway Infrastructure Modernization Project (Phase II)

2. LOCATION: Northeast, Northwest, Centre-East, and Southeast and Southwest Regions of Tunisia 3. BORROWER: Republic of Tunisia 4. EXECUTING AGENCY: Société nationale des chemins de fer tunisiens (SNCFT).

67, Av. Farhat Hached, Tunis 1002 Tél. (216) 71. 348.4540 ; Fax : (216) 71. 345.680 E-mail: SNCFT.DI@PLANET.TN

5. LOAN DATA

a) Maximum amount: € 74.40 million (UA 60.66 million) b) Terms and Conditions i) Interest: Fixed rate ii) Commitment charge: ¾ of 1% per annum on the undisbursed loan portion, effective 60 days from the signing of the loan agreement. This rate will be reduced by a maximum of 50 base points, in line with the Bank rules.

iii) Duration: Twenty (20) years, including a grace period of five (5) years.

iv) Reimbursement: 30 semesters, starting from the

end of the grace period.

6. PROJECT DESCRIPTION: The project has two (2) components, namely an institutional studies component and a physical infrastructure modernisation investment component:

ii

The institutional studies component concerns the conduct of the following 4 studies: i) re-organisation of the design of the support units; ii) railway equipment strategy; iii) Introduction of cost accounting within the SNCFT; and iv) development of the environment of the maintenance workshops. The physical infrastructure modernisation investments component concerns the following works:

(i) Consolidation of infrastructure (strengthening of steel decks on the TA lines and line 1;

strengthening of 3 beam bridges on the TA line; stabilisation of the banks of the TA line; strengthening of the civil engineering structures (l>6m) on the Sfax-Metlaoui line; reconstruction of the bridges on the Graiba-Gafsa and Teb-Redeyef line; reconstruction of 9 arch bridges and replacement of the 7 steel decks of the structures on the Sfax-Metlaoui lines);

(ii) Improvement of the exclusive sites for the southern suburbs of Tunis (construction of 3

structures separating rail/road traffic in Rades-Meliane, Hamman Chatt and Borj Cedria); (iii) Upgrading of the facilities of the railway stations (fencing off the station premises and

construction works of the buildings that will host passenger in Ghardimaou, Gafsa and Ksar Hellal; and gangways for pedestrians);

(iv) Development of freight activities (construction of the Sousse freight market, connection

of Sfax, Ghanouch and Rades ports and line 7); (v) Construction of the maintenance depot of 10 electric wagons in Sousse; (vi) Renewal of the tracks on the TA line and line 6; (vii) Railway connection to “Cité Olympique de Radès”; (viii) Signalling and telecommunication (equipment of 40 level crossings and replacement of

17 others, supply and installation of signalling equipment for the Monastir-Mahdia section, supply and installation of the channel banks and the GSM-R coverage network for the installation of the ground-to-train radio communication equipment).

7. TOTAL COST: UA 67.32 million i) Foreign exchange cost: UA 60.66 million ii) Local currency cost: UA 6.66 million 8.BANK GROUP LOAN ADB: 60.66 million UA (74.40 million €) 9. OTHER SOURCES OF FINANCE Government: UA 6.60 million 10.LOAN APPROVAL DATE: December 2003

iii

11.PROBABLE PROJECT START DATE /DURATION: January 2003/ 48 months 12.PROCUREMENT OF GOODS, SERVICES AND WORKS:

• International competitive bidding for Works (i) Strengthening and repairs of the civil engineering structures on the TA line (Tunis-

Ghardimaou); (ii) Strengthening of the steel structure of the engineering structures on the TA line; (iii) Strengthening of the steel engineering structures on line 13 (Sfax-Metlaoui); (iv) Construction of the Sousse freight market; (v) Construction of the depot for 10 electric wagons in Sousse; (vi) Earthworks and drainage of the railway connection to “Cité Olympique de Radès”. Link and

(vii) Track-laying for the various sections of the Tunis-Ghardimaou and Tunis-Kasserine lines

and connection of the Sfax and Ghannouch ports, Rades-line 7, and rail connection to “Cité Olympique de Radès”.

Supply (i) Track equipment (rails, track devices) and link pins and sundry equipment; (ii) Sousse depot equipment and 2 weighbridges; (iii) installation of signalling equipment for the Monastir-Moknine sections and the rail

connection to “Cité Olympique de Radès”); (iv) installation of equipment for 40 level crossings (LC) and the replacement of 17 others; (v) installation of channel banks (ground-to-train telecommunication of the Tunis-Sfax line); (vi) installation of the GSM-R coverage network on the Tunis-Sfax line; and

(vii) horizontal girders (angle bars) for the production of twin-block concrete sleepers to be used

in the track-laying works.

iv

• Local competitive bidding for Works (i) Protection/stabilisation of the platform and banks of 19 sections of the TA line; (ii) Flood proofing (construction of hydraulic structures, including raising of the track and

temporary diversion) on the TA line; (iii) reconstruction of 2 bridges (Graiba-Gafsa and Tebeditt-Redeye line) and 9 arch bridges and

replacement of the steel decks on line 13 (Sfax-Metlaoui); (iv) earthworks and drainage for the junction line of the Sfax port (3 km) and “Gare radès”-line

7 link (0.5 km); and (v) Construction of 3 railway stations (Ghardimaou, Gafsa and Ksar Hellel), fences for the

station premises (13 km), 3 stations and 3 pedestrian bridges (Moknie, El Jem station and faculté line 22 stop).

Supply of

- ballast (395,000 m3) for various track-laying works.

13. CONSULTANCY SERVICES REQUIRED AND SELECTION STATUS:

• International competitive bidding on the basis of shortlists for the conduct of the following institutional studies: i) organisation of the dimensioning of the support units; ii) support for the overhaul of cost accounting within SNCFT; iii) medium-term strategy in the area of railway rolling stock; and iv) improvement of the environment of the maintenance establishments.

14. ENVIRONMENTAL CLASSIFICATION - Category II.

v

Year Tunisia AfricaDevelo-

pingCountries

Develo-ped

Countries

Basic IndicatorsArea ( '000 Km²) 164 30,061 80,976 54,658Total Population (millions) 2001 9.6 811.6 4,940.3 1,193.9Urban Population (% of Total) 2001 67.4 38.0 40.4 76.0Population Density (per Km²) 2001 58.4 27.0 61.0 21.9GNI per Capita (US $) 2001 2,070 671 1,250 25,890Labor Force Participation - Total (%) 2001 40.9 43.3 … …Labor Force Participation - Female (%) 2001 26.6 35.1 … …Gender -Related Development Index Value 1999 0.700 0.476 0.634 0.916Human Develop. Index (Rank among 174 countries) 2000 97 n.a. n.a. n.a.Popul. Living Below $ 1 a Day (% of Population) 1990 2.0 45.0 32.2 …

Demographic IndicatorsPopulation Growth Rate - Total (%) 2001 1.1 2.4 1.5 0.2Population Growth Rate - Urban (%) 2001 2.5 4.1 2.9 0.5Population < 15 years (%) 2001 28.9 42.4 32.4 18.0Population >= 65 years (%) 2001 5.9 3.3 5.1 14.3Dependency Ratio (%) 2001 53.6 85.5 61.1 48.3Sex Ratio (per 100 female) 2001 102.4 99.4 103.3 94.7Female Population 15-49 years (% of total population) 2001 28.0 23.6 26.9 25.4Life Expectancy at Birth - Total (years) 2001 70.6 52.5 64.5 75.7Life Expectancy at Birth - Female (years) 2001 71.9 53.5 66.3 79.3Crude Birth Rate (per 1,000) 2001 18.6 37.3 23.4 10.9Crude Death Rate (per 1,000) 2001 6.5 14.0 8.4 10.3Infant Mortality Rate (per 1,000) 2001 26.8 79.6 57.6 8.9Child Mortality Rate (per 1,000) 2001 31.7 116.3 79.8 10.2Maternal Mortality Rate (per 100,000) 1998 70 641 491 13Total Fertility Rate (per woman) 2001 2.1 5.1 2.8 1.6Women Using Contraception (%) 1998 60.0 … 56.0 70.0

Health & Nutrition IndicatorsPhysicians (per 100,000 people) 1997 70.0 36.7 78.0 287.0Nurses (per 100,000 people) 1994 257.6 105.8 98.0 782.0Births attended by Trained Health Personnel (%) 1999 82.0 38.0 58.0 99.0Access to Safe Water (% of Population) 2000 90.0 60.4 72.0 100.0Access to Health Services (% of Population) 1999 90.0 61.7 80.0 100.0Access to Sanitation (% of Population) 1994 80.0 60.5 44.0 100.0Percent. of Adults (aged 15-49) Living with HIV/AIDS 1999 0.0 5.7 … …Incidence of Tuberculosis (per 100,000) 2000 21.5 105.4 157.0 24.0Child Immunization Against Tuberculosis (%) 2000 97.4 63.5 82.0 93.0Child Immunization Against Measles (%) 1996 84.6 58.2 79.0 90.0Underweight Children (% of children under 5 years) 1997 3.8 25.9 31.0 …Daily Calorie Supply per Capita 2000 3,299 2,408 2,663 3,380Public Expenditure on Health (as % of GDP) 1998 2.2 3.3 1.8 6.3

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 1997 120.0 80.7 100.7 102.3 Primary School - Female 1997 117.0 73.4 94.5 101.9 Secondary School - Total 1997 64.3 29.3 50.9 99.5 Secondary School - Female 1996 64.5 25.7 45.8 100.8Primary School Female Teaching Staff (% of Total) 1998 49.2 40.9 51.0 82.0Adult Illiteracy Rate - Total (%) 2001 27.9 37.7 26.6 1.2Adult Illiteracy Rate - Male (%) 2001 17.7 29.7 19.0 0.8Adult Illiteracy Rate - Female (%) 2001 38.1 46.8 34.2 1.6Percentage of GDP Spent on Education 1998 7.7 3.5 3.9 5.9

Environmental IndicatorsLand Use (Arable Land as % of Total Land Area) 1999 18.3 6.0 9.9 11.6Annual Rate of Deforestation (%) 1995 0.5 0.7 0.4 -0.2Annual Rate of Reforestation (%) 1990 8.0 4.0 … …Per Capita CO2 Emissions (metric tons) 1997 … 1.1 2.1 12.5

Source : Compiled by the Statistics Division from ADB databases; UNAIDS; World Bank Live Database and United Nations Population Division.Notes: n.a. Not Applicable ; … Data Not Available.

TUNISIA: COMPARATIVE SOCIO-ECONOMIC INDICATORS

GNI per capita US $

0

500

1,000

1,500

2,000

2,500

19

95

19

96

19

97

19

98

19

99

20

00

20

01

Tunisia Africa

Population Growth Rate (%)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

19

95

19

96

19

97

19

98

19

99

20

00

20

01

Tunisia Africa

111213141516171

19

95

19

96

19

97

19

98

19

99

20

00

20

01

Tunisia Africa

Life Expectancy at Birth (Years)

Infant Mortality Rate ( Per 1000 )

0102030405060708090

100

19

95

19

96

19

97

19

98

19

99

20

00

20

01

Tunisia Africa

vi

REPUBLIC OF TUNISIA RAILWAY INFRASTRUCTURE MODERNISATION PROJECT –PHASE II

PROJECT MATRIX

HIERARCHY OF OBJECTIVES (N°) OBJECTIVELY VERIFIABLE INDICATORS (OVI)

MEANS OF VERIFICATION (MOV)

IMPORTANT ASSUMPTIONS /RISKS

SECTOR OBJECTIVE Enhance the efficiency and quality of services of the transport sector to help improve the competitiveness of Tunisian enterprises.

Infrastructure and services upgraded, construction of ports, rail and road networks interconnected in 2008, sector’s investments increased by 61%, up from TND 4,314 million in 2002 to TND 7,127 million in 2008, and the share of private investments from 40% to 60%

Transport statistics and annual statistics of Tunisia, MDC reports on the outputs of the 10th Plan

PROJECT OBJECTIVE Improve the efficiency and quality of service of railway transport by rationalising management costs and modernising infrastructure.

In 2008 time gain improved on the main lines: Tunis-Sousse-Sfax-Gabès (4H55 /5H15); Tunis-Ghard. (2H50/3H00); Tunis-Radès (10 mn by train/35 mn by car) Number of trains < 15 mn late increasing from 70% to 80%, number of phosph. trains more than 120mn late dropping from 91% to 20%, revenues from freight up from TND 30.4 million to TND 40.6 million

Financial adjustment of SNCFT including ratios: sal. /rec.trfc from 54% to 47%; debt coverage ratio from 1.3 to 2.1; leveraging from 0.45 to 0.39; and operating expenses from 0.88 to 0.82 and staff output (thousands of uk)/staffing from 602 to 852

Annual SNCFT balance sheet, annual status report and implementation of the 2002-2006 PC Idem Idem

Continuation of the macro-economic and sectoral reforms, including liberalisation of the transport services sector. Compliance with the Government’s commitments under the 2002-2006 PC

OUTPUTS Institutional component: studies conducted and relevant recommendations implemented. Physical railway infrastructure modernisation investments made.

4 Internal management rationalisation studies of SNCF conducted, conclusions and recommendations implemented. Facilities of Tunis-Ghard line, lines 1 and 6 consolidated, exclusive sites of the southern suburbs improved; beams of Gafsa and Aguila stations as well as the facilities of Gafsa, Ghard and Ksar Hellal updated; Sousse freight market and new depot constructed; Sfax, Ghannouch and Radès ports linked to the railway network, TA line (62 km of rail) and TK line (58,5 km of rail) renewed, appropriate signalling on the Monastir-Moknine line; Tunis-Cité Olymp. Radès train service provided and electrified; 35 base land stations and 111 mobile train stations constructed for the ground-to-train communication system between Tunis and Sfax; 47 computerised level crossings installed, including 17 renewed ones; structures for separating rail/road trafficconstructed at Borj Cedr, Hamman Liff and Hammam Chatt.

SNCFT status report, annual balance sheet of the 2002-2006 performance contract and supervision reports and PCRs Idem.

Respect of all the commitments undertaken by the co-financiers and all the partners involved in the implementation of the project.

ACTIVITIES/COMPONENTS 1. Rationalisation studies - Shortlists and procurements - Implementation, approval and application of recommendations 2.Infrastructure modernisation investments. Works: - Approval of BD & launching of ICB and LCB - Procurements - Works execution and acceptance

Supplies (track-rail equip, track devices, miscellaneous equip, weighbridges, depot equip. and 17 PN, ballast, sleepers) - Approval of BD and launching o ICB/LCB - Procurements - Contract performance and acceptance - Equipment supply, track-laying and acceptance Turn-key supplies (signalling equip. Ground -to-train radio communication, caten. and conversion post, 40 PN) - Approval of BD & launching of ICB - Procurements - Contract performance including installation and tests. - Preparation of the completion report

RECEIPTS AND RESOURCES (in million UA)

Receipt Item Costs Studies 1.14 Works 25.84 Supplies 31.62 Base total 58.60 Unallocated 8.71 Grand Total 67.32 Resources Sources Total (%) ADB 60.66 90% Gvt 6.66 10% Total 67.32 100

Signed contracts of all procurements of works, goods and services. Periodic reports - project implementation status - audit of project accounts - supervision, review and completion Periodic and final account of contract payment and disbursement status. .

Acceleration of bids examination and approval procedures. Compliance with contract performance deadlines.

vii

EXECUTIVE SUMMARY Project Background: In the run up to the application of the partnership agreements signed with the EU for the creation of a free trade area by 2008, and in keeping with market globalization as well as with attempts to improve the competitiveness of Tunisian exports, the Government drew up a transport strategy for the period 1997-2005, focusing on the implementation of appropriate sector reforms, upgrading of infrastructure and the integration of the various means of transport. The key objective of this strategy is to obtain, in the medium-term, as efficient and quality transport system and services at the lowest cost. The implementation of this project is part of efforts to attain the objective of competitiveness, by upgrading the railway infrastructure and rationalizing the management costs of transport. The investments under the present project are part of the Government’s investment programme for the 10th Economic and Social Development Plan (2002-2006). The implementation of the project is in line with the Bank’s operations strategy in the sector in Tunisia for the 2002-2004 period. Loan Objective: The Bank loan of € 74.40 million (UA 60.66 million) representing 90% of the total project cost,

will be used to finance the entire foreign exchange cost of the project. Sector objective and project objectives

The sectoral objective of the project is to enhance the efficiency and quality of service of the sector with a view to improving the competitiveness of Tunisian enterprises in order to open the national market to foreign competition. The specific project objective is to enhance the efficiency and grade of service of railway transport by modernising the infrastructure and rationalizing the management costs of the railway company, SNCFT. The investments envisaged will also allow back up the financial rehabilitation of the company under the ongoing 2002-2006 performance contract. Brief description of project outputs: The project has 2 components: an institutional component and a physical railway infrastructure modernisation investments component. The institutional component aims at the implementation and application of the pertinent conclusions and recommendations of the following studies: i) organisation of the dimensioning of the support units; ii) support for the overhaul of the cost accounting within SNCFT; iii) medium-term strategy regarding the railway rolling stock; and iv) improvement of the environment of maintenance establishments. The physical infrastructure modernisation investments component concerns the upgrading works and equipment of the various railway lines (Tunis-Ghardimaou -TA, Monastir-Mahdia, Tunis-Kasserine, Sfax-Metlaoui, Graiba-Gafsa and Teb-Redeyef) and fixed installations (station buildings and track beams, construction in Sousse of a new freight market and an electric wagons maintenance depot), installation on the railway network of computerized level crossings and/or construction of structures separating rail/road traffic, supply and installation of appropriate signalling and equipment of the ground-to-train radio communication system), connection of Sfax, Ghannouch and Rades ports to the railway network, rail connection of the southern suburbs of Tunis.

viii Project cost:

The estimated total project cost net of taxes is TND 120.78 million (UA 67.32 million), comprising TND 108.86 million (UA 60.66 million) in foreign exchange and TND 11.92 million (UA 6.66 million) in local currency, representing 90% and 10%, respectively, of the total cost. These costs were estimated on the basis of recent unit prices of similar bids in Tunisia. Provision was made for physical contingencies of 5% and 10% of the base costs estimated for studies and works, as well as supplies. Provisions for price escalation were determined, depending on the individual implementation schedule of each of the project components, on the basis of an annual inflation rate of 2.8% and 2% on the base costs in foreign exchange and local currency, respectively. Source of finance: The project is jointly financed by the Tunisian Government and the Bank; ADB financing covers the foreign exchange cost representing 90% of the total project cost, i.e. UA 60.66 million; the Government will finance the balance of the total cost, representing 100% of the local currency cost of the project, i.e. TND 11.92 million equivalent to UA 6.66 million. Project implementation: Project implementation will stretch over a period of 4 years (48 months), starting from January 2004. The technical management of project implementation will be provided within SNCFT, through the two Departments of the Central Railways Department of Tunisia (Direction centrale du domaine ferroviaire tunisien - DCDFT), notably the Department of Infrastructure Development which is in charge of infrastructure works (civil engineering, engineering structures, buildings, etc.) and the Department of Superstructure for track-laying and the installation of track equipment (signalling and telecommunication, etc.). The Department of Management Planning and Control (DPCG) will monitor the rationalisation studies. This management plan for project monitoring may be considered adequate and appropriate for the success of the project. It has stood the test of time, especially in the implementation of recent projects managed by DCDFT. Conclusions and recommendations: The project submitted to the Bank for financing is in keeping with the Institution’s operational strategy in the sector. The implementation of the project is also in line with the objectives pursued by the Government in the sector and with the investment programme adopted for the 10th Plan. The planned investments are limited to the priority needs of SNCFT and will enhance its transport capacity so as to enable it to efficiently withstand competition in the market areas where it has comparative economic and financial advantages. From the socio-economic point of view, the implementation of the project will facilitate the movement of the populations on the inter-city lines and the 2 major suburbs of the country (Tunis and the Sahel region –Sousse-Monastir-Mahdia), promote trade between Tunisia and Algeria, especially with the resumption in June 2003 of the Tunis-Annaba international passenger link. It will also create jobs during the works (labour and opportunities for suppliers and local contractors) and in the commissioning phase of the upgraded infrastructure (increased activities in the ports connected to the railway network and other service activities in the upgraded stations, etc.). It is recommended that a loan not exceeding UA 60.66 million be granted to the Tunisian Government to implement the project as described in this report, subject to the conditions set forth in the Loan Agreement.

1. INTRODUCTION Project Origin and Background 1.1 Following its admission to the WTO and with a view to the application of the partnership agreements with EU, the Tunisian Government developed a transport strategy for the period 1997-2005, aimed at implementing appropriate sector reforms, upgrading the infrastructure and integrating the various means of transport. The key objective of this strategy is to have in the medium-term a system and efficient quality transport services at the least cost, that can fully play their socio-economic role in the growth of the national economy and help improve the competitiveness of Tunisian export enterprises, by reducing the forwarding time and therefore the transport costs. 1.2 During the period 1997-2001, the Government, with the assistance of the various development partners, embarked on many institutional reforms and significant infrastructure upgrading investments (motorways, modernisation of the classified road network, main airports and ports, fixed railway installations, dual carriageways and electrification of the railway lines, etc.), which enabled the sector to achieve a 5.5 % growth rate over the period. The broad outlines of the 10th Plan (2002-2006) focus primarily on continuing the upgrading programme of the sector, with as overall objective, among others, the speeding up of reforms and the achievement of a sector growth rate of 5.5%. Investments earmarked for the sector amount to TD 7.13 billion, corresponding to 19.2% of the total investments programmed for the 2002-2006 period. In the railway sector, the volume of investments earmarked for SNCFT, amounts to TD 450 million, with 74% on external financing. This amount is equitably distributed among projects relating to fixed installations and equipment. 1.3 This project, which is part of the investment programme, was identified during various Bank missions in 2002. It has two components: the institutional component relating to the programme of streamlining the management of the National Tunisian Railways Corporation (SNCFT), undertaken during the 9th Plan (1997-2001), and a physical modernisation investment component of the fixed railway installations. 1.4 The implementation of the present project is also in line with the Bank’s assistance strategy in Tunisia for the period 2002-2004, whose operational thrust in the transport sector is the continuation of the economic infrastructure strengthening and upgrading programme to enhance the country’s competitive ability in production and service, faced with the demands of market globalisation and opening on the European market. In May 2003, the Government conducted an official financing survey on the project, after which the Bank organised a preparation mission in June 2003. 1.5 The present report was prepared following the September 2003 appraisal mission. It is based on the report of the preparation mission, reference documents and recent discussions with the Tunisian Authorities.

2

2. THE TRANSPORT SECTOR 2.1 The Transport System 2.1.1 With an estimated value added contribution of about 6% of GDP achieved to the tune of 48%, 30%, 17% and 5% respectively in the different road, air, sea and rail sub-sectors, the transport sector registered an annual growth rate of 5.5% during the period of the 9th development plan (1997-2001) and provided over 140,000 direct jobs, representing more than 4.5% of the employments of the working population. 2.1.2 The infrastructure, backup of the transport system, is in relatively good condition and the level of equipment is considered satisfactory, with an average road network density of 70 ml/km² comprising a classified network asphalted to nearly 70%, 192.5 km of motorway whose length will be increased to about 450 km in 2006, 60,000 km of regional and agricultural feeder roads, 7 international airports, 10 ports, about 2,000 km of railway lines. 2.2 Sectoral Overview

Road transport 2.2.1 Road transport remains the predominant means of transport. It enables 305,400 people to travel daily and provides the transportation of 192,200 tonnes of goods, representing a market share of 95.3% and 88.5% respectively. Nearly 41.4% of the movements are by private vehicles on the national road network known as classified, which serves all the governorates of the country and provides a link with the neighbouring countries. The traffic volume on the main roads of the network reaches daily flows exceeding 3,000 veh/day on 3,970 km and 5,000 veh/day on 2,130 km, i.e. about 33 % and 18 % respectively of the asphalted road. Thus end of 2001, the traffic volume, in terms of the average daily flow per annum for the total asphalted network, is estimated at 4,750 veh/day. According to the results of the study of a national transport master plan (PDNT), the travel demand should increase on average by 3.5 % per annum between 2000 and 2006 and by 4.7% thereafter to attain 713,800 passengers/day in 2020. The demand for goods transport should increase by 6.5% on average per annum between 2000 and 2006 and by 8.1% between 2006 and 2020 to handle 92% of the market share of road transport. Railway transport 2.2.2 The railway network totalling 2,168 km of lines, with 1,867 km in operation, is essentially a single track (2,074 km) and metric gauge (1,687 km). 65 km of the lines are electrified. The network runs from north to south with a backbone linking Tunis to the major industrial areas of the Centre and Southeast and an international line connected to the Algerian network and lines providing phosphate transport in the south. Of the total line in operation, 64% (1,190 km) is for mixed passenger and goods traffic and 36% (670 km) for goods traffic. Phosphates traffic traditionally accounts for nearly 70% of the goods traffic. 2.2.3 Railway transport handles annually the movement of 35 million passengers on the main lines and 13 million tonnes of goods, including 8 million tonnes of phosphate, representing 4.4% and 14.1% respectively of the market share of passenger and goods transport. The global annual traffic has remained almost static in the last two decades, resulting in the loss, by the railway, of a significant share of the transport market. Following the internal re-organisation of the railway enterprise into five transport business units, the implementation of adequate commercial measures and a tariff increase under the performance

3

contract – PC (1997-2001), the global traffic increased slightly with a resumption of the passenger traffic and phosphate transport, to reach 3.51 billion unit-km (u.k) in 2002. However, the financial performance of the company fell short of the financial targets set under the PC. The new PC for the 2002-2006 period is essentially aimed at achieving the financial balance of the company. Detailed analysis of the railway sub-sector and the performance of SNCFT are given in chapter 3. Sea transport 2.2.4 The port infrastructure is fairly well developed with ten (10) ports. The largest, in terms of their characteristics are Goulette (1.090 m of docking space), Radès (1.110 m of docking space), Sfax (1.040 m of docking space) and Tunis (860 m of docking space). The main ports are concentrated in a distance of 200 km from Bizerte to Sousse and, consequently, can be easily integrated to strengthen their complementarity and better share traffic between them. 2.2.5 The volume of external maritime trade in 2001 was about 27 million, with 22 million tonnes unpackaged (cereals, phosphate, kerosene, gas, etc.) and 5 million tonnes of sundry goods (textiles, automobile components, etc.). Tunisia has at present a fleet of 20 boats 15 of which are owned by private individuals. The productivity of the sub-sector remains low; the main Radès port suffers from congestion as a result of bureaucracy in port operations, which are exclusively owned by a state company (STAM). To improve the quality of services, reforms were initiated in 2001 in order to introduce competition in port services and operations. In addition, the Radès port modernisation works are in progress through the construction of a container wharf and a dry port. Air transport 2.2.6 Tunisia has 10 airports, the major ones being Tunis, Monastir, Jerba, Sfax, Tozeur and Tabarka. The first three are benefiting from significant investments to increase their capacity. The airports comply with international standards and their management is entrusted to a State structure, OACA (Office de l’aviation civile et des aéroports), which is also responsible for construction, maintenance and supply of airport equipment; it also contributes to air navigation safety. The management of OACA is satisfactory, so also is its self-financing capacity. 2.2.7 Several foreign European and national companies provide air transport with an overall traffic of about 10 million passengers per annum mainly handled by the three main international airports of Monastir, Tunis-Cathage, while tourist traffic accounts for over 85% and is characterized by its concentration in time (70% of the annual traffic takes place between April and October of the year). Domestic traffic is low and on the decline with about 600,000 passengers (6.2%), owing to the low domestic demand between the main urban centres. Since 1997, airfreight stands at an average level of 3 million tonnes per annum. 2.3 Donors’ Intervention and Sectoral Constraints 2.3.1 In spite of an infrastructure in relatively good state and a satisfactory level of equipment, the transport system shows certain qualitative weaknesses, especially in terms of the limited service of the road network. This betrays gaps in the gauge and structural state of the surface of most of the roads and the low productivity of sea and rail transport, resulting in a still greater commitment of the State to the provision of services.

4

Donors’ intervention 2.3.2 Substantial investments and institutional reforms were embarked upon during the period 1997-2001 with the financial support of the various stakeholders in the sector (ADB, IBRD, EIB, FADES and JBIC) to remedy these shortcomings and upgrade the sector. In effect, during the period, in keeping with its operational strategy in the sector defined in the different CSP, the ADB financed over the 1997-2001 period, 3 road projects aimed at the construction of 1,500 km of roads and the railway infrastructure modernisation project jointly financed with EIB and IBRD; the latter also financed the transport sector programme (TSP). FADES and JBIC participated in the extension of the highway programme and in the electrification of the track of the southern suburb of Tunis. Constraints of the sector 2 .3.3 In general, the different projects financed in the sector do not encounter specific implementation problems. Data on the sector is available; the staff of the project executing agencies are competent and experienced. There is also efficient internal control of the utilisation of project funds; in addition, the public contracts code was modified in December 2002 to introduce greater objectivity and transparency in the contract award procedures. However, increasingly, the bureaucracy observed in the approval procedures of contract documents at the level of the High Purchasing Committee (HPC) adversely affects the implementation of projects in terms of cost and efficiency and becomes a demobilisation factor of the executing agencies. At the institutional level, the actual implementation of the reforms undertaken to liberalise the sector is deemed slow. 2.3.4 Overall, it follows from the above that the present constraints on the implementation of transport sector programmes arise mainly from the bureaucracy observed in: (a) the procurement procedures adopted by the HPC for the physical implementation of projects; and (b) the actual implementation of the reforms undertaken to liberalise the sector. These difficulties are discussed by the leading stakeholders in the sector, notably between IBRD and ADB in their regular consultation during the supervision of ongoing projects TSP-2 and the railway modernisation project. For delays in the procurements submitted to the control of the HPC, the Government’s attention has been drawn to the necessity to lighten the approval process of contract awards. With regard to the slow application of reforms in the sector, accompanying actions and measures are underway to speed up this process with the assistance of the various donors under the programme to improve the competitiveness of the Tunisian economy. 2.4 Transport Policy, Planning and Co-ordination 2.4.1 The country’s transport policy aims at introducing an efficient transport system at the lowest cost, reflected in the key policies taken, namely: (i) modernisation of transport capacities and increase in capital productivity; (ii) reduction of the scope of public regulations for greater liberty to operators in order to optimize the combinations of factors; and (iii) promotion of multi-modal transport as well as integration of Tunisian transport operators into the international networks. 2.4.2 In the railway sub-sector, the policy has focused on a commercial orientation for SNCFT, against the general background of a competitive transport market. Its implementation, initiated under the 1997-2001 performance contract signed between the State

5

and SNCFT, is ongoing under 2002-2006 performance contract, whose implementation period corresponds to that of the 10th Economic and Social Development Plan. Investments programmed in the sub-sector, especially those of the present project, are part and parcel of the commitments taken by the State under the implementation of the PC. 2.4.3 Responsibility for the organisation, management and coordination of transport sector activities, particularly the planning of sea and air transport, as well as the coordination and regulation of land transport falls on the Directorate General of Planning and Studies (DGPE) and the Directorate General of Land Transport (DGTT), which are the central services of the Ministry of Communication and Transport Technologies (MTCT). DGPE has supervisory authority over the management and operation of ports and railways, while DGTT is responsible for problems relating to tariff fixing, the issue of driving licences and transport permits to private enterprises and the technical inspection of vehicles. 2.4.4 With the implementation of the institutional reforms undertaken, the role of MTCT should tend towards strictly monitoring and regulating the transport market considering that central planning and supervision of public enterprises in the sector is diminishing as a result of the opening up to the private sector, or at least towards relieving these enterprises. Consequently, SNCFT, which is henceforth moving towards a competitive market, should strengthen its long-term strategic projection/planning. 3. THE RAILWAY SUB-SECTOR: SNCFT 3.1 Institutional Framework 3.1.1 SNCFT is an industrial and commercial public establishment, endowed with a legal status and financial autonomy. It is responsible for operating the railway network and, more generally, for managing the property allotted to it. It is placed under the supervision of the Ministry of Transport (MTCT). 3.1.2 Under the 9th Development Plan 1997-2001, the Government deeply reorganised the institutional framework of the company in order to adopt laws and regulations that reconcile the role and procedures of Tunisian public enterprises with the demands of an activity in a competitive environment. To do this, Law No. 69/31 of 9 May 1969 laying down the by-laws of SNCFT was repealed and replaced with a new law that adopts a concession system of public land for a minimum duration of 30 years renewable. Pursuant to this law, the Government grants SNCFT, under a concession agreement, the fixed installations, the track with its station premises and accessories, as well as all the railway public lands used or to be used for operating the railway network. In fact, the Government, by this act, granted to SNCFT the management of the railway public land, subject to payment by the company of an annual charge for the concession. However, the development of the railway sector, including investments occasioned by the new infrastructure, is still borne by the Government, which also remains the owner of the network and the extensions that will be built, whereas SNCFT provides operation and maintenance. 3.1.3 A performance contract for the 10th Plan (2002-2006) was signed with the Government and had the following global objectives: (i) achieve the operating account balance at the end of the fiscal year 2003 and be able to generate benefits, during the subsequent fiscal years, that enable the financial autonomy of the company and the development of its activity; (ii) realize a global turnover of 160 MTD in 2006 by

6

implementing a dynamic commercial policy; (iii) rationalise human resources notably by reducing the staff strength to 4589 employees at the end of 2006, compared to 6075 in 2001; et (iv) achieve a productivity level of 852 thousand unit-kilometres per worker (UK/worker) at the end of the 10th Development Plan in relation to 570 thousand unit-kilometres per worker in 2001, a level comparable to that of performing networks. 3.2 Organisation and Management 3.2.1 Under the implementation of the 1997-2001 PC, a new organizational strategy was adopted and put in place in 2000, based mainly on customer satisfaction and enabling increased staff responsibility and motivation. The implementation of this strategy has led to a re-organization of the structures reflecting corporate management by business units. This new structure is based on six (6) «business units» five of which are operational, the phosphates business unit (PBU), the freight business unit (FBU); business unit in the big suburbs (UABGL), business unit in the suburb of Tunis (BUST), and business unit in the suburb of Sahel (BUSS), which are responsible for the management and operation of railway transport activities and, a support unit, the industrial maintenance business unit (IMBU), which maintains railway equipment for the operational units. The Central Directorates of Railway Lands (DCDF) and Railway Network Operation (DCERF) maintain the management, operation and maintenance of their railway lands. Therefore, they manage the monitoring of outputs for investments in railway lands infrastructure and superstructure. 3.2.2 Each business unit, whose Director reports directly to the Managing Director, is allocated a budget in receipts and expenditure. It manages the technical and human resources allocated to it and is responsible for all the commercial aspects of its activity. In addition to these business units, there are two (2) general delegations: one is responsible for the environment and energy saving and the other for railway quality and safety. The Management of the enterprise maintains all activities relating to the centralisation of financial and accounting management, financial control and audit, as well as the definition of the general staff policy. 3.3 Staff and Training Staff 3.3.1 As at 31 December 2002, following departures on retirement in connection with the restructuring plan under the 1997-2001 PC and the TSP financed by IBRD, the staff strength was reduced from 7,030 in 1998 to 5,737 employees, representing a reduction of about 18.3% during the period. This staff rationalisation was implemented with a view to making the enterprise more competitive, with efficiency comparable to performing enterprises in the sector. The average staff age was 43 years in 2002, with a staff concentrated within the 36 to 45 (38.7%) and 46-55 (46%) age brackets. The breakdown by educational level shows that 67.9% of staff received secondary education, 20.6% primary education, 10.4% higher education, and that only 1.1% of the staff are illiterate. The female staff of SNCFT was 299, representing 5.2% of the total staff in 2002; the ratio remained constant during the 1998-2002 period. This staff comprised a majority of managerial staff (39.1%), line supervisors (31.1%) and functional staff (29.8%).

7

3.3.2 The 2002-2006 PC provides for a human resources rationalisation consisting in continuously adapting staff utilization to the real needs of the enterprise. Consequently, a framework law fixing staff requirements that correspond to the posts and functions of the various activities of the company was passed. This rationalisation will be effected through staff reduction against the compensation of 1,125 employees, excluding 613 departures on retirement, and by limiting recruitments for the period to the replacement of departures in the production activities, i.e. 50 employees per annum. The recruitment plan will be based on a temporary management model of relief staff for all functions. Likewise, provision is made to improve the level of skills of the workers in all the railway specialties by introducing a training contract used as a framework for new recruitments. This training contract will see the implementation of a retraining programme to facilitate the integration of workers redeployed in the production functions and the establishment of a close link between staff promotion and training. . Training 3.3.3 The SNCFT staff training policy focuses on various fields of activity in addition tothe general training. The company has a training centre in Hammam-liff within the Railway School, which has been operational since 1993, constructed with the corporation’s funds. The centre provides several types of training, particularly in pneumatics, science of heat, electronics, train driving, safety regulations, micro computing and quality. It has an admission capacity of 300 employees/day. It resorts to part-time teachers for further training cycles, or to specialised training firms. 3.3.4 The number of days-employees training (d-e-t) increased from 13 679 in 1997 to 16 545 days in 2002, representing an increase of about 30% during the period, with a training cost that has steadily decreased since 2000 (about 19%), following the introduction of a better programming and a new training policy that gives priority to in-house training. The training budget amounts to about 2% of the payroll charged by the State as training tax that must be utilized during the same fiscal year. 3.4 Accounting and Audit 3.4.1 SNCFT accounts have been kept since 1 January 1997, in accordance with the new Tunisian accounting system defined by Law No.96-112 of 30 December 1996. SNCFT currently has a centralised accounting system, which has facilitated the introduction of a general corporate accounting and data processing in real time. However, accounting entries are not integrated systematically for all financial and accounting operations (management of fixed assets, loans and cash operations). In effect, the cost accounting system has many shortcomings, especially the failure to reconcile general accounting expenses and those of cost accounting, and this does not allow for adequate management control. It is however planned to correct this discrepancy during the 10th Plan by finalizing all the general and cost accounting modules. 3.4.2 There are two levels of account control and auditing within SNCFT. The first level is the Internal Audit and Budget Control Department, which comprises two units: the Internal Audit Unit and the Statutory Audit Unit. The main responsibilities of the Department are: (i) management assistance which comprises salary audit actions, actions relating to stocks organisation and management, as well as the audit of receipt accounting; (ii) accounts audit and adjustment, audit of the motive power spare parts restocking system,

8

etc; (iii) study and design of stocks management manuals; (iv) monitoring of water, electricity and telephone consumption; and (v) processing and audit of expenses, as well as monitoring of the operating and investment budget. 3.4.3 However, the Internal Audit Unit does not have the human resources required to accomplish its tasks properly, especially the technical aspects, in view of the size of the corporation, the geographical spread of its operational centres and the diversity of its operations. Its staff is limited to three auditors, which falls short of the international standard of an average of 3 auditors for 1000 employees, i.e. around 18 auditors for a staff of 5,737 employees end of 2002. The Borrower’s commitment to beef up this unit will constitute a loan condition. 3.4.4 The second level is an external accounting firm serving as auditors. It audits and certifies accounts every year. Its reports are forwarded to the supervisory authority. 3.5 Retrospective Financial Analysis Assessment of the key results of the 1997-2001 PC 3.5.1 The restructuring of the railway sector was initiated with the signing of the 1992-1996 performance contract. It continued with the 1997-2001 performance contract under the 10th Development Plan, which sought mainly to i) prepare the railway tool with a view to adapting it to the liberalisation of the transport sector and to the change of the institutional framework as decreed by the State under the national transport strategy; ii) fix the technical, economic, social and financial obligations of SNCFT for the harmonious development of railway transport in Tunisia; iii) define and assess the costs that make the State compensate SNCFT for imposed public duty; iv) define the financial performance evaluation criteria to be met by SNCFT; and v) assess, notably the financial support to be given by the State for the construction of new infrastructure and the rehabilitation of the existing ones, and the annual assistance of the State for the obligations of public service and the implementation of the restructuring measures of SNCFT. This performance contract was accompanied by a corporate plan comprising performance indicators that enable the Board of Directors to assess the management quality of the enterprise for every fiscal year. 3.5.2 An evaluation of the results of the PC shows that the traffic objectives were attained. The result of railway transport showed a good performance throughout the 1997-2001 period. In terms of utilisation of the networks expressed in million unit-kilometres, there was a growth of around 3.6% between 1997 and 2001 with 101% implementation rate of the PC. The number of passengers transported increased from 17% during the period 1997-2001 and recorded a 108% implementation rate of the PC. Freight traffic showed a decline of about 5.5% during the 1997-2001 period, leading to a 95% implementation of the estimates of the PC. Freight was indeed affected both by the exhaustion of mineral resources giving rise to a considerable fall in iron ore transport and by the increasingly keen competition of private road transport, following the liberalisation of this traffic. 3.5.3 However, the financial objectives in terms of traffic earnings and operating incomes, were not achieved mainly owing to: (i) the low tariff increases applied, especially in the suburbs of Tunis and Sahel; (ii) the maintenance of service on the low traffic lines, which occasioned extra expenses of around 13 million dinars over the period 1997-2001 in respect of public service; (iii) non-compliance with the tariff adjustments provided for in the PC,

9

leading to a tariff deficit and a loss of 23 million dinars in revenues over the period 1997-2001 (i.e. 4.3 million dinars in the main lines, 4.8 million dinars in the suburbs and 14.4 million dinars in phosphates transport). These tariff deficits represent 45 % of the accumulated operating deficits over this period. 3.5.4 According to the 1997-2001 PC, the net income of the fiscal year should during the period of the 9th Plan, show a positive trend from the 2000 fiscal year through spending cuts and improved revenues. While the enterprise was able to cut down operating expenses by making savings of 30 MTD on consumed purchases during the period, the committed costs showed an overrun of 63.94%. This was owing to increase in amortization expenses because of the significant investments undertaken concurrently in the acquisition of 21 locomotives and the rehabilitation of varnish wagons and phosphates wagons on the one hand and, on the other, to financing expenses both in interests and exchange losses, resulting from borrowings for this purpose. However, the increase in amortization expenses during the period helped to a certain extent consolidate the self-financing capacity of the corporation. 3.5.5 It should be pointed out that SNCFT’s assessment of these exogenous factors and the adjustment to the financial performance of the enterprise give an amount comparable to that projected in the PC. Which means that without the impact of these exogenous factors, SNCFT would have achieved the financial objectives of the 1997-2001 performance contract .

Financial Status of SNCFT (1998-2002) 3.5.6 The financial analysis of SNCFT is based on the financial statements of the last five years 1998-2002 as given in Annex 2. A review of the operating accounts shows an overall improvement in the net income of activities even if it remains in deficit. The balance sheet structure is deemed solid with a balanced financial structure and an apparent return potential. SNCFT is quite solvent with its total balance sheet on the increase. 3.5.7 As shown in the annex, revenues rose from 95.95 MTD in 1998 to 103.78 MTD in 2002, representing a 7.5% increase over the period. This increase is explained in part by a growth of earnings from the transport of main line passengers. The operating incomes also increased slightly but stagnated in 2001 and 2002 at around 130 MTD. The operating expenses which showed a very high upward trend in 2000 has since then been curtailed and have shown a global drop of 5 % in the last three years, owing to the fall in the cost of consumed purchases over the period. This resulted in the recovery of the operating income, which plummeted from –10.49 MTD in 2000 to –6.52 MTD in 2002, representing an increase of 38%. The financial performance improved markedly following a very rapid growth between 1998 and 2001. This improvement stems from the significant drop in financial expenses of about 70% between 2001 and 2002 because of the advance payment of certain debts SNCFT owed to foreign suppliers for the purchase of 21 locomotives and the rehabilitation of 100 wagons. This positive trend of the financial performance coupled with that of the operating income, shows a net income throughout the period in distinct improvement –4.76 MTD since the 2000 fiscal year when it reached an amount of –18.78 MTD. Table 3.1 hereunder summarises the operating account of SNCFT during the 1998-2002 period.

10

Table 3.1: Summary of operating accounts (in million TD)

Description 1998 1999 2000 2001 2002 Revenues 95.95 100.70 98.76 99.12 103.78 Other revenues 28.75 31.7 35.14 31.58 26.42 Total operating proceeds 124.7 132.4 133.9 130.7 130.2 Operating expenses 132.0 133.1 144.4 138.1 136.7 Operating income -7.3 -0.7 -10.5 -7.4 -6.5 Non-operating revenues and expenses -0.1 -5.5 -8.3 -8.2 1.8 Net fiscal year income -7.5 -6.2 -18.8 -15.7 -4.8 Operating ratio (op. exp/turnover.) 1.05 1.00 1.08 1.06 1.05 Gross margin rate (res expl /ca) -5.85% -0.53% -7.84% -5.66% -4.99%

Source: SNCFT annual reports 3.5.8 The balance sheet structure of SNCFT for the same period is analysed through the annexed balance sheet. The table below shows the principal ratios covering the financial solidity, profitability and solvency of SNCFT. The equity represents about 50% of the total balance sheet, which demonstrates its sound financial autonomy and an improvement of the debt carrying capacity of SNCFT. The debts of the corporation are perfectly covered by its assets, twice on average and the fixed assets are adequately financed by invested capital to the tune of around 60% over the whole period. The general liquidity ratio has substantially increased over the 5 years to a point of covering its short-term bonds in 2002 with a ratio of 1.19. SNCFT owes this sound creditworthiness to the positive growth of its assets and to its mastery of the debt trend.

Table 3.2

Summary of SNCFT Balance Sheet (in million TD)

Description 1998 1999 2000 2001 2002 Fixed assets 484.78 542.23 565.39 582.13 602.46

Base stock and supplies 33.05 28.77 34.94 36.57 37.94

Customers and charged accounts 22.56 22.48 26.27 21.16 19.57

Cash and other current assets 40.35 55.18 64.73 76.15 92.45

TOTAL ASSETS 580.75 648.66 691.33 716.01 752.46

Equity 328.47 324.77 318.65 344.05 406.60

Long-term debts 133.27 184.525 206.38 227.26 220.41

Short-term debts 119.01 139.37 166.31 144.70 125.46

TOTAL LIABILITIES 580.75 648.67 691.33 716.01 752.46

RATIOS Financial autonomy 56% 50% 46% 48% 54%

Financing of fixed assets 60% 60% 58% 61% 63%

General solvency 2.3 2 1.9 2 2

General liquidity 0.80 0.76 0.75 0.92 1.19

Source: SNCFT annual reports 3.5.9 The negative trend of the company’s financial performance compelled the undertaking of a financial adjustment plan in 2001 with Government assistance. The key objectives of the plan are to provide the balance of the company’s financial structure, restore its self-financing capacity and guarantee the conditions required to preserve its medium and long-term financial balance. To achieve these objectives, the efforts of the enterprise will be geared towards cost control and rationalisation by cutting down expenses in all the items and

11

particularly in consumed purchases. The rationalisation efforts will comprise a phosphates transport rationalisation plan, which facilitated the signing of a performance contract between SNCFT and GPC in 2001, a programme of staff reduction by 1125 employees, externalisation of the factories manufacturing reinforced concrete sleepers and abandonment of the operation of lines with low passenger traffic (to be proposed to the public authorities). Another thrust, which will contribute to the financial adjustment of the enterprise, consists in commercial actions resulting in material and infrastructure investments, partnerships with customers and/or with other transport operators. 3.5.10 It was within this framework that SNCFT signed three (3) agreements in 2001 with the Government, relating to compensations in respect of public service obligations, including the compensation for the operating of suburbs in Tunis and Sahel and the operating of the low traffic lines - Tunis-Bizerte and Tunis-Kaala Khasba. The amount of these compensations, which were actually paid to SNCFT in 2002, was 14.585 million TD. Regarding compensation for the application of reduced or free tariff on the main lines, the State paid SNCFT an amount of 1 million TD in respect of the 2002 fiscal year. 3.5.11 An agreement between GPC and SNCFT, defining the conditions of phosphates transport, has been signed for the period 2002-2006. This agreement stipulates a tariff by tranche of tonnage and by route. The base rate should enable SNCFT to cover all its costs, including infrastructure costs chargeable to phosphates transport. This agreement has been signed between both parties. Other goods transport agreements have been signed with GPC and the Chemical Group, with the Cereals Office, ALKIMIA Company, the Tunisian Chemical Fertilizer Company (STEC) and with the Tunisian Navigation Company (CTN) 3.5.12 With regard to passenger transport, the agreement was signed with the operators in the private sector, namely: (i) an agreement with the Regional Transport Company of Gabès Governorate for the Tunis-Médine-Zarzis rail-road link; (ii) an agreement with the Regional Transport Company of Médine Governorate for the Tunis-Jerba rail-road link; (ii) an agreement with the State for the BLT and BLS passenger transport and goods transport. Financial Projections: 3.5.13 Assumptions for the financial projections are given as annex. Table 3.3 below gives the provisional operating accounts of SNCFT for the period 2002-2011.

Table 3.3 Provisional Income Statement of SNCFT

Description 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Total expenses 144567 150180 155463 154982 158200 161804 168364 175073 181942 188983 Inclu. operating expenses 124666 129209 134494 135722 138191 141195 147136 153208 159421 165786 Total incomes 137910 147328 154200 157445 163454 161917 168826 176121 183827 191970 Operating incomes 117910 125218 131957 139396 145372 151917 158826 166121 173827 181970 State contribution 20000 22110 22243 18048 18083 10000 10000 10000 10000 10000 Gross value added 83562 89789 93612 96062 99211 94671 98405 102341 106491 110868

Gross operating income 13244 18119 19706 21723 25264 20723 21690 22913 24406 26184 Net fiscal year income -6657 -2852 -1263 2463 5254 113 462 1049 1886 2987 Operating ratio 1.04 1.01 1.0 0.98 0.96 0.99 0.99 0.99 0.98 0.98 Percentage of the gross margin rate 9.6 12.3 12.8 13.8 15.5 12.8 12.8 13.0 13.3 13.8 Debt service coverage rate 1.11 1.19 1.29 1.40 1.84 1.51 1.58 1.67 1.78 1.91

Source: SNCFT

3.5.14 Table 3.3 shows that the budgeted financial statements of SNCFT generate a value added in steady progression from 83.6 million TD in 2002 to 110.8 million TD in 2011,

12

representing a growth of 32.5% over the period. The gross operating surplus becomes positive from 2002 and will attain +26.1 million TD in 2011. The corporation’s net income will be affected by deductions for amortizations and exchange losses (in 2003-2004) and by the removal, starting from 2007, of the subsidy of 10 million TD, which the State granted to SNCFT for major maintenance of the network. The company’s net income remains positive from 2005 over the whole period analysed, thereby enabling SNCFT to make investments required for its development, without financial balance being greatly as indicated by the different ratios given above. 3.6 Operating Resources Railway infrastructure 3.6.1 The traffic density of the railway network remains low with 1.67 million traffic units per km (u-k) of the line compared to 3.73 and 3.43 million traffic units per km for Morocco and France, respectively. Furthermore, the haul distances on the network are short and concern unit quantities that are often very low; a priori, this is a constraint on the economic competitiveness of railway transport in relation to road transport. 3.6.2 The track structure comprises varied equipment including rails of 25 kg, 30 kg, 36 kg, 46 kg or equivalent (100 lbs) and 54 kg on steel sleepers or twin-block concrete sleepers. The 25 to 30 kg rails are of old design and placed on low traffic (25kg) or sensitive traffic lines (30 kg). The 46 kg and 54 kg rails are recent or relatively recent renewals on lines with heavy traffic; this type of rail is used for phosphates transport as the tracks are renewed and the steel sleepers are replaced with twin-block concrete sleepers, which are more stable and resistant. 3.6.3 The current network has a satisfactory layout, generally compatible with the expected commercial speeds. The most critical points concern the south network which is prone to flooding and ballasting (line 21 Gafsa-Gabès), but also the north-west (Tunis-Ghardimaou –TA lines), line 6 (Tunis-Kassérine), on which the railway equipment is light (rail of 36 kg/ml), resulting in frequent traffic slowdowns. In this respect, significant development works have been carried out, in particular the development of dune stabilization systems on the southern network, the consolidation and raising of platforms, the construction of appropriate civil engineering and hydraulic structures and the renewal of 162 km on the network. 3.6.4 The implementation of the investment programme under the 10th Plan (2002-2006), of which the present project is a major component, will help consolidate the existing infrastructure, renew sections of the track and enhance the transport capacity on certain priorities, connect the network to the main ports and suburbs. The Rolling Stock 3.6.5 As at 31 December 2002, the rolling stock in service stood at 135 line locomotives, 44 shunting locomotives, 6 electric power cars, 284 railcars for the tractive stock, coaches and trailers for passengers, 4,333 wagons (SNCFT and private) and 2,064 containers for the freight stock. Following the internal re-organisation of its structures in 2001, this stock was divided between the five different business units established, and its maintenance was entrusted to an operational business unit – the railway maintenance unit.

13

3.6.6 The pool is heterogeneous and ageing with an average age of the tractive stock ranging from 18 years for the 4 business units (UAP, UABT , UABS, UAGL) to 30 years for the freight unit (UAF). This probably explains the low availability rate of the tractive stock for this unit, which, to better position itself on the freight transport market, should take rapid steps to strengthen its pool. A study is being conducted for steps to be taken for new acquisition or rehabilitation. For the other business units, the availability rates obtained have achieved the performance targets set in the PC (UAP), or are close to the said targets (UABT and UAGL). These performances could be improved by streamlining maintenance through the effective implementation of the technical maintenance and repair programmes and by pursuing the standard exchange application process. In any case, the outdated state and heterogeneous nature of the stock limit the performance of the pool and increase the maintenance costs. 3.6.7 The implementation of the equipment investment programme of the 10th Plan will make it possible to renew part of the rolling stock and improve the quality of service of SNCFT. Pending the programmed acquisitions, the institutional component of the present project provides for the conduct of studies on the railway equipment and maintenance strategy. The Government’s commitment to implement the relevant conclusions and recommendations resulting from the said studies is a loan condition. Maintenance of Railway Tools Fixed installations 3.6.8 The maintenance of the fixed installations (routine maintenance of the buildings, track infrastructure and its station premises, as well as part track renewal) is financed from the operating costs of SNCFT with the State’s contribution exclusively for track maintenance (track including part renewal of track). Table 3.4 below gives the amounts allocated and earmarked for the maintenance of the fixed installations and the track during the last two years of the 9th Plan and over the period 2000-2006.

Table 3.4 Financing of the Maintenance of Fixed Installations

Last 2 years of the

9th Plan 10th Plan Maintenance (million TD)

2000 2001 2002 2003 2004 2005 2006 Total 10th Plan Fixed installation, including 19.00 20.00 20.00 20.00 20.00 20.00 20.00 100.00 Track maintenance 13.00 14.10 11.00 10.00 10.00 10.00 10.00 53.00 State contribution 13.00 13.00 9.00 10.00 10.00 10.00 10.00 49.00 % of State contribution (track) 100% 92.2% 81.8% 100% 100% 100% 100% 92.5% % of the State’s total maintenance contribution

68.4% 65% 45% 50% 50% 50% 50% 49%

Implementation (track maintenance)

13.25 13.25 9.00 10.00 10.00 10.00 10.00 49

Source: SNCFT 3.6.9 The State contribution is fixed under the performance contract (clause 24), in respect of compensations for public service obligations and it is exclusively reserved for track maintenance which represents nearly 60% of the total maintenance budget allocated for maintenance of the fixed installations. This contribution dropped from 66.5 million TD under the 9th Plan to 49.00 million TD under the 10th Plan, i.e. a reduction of 26.3%. The strategy adopted by the State for the financing of track maintenance is firstly to upgrade the

14

railway infrastructure, thereby reducing maintenance costs and, in the medium-term, to fully disengage from the financing of track maintenance, which should be entirely borne by the operating costs of SNCFT. 3.6.10 Routine track maintenance works consists of limited maintenance operations or LM (levelling, tightening and works in the areas surrounding the platform) and general overhaul operations or GO (replacement of rails, link pins, joints and sleepers, etc.). 90% of these works are executed on the basis of a work agreement signed with SOTRAFER- the works branch of SNCFT. In its various regional zones, SNCFT has small maintenance units for limited maintenance works and ad-hoc emergency operations. Track maintenance extends to a total rail length estimated at 880 km km/year, with about 180 km on GO and 700 km on LM. The level of maintenance is satisfactory with an average implementation rate of 92.4% during the 2000-2002 period, including 84% (147.3 km) and 94.3% (708.1 km) on GO and LM respectively. Rolling Stock 3.6.11 In the new organizational structure, maintenance establishments constitute really important cost and profit centres, as their services will be billed on the basis of contracts performed according to duly rationalised cost benchmarks. The maintenance policy in force is active and based on a preventive strategy that makes it possible to increase periodic servicing (in workshops) and periodic checks or routine maintenance (in depots) in order to reduce unscheduled repairs, reinforce maintenance and improve the availability of equipment. Servicing is thus provided depending on the distances recorded for the locomotives and cars and on the time factor for wagons. The implementation rate of the overall programme of maintenance and servicing of the tractive stock and wagons for passengers is about 92%. However, the run-down state of the stock, especially the tractive stock, seriously handicaps the achievement of the targets of availability of equipment. 3.6.12 To optimize maintenance operations, the corporate plan envisages, in addition to the modular maintenance already in place, based on standard replacement of engine components, to operationalize computer-assisted maintenance management (CAMM) and other complementary actions, notably: i) resumption of the maintenance cycles to adapt to the real degradation of equipment; ii) improvement of the quality of interventions to prevent non-quality costs; iii) grouping of spare parts for triennial orders (grouped purchases) and down-grading of equipment whose maintenance cost is considered excessive; and iv) possibility of sub-contracting the maintenance of the 21 new locomotives procured for the business unit of the main lines. 3.7 Railway Investments

3.7.1 Railway investments are programmed under the national five-year plans. It should be noted that since 1987 these investments have been included in Government measures and projects envisaged under the various performance contracts signed with SNCFT. The investments are financed on the budget of the Government, either from its own resources or external borrowing. Annual programming and accounts processing in respect of these investments are carried out as part of the annual preparation of budgets by expenditure item and by project. Table 3.5 presents the investments under the 9th Plan.

15

3.7.2 Investments under the 9th Plan 1997-2001 amount to TND 252.41 million: TND 164.86 million (65.3%) for infrastructure and TND 87.55 million (34.7%) for equipment. The breakdown is 56.5% and 43.5% for ongoing projects and 88.8% and 11.2% for new projects; this lays particular emphasis on equipment for the new projects. In relation to projections, the implementation rate is 86.7%. The amount of the investment programme under the 10th Plan (2002-2006) is TND 450 million, up by 78% in relation to the amount of the previous plan. It is relatively equitably divided between infrastructure and equipment at the rate of 54.6% (TND 245.73 million) and 45.4% (TND 204.27 million), respectively.

Table 3.5: Investments under the 9th Plan (1997-2001)

Year Railway investments (million in constant 2001 TD) 1997 1998 1999 2000 2001 Total

(%)

a) Ongoing projects (8th Plan) Infrastructure 27.55 32.48 26.61 10.08 6.61 103.32 56.5%

Equipment 16.15 2.85 40.98 8.30 11.17 79.44 43.5%

Total a) 43.70 35.33 67.59 18.38 17.78 182.78 100%

b) New projects under 9th Plan

Infrastructure 0.31 2.86 10.44 26.45 21.49 61.54 88.8%

Equipment - 0.62 0.80 3.25 3.42 8.09 11.2%

Total b) 0.31 3.48 11.24 29.70 24.91 69.63 100%

Grand Total 44.01 38.81 78.83 48.08 42.69 252.41 100%

Projections of the 9th Plan 57.18 44.01 72.23 71.50 46.17 291.10 100%

Implementation rate 77% 88.2% 109.1% 67.2% 92.5% 86.7%

Source: SNCFT- Evaluation of the 1997-2001 PC. 4. THE PROJECT 4.1 Project Design and Justification 4.1.1 This project has been designed with a view to enhancing the efficiency and quality of railway transport in a highly competitive market and supporting the financial restructuring of SNCFT, which is the primary objective of the 2002-2006 performance contract. Its implementation also falls within the global investment programme of the 10th Plan (2002-2006), which was supported by the populations and principal beneficiaries in the project areas. The objectives of this plan for the transport sector are summarized as follows: (i) increase the efficiency and quality of services; (ii) strengthen intermodal transport by improving the productivity of the various transport interfaces and by introducing a market environment conducive to greater participation of the private sector. 4.1.2 Concerning the preparation status of the project, the Bank has considered and approved the terms of reference (TOR) of the studies of the institutional component, the feasibility and technical economic studies, as well as most of the infrastructure modernisation component. With regard to its implementation, this project is not different from the previous ones implemented in the sub-sector, namely an ongoing project with an implementation rate of about 60%, also financed by the Bank under the 9th Plan (1997-2002). The last bids for the implementation of this project are being examined; the project status has nonetheless been affected by the bureaucracy encountered in the procurements at the level of the High Procurement Commission (HPC). Government has taken steps to speed up the procurement procedures, among others, the restructuring of the HPC into different specialized commissions in order to speed up the examination of documents and decision-making.

16

4.2 Project Area and Beneficiaries 4.2.1 Project area: the project concerns the coastal regions of the north, central-east, north-west, central-west and the south, including the governorates of Tunis, Ben arous, Nabeul, Sousse, Monastir, Mahdia, Kassérine, Béja, Sfax and Gafsa where about 85% of the Tunisian population live and which account for the principal production activities of the country. In effect, the industrial and tourist centres of the country are located in these regions, which are dynamic in generating revenues and creating jobs. They provide employment in the sectors of agriculture, livestock breeding, fishing, chemical and manufacturing industry, export-oriented textiles, craft industry and tourism. 4.2.2 Project beneficiaries: the beneficiaries of the project are the populations of the above-mentioned regions, who will derive undoubted benefits from its implementation, especially in terms of i) greater mobility in their activities and facilitation of trade through the upgrading of infrastructure on the various modernised lines (gain of travel time between the different regions and localities connected, particularly Tunis and its southern suburb of Radès, Tunis and Kassérine, Tunis and Ghardimaou, Ghardimaou-Annaba in Algeria, Monastir and Mahdia, etc..); ii) traffic safety for passengers and goods through reduction of accidents as a result of the improvement in the state of the tracks, elimination of many road/rail conflicts (installation of computerized level crossings and/or structures to separate road/rail traffic); and installation of an appropriate signalling system; and iii) creation of jobs in the project areas during works execution and also through the induced effects of the outputs (trading and services in the modernised passenger and goods stations, jobs in the ports connected to the railway network for the transportation of newly transported products such as coke, phosphogypsum and in the phosphate processing industry, etc..). 4.3 Strategic Context 4.3.1 Following its admission to the WTO and in the perspective of the implementation of the of the partnership agreements signed with EU for the creation of a free trade area by 2008, and to improve the competitiveness of Tunisian exports, since the forwarding time is a determinant factor in the international trade system, the Government developed a transport strategy for the 1997-2005 period aimed at implementing appropriate sectoral reforms, modernising infrastructure and integrating the various means of transport, in order to have a system and quality transport services at the lowest cost. . 4.3.2 The implementation of the project falls within the pursuit of this objective of competitiveness by helping upgrade the transport infrastructure. It is also in line with the Bank’s assistance strategy in Tunisia for the 2002-2004 period defined in paragraph 4.1.2 above. 4.4 Objectives 4.4.1 The sector goal of the project is to increase efficiency and quality of services in order to help reduce transport costs – a factor for improving the competitiveness of Tunisian export enterprises. 4.4.2 Specifically, its objective is to improve the efficiency and quality of services of railway transport through the time gains, comfort and safety expected from its implementation, in terms of modernising the infrastructure and rationalising the management costs by implementing the results of the proposed institutional studies. The objectively verifiable indicators to achieve its targets are given in the project matrix.

17

4.5 Description of Project Outputs 4.5.1 The project has two (2) components namely an institutional component and a physical investments modernisation as follows: Institutional component 4.5.2 This component concerns the conduct of 4 rationalisation studies on railway management, namely: i) the organisation and sizing of the support units; ii) support for the re-organisation of cost accounting within SNCFT; iii) medium-term railway equipment strategy; and iv) improvement of the environment of the maintenance establishments. 4.5.3 Under its internal re-organisation, SNCFT has been restructured into operational business units and support units. The investments of the institutional unit will help improve its management by introducing an appropriate cost accounting system, identify and correct malfunctions observed in the organisation of the support units created in the wake of the internal re-organisation of the company in 2000, rationalise expenses and preserve the railway tool through the implementation of an appropriate equipment maintenance strategy and improve the work environment in the maintenance establishments. Physical infrastructure modernisation investments component 4.5.4 These investments concern the following upgrading works:

(i) Consolidation of infrastructure on the different lines (Tunis-Ghardimaou –TA line, line 1, Sfax-Metlaoui line, Graiba-Gafsa and Teb-Redeyef line) to reduce slowdowns on the tracks and maintain adequate commercial traffic speeds through reinforcement and construction /reconstruction of civil engineering structures to support the axle loads of 20 and 25 tonnes, construction of hydraulic structures, raising of the track and stabilisation of the banks and platforms. The list of structures, bridges and sections of the platforms and banks to be stabilized is given as annex;

(ii) Improvement of the exclusive way for the southern suburb of Tunis to improve the

traffic safety of trains and reduce accidents owing to rail/road conflict by constructing 3 structures to separate rail/road traffic at Radès-Meliane, Hamman Chatt and Borj Cedria on the Tunis-Sousse line;

(iii) Upgrading of the station facilities to improve the quality of service and safety in the

stations, by fencing in the right-of-way, building pedestrian overpasses and passenger buildings at Ghardimaou, Gafsa and Ksar Hellal;

(iv) Development of trading activities to strengthen the market share of SNCFT in the

freight sector by constructing in Sousse a freight station with an asphalted platform of 9ha, including service premises and a connecting line to the ports (earthworks and track-laying) of Sfax (3 km), Ghannouch (2 km) and Radès-Tunis line-La Goulette link (0.5 km);

18

(v) Construction in Sousse of the maintenance depot of 80mx40m for the maintenance of 10 train sets whose procurement is programmed under the 10th Plan for inter-urban transport between Tunis and Sousse;

(vi) Renewal of the tracks on the Tunis-Ghardimaou lines (62 km) Tunis-Kassérine line

(58.5 km) by replacing worn-out rails and signalling equipment to improve the quality of service through greater comfort and service speeds.

(vii) Railway link to Cité Olympique de Radès through connection works on 2.2 km

(construction of platform, track-laying, signalling and electrification equipment, station building) to facilitate the movement of residents of Radès towards Tunis and vice-versa and the reduce the time losses caused by road transport;

(viii) Signalling and telecommunication comprising: (i) the equipment and installation of

40 level crossings and the replacement of 17 others; (ii) the supply and installation of signalling equipment for the Monastir-Moknine line; (iii) the supply and installation of end position equipment and equipment for the GSM-R coverage network on the Tunis-Sousse-Sfax line to complete the installation of the ground-to-train radio communication system on this line.

4.6 Market and Tariffs

Market 4.6.1 The railway intervenes in the two segments of the Tunisian transport market, namely: i) passenger transport comprising main line traffic and suburban traffic; ii) goods transport which comprises, on the one hand, bulky commodities such as phosphate, iron ore, lead concentrate and zinc and, on the other, (foodstuff, fertilizer, power, etc.). The table hereunder gives the traffic trend in the last five years.

Table 4.1: Traffic 1998-2002

Description (million un-km)

1998 1999 2000 2001 2002 (%98-02)

Passengers 1134 1197 1253 1285 1264 11,5 Phosphate 1627 1635 1564 1613 1661 0,4 Sundry goods 731 738 706 672 591 -1,7 Description (thousand units)

Passengers 32498 34411 35245 36818 36558 12,5% Bulky commodities 8662 8715 8291 8375 8486 -2% Sundry goods 4449 4120 4080 3919 3471 -2,2%

Source: SNCFT annual reports 4.6.2 The traffic trend is characterised by: (i) a sharp increase in passenger traffic with a growth rate of about 12.5%, (ii) a near-stagnation of phosphates traffic and a steady fall in general goods traffic. It should, however, be noted that in spite of the growth of passenger traffic over the period 1998-2002, the demand for this transport has remained constant in the last three years, thus reflecting the impact of the slowdown in growth resulting in the reduced mobility of the population. The almost steady decline in goods traffic (2.00% over the 1998-2002 period) reflects the difficulties of railway transport faced with competition from the road. The bulky commodity traffic did not grow during the period owing to the exhaustion of the iron deposits of the Jerissa mine, the fall in the production of zinc and lead following the

19

operating difficulties of the Bougrine mine and the fall in the international price of these products, thereby reducing the transported volume and the production capacity of the phosphate mines and processing plants. 4.6.3 SNCTF is today operating in a competitive market characterised by a fragmented and overabundant road transport. Faced with this situation marked by railway traffic loss, SNCFT has drawn up a corporate plan devising a commercial strategy based on knowledge of the market and a well-focused investment programme to push ahead with the reactivation of passenger traffic and initiate the recovery of general goods traffic. SNCFT traffic objectives were therefore fixed by business units in order to maintain its place on the land transport market.

Prospects

4.6.4 The estimated transport programme was based on the corporate plan, in line with the objectives of the 2002-2006 performance contract. This programme is based on the following assumptions:

a) Passenger traffic

• Inter-urban passenger traffic will grow at an average rate of 4% owing to the development of a commercial policy geared towards improving the quality of service, notably the travel time of the train, the schedule and frequency of services particularly on the Tunis-Sousse-Sfax-Gabès, Tunis-Ghardamaou and Sfax-Métlaoui lines, which handle 75% of the traffic.

• Urban traffic: the projected increase is 7% for the suburb of Sahel and 3 % for the

southern suburb of Tunis. b) Goods traffic

• The phosphates transport volume will remain constant over the period because of

the production and processing capacity of ore; it will be 8. 250 million tonnes. The target is to optimise the transport logistics chain in order to reduce transport costs and improve competition on the international markets.

• Freight transport: the target is to consolidate, and even recapture the market of

certain commodities considered as ‘captive’ (cement, concrete iron…) and to capture market shares with new products. It is within this framework that SNCFT is developing special connections in order to provide full service for rail-to-road and door-to-door selling. The growth rate adopted for freight is estimated at 4.4% for traffic of 5.7 million tonnes in 2006; this traffic will later drop to an average rate of 2%.

4.6.5 Traffic projections on the whole network and by category of traffic are given as annex.

20

Tariffs and Tariff Structure 4.6.6 There are two types of tariffs in SNCFT, namely regulated tariff and approved tariffs. The regulated tariff concerns types of transport for which State approval is required because of social and political implications. As regards the approved tariff, SNCFT is entirely free to sign, with its major customers, agreements that define their obligations and applicable tariffs depending on the terms agreed on; this applies mainly to mineral products such as phosphate. 4.6.7 Under the 2002-2006 PC, the State imposes public service obligations on SNCF, by which tariff reductions for certain categories of customers of the inter-urban commercial passenger services granted by SNCFT give right to compensation. SNCFT is paid compensation by the Ministries directly concerned, for loss of profit resulting from the application of these reduced tariffs. In the event of non-payment, the Ministry of Finance will make deductions, in favour of SNCFT, from the subsidies granted to these Ministries. However, the applicants should submit any new deductions imposed on SNCFT outside those provided for, to the Ministry of Finance for approval with a view to its compensation. 4.6.8 In addition, at the State’s request, SNFCT will, under the public service obligation, provide train services for suburban passengers in the Tunis zone and Sousse–Sahel zone. Pursuant to the agreement signed between the two parties, the State should compensate SNCFT for the loss of profit. The table below gives the various tariff increases negotiated with the State under the new 2002-2006 PC. Table 4.2 Tariff increase of the 2002-2006 PC (%)

Description 2002 2003 2004 2005 2006 UABT +5 +3 +3 +3 +3 UABS +5 +3 +3 +3 +3 UAGL +3 +3 +3 +3 +3 UAP +3 +2 +2 +2 +1 UAF - - - - -

4.6.9 The effective application of these increases, as well as the actual payment of compensation for public services obligations, should improve the financial situation of SNCFT and enable it to achieve financial balance from the 2003 fiscal year. Compliance by the State with its commitments under the 2002-2006 PC, especially the tariff increases and effective payment of the compensations due to SNCFT in respect of the obligations of public service rendered is a loan condition. 4.6.10 A new agreement between GPC and SNCFT, defining the technical, economic and financial conditions of phosphates transport for the 2002-2006 period was signed in January 2002. It provides for a tariff by tranche of tonnage and distance covered. The basic tariff should enable SNCFT to cover all its expenses, including the infrastructure costs chargeable to phosphates transport. Agreements have been signed with other private sector operators. 4.7 Environmental Impacts

4.7.1 In keeping with the relevant recommendations of the Bank, this project that concerns mainly rehabilitation works and upgrading of the railway infrastructure, was classified in environmental category 2; it does not interfere with the ecological, historic and

21

religious areas classified or protected. However, as required by the Tunisian legislation in accordance with the relevant laws and decrees in force, a brief environmental impact assessment has been conducted on certain components. The environmental and social management plan (ESMP) of the project is given in annex 7. 4.7.2 Positive impacts: the positive impacts of the project will be mainly of a social and economic nature: facilitation of transport (time gain and comfort), traffic safety of the trains (fewer risks of derailment and accidents caused at present by inappropriate signalling, wear and tear of the rails, soil instability, etc.) and development of trade and tourism (competitive prices and services provided). The positive impacts will be boosted by the improvement of the level of service on the existing line, upgrading of the signalling technology, electrification of the line of the southern suburb of Tunis, introduction of an adequate maintenance policy and improvement of the working conditions in the maintenance establishments (creation of an appropriate environment). 4.7.3 Negative impacts during works: the negative impacts will be limited to disturbances that stem from the traffic schedule, some losses of agricultural land and fruit trees caused by the works (freight terminal, Sousse depots and Radès train service) as well as loss of some land for the connection works of Sfax port. The impacts on human safety will depend on site organisation and traffic signalling. Overall, except for the loss of a few trees along the right-of-way during the works mentioned above, the project would not have any major impact on the biodiversity. The direct physical impacts generated by the sites (sound and gas pollution, risks of soil infiltration by the various site wastes, dust, etc) will only affect a small strip of land limited, to the maximum, to 20 m on both sides of the tracks. These impacts will be negligible as the areas in question are removed from the highways and residential areas (big cereal and olive farms). 4.7.4 Potential negative impacts in the operating phase: impacts on the human environment deriving mainly from the visual perception of the rehabilitated and/or reconstructed railway tracks and bridges, will also be reduced as they will be set back from the structures in relation to the houses and roads. The noise level will be negligible in view of the low population density around the worksites. Nuisances occasioned by the emission of waste gas will be minimized by the proposed electrification of the lines. Risks related to the traffic safety of the trains will be minimized by the modernisation of the signalling devices and the construction of structures to separate road and rail traffic. The railway network carries few dangerous substances that are subjected to a strict legislation. 4.7.5 Mitigation and optimisation programme: the expropriation of lands for public utility purposes and the degradation of farmlands and crops will be handled by regional conciliation commissions, which are authorized to decide on compensations. To minimize the risks of dust propagation, vegetation will be planted on the banks; risks of water pollution will be checked by the collection of oily and petroleum wastes in drains which will be channelled towards processing industries. All solid wastes from the sites will be collected and emptied into authorised dumps, or recycled elsewhere. To avoid traffic accidents, adequate signalling will be installed, likewise temporary diversions. Seismic risks will be offset by the integration of anti-seismic standards in the design of the targeted structures. The aesthetic impacts will be mitigated by the conceptual integration of new structures in the local landscape by planting trees.

22

4.7.6 Environmental monitoring: the national agency for environmental protection (ANPE) and SNCFT will be directly responsible for the permanent monitoring of the impacts arising from the sites. An environmental audit will be conducted upon acceptance of works; the periodic supervision reports will take this aspect of the project into account. 4.7.7 Impacts on women: the project actions centre on the regional areas (Tunis, Ben Arous, Jendouba Sousse, Sfax, Gabès, Gafsa, Jendouba), which group a large part of the population, especially Sousse, Mahdia, Jendouba, and Sfax, as well as Tunisia’s economic activity: agriculture (33% women), phosphate, manufacturing industry (43% women), textile (76.5% women), craft industry and tourism; these sectors are dynamic in the generation of revenues and creation of jobs. Project implementation will help improve the living conditions of women by facilitating movements relating to their economic activities, as well as their access to social facilities. The expected time gain will contribute to the growth and diversification of the socio-economic activities of women. 4.8 Project Cost Estimate The total estimated cost of the project, net of taxes, is TND 120.78 million (67.32 million UA). The foreign exchange component of TND 108.86 million (UA 60.66 million) and the local currency component of TND 11.92 million (UA 6.66 million) represent 90% and 10% respectively of the total cost. These costs were estimated on the basis of the recent unit prices of similar bids in Tunisia. Provisions for physical contingencies were 5% and 10% of the base costs estimated for studies and works and supplies, respectively. Provisions for price escalation were determined in function of the individual implementation schedule of each of the project components, based on an annual inflation rate of 2.8% and 2% respectively on the base costs in foreign exchange and local currency. The summary estimate of the total project cost by component and by category of expenditure is given in the table below. The detailed estimated cost of each of the two components is presented in annexes 3 and 4.

Table 4.3- a: Summary cost estimate net of taxes

Component Million TND

Million UA (%)

F.E. L.C. Total F.E. L.C. Total

Institutional component – Studies 2. 05 0.00 2.05 1.14 0.00 1.07 2%

Infrastructure modernisation component

92.36 10.67 103.03 51.47 5.95 57.42 98%

Total Base cost 94.41 10.67 105.08 52.61 5.95 58.56 100%

Phy. Contingencies 7.25 0.60 7.86 4.04 0.34 4.37 7%

Price escalation 7.19 0.66 7.86 4.01 0.37 4.38 7%

Grand Total 108.86 11.92 120.78 60.66 6.66 67.32 100%

Percentage 90% 10% 100% 90% 10% 100%

23

Table 4.3-b: Cost estimate net of taxes by category of expenditure

Categories of expenditure In million UA

F.E. L.C. Total

Works 22.06 3.78 25.84

Supplies 29.41 2.17 31.58

Services-Studies 1.14 0.00 1.14

Base cost 52.61 5.95 58.56 Total -Unallocated (Phy. Conting. + Price escalation) 8.05 0.71 8.76

Total Project 60.66 6.66 67.32

Percentage 90% 10% 100%

4.9 Sources of Finance and Disbursement Schedule 4.9.1 Source of finance: The project is jointly financed by the Tunisian Government and the Bank; the Bank’s financing covers the foreign exchange costs representing 90% of the total project cost, or UA 60.66 million; the Government bears the remaining cost, representing 100% of the local currency cost of the project, i.e. TD 11.92 million equivalent to UA 6.66 million. The project financing plan by source, by component and by category of expenditure is summarised in the tables that follow:

Table 4.4-a: Financing plan by source

In million UA

Source of finance F.E L.C. Total NT

%

Bank 60.66 - 60.66 90%

Government - 6.66 6.66 10%

Total 60.66 6.66 67.32 100

(%) 90% 10% 100

Table 4.4-b: Financing plan by component

Component In million UA

ADB Gvt Total DF % Institutional component 1.25 - 1.25 2% Modernisation investment component

59.41 6.66 66.07 98%

Total 60.66 6.66 67.32 100% (%) 90% 10% 100%

24

Table 4.4-c: Financing plan by category of expenditure

In million UA ADB financing Categories of expenditure

F.E. L.C. Total Million UA

Works 22.06 3.78 25.84 22.06

Supplies 29.41 2.17 31.58 29.41

Services 1.14 0.00 1.14 1.07

Base cost 52.61 5.95 58.56 52.61 Phy. contingencies 4,04 0,34 4,38 5.59 Price escalation 4,01 0,37 4.69 4.26

Total –Unallocated 8,05 0,71 8,76 8,76

Total Project 60,66 6,66 67,32 60,66 4.9.2 Disbursement schedule: the provisional disbursement schedule by source of finance and by component is given in the table below:

Table 4.5-a

Disbursement schedule by source of finance

Source of finance IMPLEMENTATION YEAR (in million UA) 2004 2005 2006 2007 Total %

Bank 3.76 24.63 21.96 10.31 60.66 90% Government 0.41 2.70 2.41 1.14 6.66 10% Total 4.17 27.33 24.37 11.45 67.32 100%

% 6.2% 40.6% 36.2% 17% 100%

Table 4.5-b Disbursement schedule by component

Component IMPLEMENTATION YEAR

(in million UA) 2004 2005 2006 2007 Total % Institutional component 0.63 0.62 - - 1.25 2% Modernisation investment component 3.55 26.71 24.37 11.45 66.07 98% Total 4.17 27.33 24.37 11.45 67.32 100%

% 6.2% 40.6% 36.2% 17% 100%

5. PROJECT IMPLEMENTATION 5.1 Executing Agency

The Government is the borrower; the executing agency –SNCFT- co-ordinates, programmes, monitors and supervises the implementation of all the activities. SNCFT has a qualified staff experienced in the management and monitoring of similar infrastructure projects financed by all the donors operating in the sector. 5.2 Institutional Arrangements 5.2.1 The technical management of project implementation is ensured through the two Departments of the Direction centrale du domaine ferroviaire (DCDF), especially the Infrastructure Development Department for the infrastructure works (civil engineering, structures, buildings, etc.) and, the Department of Superstructure, for track-laying and track equipment installation (signalling and telecommunication, etc.), while the Department of Planning and Management Control (DPCG) carries out the rationalisation studies.

25

5.2.2 It was deemed appropriate to entrust the implementation management of these studies to DPCG as they cover fields that do not directly fall under DCDF, notably the introduction of cost accounting within SNCFT, the equipment strategy and the improvement of the environment of the workshops. Furthermore, the relevant documents (TOR, BD) are already finalised and ready for the launching of bids, which is the responsibility of the Procurement Department (PD). DPCG will co-ordinate the implementation with the Departments in charge of studies. 5.2.3 The 2 departments of DCDF are organised into units managed by qualified engineers experienced in contract administration and settlement, control and monitoring of the technical execution of works. To minimise any risk of procurement delay and therefore guarantee the implementation of the project on schedule, the two departments will be entirely responsible for the programming of bids and the preparation of bidding documents, in co-ordination with the Supplies and Procurement (SP) Department. DCDF will be solely responsible for the launching of bids and related procedures. Moreover DCDF will ensure the general programming and control of the monitoring of activities included in the operating budget and the preparation of periodic status reports, in co-ordination with the Management Planning and Control Department (DPCG) and the Finance Department (FD), which is responsible for maintaining the project financial management accounts. Thus DCDF, DPGC and FD will be the collaborators of the Bank throughout project implementation, especially for the various supervision and mid-term review missions. 5.2.4 This management plan for monitoring the project may be considered adequate and appropriate for the success of the project. It has proved itself, notably in the implementation of previous projects managed by DCDF. 5.3 Implementation and Supervision Schedules The project implementation schedule has been established on the basis of estimated provisional implementation periods defined for each of the project components. Project implementation will, therefore, be spread over a period of 48 months, starting from January 2004. The estimated implementation schedule is given in annex 5 and is succinctly presented as follows:

Activities Estimated date Responsibility 1. Institutional studies Drawing up of short lists December 2003 SNCFT/ADB Launching of bids Jan-March 2004 SNCFT/ADB Procurements April-July 2003 SNCFT/ADB Conduct of studies August 2004-July 2005 Consultants 2. Modernisation investments Launching of international and local competitive bids for works and supplies

January 2004-March 2006 SNCFT/ADB

Procurements March 2004-January 2006 SNCFT/ADB Performance of work and supply contracts April 2004-December 2007 Contractor/Suppliers 3. Project launching mission March 2004 ADB 4.Supervision missions (frequency of 2 missions/year) Sept. 2004-December 2007 ADB 5. Project implementation mid-term review December 2005 ADB 6. PCR preparation mission December 2008 ADB

26

5.4 Procurement Arrangements 5.4.1 All procurements financed by the Bank under the project will be in accordance with the relevant rules of procedure, by using the appropriate standard bidding documents. Arrangements for these various procurements, as well as the estimated amounts, are summarised in table 5. Annex 4 gives a comprehensive list of the various procurements by project component and by method of procurement adopted.

Table 5.1 Procurement Arrangements

Categories In million UA ICB LC Other Short list. Fin. Other

than ADB Total

1. Studies - - - 1.14 (1.14) - 1.14 (1.14) 2. Works - 2.1 Civil works (Earthworks & stab. Bank)

7.75 (6.63 1.00 (0.85) 0.33 (-) - 9.08 (7.48)

2.2 Structures 8.30 (7.03) 0.76 (0.65) - - - 9.06 (7.79) 2.3 Buildings and fences - 1.30 (1.15) - - - 1.30 (1.15) 2.4 Track-laying 6.55 (5.56) - - - - 6.55 (5.74) Total Works 22.60 (19.51) 3.06 (2.65) 0.33 (-) - (-) - 25.99 (22.16) 3. Supplies - 3.1 Track equipment 12.95 (12.95) - 12.95 (12.95) 3.2 Ballast 1.55 (1.35) - 1.55 (1.35) 3.3 Sleepers (girder) 0.82 (0.82) 1.93 (0.00) - - 2.75 (0.82) 3.4 Other supplies including assembly 14.19 (14.19) - - - - 14.19 (14.19) Total Supplies 27.96 (27.96) 1.55 (1.31) 1.93 (0.00) - (-) - 31.44 (29.31) Base cost Project 50.56 (47.47) 4.61 (4.00) 2.26 (0.00) 1.14 (1.14) - 58.57 (52.61) Unallocated 8.13 (7.74) 0.32 (0.20) 0.20 (0.00) 0.11 (0.11) - 8.76 (8.05) Total Project 58.69 (55.21) 4.93 (4.20) 2.46 (0.00) 1.25 (1.25) - 67.32 (60.66)

ADB financing Works: 5.4.2 All civil works (earthworks of the platform and terminal market and maintenance depot, bank), construction of civil engineering structures, track-laying, with the exception of bank stabilisation works on the Tunis-Ghardimaou line, reconstruction of bridges and replacement of steel decks on the Graîba-Redeyef and Sfax Metlaoui lines, will be procured through international competitive bidding. In effect, these works (stabilisation of bank, reconstruction and/or replacement of the steel decks of bridges) are simple and repetitive and their total amount is too small to attract a wider international competition (0.31 and 0.45 million UA respectively). 5.4.3 The construction works of the railway stations (Ghardimaou, Gafsa and Ksal Hellal) and fencing for the improvement of exclusive ways will be procured through local shopping. These works are not constructed concomitantly and their individual amounts are small. Supply: 5.4.4 The procurements of track equipment (rails, track devices and sundry equipment, tie-bars for the production of sleepers), 2 weighbridges, signalling and electrification equipment, level crossings, ground-to-train radio telecommunication will be through international competitive bidding. Supplies of rail and track devices and sundry equipment for all the project components will be grouped into one bid package. Signalling equipment for the signals of the Monastir-Moknine line and the connection of Cité Olympique, level crossing equipment and weighbridges and tie-bars will be procured through separate bids.

27

5.4.5 The supplies of ballast (crushed gravel of 0/30.5) available locally will be procured through local shopping with several lots for all the railway work sites envisaged. Services 5.4.6 The 4 institutional studies will be conducted through international competitive bidding on the basis of a short list for each of the studies. The price will be a determinant factor for the selection of the consultant for each of the studies in view of their specificity. 5.4.7 General Procurement Notice: The text of a General Procurement Notice (GPN) has been discussed with SNCFT and will be adopted during loan negotiations for publication in "Development Business" as soon as the Board of Directors approves the loan proposal. Review procedures 5.4.8 The following documents will be submitted for Bank review and approval before they are published: (i) specific procurement notices, (ii) bidding documents; (iii) evaluation report of the bids comprising recommendations on the contract award; and; (iv) draft contracts, if those in the bidding documents have been changed. 5.5 Disbursement Arrangements Disbursements will be made in accordance with the Bank’s disbursement manual. The Finance Department of SNCFT is familiar with the Bank’s disbursement rules and regulations. As the Bank is established in Tunis, and in order to avoid procedural delays in the transmission of payment requests, the disbursement method proposed will be direct payment to suppliers and contractors. SNCFT may ask for the opening of a special account for the payment of requests below UA 20,000. 5.6 Monitoring and Evaluation 5.6.1 Project implementation will be monitored by DCDF for the technical components, DF for the financial aspects and DPCG for the institutional aspects, particularly the implementation of the 5 management rationalisation studies. FD will have a separate project account and bookkeeping that conforms to the model to be provided by the Bank. In co-ordination with DCDF and DPCG, FD will, on a quarterly basis, furnish the Bank with a technical and financial report of the project activities, reviewing the status of fulfilment of the lending conditions, the status of procurements of goods and works, the work status, the implementation of the environmental and social management plan and the financial implementation status of the project. The reports will also indicate the possible problems encountered in the implementation of the project, as well as the solutions to them. 5.6.2 The Bank will also monitor the implementation of the project through regular supervision missions, at the rate of 2 missions per annum. The missions will endeavour to collect all the data on project implementation in order to evaluate the technical, socio-economic and environmental aspects of the project and the implementation status of the performance contract for the period 2002-2006. At the end of project implementation, SNCFT will submit to the Bank a project completion report prepared in accordance with Bank format, which will be used as a background document for preparing the Bank’s completion report.

28

5.7 Audit and Financial Reports The project will have a self-accounting system that will be audited by the Contrôle Général des Finances (CGF)– General Finance Inspectorate – of the Ministry of Finance, which is responsible for the audit of project accounts that require State contribution. This audit report, as well as the financial statements of SNCFT, which are usually audited annually by an independent firm, will be submitted within six months of the end of each fiscal year. This is done every year during the project implementation period. GPC audit performances in past projects were evaluated by the Bank, which recommended improvements in the format and content of these reports. On that basis, the audits will be performed in keeping with the terms of reference prepared and in conformity with Bank guidelines for the audit of project accounts. 5.8 Aid Co-ordination Donors’ operation in Tunisia are carried out within the context of the different five-year development plans. The leading stakeholders in the transport sector are the ADB, IBRD, EIB, AFESD and JIBC. With a few rare exceptions, each donor is confined to areas of operation specified by the Government. Co-ordination with IBRD, initiated under PST1 and during the preparation mission of the present project, will be regularly provided through exchange of information and strengthened by joint supervision missions for the mid-term review of the project. The dates of these missions will be fixed during project implementation. 6. PROJECT SUSTAINABILITY AND RISKS 6.1 Recurrent Costs and Sustainability 6.1.1 Project implementation will not lead to unsustainable recurrent maintenance expenses for SNCFT, as they will concern only the layout of the newly constructed lines - 35.9 km. With regard to the renewed existing lines, i.e. a total length of 120.5 km, the implementation of the project will on the contrary help generate substantial track maintenance savings. In accordance with the maintenance policy adopted by SNCFT, the frequency of intervention for the old tracks (more than 30 years old) is 1 LM/2 years and 1 GO/4 years. After modernisation of the lines concerned, the intervention rate will be 1 LM/4 years and 1 GO/12 years for the first 12 years of service, 1 LM/3 years and 1 GO/5 years beyond the 12th year and, up to the 30th year of service, a difference of maintenance cost of 7LM and 2GO over 30 years. 6.1.2 Based on the kilometric costs of track maintenance (TND 18,000 for the GO and TND 12,000 for the LM), the maintenance costs on the Tunis-Ghardimaou line (62 km) and Tunis-Kassérine line (58,5 km), are estimated at TND 7,812,000 and TND 7,371,000 respectively over 12 years, representing a total amount of TND 15,183,000 or TND 1,265,250,000 /year. After the modernisation of these lines, the maintenance costs will stand at TND 567,376,682 /year or TND 6,808,520,179 for the 12 years following their commissioning, i.e. a cost reduction of 55.2% (TND 8,374,480 over 12 years). This reduction largely offsets the maintenance expenses by the newly created lines (TND 1,938,600 TD over 12 years or TND 161550/year), which are included in the operating costs of SNCFT.

29

6.1.3 As indicated in chapter 3, track maintenance is adequately carried out. The new track maintenance strategy to be introduced following the conclusions of the preventive maintenance study proposed under the project will lead to greater efficiency in maintenance works and help further rationalise the operating costs. This new provision is likely to preserve the railway heritage and ensure the sustainability of the investments made by the project. 6.2 Major Risks and Mitigation Measures 6.2.1 The implementation of the project entails three significant risks: a) slippage on its implementation resulting from delays in the procurement of supplies and works, which are quite many for the present project, can negatively affect the objectives set; b) non-compliance with the provisions of the Government-SNCFY performance contract, especially the failure to apply on time the annual tariff increases concluded, as well as the non payment on schedule of the compensations owed by the State under the obligations of public service rendered, which are important factors for the financial adjustment of SNCFT by the year 2006; and c) delay in the application of the findings of the different studies conducted under the rationalisation of the internal management of SNCFT. 6.2.2 Concerning the slippage on project implementation owing to the delay in the procurements submitted to HPC control, the Government has just taken measures aimed at improving the approval process of bid documents at the level of the HPC, notably its reorganisation into specialised internal commissions for different types of procurements. 6.2.3 To monitor compliance with the commitments taken by the State, the Bank will carry out an annual implementation review of the 2002-2006 PC. Submission by the Borrower of the annual implementation review of the said PC constitutes a loan condition. This document should be submitted latest at the end of the first quarter of every year, in order to ascertain the effective payment of the compensations in respect of the obligations of public service rendered and the tariff increase applied for the current year. 6.2.4 At the end of the implementation of the 1997-2001 performance contract, the structures of SNCFT were re-organised and business units and units to support them were created. To support the new institutional framework set up, the studies to rationalise the internal management of the corporation, which could not be conducted under the PST, were finally carried forward to the implementation of the present project. The conduct of these studies were discussed with IBRD and any delay in their preparation seriously handicaps the reform of the internal management of the company and prejudices efforts at the financial adjustment of the company, which is the essential objective of the PC. The Government’s undertaking to effectively implement the findings of the said studies not later than December 2006 is a loan condition.

30

7. PROJECT BENEFITS 7.1 Financial Analysis The assumptions and the calculation of the financial return of the project are presented as an annex. The project financial rate of return is estimated at 17.74%, which is above the interest rate applied by the Bank (October 2003): 2.48% for the euro floating rate, 4.274% for the euro fixed rate and 5.990% for the variable euro rate. It is also higher than the capital opportunity cost in Tunisia estimated at around 12%. The project is therefore viable and profitable as attested by the internal rate of return. 7.2 Economic Analysis 7.2.1 To achieve the objectives set in the performance contract, ensure its sustainability and increase its market shares in the competitive sector, SNCFT has designed an investment programme. This programme will enable it to reverse the present downward trend of the general goods transport and to cope with a growing passenger demand to reduce its operating costs. 7.2.2 An economic return study has been conducted on each of the main project components; it reveals that they generate a rate of return of 12 to 33%. They therefore enhance efficiency and strengthen the production tool by helping: i) minimise the deterioration of the rolling stock as a result of the state of the track; ii) reduce the maintenance costs of the tracks; iii) shorten the travel time of the passenger trains on the Tunis-Ghardimaou, Moknine-Mahdia, Sfax-Metlaoui, Tunis-Kasserine lines; v) develop marketing activities in Ghannouch Sousse, Sfax and Rades; vi) upgrade Gafsa and Aguila stations; and (vii) provide train service to Cité Olympique de Radès. Track renewal component: sections of the Tunis-Ghardimaou Line 7.2.3 The project aims to renew 72 km of the Tunis-Ghardimaou line (216km), which constitutes the international network route and, alone, provides 25% of the whole railway traffic. Today, these 72 km show obvious signs of wear and tear and are responsible for the frequent speed limits. The projected increase in inter-urban traffic and the development of container traffic for freight are in the final analysis incompatible with the current state of the track. The studies conducted show that the implementation of the project will generate 5% savings on the variable operating costs, 40% reduction in the variable maintenance costs and a time gain corresponding to 1.34millimes/vk. These benefits will increase with the traffic at an annual average rate of 4.75%. On the basis of the investment cost net of duties, estimated at 17.7 million TD, the economic rate of return on the renewal component stands at 12%. Track renewal component: sections of the Tunis-Kasserine Line 7.2.4 Compared with the Tunis-Ghardimahou line, the Tunis-Kasserine line also shows signs of fairly marked wear and tear on certain sections totalling 54 km. This state drastically reduces the capacity of the Tunis-Kasserine line (314km), which handles more than 10% of the network traffic, both passenger and goods traffic. This strengthening, which will meet the estimated demand for inter-urban passenger and container freight transport, entails upgrading the track on these sections of the Tunis-Kasserine line. The savings made will increase at the annual average rate of traffic growth on this section, which is 4.75%. The investment cost of this component being 12.18 million TD, the economic calculation shows a rate of return of 12%.

31

Connections of the Ghanouch, Sfax and Radès Ports 7.2.5 This sub-project consists in constructing tracks that link up the Ghanouch and Sfax ports and, for Radès, shorten by 10 km the distance for trains going towards Sousse through a direct link between Radès and the Tunis-la Goulette line. In Gbanouch and Sfax, these connections will make it possible to meet a transport demand expressed by the users by installing additional capacity, to save on intermediate reloading costs (handling) of about 0.7dinar/tonne; it concerns a new product –fuel coke – whose tonnage is estimated at 450,000t of fuel coke (this tonnage will remain constant throughout the project duration) as well as the 250,000 tonnes of cereals transported in 2002, which will go up at the rate of 5.8%. The advantages of the direct link to Radès port yield a distance gain that enable cost savings corresponding to the kilometric expenses of trains estimated at 18 millimes per T.K; this traffic comprised mainly of maritime containers should reach 200,000 tonnes from 2006 and then increase yearly at a rate of 5.5%, i.e. at the economic growth rate. The DF (duty free) cost of this component is estimated at 3.21 million TD. The rate of return of this sub-project is 32.91%. Sousse Depot 7.2.6 The construction of the Sousse maintenance depot for an investment cost of TND 8 million allows to make substantial savings in view of the annual sub-contracting cost of TND 3.6 million to be borne by SNTF after the guarantee period for the new specific train sets that will be procured to supplement the present stock. Indeed, with this construction, SNCFT will carry out maintenance in the depot according to annual costs estimated in function of the intervention cycles. These savings will make it possible to achieve an economic rate of return of 27%.

Strengthening of the civil engineering structures of the Graiba-Metlaoui Line and Construction of the Sousse Terminal Market.

7.2.7 These two operations contribute to the efforts of SNCFT to recover a part of the goods traffic lost to road transport and to increase the productivity of transport. On the basis of the studies conducted, the savings made were estimated at 10% of the incomes generated by the volume of transport recovered with the construction the Sousse railway station. The rate of return is 12%. By offering the possibility of heavier transport, the strengthening of structures helps generate savings on the transport towards Metlaoui; the rate of return is 14.61% Connection to Cité Olympique 7.2.8 The development of the suburbs of Tunis with traffic potential estimated at 5.6 million passengers by 2007 demands the construction of a line of 2.2 km to provide a link between Tunis, Radès and the suburbs of Tunis. The project will therefore garner about 73.2 million passengers/km. A part of it related to the daily travel activities (59.6 m.uk) will increase at a rate of 7% and the rest will remain constant. From 2007, the induced economic benefits will attain 1875000 TD. The economic calculation shows a rate of return of 20.28%. 7.2.9 The quantifiable benefits generated by each of the key components of the programme argue in favour of implementing the project; the detailed calculation of each component is given in the project brief; taken as a whole, the project shows a highly

32

acceptable economic rate of return of 16.30%. This rate is higher than the capital opportunity rate estimated at around 12% for Tunisia. The assumptions for the calculation of the economic rate of return and the calculation table of the overall project rate of return are given as annex. 7.2.10 The other economic benefits of the project concern the construction and equipment of workshops, which will enhance the maintenance efficiency of the rolling stock in order to sustain its potential and performance. The procurement of computer equipment and software package is also fully consistent with the computer master plan of SNCFT and therefore contributes to the rationalisation of the management of the company. 7.3 Social Impact Analysis The project outputs interest all the populations of the country, particularly those of the northern and southern coastal governorates, the north-west, centre-west and south-east, who will derive considerable socio-economic benefits through the facilitation of movements, better quality of service offered (time gain, comfort, safety), development of national trade (Sahel train between Sousse, Monastir and Mahdia, connection of the suburbs of Radès and inter-regional lines (Tunis-Annaba route), better access to the various university campuses: Béja, Mahdia, Sousse, Sfax and Tunis. The connection of Sfax, Ghannouch and Radès ports to the rail network and the commissioning of a new freight terminal in Sousse will be beneficial to economic activity. This will result in additional jobs and consequently in increased incomes. 7.4 Sensitivity Analysis

7.4.1 A sensitivity analysis of the project economic rate of return was conducted by varying the investment amounts. A 10% increase in the investment cost reduces the ERR from 16.30% to 15.23%, representing a fall of about 1 point; and a 10% reduction in the project benefits gives an ERR of 15.17%, representing a fall of 1 point as well. The combination of the two tests gives a global rate of return of 14.15 %. 7.4.2 The sensitivity analysis of the project financial rate of return is based on three Assumptions, namely: (i) 20% increase in the investment costs; (ii) 20% fall in revenues throughout the period analysed; and (iii) a combination of (i) and (ii). Under the first assumption, the IRR falls from 17.74% to 15,42%, whereas under the second and third assumptions, it falls to 14.70% ad 12.71% respectively. The project financial return still remains buoyant, as the IFRR is above the capital opportunity cost in Tunisia, estimated at about 12%. 8. CONCLUSIONS AND RECOMMENDATIONS 8.1 Conclusions 8.1.1 The project submitted to the Bank for financing is in keeping with the latter’s operations strategy in the sector. The implementation of the project is also consistent with the objectives pursued by the Government in the sector and with the investment programme adopted for the 10th Plan. The investments envisaged are limited to the priority needs of SNCFT and help enhance its transport capacity in order to enable it to compete efficiently in market segments where it has comparative economic and financial advantages.

33

8.1.2 From the socio-economic point of view, the implementation of the project will facilitate travel on the inter-town and suburban lines, promote trade between Tunisia and Algeria, especially with the resumption in July 2003 of the Tunis-Annaba international passenger line. It will also create jobs during the works (labour and opportunity for local contractors and suppliers) and in the commissioning phase of the modernised infrastructure (increased activities in the ports connected to the railway network, trade and other service activities in the upgraded stations, etc.). 8.2 Recommendations and Loan Conditions 8.2.1 It is recommended that an ADB loan not exceeding UA 60.66 million be granted to the Government of the Republic of Tunisia to implement the project as described in the report. In additional to the usual Bank Group terms and conditions, the loan will be subject to the following specific conditions: A. Conditions precedent to entry into force 8.2.2 The entry into force of the loan agreement will be subject to fulfilment by the Borrower of the conditions precedent stipulated in section 5.01 of the General Conditions.

B Conditions precedent to disbursement 8.2.3 The disbursements of the loan resources will be subject to fulfilment by the Borrower of the following conditions: undertake to

i) strengthen the human resources of the «Internal Audit» Department of SNCFT (paragraph 3.4.3);

ii) transmit to the Bank, throughout the project implementation period, status reports

on the 2002-2006 performance contract, including, in particular, the financial measures (articles 25 and 26), that will make it possible to ensure the financial equilibrium of SNCFT (paragraph 6.2.3); and

iii) apply the relevant conclusions and recommendations stemming from the studies

on the institutional component (paragraph 6.2.4).

Other conditions: The Borrower shall in addition:

i) Not later than 31 December 2006, strengthen the human resources of the «Internal Audit» Department of SNCFT to bring the number of auditors to at least twelve (12) employees (paragraph 3.4.3);

ii) Not later than the end of the first quarter of every year, and throughout the project

implementation period, transmit to the Bank, status reports on the 2002-2006 performance contract, including, in particular, the financial measures (articles 25 and 26) that will make it possible to ensure the financial balance of SNCFT (paragraph 6.2.3);

iii) Not later than 31 December 2006 provide the Bank with the action plan for

implementing the relevant conclusions and recommendations relating to the studies on the institutional component (paragraph 6.2.4).

ANNEX 1

ANNEX 2

Page 1/2

REPUBLIC OF TUNISIA

RAILWAY INFRASTRUCTURE MODERNISATION PROJECT –PHASE II SNCFT OPERATING ACCOUNTS

(in million TD)

Descriptions 1998 1999 2000 2001 2002 OPERATING INCOME Revenue 95.95 100.70 98.76 99.11 103.78 Other operating income 13.88 13.90 14.00 14.00 10.02 Change in current stocks -0.003 -0.12 0.26 -0.0.9 -0.04 Self-constructed assets 12.44 16.25 18.03 13.27 15.24 Transport in operation 1.52 0.84 1.79 1.68 0.89 Recovery on amortization, and provisions 0.896 0.80 1.61 2.72 0.25 Total operating income 124.684 132.37 133.93 130.70 130.15 OPERATING COSTS Purchase of supplies 35.77 36.56 46.58 38.45 35.75 Change in stok reserves -1.97 -2.62 -4.98 -1.72 -1.42 Non-stocked purchases 4.23 4.34 4.70 4.52 3.11 Staff expenses 68.19 63.78 66.65 67.38 69.76 Amortization and provisions 7.65 8.32 13.20 11.93 14.68 Other operating expenses 18.17 17.47 18.28 17.58 14.80

Total operating expenses 132.05 133.10 144.43 138.14 136.681 OPERATING INOME -7.36 -0.73 -10.50 -7.43 -6.53 Financial expenses 4.26 7.62 10.36 10.14 2.90 Recovery on provisions for the financial expenses of the network

0.00 1.06 0.00 0.00 3.03

Net gain from investments 0.63 1.48 0.80 0.70 0.76 Other ordinary gains 3.57 0.39 1.50 1.38 1.63 Other ordinary losses 0.07 -5.47 0.23 0.18 0.75 FINANCIAL INCOME -0.12 -5.47 -8.29 -8.24 1.77 ORDINARY INCOME BEFORE TAX -7.49 -6.20 -18.78 -15.67 -4.76 Tax on benefits 0.002 0.002 0.002 0.002 0.002 NET FISCAL YEAR INCOME -7.49 -6.20 -18.78 -15.67 -4.76

Source: SNCFT - 1998-2002 annual reports

ANNEX 2 Page 2/2

REPUBLIC OF TUNISIA

RAILWAY INFRASTRUCTURE MODERNISATION PROJECT –PHASE II

SNCFT BALANCE SHEETS

(in million TD)

Description 1998 1999 2000 2001 2002 ASSETS

NON-CURRENT ASSETS Fixed assets Intangible assets 1.83 1.95 2.88 3.02 3.12 Depreciation -0.67 -0.90 -1.13 -1.52 -1.72 Tangible assets 754.96 829.47 876.93 919.59 968.78 Depreciation -297.11 -320.27 -347.44 -375.83 -405.96 Long-term investments 13.34 12.72 12.00 13.63 13.43 Reserves -0.54 -0.37 -0.36 -0.36 -0.35 Total of fixed assets 471.81 522.57 542.87 558.53 577.31 Other non-current assets 12.98 19.66 22.51 23.592 25.16 Total of non-current assets 484.78 542.23 565.39 582.12 602.46 CURRENT ASSETS Stocks 35.77 33.71 38.81 40.29 41.05 Provisions -2.72 -4.94 -3.87 -3.72 -3.11 Accounts receivable 34.55 36.45 40.11 35.26 34.21 Provisions -11.99 -13.97 -13.84 -14.09 -14.64 Other current assets 34.88 50.10 47.34 51.26 55.59 Investments and other financial assets 1.76 0.85 0.82 0.84 0.77 Liquid Assets and equivalents 3.72 4.23 16.57 24.05 36.13 Total current assets 95.97 106.43 125.94 133.88 150.00 TOTAL ASSETS 580.75 648.66 691.33 716.01 752.47 LIABILITIES SHAREHOLDERS’ EQUITY Endowment fund 222.03 222.03 222.03 222.03 222.03 Deferred income -140.17 -152.91 -159.09 -175.81 -193.55 Reserves 8.05 8.05 8.05 8.05 8.05 Net investment subsidies 246.04 253.79 266.44 305.44 374.82 Total capital before income allocation 328.47 324.77 318.65 344.05 411.36 NON-CURRENT LIABILITIES Provisions and exchange adjustments 1.20 0.82 1.91 0.40 1.42 Borrowings 132.07 183.71 204.46 226.86 218.98 Total non-current liabilities 133.27 184.52 206.37 227.26 220.41 CURRENT LIABILITIES Suppliers and related accounts 44.60 51.10 49.51 49.55 55.89 Bank assistance and other financial liabilities 15.09 19.88 19.59 19.83 18.18 Other current liabilities 59.32 68.39 97.20 75.31 51.39 Total current liabilities 119.01 139.37 166.31 144.70 125.46 TOTAL LIABILITIES 580.75 648.66 691.33 716.01 752.47 Source: SNCFT - 1998-2002 annual reports

ANNEX 3

Page 1/3 REPUBLIC OF TUNISIA

RAILWAY INFRASTRUCTURE MODERNISATION PROJECT –PHASE II

SUMMARY OF ESTIMATED PROJECT COST

COMPONENTS In million TD In million UA In million €

F.E. L.C. Total F.E. L.C. Total F.E. L.C. Total (%) Institutional component –Studies

Base cost –Studies 2.05 2.05 1.14 0.00 1.14 1.40 0.00 1.40

Physical contingencies 0.10 0.10 0.06 0.06 0.07 0.07

Price escalation 0.09 0.09 0.05 0.05 0.06 0.06

Total Institutional component-Studies 2.24 2.24 1.25 0.00 1.25 1.53 0.00 1.53 1.9%

Infrastructure modernisation component

1. Infrastructure consolidation

Base cost Infrastructure consolidation 6.19 1.09 7.29 3.45 0.61 4.06 4.24 0.75 4.98

Physical contingencies 0.31 0.05 0.36 0.17 0.03 0.20 0.21 0.04 0.25

Price escalation 0.35 0.06 0.41 0.19 0.03 0.23 0.24 0.04 0.28

Total Consolidation works 6.85 1.21 8.06 3.82 0.67 4.49 4.68 0.83 5.51 6.7%Improvement of exclusive way of southern suburb of Tunis

Base cost of SST Exclusive Way 9.65 1.70 11.36 5.38 0.95 6.33 6.60 1.16 7.77

Physical contingencies (5%) 0.48 0.09 0.57 0.27 0.05 0.32 0.33 0.06 0.39

Price escalation 0.36 0.06 0.42 0.20 0.04 0.24 0.25 0.04 0.29 Total Exclusive site works of southern suburbs of Tunis 10.50 1.85 12.35 5.85 1.03 6.88 7.18 1.27 8.44 10.2%

Upgrading of railway station facilities

Base cost 1.98 0.35 2.33 1.10 0.19 1.30 1.35 0.24 1.59

Physical contingencies 0.10 0.02 0.12 0.06 0.01 0.06 0.07 0.01 0.08

Price escalation 0.09 0.02 0.11 0.05 0.01 0.06 0.06 0.01 0.08 Total Upgrading of station facilities 2.17 0.38 2.56 1.21 0.21 1.43 1.49 0.26 1.75 2.1%Upgrading of the Gafsa/Aguila stations track beams

Base cost 2.95 0.36 3.31 1.64 0.20 1.85 2.02 0.25 2.26

Physical contingencies 0.21 0.02 0.27 0.12 0.01 0.13 0.14 0.01 0.16

Price escalation 0.13 0.06 0.22 0.07 0.03 0.11 0.09 0.04 0.13

Total Upgrading of Gafsa/Aguila railway stations 3.29 0.44 3.81 1.84 0.24 2.08 2.25 0.30 2.55 3.1%

Development of marketing activity

a) Improvement of the Sousse freight terminal

Base cost 4.95 0.74 5.69 2.76 0.41 3.17 3.38 0.51 3.89

Physical contingencies 0.32 0.04 0.36 0.18 0.02 0.20 0.22 0.03 0.25

Price escalation 0.23 0.03 0.26 0.13 0.02 0.14 0.16 0.02 0.18

Total a) Improvement of the freight terminal 5.50 0.81 6.31 3.07 0.45 3.52 3.76 0.55 4.31 5.2%

b) Connection of Sfax, Ghann ports & Radès-L7

- Sfax port (3 Km) 1.45 0.18 1.63 0.81 0.10 0.91 0.99 0.12 1.12

- Ghannouch port (2 Km) 0.17 0.08 0.25 0.10 0.04 0.14 0.12 0.05 0.17

- Radès port ->Line 7 (0,5 km) 0.43 0.05 0.48 0.24 0.03 0.27 0.29 0.04 0.33

Base cost 2.05 0.31 2.36 1.14 0.17 1.32 1.40 0.21 1.62

Physical contingencies 0.15 0.01 0.16 0.08 0.01 0.09 0.10 0.01 0.11

Price escalation 0.20 0.01 0.21 0.11 0.00 0.12 0.14 0.00 0.14

Total b) Connection of 3 ports 2.40 0.33 2.73 1.34 0.18 1.52 1.64 0.23 1.87 2.3%

ANNEX 3

Page 2/3 REPUBLIC OF TUNISIA

RAILWAY INFRASTRUCTURE MODERNISATION PROJECT –PHASE II SUMMARY OF ESTIMATED PROJECT COST

COMPONENT In million TD In million UA In million €

F.E. L.C. Total F.E. L.C. Total F.E. L.C. Total

c) Procurement of 2 weighbridges (G. Sous. & P.Ghan.)

Base cost 0.60 0.00 0.60 0.33 0.00 0.33 0.41 0.00 0.41

Physical contingencies 0.06 0.00 0.06 0.03 0.00 0.03 0.04 0.00 0.04

Price escalation 0.04 0.00 0.04 0.02 0.00 0.02 0.03 0.00 0.03

Total c) Procurement of 2 weighbridges 0.70 0.00 0.70 0.39 0.00 0.39 0.48 0.00 0.48 0.6%

Total Development of marketing activity 8.60 1.14 9.74 4.79 0.64 5.43 5.88 0.78 6.66

Maintenance depot of 10 train sets –Sousse

Base cost 7.36 0.64 8.01 4.10 0.36 4.46 5.03 0.44 5.48

Physical contingencies 0.68 0.07 0.76 0.38 0.04 0.42 0.47 0.05 0.52

Price escalation 0.68 0.08 0.76 0.38 0.04 0.42 0.47 0.05 0.52

Total Maintenance depot of 10 train sets 8.73 0.79 9.52 4.86 0.44 5.31 5.97 0.54 6.51 7.9%

Track renewal – TA line & line 6

a) Renewal of TA line

Base cost 16.16 2.51 18.67 9.00 1.40 10.40 11.05 1.72 12.77

Physical contingencies 1.29 0.13 1.42 0.72 0.07 0.79 0.89 0.09 0.97

Price escalation 1.23 0.17 1.40 0.68 0.09 0.78 0.84 0.12 0.95

Total a) Renewal of TA line 18.68 2.80 21.48 10.41 1.56 11.97 12.77 1.92 14.69 17.8%

b) Renewal of line 6 (Tunis-Kasserine)

Base cost 10.94 1.99 12.93 19.64 3.56 23.20 24.10 4.37 28.47

Physical contingencies 0.83 0.13 0.96 1.49 0.23 1.72 1.83 0.28 2.11

Price escalation 0.76 0.13 0.88 1.36 0.23 1.58 1.67 0.28 1.94

Total b) Renewal of line 6 12.53 2.24 14.77 22.49 4.02 26.50 27.60 4.93 32.52 39.4%

Total Track renewal of TA line & Line 6 31.21 5.04 36.25 17.39 2.81 20.20 21.34 3.45 24.79 30.0%

Rail connection of Cité Olymp. Radès –2.2 km

Base cost 10.35 0.53 10.88 18.58 0.94 19.52 22.80 1.16 23.95

Physical contingencies 0.91 0.03 0.93 1.62 0.05 1.67 1.99 0.06 2.05

Price escalation 1.12 0.04 1.16 2.01 0.07 2.08 2.47 0.09 2.56

Total Rail connection of Cité Olymp. Radès –2.2 km 12.38 0.59 12.97 22.21 1.07 23.28 27.26 1.31 28.57 34.6%

Signalling and Telecommunication

a) Level crossing equipment (LC)

Base cost 7.06 0.44 7.50 3.93 0.25 4.18 4.83 0.30 5.13

Physical contingencies 0.60 0.02 0.62 0.33 0.01 0.35 0.41 0.02 0.43

Price escalation 0.66 0.04 0.70 0.37 0.02 0.39 0.45 0.03 0.48

Total a) LC equipment 8.31 0.50 8.82 4.63 0.28 4.91 5.69 0.34 6.03 7.3%

b) Signalling of Monastir-Mahdia

Base cost 5.00 0.00 5.00 2.79 0.00 2.79 3.42 0.00 3.42

Physical contingencies 0.50 0.00 0.50 0.28 0.00 0.28 0.34 0.00 0.34

Price escalation 0.58 0.00 0.58 0.32 0.00 0.32 0.40 0.00 0.40

Total b) Signal. - Monastir-Mahdia section 6.08 0.00 6.08 3.39 0.00 3.39 4.16 0.00 4.16 5.0% c) Installation of ground-train Telecommunication system

Base cost 7.10 7.10 3.96 3.96 4.86 4.86

Physical contingencies 0.71 0.00 0.71 0.40 0.00 0.40 0.49 0.00 0.49

Price escalation 0.57 0.00 0.57 0.32 0.00 0.32 0.00 0.00 Total c) Installation of ground-train telecommunication system 8.38 0.00 8.38 4.67 0.00 4.67 5.34 0.00 5.34 6.5%

Total Signalling and Telecommunication 22.78 0.50 23.28 12.69 0.28 12.97 15.58 0.34 15.92 19.3%

Infrastructure modernisation 106.61 11.93 118.54 59.42 6.65 66.06 72.91 8.16 81.06 98.1%

Grand total 108.86 11.93 120.78 60.67 6.65 67.31 74.44 8.16 82.60

PERCENTAGE 90% 10% 100% 90% 10% 100% 90% 10% 100%

ANNEX 3 Page 3/3

REPUBLIC OF TUNISIA

RAILWAY INFRASTRUCTURE MODERNISATION PROJECT –PHASE II

COST OF NEW SOUSSE DEPOT EQUIPMENT

Description Estimated cost in thousand TD

MT/BT 630 KVA transformer +electrical installation 500

20t overhead travelling bridge 80

Computerised installation of diesel distribution 300

Installation of MD oil distribution 200

Installation of GMAO network 120

Installation of water treatment + boiler 100

Installation of compressed air with compressor 100

Sets of 8 wing jacks of 15 Tonnes 150

Lift trailer 40

Truck for transporting spare parts for repairs 100

Ambulance 50

Battery charger 20

Tool kit 100

Washstand equipment 200

Office equipment 50

TOTAL 2210

Source: SNCFT

ANNEX 4 Page 1/7

REPUBLIC OF TUNISIA RAILWAY INFRASTRUCTURE MODERNISATION PROJECT –PHASE II

DETAILED COST AND PROCUREMENT METHODS ADOPTED

Financing rate (%) ADB GVT 0.3 FE inflation= 0.028 VAT= 0.18

UA/TD rate

0.85 0.15 SleeperTD inflation= 0.02 1.7944

IMPLEMENTATION YEARS Audit Total Total UC /€ rate

Component (in million TD) 2004 2005 2006 2007 Total SNCFT IOT 1.2271 Total Amt

Procurement

method

ADB Fin. MUA

-Institutional studies

Rationalisation of management of the support units 0.50 0.50 1.00 0.00 1.00 1.00 1.00 0.56 Short list

Support to cost accounting 0.35 0.35 0.70 0.00 0.70 0.70 0.70 0.39 Short list

Railway equipment strategy & Industrial maintenance 0.10 0.10 0.20 0.00 0.20 0.20 0.20 0.11 Short list

Improvement of the environment of maintenance establishment 0.08 0.08 0.15 0.00 0.15 0.15 0.15 0.08

Short list.

Base cost –Studies 1.03 1.03 0.00 0.00 2.05 0.00 2.05 2.05 2.05 1.14 Short list.

Physical contingencies (5%) 0.05 0.05 0.00 0.00 0.10 0.00 0.10 0.10 0.10 0.06

Price escalation 0.03 0.06 0.00 0.00 0.09 0.00 0.09 0.18 0.09 0.05

Total Institutional component 1.11 1.14 0.00 0.00 2.24 0.00 2.24 2.33 2.24 1.25 L. restr.

Infrastructure modernisation component

-Consolidation of infrastructure

Strengthening of MT on TA line and line 1 0.25 0.89 0.13 1.27 0.00 1.27 1.50 1.08 0.71 ICB

Strengthening of 3 box-girders on TA line 0.25 0.51 0.08 0.85 0.00 0.85 1.00 0.72 0.47 ICB

Stabilisation of the banks on TA line 0.66 0.36 1.02 0.00 1.02 1.20 0.86 0.57 LS

Flood proofing on TA line 0.14 1.15 0.14 1.44 0.00 1.44 1.70 1.22 0.80 ICB

Strengthening of steel AO (L>6m) on Sfax-Metlaloui line 0.42 0.80 0.14 1.36 0.00 1.36 1.60 1.15 0.76 ICB Reconstruction. of bridges on Ghrba-Gafsa & Teb. -Redeyef lines 0.06 0.44 0.06 0.55 0.00 0.55 0.65 0.47 0.31 LS Reconstruction. of 9 arch bridges & replacement of 7TM d'OA-on Sfx-Metl lines. 0.17 0.55 0.08 0.81 0.00 0.81 0.95 0.68 0.45 LS

Base cost Consolidation of infrastructure 1.30 5.00 0.98 0.00 7.29 0.00 7.29 8.60 6.19 4.06

Physical contingencies (5%) 0.07 0.25 0.05 0.00 0.36 0.00 0.36 0.43 0.31 0.20

Price escalation 0.04 0.29 0.09 0.00 0.41 0.00 0.41 0.81 0.35 0.23

Total Consolidation works 1.40 5.54 1.12 0.00 8.06 0.00 8.06 9.84 6.85 4.49

Improv. of exclusive way of southern suburbs of Tunis

Tilting structure on the Radès-Meliane rail/road 0.38 2.12 1.31 3.81 0.00 3.81 4.50 3.24 2.13 ICB

Tilting structure on the Hamman Chatt rail/road 0.36 2.03 1.25 3.64 0.00 3.64 4.30 3.10 2.03 ICB

Tilting structure on the Borj Cédria rail/road 0.39 2.17 1.34 3.90 0.00 3.90 4.60 3.31 2.17 ICB

Base cost Exclusive way of SST 1.14 6.31 3.91 0.00 11.36 0.00 11.36 13.40 9.65 6.33 ICB

Physical contingencies (5%) 0.06 0.32 0.20 0.00 0.57 0.57 1.14 0.67 0.48 0.32

Price escalation 0.03 0.36 0.03 0.00 0.42 0.00 0.42 0.85 0.36 0.24

Total exclusive way works on SST 1.22 6.99 4.13 0.00 12.35 0.00 12.35 14.92 10.50 6.88 ICB

Upgrading of station facilities

Fencing of rights of way of the stations 0.25 0.45 0.06 0.76 0.00 0.76 0.90 0.65 0.43 3LS

Ghardimaou, Gafsa and Ksar Hellal head houses 0.47 0.86 0.11 1.44 0.00 1.44 1.70 1.22 0.80 3LS

Pedestrian bridges (fac line 22, Moknine & El Jem stations) 0.04 0.08 0.01 0.13 0.00 0.13 0.15 0.11 0.07 4LS

Base cost 0.76 1.39 0.18 0.00 2.33 0.00 2.33 2.75 1.98 1.30 LS

Physical contingencies (5%) 0.04 0.07 0.01 0.00 0.12 0.00 0.12 0.14 0.10 0.06

Price escalation 0.02 0.08 0.01 0.00 0.11 0.00 0.11 0.22 0.09 0.06

Total Upgrading works of station facilities 0.82 1.54 0.20 0.00 2.56 0.00 2.56 3.11 2.17 1.43

ANNEX 4 Page 2/7

REPUBLIC OF TUNISIA RAILWAY INFRASTRUCTURE MODERNISATION PROJECT –PHASE II

DETAILED COST AND PROCUREMENT METHODS ADOPTED

IMPLEMENTATION YEARS Audit Total Total UA/ /€ rate

Component (in million TD) 2004 2005 2006 2007 Total SNCFT IOT 1.2271 Total Amt

Proc. metho

d Upgrading of track beams of Gafsa & Aguila stations

- Supply (track equipment and materials) - Rails (550 T) 0.04 0.30 0.05 0.39 0.00 0.39 0.39 0.39 0.22 ICB - Link pins and sundry equipment 0.04 0.31 0.05 0.40 0.00 0.40 0.40 0.40 0.22 ICB - Track devices 0.13 1.01 0.18 1.32 0.00 1.32 1.32 1.32 0.74 ICB S/T supply of track equipment 0.21 1.61 0.29 0.00 2.11 0.00 2.11 2.11 2.11 1.18 ICB - Ballast (9000 m3) 0.04 0.06 0.10 0.00 0.10 0.12 0.08 0.06 LS - Sleepers + transport (9 km) 0.06 0.27 0.33 0.00 0.33 0.39 0.10 0.19 ICB S/Total materials 0.00 0.10 0.33 0.00 0.43 0.18 0.24 - Track laying works 0.00 0.39 0.39 0.00 0.77 0.00 0.77 0.91 0.65 0.43 ICB Base cost 0.21 2.10 1.01 0.00 3.31 0.00 3.31 3.53 2.95 1.85 Physical contingencies-Track equipment 100% ADB) 0.02 0.16 0.03 0.00 0.21 0.21 0.12 Physical contingencies ballast 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Physical contingencies -sleepers 0.00 0.00 0.01 0.00 0.02 0.00 0.01 Physical contingencies Track laying 0.00 0.02 0.02 0.00 0.04 0.03 0.02 Total Physical contingencies 0.02 0.19 0.06 0.00 0.27 0.00 0.25 0.15

Total Price escalation 0.01 0.13 0.09 0.00 0.22 0.00 0.20 0.12

Total Upgrading of Gafsa and Aguila stations 0.24 2.41 1.16 0.00 3.81 3.40 2.12

Development of market activity

Improvement of the Sousse Freight Terminal - Civil works and sundry 2.29 0.93 0.17 3.39 0.00 3.39 4.00 2.88 1.89 ICB - Supply (track equipment and materials) - Rails (550 T) 0.29 0.10 0.39 0.00 0.39 0.39 0.39 0.22 ICB - Link pins and sundry equipment 0.19 0.07 0.26 0.00 0.26 0.26 0.26 0.14 ICB - Track devices (18 U) 0.62 0.21 0.83 0.00 0.83 0.83 0.83 0.46 ICB S/T Supply of track equipment 0.00 1.10 0.38 0.00 1.48 0.00 1.48 1.48 1.48 0.82 ICB - Ballast (11000 m3) 0.12 0.04 0.16 0.00 0.16 0.19 0.14 0.09 LS - Sleepers + transport (5.5 km) 0.15 0.05 0.20 0.00 0.20 0.24 0.06 0.11 ICB

- Track laying works (5.5 km) 0.34 0.12 0.46 0.00 0.46 0.46 0.39 0.26 ICB

Base cost 2.29 2.64 0.76 0.00 5.69 0.00 5.69 6.37 4.95 3.17

Physical contingencies Track equipment 100% ADB) 0.00 0.11 0.04 0.00 0.15 0.15 0.08

Physical contingencies Ballast 0.00 0.01 0.00 0.00 0.01 0.01 0.00

Phy. Conting. Sleepers 0.00 0.01 0.00 0.00 0.01 0.00 0.01

Phy. Conting. Track laying works 0.11 0.06 0.01 0.00 0.19 0.16 0.11 Total Phy. Contingencies 0.11 0.19 0.06 0.00 0.36 0.00 0.32 0.20 Price escalation- Track equipment 0.00 0.07 0.04 0.00 0.10 0.10 0.06

Price escalation- ballast 0.00 0.01 0.00 0.00 0.01 0.01 0.01

Price escalation – sleepers 0.00 0.01 0.00 0.00 0.01 0.00 0.01

Price escalation –works 0.06 0.05 0.02 0.00 0.13 0.11 0.07

Unallocated supply (Conting.+ price escalation) 0.00 0.21 0.09 0.00 0.29 0.00 0.27 0.16

Unallocated works (Conting. + price escalation) 0.18 0.12 0.03 0.00 0.33 0.00 0.28 0.18

Total Price escalation 0.06 0.14 0.06 0.00 0.26 0.00 0.26 0.23 0.14

Total Improvement of freight terminal 2.47 2.97 0.88 0.00 6.31 0.00 6.31 6.37 5.50 3.52

ANNEX 4

Page 3/7 REPUBLIC OF TUNISIA

RAILWAY INFRASTRUCTURE MODERNISATION PROJECT –PHASE II DETAILED COST OF PROCUREMENT METHODS ADOPTED

IMPLEMENTATION YEARS Audit Total Total UA /€ rate

Component (in million TD) 2004 2005 2006 2007 Total SNCFT TTC 1.2271 Total amt.

Proc. metho

d

Connection of Sfax, Ghannouch & Radès ports

Connection Sfax port (3 Km)

- Civil works 0.00 0.00 0.00 0.42 0.42 0.00 0.42 0.50 0.36 0.24 LS

- Supply (track equipment and materials)

- Rails (300 T) 0.21 0.21 0.00 0.21 0.21 0.21 0.12 ICB

- Link pins and sundry equipment 0.12 0.12 0.00 0.12 0.12 0.12 0.07 ICB

- Track devices (10 U) 0.50 0.50 0.00 0.50 0.50 0.50 0.28 ICB

S/T Supply of track equipment 0.00 0.00 0.00 0.83 0.83 0.00 0.83 0.83 0.83 0.46 ICB

- Ballast (6000 m3) 0.07 0.07 0.00 0.07 0.06 0.04 LS

- Sleepers + transport (3,0 km) 0.11 0.11 0.00 0.11 0.03 0.06 ICB

- Track laying works (3,0 km) 0.20 0.20 0.00 0.20 0.17 0.11 ICB

Base cost 0.00 0.00 0.00 1.63 1.63 0.00 1.63 1.33 1.45 0.91

Phy. Conting. – Track equipment 0.00 0.00 0.00 0.08 0.08 0.00 0.08 0.08 0.05

Contingency – ballast 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Contingency – sleepers 0.00 0.00 0.00 0.01 0.01 0.00 0.00

Contingency – works (civil works and track laying) 0.00 0.00 0.00 0.03 0.03 0.03 0.02

Total Physical Contingencies 0.00 0.00 0.00 0.12 0.12 -0.04 0.08 0.12 0.11 0.07

Price escalation –track equipment 0.00 0.00 0.00 0.11 0.11 0.11 0.06

Price escalation – ballast 0.00 0.00 0.00 0.01 0.01 0.01 0.00

Price escalation – sleepers 0.00 0.00 0.00 0.01 0.01 0.00 0.01

Price escalation – works including track laying 0.00 0.00 0.00 0.05 0.05 0.04 0.03

Unallocated supply (contingency + price escalation) 0.00 0.00 0.00 0.22 0.22 0.00 0.22 0.20 0.12

Unallocated – works (contingency + price escalation) 0.00 0.00 0.00 0.08 0.08 0.00 0.08 0.07 0.05

Total Price escalation 0.00 0.00 0.00 0.18 0.18 0.18 0.16 0.10

Total Connection of Sfax port 0.00 0.00 0.00 1.93 1.93 1.93 1.73 1.08

Connection of Ghannouch port (2 Km)

- Supply (track equipment and materials) 0.00

- Rails 0.00 0.00 0.00 0.00 0.00

- Link pins and sundry equipment 0.00 0.00 0.00 0.00 0.00

- Track devices 0.00 0.00 0.00 0.00 0.00

S/T Supply of track equipment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

- Ballast (4000 m3) 0.05 0.05 0.00 0.05 0.04 0.03 LS

- Sleepers + transport (2.0 km) 0.07 0.07 0.00 0.07 0.02 0.04 ICB

- Track laying works (2.0 km) 0.13 0.13 0.00 0.13 0.11 0.07 ICB

Base cost 0.25 0.00 0.00 0.00 0.25 0.00 0.25 0.17 0.14

Total Physical Contingencies 0.01 0.00 0.00 0.00 0.01 0.00 0.01 0.01 0.01

Total Price escalation 0.01 0.00 0.00 0.00 0.01 0.01 0.00 0.00

Total Connection of Ghannouch port 0.27 0.00 0.00 0.00 0.27 0.00 0.27 0.19 0.15

ANNEX 4 Page 4/7

REPUBLIC OF TUNISIA RAILWAY INFRASTRUCTURE MODERNISATION PROJECT –PHASE II

DETAILED COST OF PROCUREMENT METHODS ADOPTED

IMPLEMENTATION YEARS Audit Total Total UA/€ rate

Component (in million TD) 2004 2005 2006 2007 Total SNCFT IOT 1.2271 Total amt.

Procuremen

t metho

d

Connection of Radès-L7 port (0.5 Km)

-Civil works and sundry 0.17 0.17 0.00 0.17 0.20 0.14 0.09 LS

- Supply (track equipment and materials) 0.00

- Rails (50 T) 0.04 0.04 0.00 0.04 0.04 0.02 ICB

- Link pins and sundry equipment 0.03 0.03 0.00 0.03 0.03 0.01 ICB

- Track devices (3U) 0.14 0.14 0.00 0.14 0.14 0.08 ICB

S/T Supply of track equipment 0.00 0.20 0.00 0.00 0.20 0.20 0.20 0.11 ICB

- Ballast (1000 m3) 0.01 0.01 0.01 0.01 0.01 LS

- Sleepers + transport (0.5 km) 0.02 0.02 0.02 0.01 0.01 ICB

- Track laying works (0.5 km) 0.08 0.08 0.08 0.07 0.05 ICB

Base cost 0.00 0.48 0.00 0.00 0.48 0.48 0.40 0.43 0.27

Contingency – track equipment 0.00 0.02 0.00 0.00 0.02 0.02 0.02 0.01

Contingency –ballast 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Contingency – sleepers 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Contingency – works including track laying 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total Physical Contingencies 0.00 0.03 0.00 0.00 0.03 0.03 0.02 0.01

Price escalation on track equipment 0.00 0.01 0.00 0.00 0.01 0.01 0.01

Price escalation –ballast 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Price escalation –sleepers 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Price escalation – sleepers 0.00 0.01 0.00 0.00 0.01 0.00 0.01 0.01

Unallocated supply (contingencies +price escalation) 0.00 0.04 0.00 0.00 0.04 0.00 0.03 0.02

Unallocated works (conting. + price escalation) 0.00 0.02 0.00 0.00 0.02 0.00 0.02 0.01

Price escalation -others 0.00 0.02 0.00 0.00 0.02 0.01 0.01

Total Price escalation 0.00 0.03 0.00 0.00 0.03 0.03 0.04 0.02

Total Connection of Radès-L7 port 0.00 0.53 0.00 0.00 0.53 0.53 0.49 0.30

Total Connection of ports 0.27 0.53 0.00 1.93 2.73 0.00 2.73 2.40 1.52 Procurement of 2 weighbridges (Terminal market & Ghan.) Port)

Base cost 0.60 0.60 0.60 0.60 0.33 ICB

Physical contingencies 0.00 0.06 0.00 0.00 0.06 0.00 0.06 0.06 0.06 0.03

Price escalation 0.00 0.04 0.00 0.00 0.04 0.04 0.02

Total Procurement of 2 weighbridges 0.00 0.70 0.00 0.00 0.70 0.70 0.39 ICB

Total Development freight activity 2.74 4.20 0.88 1.93 9.74 8.60 5.43

ANNEX 4 Page 5/7

REPUBLIC OF TUNISIA RAILWAY INFRASTRUCTURE MODERNISATION PROJECT–PHASE II

DETAILED COST AND PROCUREMENT METHODS ADOPTED

IMPLEMENTATION YEARS Audit Total Total UA/€ rate

Component (in million TD) 2004 2005 2006 2007 Total SNCFT IOT 1.2271 Total amt.

Procuremen

t metho

d Maintenance depot (10 power cars -Tunis-Sousse line)

Expropriation 0.60 0.60 0.60 0.60 0.33 Other

-Civil works and sundry 3.11 1.30 4.41 4.41 5.20 3.75 2.46 ICB

- Supply

- Depot equipment 2.00 2.00 0.00 2.00 2.00 2.00 1.11 ICB

- Rails (200 T) 0.15 0.15 0.00 0.15 0.15 0.08 ICB

- Link pins and sundry equipment (2 km) 0.09 0.09 0.00 0.09 0.09 0.05 ICB

-Track devices and dilatation (8U) 0.46 0.46 0.00 0.46 0.46 0.26 ICB

S/Total Track equipment 0.00 0.00 0.70 0.00 0.70 0.70 0.39

- S/Total Supply –track equipment and materials 0.00 0.00 0.70 2.00 3.40 0.00 2.70 2.70 3.40 1.89 ICB

- Ballast (1000 m3) 0.05 0.05 0.00 0.05 0.04 0.03 LS

- Sleepers + transport 0.07 0.07 0.00 0.07 0.02 0.04 ICB

S/total – other supplies 0.00 0.00 0.00 0.12 0.12 0.00 0.12 0.06 0.07

Total supply 0.00 0.00 0.70 2.12 2.82 0.00 2.82 3.46 1.57 - Track laying works 0.18 0.18 0.00 0.18 0.15 0.10 ICB Base cost 0.00 0.60 3.81 3.60 8.01 0.00 8.01 7.36 4.46 Physical contingencies and track equipment 0.00 0.00 0.07 0.20 0.27 0.27 0.15 Contingencies – ballast 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Contingencies – sleepers 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Contingencies – works (civil works and track laying) 0.00 0.16 0.07 0.26 0.48 0.41 0.27 Physical contingencies -others 0.00 0.06 0.31 0.16 0.53 0.45 0.30 Total Physical Contingencies 0.00 0.16 0.14 0.47 0.76 0.00 0.76 0.68 0.42 Price escalation (supply of track equipment and materials) 0.00 0.00 0.07 0.26 0.32 0.32 0.18 Price escalation –ballast 0.00 0.00 0.00 0.01 0.01 0.00 0.00 Price escalation –sleepers 0.00 0.00 0.00 0.01 0.01 0.00 0.00 Price escalation –works including track laying 0.00 0.00 0.26 0.17 0.42 -0.42 0.36 0.24 Total - Price escalation 0.00 0.00 0.32 0.43 0.76 -0.42 0.76 0.68 0.42

Total Maintenance depot of 10 power cars 0.00 0.76 4.26 4.50 9.52 0.00 9.52 8.73 5.31 Track renewal –TA line/ 62km +10 km station tracks - Supply (track equipment and materials) - Rails (8200 T) 5.74 5.74 0.00 5.74 5.74 3.20 ICB - Link pin and sundry equipment 2.85 2.85 0.00 2.85 2.85 1.59 ICB -Track device (20 U+16 U of dilatation) 1.15 1.15 0.00 1.15 1.15 0.64 ICB S/T Supply of track equipment 0.00 5.74 4.00 0.00 9.74 0.00 9.74 9.74 9.74 5.43 ICB - Ballast (180.000 m3) 0.81 0.56 1.37 0.00 1.37 1.16 0.76 LS - Sleepers +transport (72 km) 0.47 1.66 2.13 0.00 2.13 0.64 1.19 ICB - Track laying works (72 km) 1.19 4.24 5.43 0.00 5.43 4.62 3.03 ICB Base cost 0.00 8.21 10.46 0.00 18.67 16.16 10.40 Total Physical contingencies 0.00 0.70 0.72 0.00 1.42 0.00 1.42 1.29 0.79 Total Price escalation 0.00 0.49 0.90 0.00 1.40 0.00 1.23 0.78 Total Renewal of TA line on 62 km 0.00 9.40 12.09 0.00 21.48 0.00 21.48 18.68 11.97

ANNEX 4 Page 6/7

REPUBLIC OF TUNISIA RAILWAY INFRASTRUCTURE MODERNISATION PROJECT –PHASE II

DETAILED COST AND PROCUREMENT METHODS ADOPTED

IMPLEMENTATION YEARS Audit Total Total UA /€ rate

Component (in million TD) 2004 2005 2006 2007 Total SNCFT IOT 1.2271 Total amt.

Procuremen

t metho

d Track renewal of line 6 (Tu-Kass.) / 58.5 km - Supply (track equipment and materials) - Rails (4100 T) 2.81 0.06 2.87 2.87 2.87 2.87 1.60 ICB - Link pins and sundry equipment 2.22 0.05 2.27 2.27 2.27 2.27 1.26 ICB -Track devices (22 U+20 U of dilatation) 1.08 0.02 1.10 1.10 1.10 0.61 ICB S/T Supply of track equipment 0.00 6.10 0.14 0.00 6.24 6.24 6.24 3.47 ICB - Ballast (130.000 m3) 0.30 0.59 0.88 0.88 0.75 0.49 LS - Sleepers +transport 0.84 0.94 1.78 1.78 0.54 0.99 ICB - Track laying works (62 km) 0.83 3.20 4.03 4.03 3.43 2.25 ICB Base cost 0.00 8.07 4.86 0.00 12.93 12.93 10.94 7.21 Physical contingencies – track equipment 0.00 0.61 0.01 0.00 0.62 0.62 0.35 Contingencies – ballast 0.00 0.01 0.03 0.00 0.04 0.04 0.02 Contingencies – sleepers 0.00 0.04 0.05 0.00 0.09 0.00 0.05 Physical contingencies –works incl. track laying 0.00 0.04 0.16 0.00 0.20 0.17 0.11 Total Physical contingencies 0.00 0.71 0.25 0.00 0.96 0.00 0.96 0.83 0.53 Price escalation – track equipment 0.00 0.38 0.01 0.00 0.39 0.39 0.22 Price escalation –ballast 0.00 0.02 0.05 0.00 0.07 0.06 0.04 Price escalation – sleepers 0.00 0.04 0.06 0.00 0.10 0.03 0.05 Price escalation- works 0.00 0.05 0.28 0.00 0.32 0.28 0.18 Unallocated supply (contingencies + price escalation) 0.00 1.10 0.21 0.00 1.31 0.00 1.31 1.14 0.73 Unallocated works (contingencies + escalation) 0.00 0.09 0.44 0.00 0.53 0.00 0.53 0.45 0.29 Total Price escalation 0.00 0.48 0.40 0.00 0.88 0.00 0.88 0.76 0.49 Total Track renewal of line 6 0.00 9.26 5.51 0.00 14.77 0.00 14.77 12.53 8.23 Total Track renewal 0.00 18.65 17.60 0.00 36.25 36.25 31.21 20.20 Rail connection of Cité Olympique de Radès –2.2 km -Earthworks –station 0.85 1.70 2.54 18% 3.00 2.16 1.42 ICB - Supply (track equipment and materials) - Rails 0.00 0% 0.00 - Link pins and sundry equipment 0.00 0% 0.00 -Track devices 0.00 0.00 S/Total Track equipment 0.00 1.28 0.00 ICB -Signalling +Telecom+ electrification 0.65 5.85 6.50 6.50 6.50 6.50 3.62 ICB S/T Supply of track equipment 0.32 0.96 1.28 1.28 1.28 0.71 ICB - Ballast 0.02 0.06 0.08 0.08 0.07 0.04 LS - Sleepers +transport 0.03 0.08 0.11 0.11 0.11 0.03 0.06 ICB - Track laying works 0.09 0.28 0.37 0.37 0.37 0.31 0.20 ICB Base cost 0.00 1.31 3.72 5.85 10.88 10.88 1.84 10.35 6.06 Physical contingencies –track equipment 0.00 0.03 0.16 0.59 0.78 0.78 0.43 Contingencies –ballast 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Contingencies – sleepers 0.00 0.00 0.00 0.00 0.01 0.00 0.00 Physical contingencies – sleepers incl. track laying 0.00 0.05 0.10 0.00 0.15 0.12 0.08 Total Physical contingencies 0.00 0.08 0.27 0.59 0.93 0.00 0.93 0.91 0.52 Price escalation – track equipment 0.00 0.02 0.15 0.75 0.92 0.92 0.52 Price escalation – ballast 0.00 0.00 0.01 0.00 0.01 0.01 0.00 Price escalation - sleepers 0.00 0.00 0.01 0.00 0.01 0.00 0.00 Price escalation – works 0.00 0.05 0.17 0.00 0.22 0.19 0.13 Total Price escalation 0.00 0.08 0.33 0.75 1.16 0.00 1.16 1.12 0.65 Total rail connection of Radès 0.00 1.46 4.32 7.19 12.97 12.97 12.38 7.23

ANNEX 4

Page 7/7 REPUBLIC OF TUNISIA

RAILWAY INFRASTRUCTURE MODERNISATION PROJECT –PHASE II DETAILED COST AND PROCUREMENT METHODS ADOPTED

IMPLEMENTATION YEARS Audit Total Total UA /€ rate

Component (in million TD) 2004 2005 2006 2007 Total SNCFT IOT 1.2271 Total amt.

Procuremen

t metho

d Signalling and Telecommunication Level crossing equipment (LC) Improvement of 40 LC - Supply, equipment and works -Equipment supply 1.05 1.83 1.05 3.93 3.93 3.93 2.19 ICB - Civil works 0.57 0.99 0.57 2.12 2.12 2.50 1.80 1.18 ICB - Energy supply, equipment & insulation works - Energy supply STEG 0.07 0.12 0.07 0.25 0.25 0.21 0.14 LS - Track equipment 0.18 0.31 0.18 0.66 0.66 0.66 0.37 ICB - Sleepers 0.03 0.05 0.03 0.10 0.10 0.03 0.06 ICB - Track laying 0.03 0.05 0.03 0.10 0.10 0.09 0.06 ICB Renewal of 17 LC 0.00 -Supply and installation 0.00 0.20 0.14 0.34 0.34 0.34 0.19 ICB Base cost 0.00 1.91 3.54 2.05 7.50 0.00 2.57 7.43 7.06 4.18 Physical contingencies –equipment 100% ADB 0.00 0.12 0.23 0.14 0.49 0.49 0.27 Physical contingencies 0.00 0.00 0.00 0.00 0.01 0.00 0.00 Physical contingencies –works 0.00 0.03 0.06 0.03 0.12 0.10 0.07 Total Physical contingencies 0.00 0.16 0.29 0.17 0.62 0.00 0.62 0.60 0.35 Price escalation – equipment. 0.00 0.08 0.22 0.18 0.47 0.47 0.26 Price escalation – sleepers 0.00 0.00 0.00 0.00 0.01 0.00 0.00 Price escalation –works 0.00 0.04 0.10 0.08 0.21 0.18 0.12 Total Price escalation 0.00 0.12 0.33 0.26 0.70 0.00 0.70 0.00 0.66 0.39

Total LC equipment 0.00 2.18 4.16 2.48 8.82 0.00 8.82 8.31 4.91 Signalling of the Monastir-Mahdia section - Supply and installation incl. machinery compartments 1.89 3.12 5.00 5.00 5.00 2.79 ICB Base cost 0.00 0.00 1.89 3.12 5.00 0.00 0.00 5.00 5.00 2.79 Physical contingencies 0.00 0.00 0.19 0.31 0.50 0.00 0.00 0.50 0.50 0.28 Price escalation 0.00 0.00 0.18 0.40 0.58 0.58 0.32

Total Signalling of Monastir-Mahdia 0.00 0.00 2.25 3.83 6.08 6.08 3.39

Ground-train Telecommunication - Supply and installation of end equipment 1.17 0.97 0.16 2.30 2.30 2.30 1.28 ICB - Supply and installation of the GSM-R coverage network 2.43 2.03 0.34 4.80 4.80 4.80 2.68 ICB Base cost 0.00 3.60 3.00 0.50 7.10 0.00 7.10 7.10 3.96 Physical contingencies 0.00 0.36 0.30 0.05 0.71 0.71 0.71 0.40 Price escalation 0.00 0.22 0.29 0.06 0.57 0.57 0.57 0.32

Total Ground -to-train telecommunication 0.00 4.18 3.59 0.61 8.38 0.00 8.38 8.38 8.38 4.67 Total signalling and Telecommunication 0.00 6.37 10.00 6.91 23.28 0.00 8.38 22.78 12.97 Total Infrastructure modernisation component 6.42 47.91 43.67 20.53 118.54 0.00 36.26 106.61 66.06 Grand total 7.53 49.05 43.67 20.53 120.78 0.00 108.86 67.31 Disbursement schedule (%) 6.2% 40.6% 36.2% 17.0% 100.0% 90%

ANNEX 5 REPUBLIC OF TUNISIA

RAILWAY INFRASTRUCTURE MODERNISATION PROJECT - PHASE II

IMPLEMENTATION SCHEDULE

Components 2003 2004 2005 2006 2007 2008 1.Institutional Studies 1.1 Preparation of short lists ---- 1.2 Launching of international competitive bids

---

1.3 Procurements ---- 1.4 Conduct of studies ---- ---- ---- ---- 1.5 Implementation of recommendations

---- ---- ---- ---- ---- ----

2. Modernisation investments 2.1 Launching of bids – Works and Supplies

---- ---- ---- ---- ---- ---- ---- ---- ----

2.3 Procurements ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----2.4 Works execution and supplies ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----2.5 Project mid-term review

ANNEX 6 Page 1/4

REPUBLIC OF TUNISIA

RAILWAY INFRASTRUCTURE MODERNISATION PROJECT –PHASE II

Assumptions for Financial Projections The 2001 operating accounts constitute the comparison base for the preparation of the budgeted financial statements.

1. Operating Revenues

i. For traffic: an annual traffic growth in the suburb of Tunis (6.2%), suburb of Sahel (7%), phosphates transport (2%), main lines transport (4%) and freight transport (4.9%);

ii. For tariffs: an annual average growth of 3 % in urban transport and main line

passenger transport; an annual increase of 2% between 2003 and 2005 and of 1% in 2006 for phosphates transport and a stagnation of tariff for freight transport.

2. Operating costs

i. Growth of consumed purchases on the basis of traffic;

ii. SNCFT staff complement falls from 5 737 employees as at 31 December 2002

to 4589 employees in 2006, with 6.3% average salary increase per annum in view of promotions (1.3%) and three-year increases (5%). After 2006, the staff will be adjusted in function of the normal retirement plan.

iii. An inflation rate of 3% per annum;

iv. Closure of the low passenger traffic lines.

3. State expenses: in keeping with the provisions of the performance contract, the

State will bear:

a. The urban deficit recorded by SNCFT; b. Loss of profit resulting from the application of reduced or free tariffs on

the main lines; c. The maintenance costs of fixed installations up to 2006; d. The repayment of the debt on the infrastructure investment loans; e. the repayment of the consolidated debt resulting from the financial

adjustment of SNCFT.

ANNEX 6 Page 2/4

REPUBLIC OF TUNISIA

RAILWAY INFRASTRUCTURE MODERNISATION PROJECT - PHASE II

Assumptions for the calculation of the financial rate of return 1. Investment cost: This cost corresponds to the base cost of the project net of

taxes and customs duties increased by 10% provision for technical contingencies, physical contingencies as well as price escalation (2%).

2. Maintenance cost: This cost is estimated by taking into account the marginal

maintenance cost of SNCFT applied to the new infrastructure put in place by the project.

3. Revenues: the project revenues are those generated by:

i. The Sfax, Ghannouch and Radès ports; ii. The Sousse freight terminal; iii. The traffic generated by the new link that will be created between

Radès station and Cité Olympique; 4. Residual value: it is estimated to be nil for reasons of conservative measures.

ANNEX 6 Page 3/4

REPUBLIC OF TUNISIA

RAILWAY INFRASTRUCTURE MODERNISATION PROJECT - PHASE II

CALCULATION OF THE FINANCIAL RATE OF RETURN

Years Investment cost Sfax- Radès

Sousse terminal market Connection of Total revenues Net Profits

Ghannouch

bridges

Cité Olymp. de Radès -

2004 3335 0 -3335 2005 5224 615 615 -4609 2006 5124 651 651 -4473 2007 5262 653 607 1142 2403 -2860 2008 896 625 1218 2739 2739 2009 912 644 1299 2855 2855 2010 928 664 1386 2978 2978 2011 945 684 1479 3108 3108 2012 964 706 1578 3247 3247 2013 983 728 1684 3395 3395 2014 1003 751 1798 3552 3552 2015 1024 775 1919 3719 3719 2016 1047 800 2049 3896 3896 2017 1071 827 2188 4086 4086 2018 1096 854 2337 4287 4287 2019 1122 883 2497 4502 4502 2020 1150 913 2667 4730 4730 2021 1179 945 2850 4974 4974 2022 1210 978 3045 5233 5233 2023 1243 1013 3254 5510 5510 2024 1278 1050 3477 5805 5805 2025 1314 1088 3716 6119 6119 2026 1353 1129 3972 6454 6454 2027 1393 1172 4246 6811 6811 2028 1436 1217 4539 7192 7192 2029 1481 1265 4852 7599 7599 2030 1529 1316 5188 8033 8033 2031 1579 1370 5547 8496 8496 2032 1632 1427 5931 8990 8990 2033 1688 1488 6342 9518 9518

FIRR 17.74%

ANNEX 6 Page 4/4

REPUBLIC OF TUNISIA RAILWAY INFRASTRUCTURE MODERNISATION PROJECT -PHASE II

CALCULATION OF THE ECONOMIC RATE OF RETURN

New maintenance

depot of 10 electric train sets

Strengthening of structures

Line connecting Radés to the Suburb

Tunis-Ghardimaou track renewal

Tunis-Kasserine track renewal

Connection to ports

Component TOTAL

Year

2003 -560 -560

2004 -423.73 -182 -540 -1145.73

2005 -600 -796.61 -1579 -11050 -7600 135 -21490.61

2006 -3810 -135.59 -3421 -6583 -4584 651 -17882.59

2007 -3600 180 -2008 1091 705 -981 -4613

2008 0 187.2 1218 1163 758 896 4222.2

2009 3387.43 194.69 1299 1240 817 912 7850.12

2010 3128.87 202.48 1386 1323 881 928 7849.35

2011 3378.87 210.57 1479 1414 950 945 8377.44

2012 3386.63 219 1578 1511 1025 964 8683.63

2013 3366.26 227.76 1684 1616 1108 983 8985.02

2014 3366.26 236.87 1798 1729 1197 1003 9330.13

2015 2860.84 246.34 1919 1852 1295 1024 9197.18

2016 3341.68 256.2 2049 1984 1402 1047 10079.88

2017 3310.64 266.44 2188 2128 1519 1071 10483.08

2018 3310.64 277.1 2337 2284 1646 1096 10950.74

2019 3298.77 288.19 2497 2453 1786 1122 11444.96

2020 3067.6 299.71 2667 2636 1938 1150 11758.31

2021 3317.6 311.7 2850 2835 2105 1179 12598.3

2022 3317.6 324.17 3045 3051 2287 1210 13234.77

2023 3317.6 337.14 3254 3287 2487 1243 13925.74

2024 3317.6 350.62 3477 3542 2706 1278 14671.22

2025 2817.6 364.65 3716 13821 9946 1314 31979.25

2026 3317.6 379.23 3972 9924 7209 1353 26154.83

2027 3317.6 394.4 4246 4454 3497 1393 17302

2028 3317.6 410.18 4539 4814 3813 1436 18329.78

2029 3317.6 426.59 4852 5207 4161 1481 19445.19

2030 3317.6 443.65 5188 5636 4542 1529 20656.25

2031 461.39 5547 6104 4960 1579 18651.39

2032 479.85 5931 6616 5420 1632 20078.85

2033 499.04 6342 7175 5925 1688 21629.04

2034 519.01 6781 7787 6481 1747 23315.01

2035 539.77 7252 8456 7091 23338.77

2036 561.36 7755 1288 2262 11866.36

TRI 27.32% 14.61% 20.27% 11.63% 11.99% 32.91% 16.30%

ANNEX 7 Page 1/4

REPUBLIC OF TUNISIA RAILWAY INFRASTRUCTURE MODERNISATION PROJECT-PHASE II

ENVIRONMENTAL AND SOCIAL MANAGEMENT PLAN 1. General Information Date and start of implementation Number and start of project: PTN – DC0-006 Project completion date: December 2008 Duration of operations: 48 months (January 2004-December 2008) Period covered by the plan: project implementation period: 2. Objectives of the ESMP 2.1 The Environmental Action Plan was prepared on the basis of information obtained from consultations with the stakeholders of the project and from data appearing in the environmental impact assessment carried out in accordance with the provisions of decree n°91-362 dated 13 March 1991 (Tunisian legislation). It defines the support, management, control and institutional measures, as well as their costs, which SNCFT will take under the Railway Infrastructure Investment in order to offset or reduce to acceptable limits the increase in nuisances resulting there from. It is planned to remain within the procedures defined by the Tunisian regulations and the various socio-environmental policies and guidelines of the ADB. 2.2 This paper will be considered a dynamic document to be updated during the project so that its content can always reflect the conditions and basic knowledge of the sites. It constitutes the normal degree of social and environmental responsibility of the project and identifies imperative specific and justified actions to guarantee that the social and environmental standards applied are of an acceptable level for the communities concerned. 3. Context. 3.1 This project has been classified in environmental category 2 according to ADB criteria: (i) reduced size in the areas concerned; (ii) nature of works; (iii) low impact of expropriations that concern only parcels of farmland; (iv) absence of interference with classified or protected ecological, historic or religious areas. However a separate ESIA has been conducted on each sub-project as required by the Tunisian legislation, pursuant to Law n° ……and its implementing order n° 91-362 of 13 March 1991. 3.2 The railway infrastructure investment project financed by ADB comprises the following actions: (i) consolidation of the Tunis-Ghardimaou lines; (ii) consolidation of the infrastructure of the Tunis-Kasserine line; (iii) connection of the Sfax port; (iv) Moknine Mehdia section; (v) rail connection of Cité Sportive of Radès; and (vi) Sousse freight terminal 3.3 The works will, for the most part, be executed in the agricultural areas (olive trees-wheat) or urban suburbs. The bio-ecological characteristics of the sites are not of particular interest and will not necessitate special protection. The same goes for the landscapes which are essentially agricultural (yearly crops, olive trees and date palms); very often they are in the process of transformation owing to urbanization and the development of road and railway networks.

ANNEX 7 Page 2/4

REPUBLIC OF TUNISIA RAILWAY INFRASTRUCTURE MODERNISATION PROJECT -PHASE II

4. Positive and Negative Impacts 4.1 Positive impacts: The positive impacts of the project will be obvious primarily from the socio-economic standpoint: facilitation of transport (rapidity and comfort), easing of the congestion and bottle-necks of certain towns, reduction of the pressure exerted by the constraints of goods road transport, development of trade and tourism, competitiveness of prices and services, opening up, diminished risks of derailment and accidents due, at present, to inappropriate signalling and ground instability, etc. An upgrading of the signalling technology will magnify them. 4.2 Negative site impacts: In view of the uniformity of the works that will be undertaken and which mainly consist in laying ballasts and rails, drainage networks and growing of vegetation, the key impacts will be virtually identical irrespective of the site location. There will be some factor specifications concerning the construction of the Sousse and Radès railway stations, which will necessitate expropriations, the widening of the right of way of the Gafsa-Aguila section in an oasis, including damage to the irrigation network (3 markers to be displaced). The nature, monitoring and costs of the environmental measure identified to fight against the negative impacts of the project are summed up in table 4.2.

Implementation of the environmental protection measures and their costs.

Environmental measure Period Monitoring/implementation

Assessment

Expropriation Compensation for trees Loss of productivity of harvests

Prior SNCFT-CRDA ANPE-ADB

Quarries – borrow areas, organisation and rehabilitation

Prior CRDA-ANPE ADB-ANPE

Mov. Sum. Conc. (Water-san.,elect., tele.) Prior CRDA/conclusion ANPE-ADB Stabilisation of the rights of way (plantation, growing of vegetation, drainage, etc)

Permanent CRDA/Contractors

ADB–ANPE-SNCFT

Installation of fences Permanent Contractors ADB-SNCFT

Installations of road diversions Laying of signals

Works Contractor/SCNFT ADB

Protection of surface and underground water Recuperation of petroleum-oily wastes

Works Contractors CRDA-ADB-ANPE

Elimination of solid and liquid wastes Works Contractors ANPE-ADB Protection from dust Works Contractors ANPE-ADB Gas pollution Works and

operation Contractor/SNCFT ANPE-ADB

Noise pollution –tree screens Permanent Contractor/SNCFT ANPE-ADB Aesthetic impacts Permanent Contractor/SNCFT ANPE-ADB Seismic impacts permanent Contractor/SNCFT ANPE-ADB ENVIRONMENTAL MONITORING Works SNCFT

ANNEX 7 Page 3/4

REPUBLIC OF TUNISIA RAILWAY INFRASTRUCTURE MODERNISATION PROJECT -PHASE II

5. Mitigation and Optimization Programme: Responsibility for the actions of the mitigation programme entails the mobilisation of partners specialised in the different sectors. SCNFT and ANPE will provide the bulk of the expertise required by the environmental management of the project, but external assistance will be indispensable in several sectors: boroughs of the CRDA as well as the General Directorate of Agricultural Production of M /AERH, which are in charge of this sector, CITET (gas pollution), the General Directorate of Big Dams and Hydraulic Public Works (M/AERH), the GD/Bridges and Roads (DGPC) of M/EHAT. 6. Monitoring Programme 6.1 Supervision activities: The regional managers of SNCF, as well as those of the governorates and Wilayas concerned, of CRDA and DR/E along with the representatives of the inhabitants concerned, will be responsible for ensuring a permanent monitoring of the management or impacts attributable to the sites. This permanent structure will receive support from the teams of Controllers from ANPE. 6.2 Monitoring activities: SNCFT will set up a monitoring unit within it or will recruit a consultant who will be responsible for verifying whether the recommendations for environmental protection have been implemented. The following points will be taken into account: (i) satisfactory implementation of the expropriation measures and compensation of the persons affected; (ii) hydraulic monitoring; (iii) conformity of the constructions in view of the local seismic risks; (iv) rehabilitation of the lands compressed by the sites; (iv) rehabilitation of the borrowing areas; (v) control of the various forms of pollution; (v) identification of the measures taken to guarantee safety; (vi) the degree of integration of the constructions into the landscapes. 7. Public consultations: Notice of works and expropriations was published in the Wilayas and local newspapers. The consultations initiated between the farmers and the regional teams of SNCFT will be permanently pursued during the project duration. 8. Complementary initiatives: PGES will integrate all the initiatives that will be proposed during the project to improve the environmental and social performance of the project, including their costs and schedule. In addition, these supplementary initiatives will be taken into consideration during works acceptance and the determination of responsibilities. 9. Responsibilities and Institutional Provisions 9.1 The National Agency for Environmental Protection (ANPE), SNCFT and the various ministries will be directly mobilised to implement the mitigation programme; they will intervene in the respective areas that concern them; external assistance will be indispensable in several sectors. 9.2 Expropriations will be organised by the communes and SNCFT. The various districts (OEP, Plant Production, Water Resources, Feeder Roads, etc) will be directly involved and given responsibilities in the conduct of the environmental protection measures. They will be supervised by the General Directorate for the Improvement and Safeguard of Agricultural Lands (DG/ASTA) of M/AERH, the General Directorate of Agricultural Production of M /AERH, the General Directorate of Big Dams and Hydraulic Public Works (M/AERH) and the Directorate of Regional Planning of M /EH.

ANNEX 7 Page 4/4

REPUBLIC OF TUNISIA RAILWAY INFRASTRUCTURE MODERNISATION PROJECT -PHASE II

9.3 The Donors will assess the environmental monitoring of the project during the supervision mission and during works acceptance. ANPE will also carry out an in-depth monitoring of the project outputs. 10. Implementation schedule and reporting: The environmental measures and their programming will be incorporated into works specifications. They will follow the works timetable. Their acceptance will be subject to an Environmental Audit, which will be conducted concurrently with works acceptance.

ANNEX 8 REPUBLIC OF TUNISIA

RAILWAY INFRASTRUCTURE MODERNISATION PROJECT -PHASE II

LIST OF DES DOCUMENTS CONSULTED 1. Etude de la stratégie des transports, Vol. I et II, République tunisienne, Banque mondiale,

février 1996 2. Projet de modernisation de l’infrastructure ferroviaire, rapport d’évaluation, BAD, Juin

1999 3. Situation actuelle et perspectives, SNCFT, Décembre 2001 4. Contrat-programme Etat-SNCFT (2002-2006), version langue arabe, Ministère du

Transport et des communications, janvier 2002 5. Contrat-programme Etat-SNCFT (1997-2001), Notes d’évaluation des réalisations à fin

2001, , SNCFT, Juillet 2002 6. Plan d’entreprise, 2002-2006, SNCFT 7. Termes de référence des études de rationalisation de la gestion interne de la SNCFT,

SNCFT. 8. Aide-memoire de la mission de revue de la BIRD, composante ferroviaire, juin 2003 9. Rationalisation et modernisation des transports ferroviaires de l’industrie phosphatière

tunisienne, (rapports préliminaires vol. I et II), CANAC et SCET-Tunisie, SNCFT, Août 1998

10. Projet d’investissement en infrastructure du 10ème Plan (2002-2006), Recherche de financement, Dept. Planification et contrôle de gestion (DPCG), SNCFT, Janvier et Juin 2003

11. Embranchement des ports de Sfax, Ghannouch et Radès, Notes de faisabilité et recherche de financement, SNCFT ; avril 2003

12. Renouvellement de voie sur plusieurs sections de la ligne Tunis-Ghardimaou et Tunis-Kassérine ; Notes de faisabilité et recherche de financement, SNCFT ; avril 2003

13. Doublement de voie de la section Moknie-Mahdia (26 km) sur la ligne 22 (Monastir-Mahdia) dans la banlieue du Sahel, Notes de faisabilité et recherche de financement, SNCFT ; avril 2003

14. Desserte ferroviaire de la cité olympique de Radès, Notes de faisabilité et recherche de financement, SNCFT ; avril 2003

15. Fiches de projet ferroviaires du 10ème Plan ; Dept. Devéloppement de l’infrastructure et Dépt. Superstructure, juin 2003

16. Rapports annuels d’activités, SNCFT (1998-2002) 17. Budget prévisionnel d’investissement SNCFT, juillet 2003 18. Documents financiers et comptables de la sncft, 1998-2002, SNCFT 19. Projets : Doublement de voie entre Gafsa et Aguila (4km), Construction de la gare

marchandises de Sousse, Etudes d’impact environnemental et plans d’exécution, BIRD, février 2000

20. Rapport de préparation du projet, Banque africaine de Développement, juillet 2003 21. Etude d’un plan national directeur de transport, MTTI, Etic-BCEOM, 2002