Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 9052

PROJECT COMPLETION REPORT

REPUBLIC OF TUNISIA

THIRD PORTS PROJECT(LOAN 1797-TUN)

OCTOBER 10, 1990

Infrastructure Operations DivisionCountry Department IIEurope, Middle East and North Africa Region

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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"EPUBLIC OF TU ISIA

CURRENCY EOUIVALENTS

Appraisal Year Average US$1 - TD 0.40Intervening Year Average US$1 - TD 0.73Completion Year Average US$1 - TD 0.92

GLOSSARY OF ACRONYMS

FTP - Centre de Formation de Travailleurs Portuaires(Port Worker Training Center)

'I - Centre National d'Informatique(National Center for Computer Science)

3M - Commission Superieure des Marches(National Procurement Board)

rN - Compagnie Tunisienne de Navigation(Tunisian Shipping Company)

ZR - Economic Rate of Return

cc - Gabbs Chimie Transport(Gabes Chemical Transport Company)

rF - Information, Technology, and Facilities Department of theWorld Bank

?NT - Office des Ports Nationaux Tunisiens(Tunisian National Ports Authority)

CAM - Societe Tunisienne d'Acconage et de Hanutention(Tunisian Stevedoring and Cargo-Handling Company)

iCTAD - United Nations Conference on Trade and Development

FISCAL YEAR

January 1 - December 31

FOR OMCIAL USE ONLYTHE WOtLD JIANK

Washinglon. DC 204 3 3USA

OEmc. nE Di,Kctar.CAW&I

October 10, 1990

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on Republic of Tunisia

Third Ports Prolect (Loan 1797-TUN)

Attached,.for information, is a copy of a report entitled "Project

Completion Report on Republic of Tunisia Third Ports Project

(Loan 1797-TUN)", prepared by the Europe, Middle East and North Africa

Regional Office. No audit of this project has been made by the Operations

Evaluation Department at this time.

Attachment

This document hu a rtricted distribution and may be used by recipients only in the performanceof their official dutie. Its contents may not otherwise be discosed without World Bank authorization.

FOR OFFICAL USE ONLY

REPUBLIC OF TUNISIA

THIRD PORT PROJECT

(LOAN 1797-UN)

TABLE OF CONTENTS

PREFACE . . . . . . . . . . . . . . . . . . . . . . . . . . .

EVALUATION SUMMARY . . . . . . . . . . . . . . . . . . . . . . ii

PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE . . . . . . . . . . 1

I. PROJECT IDENTITY . . . . . . . . . . . . . . . . . . . . . . . . 3

II. BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

III. PROJECT OBJECTIVES AND DESCRIPTION . . . . . . . . . . . . . . . 4

IV. PROJECT DESIGN AND ORGANIZATION . . . . . . . . . . . . . . . . 6

V. PROJECT IMPLEMENTATION .... . . . . . . . . . . . . . . . . . 7Loan Effectiveness .... . . . . . . . . . . . . . . . . . . 7Project Startup . . . . . . . . . . . . . . . . . . . . . . . 7Implementation Schedule . . . . . . . . . . . . . . . . . . . 7Procurement . . . . . . . . . . . . . . . . . . . . . . . . . 9Project Costs . . . . . . . . . . . . . . . . . . . . . . . . 10Disbursement . . . . . . . . . . . . . . . . . . . . . . . . . 10

VI. PROJECT RESULTS . . . . . . . . . . . . . . . . . . . . . 1.Achievement of Project Objectives . . . . . . . . . . . . . . 10Achievement of Physical Targets . . . . . . . . . . . . . . . 10Financial Performance .11Economic Reevaluation . . . . . . . . . . . . . . . . . . . . 11

VII. PROJECT SUSTAINABILITY .... . . . . . . . . . . . . . . . . . 12

VIII. BANK PERFORMANCE .... . . . . . . . . . . . . . . . . . . . . 13

IX. BORROWER PERFORMANCE .13

X. BANK-BORROWER RELATIONSHIP ... . . . . . . . . . . . . . . . . 13

XI. CONSUETING SERVICES .................... . 14

XII. PROJECT DOCUMENTATION AND DATA . . . . . . . . . . . . . . . . . 14

PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE . . . . . . . . 15

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

REPUBLIC OF TUNISIA

THIRD PORT PROJECT

(Loan 1797-TUN)

Table of Contents (continued)

PART III: STATISTICAL INFORMATION . . . . . . . . . . . . . . . . . . . . 21Table 1: Related Bank Loans . . . . . . . a . . . . .. . 23Table 2: Project Timetable . . . . . . . . . . . . . . . 23Table 3: Loan Disbursements . . . . . . . . . . . . .. 24Table 4: Project Costs . . . . . . . . . . . . . . . . 25Table 5: Project Financing . . . . . . . . . . . .. . . 25Table 6: Direct and Indirect Benefits . . . . . . . . . . 26Table 7: Economic Impact . . . . . . . . . . . .. 26Table 8: Project Study . . . . . . . . . ....... 26Table 9: Status of Covenants . . . . . . . . . . . . . . 27Table 10: Staff Inputs . . . . . . . . . . . . . . . 28Table 11: Missions , . . . . . . . . . . . . . . . 2q

ANNEXES 9 , * * . .*. . . . . . . . .. . . . . . . 30

1. List of Equipment Procured under the Project * . . * * * . . * 302. Comparison of Actual and Forecast General Cargo Traffic . . . 313. OPNT's Audited Financial Statements (1978-1988) * . . * * * * 324. OPNT's Projected Investment and Financing Plan (1990-95) . * * 355. OPNT's Projected Financial Statements (1990-95) . * * * * * * 366. Cost/Benefit Analysis . .*. .. . .* . * 37

MAP IBRD 14530R - Tunisia: The Ports Subsector

PROJECT COMPLETION REPORT

REPUBLIC OF TUNISIA

THIRD PORTS PROJECT (LOAN 1'97-TUN)

PREFACE

This is the Project Completion Report (PCR) for the Third PortsProject in Tunisia, for which Loan 1797-TUN in the amount of US$42.5million was approved on February 8, 1980. The loan was closed on December31, 1988, three and a half years behind schedule. The last disbursementwas on April 13, 1989 and an amount of US$7.8 million was cancelled.

The PCR was jointly prepared by the Infrastructure OperationsDivision, Country Department II, of the Europe, Middle East and NorthAfrica Regional Office (Preface, Evaluation Summary, Parts I and III) andthe Tunisian National Ports Authority (Part II).

Preparation of this PCR was started during the Bank's finalsupervision mission of the project in March 1990 and is based, inter alia,on the Staff Appraisal Report; the Loan Agreement, supervision reports;correspondence between the Bank and the Borrower; and internal Bankmemoranda.

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PROJECT COMPLETION REPORT

REPUBLIC OF TUNISIA

THIRD PORTS PROJECT

(LOAN 1797-TUN)

EVALUATION SUMKARY

Introduction and Background

1. At independence in 1956, Tunisia inherited a relatively welldeveloped transport system, which was adequate to support economic developmentthrough the 1960s. In the 1970s, the country's economic performance, aided byoil exports, was strong. The Fourth Development Plan (1973-76) recognized thatthe transport network needed to be expanded to facilitate the handling ofincreasing traffic volumes and avoid a major infrastructure bottleneck to futureeconomic growth. The next Plan (1977-81) concentrated on improving the existingtransport infrastructure, especially through modernization and rehabilitationworks.

Objectives

2. The Third Ports Project was conceived through long-term portplanning, which began with the preparation of a Master Plan, partially financedby the Bank through the proceeds of the Second Port Project (Loan 573-TUN). TheMaster Plan took into account the fact that changing technology in sea transportin the Mediterranean, particularly the advent of Ro-Ro (i.e., roll-on, roll-off) vessels, could substantially reduce transport costs. The main objectivesof the project were, therefore, to enable the country's two major ports, Tunis/LaGoulette and Sfax, to cope with changes in shipping technology, while increasingtheir operational efficiency and cargo-handling capacity.

Implementation Experience

3. The project was implemented by the Borrower, the Tunisian NationalPorts Authority (OPNT). Civil works followed the original project design. Dueto limited possibilities at La Goulette, it was necessary to undertake portexpansion at Rades, a location midway between La Goulette and the smaller portof Tunis. The existing channel was deepened and widened, a new deep-water basindredged, and land reclaimed from dredged materials. Operational and storageareas, transit sheds, and maintenance facilities were included at both Rades andSfax project sites. A first tranche of cargo-handling equipment was financedthrough a Netherlands export credit and a second tranche from the Bank loan.In compliance with the Loan Agreement, this equipment was subsequently leasedto the Tunisian Stevedoring and Cargo-Handling Company (STAM). During projectimplementation, the Loan Agreement was amended to provide for the acquisitionof a comprehensive management information system, which was installed in 1989and now incorporates port operations, budgeting, and payroll. To complement

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the physical components, the project also included technical assistance neededto improve operations and train port staff. Two parts of a three-part study onthe reorganization of workshops were completed but the third part, which wouldconsist of specific recommendations, was never commissioned since fullresponsibility for cargo-handling operations and equipment maintenance wasassigned to STAM, a public enterprise with a monopoly at Tunis/LaGoulette.Participation in the TRAINMAR program, developed and delivered by the UnitedNations Conference on Trade and Comme;. e (UNCTAD), enabled OPNT to attain self-sufficiency in the training of port workers.

Results

4. The estimated cost was US$104.2 million, with about US$62.9 millionin foreign costs. The actual cost was US$104.7 million, with US$42.6 millionin foreign costs, as a strong US dollar in the early 1980s contributed tosubstantial savings in the foreign exchange cost of civil works and lowerborrowing needs, leaving a sizeable surplus in the loan account. Part of thiswas used for the purchase of a second tranche of cargo-handling equipment, andthe remainder was cancelled.

5. The project encountered lengthy implementation delays, which hadonly a marginal impact on the achievement of project objectives. Despite thesedelays and a slowdown in overall general cargo traffic growth during the 1980s,the rapid penetration of this traffic by Ro-Ro technology brought savings incargo-handling costs, ships' service time, and ships' waiting time. Based onactual costs and revised benefit calculations, an economic rate of return of 14%has been obtained on investments at the Tunis/La Goulette/Rades port complex and12.5% on those at Sfax (as compared with 16.5% for both ports at appraisal).

6. Facilities at the new port of Rades, which was commissioned inDecember 1986, are perfectly well suited for Ro-Ro traffic and can alsoaccommodate container vessels. Moreover, they have eased conventional and car-ferry congestion at the ports of Tunis and La Goulette. The port complex handled1.4 million tons of general cargo in 1989, 63X of which was unitized, primarilyin Ro-Ro form. The new land developed under the project will facilitate futureport expansion at a relatively low cost. In the meantime, part of the land isbeing leased for commercial and industrial use. At Sfax, new port facilitieswere developed in the area and adjacent to the existing port basin, facilitatingfurther expansion, when required. The port of Sfax handled 351,443 tons ofgeneral cargo in 1989, 121 of which was unitized.

7. Recent trends and present forecasts in traffic growth do not indicatethe need for any major port investments in the foreseeable future. However, themain requirement could be to provide equipment to encourage containerization,which is still at a relatively low level in Tunisia (less than 101 of generalcargo). The proposed First Transport Sector Loan, scheduled for FY92, isexpected to have a ports component aimed at promoting increased productivity andmodernization of port management through, inter alia, further containerizationat the port of Rades.

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Sustainabilitv

8. OPNT is institutionally strong in the areas of engineering, financialmanagement, and training. It also has the capacity to evaluate the technicaland economic viability of port investments. Provided tariffs continue to bereviewed periodically and rationally restructured, and if private stevedoringcompanies are permitted and encouraged to compete at La Goulette and Rades, asenvisaged, there is reasonable expectation that project benefits will besustained. In this regard, it is also critical that the groundwork be laid forstrategic planning in the port subsector (para 11).

Findings and Lessons

9. The PPAR on the Second Ports Project (Loan 573-TUN) commented on thelack of improvement in port operations and concluded that the Bank did not takethe opportunity to assist in increasing overall efficiency in Tunisian portsthrough improved cargo-handling organization and methods. As a condition ofnegotiating the Third Project, OPNT prepared a plan of action to set in motionfeasible and practical improvements in cargo handling, but the plan could notbe carried out effectively because of the tenuous relationship between OPNT andSTAM. This relationship, exacerbated by STAM's serious financial situation, ledto considerable delays and postponements in the purchase of cargo-handlingequipment. As a consequence, the ports of Tunis, La Goulette, and Rades continueto operate below their potentiality; the project, thus, did not fully meet itsinstitution-building and operational efficiency objectives.

10. Plans are now underway to open up cargo-handling operations at thethree ports to competition from private stevedoring companies and to restructureSTAM, an action long overdue. Clearly, the Bank should have intensified effortsto overcome this institutional bottleneck in port operations together with anearlier, more systematic assessment of equipment needs. In its continuingdialogue with the transport sector, highest priority will have to be assignedto this set of issues.

11. During the course of project implementation, there was frequentturnover at the Chief Executive officer level; several recent CEOs had tenuresof less than two years. Such turnover seriously hampered OPNT's corporateplanning function, as well as the strategic planning process for the portsubsector as a whole. Otherwise, OPNT is a well managed enterprise. Goodcooperation between the supervision consultants and OPNT engineering staff ledto a satisfactory achievement of physical targets in the face of difficulttechnical conditions. OPNT's financial management functioned well given anoutdated tariff structure over which it had no control. The need for tariffrestructuring had been foreseen during negotiations and carried out by December31, 1982 in compliance with the Loan Agreement. Several -ears hence, however,the downturn in traffic rendered new tariffs obsolete; the tariff structure wasonly updated after ONPT experienced a negative cash flow in 1987, which led toa tariff increase and permitted OPNT to achieve good financial resultsthereafter.

12. What is significant is that OPNT's declining revenue base relativeto its debt service requirements and operating expenses occurred during a four-

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year period (1983-86) when audit reports were not being made available until twoto three years after the due dates. Herein lies the importance of timelycompliance with the audit requirement. If, in the mid-1980s, the Bank and theGovernment had had access to annual audit reports, OPNT could have used theseresults to strengthen the case for tariff increases.

13. Clearly, lack of continuity during supervision, compounded by theBank reorganization, weakened the Bank"s effectiveness in dealing with the aboveinstitutional and financial matters. For instance, the Bank could have useddelays and general indecision concerning the acquisition of equipment as leveragein seeking an early solution to the issue involving the working relationshipbetween OPNT and STAM. On the other hand, Bank intervention into the design andimplementation of the training component helpad OPNT improve its overall humanresource capacity. Implementation of the TRAINMAP program was indeed a successnotvithstandirig earlier plans for a joint OPNT-STAM training effort, which nevergot .if the ground.

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PROJECT COMPLETION REPORT

REPUBUC OF TUNISIA

THIRD PORTS PROJECT

(LOAN 1797-TUN)

PART 1: PRJECT REIEW FRIM HE BANICS PERSP

%. 'N

REPUBLIC OF TUNISIA

THIRD PORTS PROJECT(LOAN 1797-TUN)

PROJECT COMPLETION REPORT

I. PROJECT IDENTITY

Name Third Ports Project

Loan Number 1797-TUN

RVP Unit EMENA

Country Tunisia

Sector : Transportation

Subsector Ports

II. BACKGROUND

2.01 At independence in 1956, Tunisia inherited a relatively welldeveloped transport system, which was adequate to support economic developmentthrough the 1960s. In the 1970s, the country's economic performance, aided byoil exports, was strong. The Fourth Development Plan (1973-76) recognized thatthe condition of the transport network needed to be improved to facilitate thehandl4.ng of increasing traffic volumes and avoid a major bottleneck to futureeconomic growth. The Fifth Development Plan (1977-81) had the followingobjectives for the transport sector: (a) improve the existing infrastzucture,especially through modernization and rehabilitation works; (b) promote ruraldevelopment by improving feeder roads; (c) increase Tunisia's share ofinternational traffic; and (d) reorganize regional transport companies. Toachieve the first objective, the Third Port Project would assist the Governmentin the modernization of berth facilities at the main ports of Tunis/La Gouletteand Sfax and in providing support facilities for improved port operations.

2.02 In 1978, when the project was appraised, Tunisia's five majorcommercial ports (Tunis/La Goulette, Sfax, Bizerte, Sousse, and Gabes) handledalmost 11 million tons of cargo, of which 9.3 million tons, or 85X, wasinternational traffic. Coastal traffic amounting to 1.6 million tons consistedmainly of the movement of petroleum products from Bizerte to Sfax and LaGoulette. Liquid bulk cargo totalled 4.1 million tons; dry bulk, 4.3 milliontons (including grain, 978,000 tons) and general cargo, 2.6 million tons.Eighty-four percent of the international trade was short-distance traffic withEurope and North Africa, 121 with the Americas, and 41 with Asia.

2.03 Bank assistance through the Third Port Project supported the TunisianNational Ports Authority (OPNT) investmenz in the new port of Rades, which is

situated across the channel from La Goulette, and in the expansion andmodernization of port facilities at Sfax. New facilities were built at bothports to accommodate Ro-Ro, as well as container traffic. The project alsoincluded a comprehensive port worker training program with assistance from theUnited Nations Conference on Trade and Commerce (UNCTAD). This project completedthe Government's port investment program, as evidenced in the Seventh and EighthFive-Year Plans (1987-91, 1992-96), which do not envisage any new largeinvestments except for the petroleum berth at Bizerte.

2.04 The country's main port facilities are owned and operated by OPNT,which was established in 1965 and falls under the jurisdiction of the Ministryof Transport. Cargo handling is the responsibility of several companies,including one public enterprise, the Tunisian Stevedoring and Cargo-HandlingCompany (STAM), which is by far the largest. The portion of international trafficcarried by Tunisian shipping lines constitutes about lOX and is theresponsibility of two companies: the Tunisian Shipping Company (CTN) and theGabes Chemical Transport Company (GCT).

2.05 The focus of future investments will be on the rehabilitation andmaintenance of existing port facilities. The Bank could probably finance theseactions, while continuing to promote increased productivity and modernizationof port management. The proposed First Transport Sector Loan may be a goodvehicle to accomplish this objective. Other actions that have been recommendedinclude further containerization, which would reduce cargo-handling costsconsiderably, and the restructuring of STAM. The latter would address a seriousoperational, as well as institutional, bottleneck involving the lack ofcoordination and overall poor working relationship between OPNT and STAM. Thisstems not only from STAM's weak financial position, marked by a continually highannual deficit, but also its monopoly over cargo-handling operations at Tunis,La Goulette, and Rades. Where it does not have a monopoly (e.g., at Sfax, wherefive private companies compete with STAM), STAM is far more efficient. In itsongoing dialogue with the port subsector, the Bank will inevitably assignpriority to this set of issues.

III. PROJECT OBJECTIVES AND DESCRIPTION

3.01 Changing technology in sea transport in the Mediterranean hasconsiderably reduced total transport costs from origin to destination; the adventof Ro-Ro vessels, in particular, has had a significant impact. The mainobjectives of the project were, therefore, to enable the country's two mainports to cope with the changes in shipping technology and to increase operationalefficiency and capacity at the project ports. These objectives would beaccomplished by providing: (a) specialized facilities to accommodate Ro-P.ovessels; and (b) additional port facilities with appropriate operational andstorage areas, transit shed, and maintenance facilities. To complement thephysical components, the project also included technical assistince needed toimprove operations and train port staff.

02 The project consisted of:

(a) Civil Works

at La Goulette:

dredging of an access channel and south port basin to a depth oflOm;

land reclamation with the dredged material at the new port area toreplace soft layers with suitable material;

improving soil conditions at the new port area;

constructing about 350 m of quays, and of jetties capable ofhandling general cargo liners, Ro-Ro vessels, and container ships;

constructing about 30,000 m2 of transit and customs sheds;

paving open storage areas and constructing the port access road;

constructing port administration and other ancillary buildings;

providing port utilities, inter alia, water supply, electricity,drainage; and

constructing a shallow-water berth and related back-up area tohandle dangerous materials.

at Sfax:

constructing quays about 515 m long and 11 m deep, capable ofhandling general cargo liners and Ro-Ro vessels;

constructing the port access road;

filling, grading, and paving open storage and parking areas;

constructing transit and customs' sheds and ancillary buildings; and

providing port utilities such as, inter alia, water supply,electricity, drainage;

(b) EguiRment and materials

at La Goulette and Sfax:

cargo-handling and workshop equipment; and

timber for the manufacture of about 20,000 pallets; and

(c) Technical Assistance:

consulting services for supervision of civil works construction;

consulting services to assist OPNT and STAM in reorganizing repairand maintqnance services; and

technical assistance to develop and implement training programsfor port workers.

IV. PROJECT DESIGN AND ORGANIZATION

4.01 The project was designed on the basis of the recommendations of aPort Master Plan, partially financed by the Bank under the Second Port Project(Loan 573-TUN). Upon completion of preliminary engineering for the expansionof the ports of La Goulette and Sfax, OPNT requested that the Bank appraisethese projects to determine their suitability for Bank financing. The appraisalmission, which took place in September/October 1978, concluded that the projectwas technically justified and appropriately prepared after assessing thefollowing aspects: (a) physical constraints in expanding existing portfacilities to cope with forecast traffic; (b) suitability of proposed portsexpansion in accordance with types of cargoes and shipping patterns; (c)availability of reserve areas for future expansion; (d) road network links; (e)environmental effects of the project; and (f) the selected port layouts anddevelopment schemes corresponding to least-cost solution when compared withalternative schemes analyzed during the preparation of the Master Plan studies.From an institutional standpoint, the appraisal mission recognized that OPNT'sorganization and management functioned well and that its financial managementwas particularly strong. Cash flow projections indicated that OPNT would havesufficient internally generated funds to finance local investment costs whilemaintaining satisfactory operating ratios and would be able to cover its debtservice requirements. Frcm an economic standpoint, the mission supported theGovernment's and OPNT's determination to curb port congestion, which, withinthe next four years, would result in excessive ships' waiting time.

4.02 Negotiations took place in December 1979. It was agreed that theBank would finance neither equipment procured under the project nor civil worksfor the Sfax subproject. Since the Bank loan, however, would finance technicalassistance for construction supervision at both sites, it was stressed that theBank would supervise all aspects of the project. A tentative equipment list wasdiscussed and agreed with OPNT and STAM at negotiations with the understandingthat it would be revised as required by changes in operational techniques. Allequipment would be procured by OPNT and then leased, according to the LoanAgreement, to cargo-handling companies on terms and conditions acceptable to theBank. It was also agreed that as a condition of loan effectiveness, OPNT wouldobtain export credits amounting to US$20.3 million to finance the foreignexchange cost of the civil works at the port of Sfax as well as the acquisitionof equipment.

V. PROJECT IMPLEMENTATION

Loan Effectiveness

5.01 The deadline for meeting conditions of loan effectiveness was changedfrom May 8, 1980 to July 31, 1980 to allow OPNT adequate time to obtain thefinancing needed for the Sfax subproject and export credit for the financing ofcargo-handling equipment. However, it was pointed out that funding for civilworks at Sfax would be available locally. It was also recognized that cargo-handling equipment to be financed through export credits would be needed onlynear completion of the civil works and not immediately, as originally assumed.The Loan Agreement was amended in June 1980 to require that OPNT seek exportcredit financing for an amount of US$7.0 million, instead of US$20.3 million,to procure equipment, part of which was for its own use and the other part tobe leased to cargo-handling companies, including STAM.

Project Startup

5.02 Site works at Rad6s did not commence until October 1980, four monthslater than forecast at appraisal. This was due to delays in agreeing on anacceptable site for depositing material to be dredged from the project area.Agreement between OPNT and local agencies was finally reached in September 1980after six months of discussions. Construction startup at Sfax commenced inMarch 1981, nine months later than forecast at appraisal. Delays were due tothe need to remove ship repair facilities, which were still in operation in theproject site area, and to Bank concern over the qualifications and experienceof a local consultant hired to supervise construction.

Implementation Schedule

5.03 Construction of the Port of Rades. The new port facilities,originally scheduled for completion by April 1984, were completed in mid-1986.The main causes of delays in implementing civil works at Rades were: (a)unusually adverse weather conditions, consisting of heavy rain, floods, andstrong winds; (b) the change in the site allocated for dumping dredged materialsfrom a location at the southern inner lake to the sea shore outside the portbreakwater; (c) delay in issuance of an import license for water pipes; (d)inadequate personnel and equipment provided by the local contractor to removeabout one million cubic meter of sand (7 m high) of surcharge to ensure finalsettlement of reclaimed areas; (e) OPNT acceptance of the contractor's proposalto change the design of paving of open storage areas, more than one year aftersubmission of the proposal; and (f) difficulty in obtaining an adequate numberof trucks for delivery of materials to the site, a problem that affected manyother branches of industry.

5.04 Operation of the Port of Rades. The Port of Rades was commissionedin December 1986. However, it could not be fully utilized for Ro-Ro andcontainerized traffic until mid-1989 because of delays in procuring the secondtranche of equipment and in improving the link between the port area and theroad network along a 10-mile section of MC33, which had been inadequatelyassessed during appraisal. The Bank agreed to finance the latter componentunder the Fourth Highway Project (Loan 1841-TUN). Now that the equipment has

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been delivered and put into operation and improvement of the access road hasbeen completed, the new port of Rades is fully operational under a separatedirectorate within OPNT.

5.05 Expansion of the Port of Sfax. Expansion of port facilities,originally scheduled to be completed by April 1983, was not completed until mid-1985 representing a delay of 20 months. The main reasons for delays were: (a)unusually adverse weather conditions consisting of heavy rain and floods; (b)unsatisfactory performance of the contractor responsible for superstructureworks; and (c) difficulty in obtaining an adequate numbjqr of trucks for deliveryof materials to the site (para. 5.03).

5.06 Reorganization of Maintenance WorkshoRs. The study was to have beenexecuted in three phases. Phase I covered the analysis of systems and proceduresin use. The report, completed in June 1983, presented four options: (a)improvements within the existing systems and equipment; (b) rehabilitation ofworkshops and renewal of equipment; (c) creation of an autonomous enterprise tomaintain equipment, which it would own and rent to STAM and OPNT; or (d) jointSTAM and OPNT ownership of equipment. The last option was retained and theconsultants prepared Phase II of the study, which involved defining the detailedorganization, including training needs and equipment. Phase II was completedin January 1985. A third and final phase of the study, which would have madedetailed recommendations for implementing the establishment of the new agency,was never commissioned mainly because of OPNT's preference for private sectorinvolvement and its opposition to what it perceived as becoming a cumbersome,inefficient bureaucracy. After reviewing alternative arrangements for theoperation of the port facilities at Rades, the Government decided in April 1986that cargo handling, including equipment maintenance, should be undertakenentirely by STAM.

5.07 Training. It was initially agreed that OPNT and STAM wouldcoordinate the training programs for stevedores and shed personnel at appropriatelevels. In early 1982, the Port Worker Training Center (CFTP) was establishedfor their joint use. A director and four instructors, two each from OPNT andSTAN, were appointed and received training in Tunis in accordance with a contractbetween OPNT and UNCTAD signed in August 1982. The contract specifically calledfor the application of the TRAINMAR methodology developed by UNCTAD. Thismethodology relies on the support given to course developers, whose role is toadapt training activities to the specific needs of the local sector through basiccourses centrally developed by UNCTAD, or in other countries where TRAINMAR isalready applied. Under the TRAINMAR program, CFTP developed four courses. Thefirst dealt with port operations addressing the needs of dock labor forcesupervisors, the second with the commercial aspects of the Tunisian maritime law,the third with warehousing and storage, and the fourth, developed incollaboration with a TRAINMAR-affiliated training center in Mexico, withmaintenance planning. By mid-1984, CFTP faced serious institutional problems.Although it was jointly owned by OPNT and STAN, the entire cost was being borneby OPNT. Other issues that surfaced were related to CFTP's fiscal autonomy, thepossibility of deducting amounts allocated to CFTP from taxes paid by STAN andOPNT to the National Labor Training Program, and the easing of restrictionsplaced by the Government on the use of CFTP's facilities for non-port training.Because these issues persisted, in early 1988 the Training Directorate of OPNT

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was established to replace CFTP and cater only to the training needs of OPNTstaff. Implementation of the TRAINMAR program was successful notwithstandingearlier plans for a joint OPNT-STAM training effort.

Procurement

5.08 Civil Works. Bids for construction of civil works at Rades werereceived in June 1979, but the contract was not awarded until March 1980. Thecontract for civil works at Sfax was awarded in October 1980 to two localcontractors: one for infrastructure including mainly general cargo and Ro-Roberths and the port access road; the other for superstructure, consisting mainlyof transit sheds, ancillary buildings, and port utilities.

5.09 Timber for the manufacture of pallets. The project included timberfor the manufacture of 20,000 pallets needed by STAM. Since these would not befinanced under the Bank loan, it was agreed that the timber would be procureddirectly by STAM.

5.10 Cargo-handling equipment. In 1984, OPNT negotiated export creditsfrom the Netherlands for a total amount of US$10.3 million to procure four tugboats and two pneumatic cranes for handling containers and heavy lifts. Havingexceeded the provision of US$7.0 million referred to in the amended LoanAgreement, OPNT decided to request the Bank to make available part of theanticipated surplus in the loan account to finance a second tranche consistingof land-based equipment (Annex 1), to which the Bank agreed. In mid-1987,international competitive bidding was completed. However, subsequent politicalchanges in the country and the nomination of a new CEO for OPNT delayedconsiderably the finalizing of contracts with the selected suppliers, who in themeantime raised their prices. The National Procurement Board (CSM) advised OPNTto reject those suppliers and solicit new bids. Even though the previous bidswere no longer valid, there was inadequate time to retender except for thesmallest items. In the meantime, OPNT renegotiated with the suppliers of theRo-Ro trucks and the 32-ton forklift trucks who indicated their willingness tomaintain the prices of their original tenders. The equipment list was modifiedto suit the needs of both OPNT and STAM keeping in mind that contract awards,delivery, and disbursement would have to take place within six months of thefourth and final closing date, December 31, 1989. Six four-ton forklift truckson the list were not financed from the Bank Loan because of OPNT's decision toaward the contract to the lowest bidder following a second round of tendering,which did not conform with Bank procurement guidelines.

5.11 Management Information System. In December 1984, OPNT asked theBank to finance a management information system to replace an existing outdatedcomputer. This replacement was needed to remedy the frequent disruptions in theflow of financial information, which was partly responsible for the latesubmission of audited financial statements beginning in 1983 (para. 9.02). OPNTreviewed its needs for a computerized management information system and decidedthat it should cater to a broad range of activities from the control of traffic,accounting, workshops, and stock. A consultant's report covering the proposedsystem was reviewed by Bank ITF staff who confirmed the system's generalviability. The timetable for acquiring this equipment required carefulmonitoring as the equipment tender documents had to be approved by the National

- 10 -

Center for Computer Science (CNI) as well as by the Bank. The system wasinstalled in 1989 and now incorporates port operations, budgeting, and payroll.It has already markedly improved OPNT's managerial and operational efficiency.

Proiect Costs

5.12 Actual project costs, totalling US$104.7 million were marginallyhigher than appraisal estimates (Part III, Table 4), the major component, civilworks, being within US$200,000. By subproject, however, there was somevariation; the cost of constructing the new port of Raees was 4% higher, whilethat of expanding the port of Sfax was 11% lower. A combination of factorscontributed to keeping the overall cost at almost the same level. The Tunisiandinar depreciated two-fold in relation to the US dollar from 0.43 in 1978 to0.86 in 1985 at an average rate of 15% p.a. This took place when about 95% ofall project expenditures were incurred. But this was also a period of highlocal and foreign inflation, which was averaging 10% p.a. Contract prices forcivil works were considerably lower than expected, and the Sfax port expansionwas financed entirely through local sources, thereby helping offset priceescalation. In fact, actual foreign exchange costs without changes in physicalimplementation amounted to t4o-thirds of appraisal estimates due to the strengthof the US dollar in the early 1980s and the financing of civil works at Sfaxentirely through local sources. This situation permitted Bank financing ofadditional items, i.e., cargo-handling and computer equipment, and resulted inthe cancellation of US$7.3 million from the loan account.

Disbursement

5.13 During the first three years of project implementation, actualdisbursements averaged two to three times appraisal estimates (Part III, Table3). After the third year, they remained below estimated levels, as the loansurplus mounted and redirected allocations for the acquisition remainedundisbursed.

VI. PROJECT RESULTS

Achievement of Project Objectives

6.01 Both project ports have adapted to the changes in shippingtechnology. Berths accommodating unitized cargo at Rades, in particular, haveeased conventional and car-ferry congestion at Tunis and La Goulette andincreased overall port efficiency.

Achievement of Phvsical Targets

6.02 The physical targets of the project were achieved substantially asplanned, but with delays, in the face of difficult technical conditions. Newfacilities are perfectly well suited for Ro-Ro traffic and can also accommodatecontainer vessels. At Rades, the new land developed under the project willfacilitate future port expansion at a relatively low cost. In the meantime,part of the land is being leased for commercial and industrial use. At Sfax,new port facilities were developed in the area at the south and adjacent to theexisting port basin, facilitating further expansion, when required.

- 11 -

Financial Performance

6.03 OPNT's financial statements show that performance indicators forsome years were significantly higher than estimated at appraisal and for otherssignificantly lower (Annex 3). The principal factors underlying such differenceswere: (a) the slower pace at which civil works were being implemented (i.e.,about two years behind schedule); and (b) the need for additional tariffincreases, particularly since traffic levels were significantly below appraisalestimates. The former situation caused a surge in the rate of return on net(non-revalued) fixed assets in use from 16.61 in 1981 to 26.61 in 1983; 15.8%had been projected for the latter year based, mainly on the assumption that bythen civil works would have been completed and new assets put into operation.OPNT had no difficulty complying with the covenanted 71 return on net fixedassets in use until 1987, when inadequate tariffs in the face of an overalltraffic slowdown culminated in a negative cash flow of serious proportions. Thissituation was compounded, not only by the steady decline of the Tunisian dinarin relation to hard currencies, which increased debt service requirements twofoldin 1986 alone, but also by the commissioning of Radis, which added substantiallyto net fixed assets in use. In the latter instance, as net fixed assets in userose from TD 37,577 in 1986 to TD 117,146 in 1987, there was, as to be expected,a temporary overcapacity of port facilities. Tariff increases in 1988 had animmediate decisive impact on the enterprise's financial position. Not only didrevenues nearly double in 1988, but net fixed assets in use yielded asatisfactory rate of return of 7.5X, as compared with -2.11 for the previousyear.

6.04 OPNT's financial outlook for the 1990s is promising. Its projectedinvestment and financing plan for 1990-95 (Annex 4) shows a declining debtservice requirement and an investment plan (TD 38.5 millon) that can beincreasingly financed through internally generated funds. However, there isexpected to be financing gap of US$4.0 million for the period 1990-92. Thiscould be covered through bridge loans from local banks. For the period 1993-95, the operating surplus may well surpass US$60 million. Part of this couldbe used for early repayment of loans .r for rehabilitation and maintenance. Onthe basis of balance sheet and income statement projections for 1990-1995 (Annex5), investment targets can be attained while at the same time raising performanceindicators. For example, if revenues under the present tariff structure increasecommensurately with a 41 p.a. growth rate in general cargo traffic, as predictedby OPNT, the debt service coverage ratio should reach 3.0 by the end of 1995.The rate of return on net fixed assets in use should stabilize at about 11-12Xin the early 1990s.

Economic Reevaluation

6.05 Project economic appraisal was based on the assumptions that: (a)general cargo traffic would increase, on average, at 41 p.a. at both Tunis/LaGoulette and Sfax with a gradual shift from conventional cargo to unitized cargoat Tunis/La Goulette from 301 ,n 1978 to 701 in 1992, and at Sfax from 301 in1978 to 701 by 1992; and (b) conversion to the faster and more operationallyefficient Ro-Ro technology would result in significant savings in cargo-handlingcosts, ships' service time, ship's waiting time, and avoidable diversion costs

- 12 -

arising from having to reroute cargo through other ports. An additional benefitfor La Goulette would be the value of reclaimed land.

6.06 Actual general cargo traffic at Tunis/La Goulette/Rad6s in 1989 (1.4millioni tons) was slightly below the 1978 level, indicating a net decrease duringthe project period. In fact, general cargo traffic in 1989 at both Tuni;/LaGoulette/Rades and Sfax (351,443 tons) showed decreases of 25% and Z0%,respectively, over appraisal estimates for that year. In effect, general cargotraffic at all major ports in Tunisia declined throughout the early 1980s andhas risen only slightly since 1985. This situation was due to the worldwiderecession, declining agricultural exports to the European Community, and importrestrictions imposed by the Government in response to the trade deficit. Despitelow overall growth, the pattern of traffic at Tunis/La Goulette showed a markedshift to Ro-Ro cargo. These structural changes took place much faster thananticipated. As early as 1983, Ro-Ro traffic was 58% the total general cargotraffic and containerized traffic 9%. Thus, the virtual stagnation in trafficwas substantially offset by the rapid conversion to Ro-Ro and containertechnology made possible by the new facilities and equipment.

6.07 The method used for economic appraisal and reevaluation was acost/benefit analysis based on "with project" and "without project" scenarios.At appraisal, it had been expected that the greatest stream of benefits accruingboth directly and indirectly to the Tunisian economy would be the reduction inships' waiting time. In the end, however, actual benefits derived from reducedships' service time became the more significant benefit owing to both theunforeseen stagnation in maritime traffic which automatically reduced ships'waiting time, and the fast pace of adapting to technological advance. Withoutthe project, general cargo handling throughputs would probably have increasedonly marginally from a level of about 466 tons per ship-day in 1978 to about 55Gtons per ship-day in 1989. But with the conversion to Ro-Ro and containertechnology, including improved operational methods, general cargo throughputshave actually increased to a level of 1,580 tons per ship-day: roughly 500 tonsper ship-day for conventional vessels and 2,000 tons per ship-day for unitizedcargo. Typical ship-day costs have been used to estimate ship time: US$4,500per day for coniventional vessels, US$6,000 for Ro-Ro vessels, and US$5,000 forcontainer vessels. The appraisal ERRs for both subprojects were 16.5%, assumingan 4% p.a. growth in general cargo traffic. Assuming that traffic will growbeyond 1990 at 4% p.a., the reevaluation shows an ERR of 14% for Tunis/LaGoulette/Rades and 12.5t for Sfax.

VII. PROJECT SUSTAINABILITY

7.01 OPNT is institutionally strong in the areas of engineering, financialmanagement, and training. It also has the capacity to evaluate the technicaland economic viability of port investments. Provided tariffs continue to bereviewed periodically and rationally restructured, and if private stevedoringcompanies are permitted and encouraged to compete at La Goulette and Rades, asenvisaged, there is reasonable expectation that project benefits will besustained. In this regard, it is also critical that groundwork be laid forstrategic planning in the ports subsector (para. 9.01).

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VIII. BANK PERFORMANCE

8.01 The Bank's major contribution lies in its technical advice to OPNT.At an early project implementation phase, commitment to training demonstratedthrough close liaison with UNCTAD and continual follow-up contributed measurablyto the success and sustainability of the training component. In the last phase,advice on pzocurement of the second tranche of cargo-handling equipment increasedOPNT's capacity in this area.

8.02 The Bank's major shortcoming concerns the lack of continuity insupervision, particularly during the readjustment period in the aftermath ofBank reorganization in 1987. First, more careful attention to financialindicators by supervision missions in the mid-1980s might have led to a newtariff structure in time to keep OPNT on a sound financial track. Second, theBank, at various stages of project implementation, could have used the delaysin equipment procurement as leverage for addressing the institutional issueinvolving the working relation between OPNT and STAM, which is still unresolved.

IX. BORROWER PERFORMANCE

9.01 During the course of project implementation, there was frequentturnover at the Chief Executive officer level; several recent CEOs had tenuresof less than two years. Such turnover seriously hampered OPNT's corporateplanning function, as well as the strategic planning process for the portsubsector as a whole. Otherwise, OPNT is a well managed enterprise. Goodcooperation between the supervision consultants and OPNT engineering staff ledto a satisfactory achievement of physical targets in the face of difficulttechnical conditions. OPNT's financial management functioned well given anoutdated tariff structure over which it had no control. The need for tariffrestructuring had been foreseen during negotiations and carried out by December31, 1982 in compliance with the loan agreement. Several years hence, however,the downturn in traffic rendered new tariffs obsolete; the tariff structure wasonly updated after ONPT experienced a negative cash flow in 1987, which led toa tariff increase and permitted OPNT to achieve good financial resultsthereafter.

9.02 What is significant is that OPNT's declining revenue base relativeto its debt service requirements and operating expenses occurred during a four-year period (1983-86) when audit reports were not being made available until twoto three years after the due dates. Herein lies the importance of timelycompliance with the audit requirement. If, in the mid-1980s, the Bank and theGovernment had had access to annual audit reports, OPNT could have used theseresults to strengthen the case for tariff increases.

X. BANK-BORROWER RELATIONSHIP

10.01 The relationship was smooth and fruitful to both parties. However,the lack of continuity in management from both sides resulted in less attentionbeing given to institutional issues.

- 14 -

XI. CONSULTING SERVICES

11.01 Construction supervision at Rad6s was the responsibility of a jointventure of three firms. At Sfax, this was handled by a local agency assistedby a foreign firm for soil investigation. Performance of supervision consultantsas well as that of OPNT's engineering department staff were satisfactory.Performance of consultants who executed the first two parts of the study on thereorganization of workshops was also satisfactory. Technical assistance providedby UNCTAD staff and consultants, together with Bank participation in the trainingeffort, was well received by OPNT and helped the enterprise achieve a largemeasure of training self-sufficiency.

XII. PROJECT DQCUNENTATION AND DATA

12.01 Most aspects related to the project were well documented in theDivision and Regional files. Supervision reports during most of theimplementation period contained in-depth, ongoing analyses of port traffic andoperations although operational coefficients were incomplete and inconsistentlypresented. This made it difficult to reconstruct the data base needed for theeconomic reevaluation of the two subprojects. Moreover, audit reports for theearly 1980s whose receipt by the Bank had been acknowledged were missing fromthe files.

12.02 OPNT provided the Bank supervision and completion missions withadequate information on its operations, including requested statistical data(e.g., the evolution of maritime traffic and rates of productivity) anddocumentation relating to, inter alia, its in-house training program, itsconvention with STAM, and its projected investment and financing plan (1990-95). In anticipation of PCR preparation, OPNT submitted lengthy ex-postengineering reports for both the Rades and Sfax subprojects. All of thisdocumentation will be helpful in preparing the proposed First Transport SectorLoan (scheduled for FY92).

-- Is -

PROJECT COMPLETION REPORT

REPUBIJC OF TUNISL

THIRD PORTS PROJECT

(LOAN 1797-TUN)

PART II: PRQUECT REV FROM THE BORROWER'S PERSP

- 17 -

PROJECT COMPLETION REPORT

REPUBLIC OF TUNISIA

THIRD PORTS PROJECT

(LOAN 1797-TUN)

I. SUMMARY OF BANK ACTIONS DURING PROJECT DEVELOPMENT AND IMPLEMENTATION

- Preparation of feasibility studies and negotiations gave rise to majordelays from project conception to loan signature with the result thatadditional costs for both subprojects were incurred.

- Quarterly progress reports for the two subprojects were submitted for Bankapproval. Since no comments were made, the Borrower is unaware of thereports' impact on decisions taken by the Bank.

It would have been desireable if the Bank had sent to the Borrower, atleast once a year, its comments on the various technical and financialaspects, and, in particular, its opinion concerning any variations thatmight have existed between initially planned and completed works.

II. SUMMARY OF OPNT ACTIONS DURING PROJECT DEVELOPMENT AND IMPLEMENTATION

* The OPNT took all necessary actions for the establishment of an appropriateorganizational chart for the supervision of works of the two subprojects.

- The implementation of the two subprojects provided an opportunity for OPNTtechnicians to increase their knowledge, i.e., they took full advantageof comprehensive training in the field.

- The consultants who followed up the project had good practical experiencein maritime construction works.

- OPNT was obliged several times to modify specifications for the acquisitionof port equipment, such as forklift and Ro-Ro trucks.

- The target for cargo-handling efficiency included in the workshopreorganization study did not materialize, since the program to reorganizeSTAM' s cargo-handling operations, recommended by the Bank, was not followedthrough.

- On the financial level, and to the extent that OPNT has strictly adheredto procedures and documents set forth by the Bank for all transactionssuch as withdrawal of loan proceeds and reimbursement, project performancewas positive.

- 18 -

However, some organizationa' difficulties occurred during projectimplementation; the submission by OPNT of audited financial statements for1983 to 1986 was delayed because of difficulties with obsolete computerequipment.

III. GENERAL ASSESSMENT

In general, the two subprojects have reached their intended objectives:the variati.ns between estimated and actual values are acceptable and theeconomic rates of return have been confirmud.

Port of Sfax

The expansion has been worthwhile, in particular when the old port evincednumerous deficiencies in the quays (opening of joints, settling, retainingwalls). Traffic has been diverted to the new port, thus alleviating theold infrastructure, and enabling OPNT to program its port maintenanceworks without interference.

Fifteen ha of pavement and 18,000 ml of hangars provide considerablesupport for general cargo traffic.

tort of Radis

* Complies with the needs of Ro-Ro traffic despite insufficientcontainer-handling equipment.

* Reclaimed land located outside the port of Rades, once developed,will have an important impact on the Tuiiisian economy (in particular,the creation of customs areas and industries connected with theport).

For the two subDrojects

* With the exception of certain modifications necessary for greaterefficiency in port operations, the overall project has beenimplemented as originally defined.

* All works have been completed in coordination with enterprises,consultants, and OPNT.

We also note that the Tunisian and foreign enterprises that wereselected completed their work, which was satisfactory and of goodquality. They were competent in training and supervision, andmaintained good relations with construction sites.

- 19 -

The choice of the two sites has been propitious: free flow of roadtraffic, reduction of traffic congestion in urban areas, reductionof air pollution in the city center, lower land transport costs,elimination of costs incurred from traffic detours.

- 21 -

PROJECT COMPLEflON REPORT

REPUBWC OF TUNISIA

THIRD PORTS PROJECT

(LOAN 1797-TUN)

PART III: STATtSTICAL INFORHMATN

- 23 -

Table 1: jelated Bank Loans

Loan Numberand Title Purpose FY Status

Loan 380-TUN To provide initial 64 Completed in 1968;First Port infrastructure forProject the modern port of La

Goulette and toestablish OPNT as aviable portsauthority.

Loan 573-TUN To continue and expane 69 Completed in 1973;Second Port the first project, PPAR No. 1049Project including dredging at Feb. 26, 1976

Bizerte, Sfax, and LaGoulette; to reconstructa breakwater at Bizerte;provide cargo-handlingequipment

Table 2: Proiect Timetable

Planned Revised Actual

Identification 12/77

Preparation Beginning 4/78 5/78Preparation End 8/78 8/78

Appraisal Mission 9/78 9/78

Loan Negotiations 3/79 9/79 12/7911/79

Board Approval 5/79 1/11/80

Loan Signature 2/8/80

Loan Effectiveness 5/08/80 6/25/80

Loan Closing 6/30/86 6/30/87 12/31/886/30/88

Project Completion 6/30/84 6/30/87 8/31/8912/31/886/30/89

- 24 -

Table 3: Loan Disbursements

Quarter Original Actual

FY81 1 6.52 2.0 6.5 325X3 4.0 9.5 328X4 6.0 13.2 220X

FY82 1 8.1 17.6 217X2 10.2 20.5 20113 12.3 22.8 18514 14.6 24.6 168X

FY83 1 17.2 26.1 152X2 20.1 27.0 13413 23.0 28.0 12214 26.4 28.3 107%

FY84 1 29.5 28.8 9812 32.8 29.3 8913 35.4 29.9 8414 37.9 30.1 791

FY85 1 39.9 30.3 7612 41.5 30.5 7313 42.0 30.8 73X4 42.5 30.8 721

FY86 1 42.5 32.0 7512 42.5 32.0 75X3 42.5 32.5 76X4 42.5 32.6 77X

FY87 1 42.5 32.9 7712 42.5 33.5 7913 42.5 33.6 7914 42.5 33.7 791

FY88 1 42.5 33.7 7912 42.5 33.7 7913 42.5 33.7 7914 42.5 33.7 791

FY89 1 42.5 33.7 7912 42.5 33.9 8013 42.5 33.9 8014 42.5 34.3 811

FY90 1 42.5 34.7 821

- 25 -

Table 4: Proiect Casts

Appraisal Estimates Actual

Local LocalItem Costs F.E. Total Coats F.E. Total Variation

(US$ million)

Civil Works

Radla 28.85 40.07 68.92 41.80 29.69 71.49 2.57 4SSfax 10.33 11.74 22.07 19.68 19.68 (2.39) -llS

Subtotal 39.18 51.81 90.99 61.48 29.69 91.17 0.18 0O

Eauiument

Cargo Handling 1.14 9.10 10.24 0.02 11.28 11.30 1.06 10SMIS 0.17 0.17 0.17 1001

Subtotal 1.14 9.10 10.24 0.02 11.45 11.47 1.23 121

Technical Assistance

ConstructionSupervision

at Radia 0.79 0.91 1.70 0.38 0.72 1.10 (0.60) -35Sat Sfax 0.24 0.29 0.53 0.12 0.23 0.35 (0.18) -341

WorkshopReorganization 0.00 0.04 0.40 0.00 0.13 0.13 0.09 233Z

Training 0.00 0.73 0.73 0.08 0.42 0.50 (0.23) -32Z

Subtotal 1.03 1.97 3.00 0.58 1.50 2.08 (0.92) -311

TO01L 41.35 62.68 104.23 6a.08 42.64 104.72 0.4S Ox

Table 5: Project Financing

Original Actual

Ezport ExportIBiD Credit OPT IBIRD Credit OPDS

(US$ mifLion)Civil Works

Radla 40.50 28.42 31.87 39.62Sfax 7.20 14.87 19.68

Subtotal 40.50 7.20 43.29 31.87 59.30

EouiEumnt

Cargo-Handlin 9.10 1.14 0.90 10.40MIS 0.17

Subtotal 9.10 1.14 1.07 10.40

Tschnical Assistance

Construction Supervision 1.23 1.00 1.25 0.20Workshop Study 0.04 0.13Training 0.73 0.42 0.08

Subtotal 2.00 1.00 1.80 0.26

TOTAL 42.50 16.30 45.43 34.74 10.40 50.56

- 26 -

Table 6: Direct and Indirect Benefits

A. Direct and Indirect Benefits a/

Closing Date Full ODerationEstimated Actual _/ Estimated Actual _/

(1989) (1992)

Tunis/La Goulette/Rad&s

Annual Savings in Cargo-Handling Costs 669 1,386 2072 790 1,653 2092Annual Savings in Ships' Service Time 1,278 3,414 2672 1,278 15933 1252SAnnual Savings in Ships' Waiting Ti.. 41,488 11,385 272 41.488 13,485 332Annual Savings in Land Transport na. 289 na. 329Value of Reclaimed Land 19,756 19,756 100l na. n.a.Savings in Avoidable Diversion Costs - - 342 1,278 3732

Subtotal 63,191 36,230 572 43,898 32,738 752

Sfar

Annual Savings in Cargo-Handling Costs 311 67 222 358 188 522Annual Savings in Ships' Service Time 3,899 136 32 4,504 2,255 502Annual Savings in Ships' Waiting Time 5,334 1,831 342 11,406 2,010 182Savings in Avoidable Diversion Costs - - - -

Subtotal 9,544 2,034 212 16,269 4,453 272

TOTAL 72,735 38,264 53Z 60,167 37,192 62X

j/ All figures in 1989 constant pricesk/ Annex 1 shows a comparison between estimated and actual traffic and Annex 2 shows actual cost and

benefit stramss.

Table 7: Economic Imiact

OriginalEstimate Reevaluated

Economic Rate of ReturnTunis/La Goulette/Radla 16.52 14.02Sfax 16.52 12.52

Projoect Life 30 years 40 years

Table 8: Proiect Stdv

Purpose asDefined at Impact ofAppraisal Status Study

Workshop To assist OPT anO Two out of three The third part of the studyReorganisation and STA in parts of the study which would consist of specific

reorganising repair completed. recomendations, was nverand maintenance comissioned becauue of policyservices, and institutional ehanges in

responsibility for cargo-handling operations andeuipment mlantenance.

- 27 -

Table 9: Status of Covenants

LoanAgreementReference Description Status

3.02(a) Employment of consultants Complied with.

3.06 & SL 3 Cargo-handling equipmentto be leased on terms and Complied with.conditions satisfactoryto the Bank.

5.02 Audited accounts to be Complied with, exceptsubmitted within six for the period 1983-86.months of the end of thefiscal year.

5.05 Until project completion, The investment programinvestments not to exceed for cargo-handingUS$2.5 million p.a. and as equipment and for portagreed in the investment rehabilitation exceededplan for 1984. the original forecast but

the Bank considered theexpenditure to bejustified and offered noobjection.

5.06 Review tariff structure Complied with.by December 31, 1982.

5.07(a) Rate of return of not less In default in 1987;than 7X on net fixed assets; complied with in 1988assets to be revalued by after a substantialDecember 1980. tariff increase.

5.08(a) OPNT to maintain a debt In default in 1987 andservice coverage ratio of 1988. Positive impactat least 1.5. of the tariff increase

on this ratio require-ment will be noted in1991.

- 28 -

Table 10: Staff Ingur&(Staff - Weeks)

Prc- LoanAppraisal Appraisal Negociations Processing Supervision PCR Total

FY79/80 31.5 72.1 5.1 12.0 3.5 125.1

FY81 21.5 21.5

FY82 24.1 24.1

FY63 6.6 6.6

FY84 1.1 1.1

FY65 2.1 16.7 18.8

FY86 2.8 12.1 14.9

FY87 0.8 15.6 16.4

FY68 10.8 10.8

FY89 3.5 3.5

FY90 0.2 16.1 4.2

TOTAL 31.5 72.1 5.1 u.S 115.3 16.1 250.3

- 29 -

Table 11: Missions

Specializa-Stage of month/ No. of Days in tions mature ofProject Cycle Year Staff Field Rapresanted I/Ratirns Problem

Through Appraisal 12/77 2 3 Deputy ChiefFinancial AnalystPort Engineer

05/7S 4 8 Deputy Chieffinhncist Analyst

Port Engineer

Appraisat through 10/78 5 21 Deputy ChiefBoard Approval Financial Analyst

EconomistPort EginoeerPort Specialist

07/79 4 10 Finacial AnalystEconomistPort EnginerLoan Officer

Supervision 09/80 2 12 Financial nalyst 2 TechnicalPort Engineer

05/81 3 10 Financial Analyst 2 TechnicelPort EngineerPort Specialist

12/81 2 11 FinanciaL Analyst 1 TechnicalPort Engineer

07/82 2 11 Financial Analyst 2 TechnicalPort Enginser Financist

06/03 1 7 Finwcial Analyst I Technical07/84 2 7 Financale Analyst 2 Technicat

Port Enginer03/85 1 4 Port Engineer 2 TechnicaL06/86 1 7 Trainfng Specialist 2 Nanagerial07/86 2 12 Port Engineer 2 anagerial

Procurement Engineer02/37 2 9 Deputy Chief 2 Financial

Port Engineer anagerialProceurant Engineer

01/88 1 a Opwration Analyst 2 FinanciaL>Mawnariet

06/88 1 2 Port Engineer 2 FinancialMinugriot

05/89 1 6 Port Enginer 2 FinwncialManagerial

Cooptetion 03/90 1 8 Operations Anetyst

Total uSter of doas in fletd * 156

- 3n. -

Annex 1

List of EguiRment Procured under the Project

Netherlands IBRDExport Credit Loan

(US$)

First Tranche

2 32-ton mobile container-handling cranes 1,280,000

4 tugboats 9,100,000

Second Tranche

2 32-ton Forklift (32-ton) 405,924

1 Spreader

5 RoRo Tractors (200 hp) 337,256

2 Forklift Trucks (10 ton) 158,412

6 Forklift Trucks (4 ton)

TOTAL 10!380,000 901,441

- 31 -

Annex 2

Comparison of Actual and Forecast General Cargo Traffic

Tunis/La Goutette/Rades Sfax

Appri sat AppraisalEstimates Actual X Estimtes Actual X

(tons)

1978 1,450,000 1,393,961 96X 558,000 485,899 87X

1979 1,3U8,500 1,253,322 90X 448,835 375,625 84X

1980 1,327,000 1,244,560 94X 339,669 443,73 1311

1981 1.382,058 1,244,560 921 356,653 410,769 115X

1982 1,439,401 1,275,988 96X 374,486 358,460 96X

1983 1,509,500 1,378,205 851 436,000 434,065 100X

1984 1,561,000 1,317,867 871 457,800 404,m 581

1985 1,625,767 1,236,283 791 485,800 391,245 811

1986 1,693,221 1,191,525 731 509,250 298,260 59X

1987 1,763,474 1,159,378 651 534,713 326,361 611

0988 1,834,013 1,153,754 751 561,448 376,297 67X

1989 1,907,373 1,375,016 751 589,521 351,443 601

- 32-

Annex3Page 1 of 3

OPNT's Audited Financial Statements

197 1979 1979 1980 190 1981 1981ACT APR ACT APR ACT APR ACT

(TD 000)

NALAbCE SNEET

Current Assets 2,126 3,468 4,677 3,291 4,740 2,908 4,904Gross Fixed Assets 42,871. 44,875 44,729 48,195 53,348 49,295 55,293Less Depreciation 15,763 17,363 16,912 19.063 18,712 20,913 20,488Net Fixed Assetsin Use 27,108 27,512 27,817 29,132 34,636 28,382 34,805Other Assets 3,219 3,866 7,068

Work-in-Progress/New Investments 8,625 8,795 7,151 14,715 12,167 24,935 25,747

Total Assets 37,859 39,775 42,864 47,138 55.409 56,225 72,523

Current LiabiLities 0 0 3,157 8,203 7,883Long-Term Debt 10,376 9,609 9,896 13,410 15,137 18,935 30,574Equity 27,483 29,654 29,809 33,728 32,070 37,290 34,066

Total Liabilities 37,859 39,263 42,864 47,138 55,409 56,225 72,523

INCO"E STATERWE

Revenues 6,268 7,850 8,577 10,370 10,127 10,890 11,364operating Expenses 3,181 3,382 4,551 3,860 5,957 4,270 6,426Depreciation 1,367 1,600 1,149 1,700 1,801 1,850 1,776Operating Surplus 1, 720 2,868 2,878 4,810 2,369 4,770 3,162Interest 507 440 481 738 468 1.073 489Net Surplus 1,213 2,428 2,396 4,072 1,901 3,697 2,673Non-Operating Expw es 144 125 70 130 714 135 (201)Not Revenues 1,069 2,303 2,326 3,942 1,188 3,562 2,874Gross Cash Flow 2,436 3,903 3,474 5,642 2,968 5,412 4,649

KEY RATIO9I1WICT31

Debt/Equity Ratio 27/73 24/76 25/75 28/72 32/68 34/66 47/53Operating Ratio 735 632 66X 54X 772 56X 722Debt Service coverag I/ 3.3 5.6 5.1 5.6 5.5 4.4 6.0Return on AveragMet FIxed Assts 5.8X 10.5X 10.5X 17.02 7.6X 16.6X 9.1X

I/ calculated on the basis of: (Gross Cash Flow + Depreciation)/(Int*rest Expeneo + Repayment ofPrincipal); actual repayment of principal, which is not shown in the above financial atatements is asfollows: 1979, TD 303,045; 1980, TD 294,000; 1981, TD 328,215.

- 33 -

Annex 3Page 2 of 3

OPNT's Audited Financial Statements

APIt ACT APUC ACT APR ACT

(TD 000)

UIIAAICE SIE

Current Assets 2,641 7,385 1,1S1 11,538 3.136 8,230

Gross Fixed Assets 51,805 56,560 6S,685 56,760 102,475 57,192Le DOpreciation 22,913 22,187 25,113 24,076 27,768 25,918Not Fixed Assetsin Use 28,892 34,373 40,572 32,684 74.707 31,275Other Assets 9,811 13,346 15,498

Work-in-Progress/New Invest"ents 44,047 40,134 34,930 55,363 5,220 72,018

Total Assets 75,580 91,702 76,653 112,932 83.063 127,021

Current Liabilities 0 11,276 16,314 0 19,821Long-Term Debt 40,310 39,802 43,6U 51,687 47,257 59,172Equity

Total Liabilities 66,318 91,702 76,653 112.932 83,063 127,021

1 -n^T

Revenes 11.440 16,266 13,010 19.805 13,800 19,473Operating Expeses 4,774 8,344 5,310 9.003 5,970 10,730Depreciation 2.000 1,699 2,200 18'9 2,655 1,842Operating Surplus 4,666 6,223 5,500 8,913 5.175 6,902Interest 1.506 501 2,012 531 2,416 536Net Surplus 3,160 5,722 3,488 8,382 3,759 6,366Mon-operating Expees 140 (210) 150 416 150 282Net Revene 3,020 5,931 3,338 7,966 3,609 6,084Gross Caah Flow 5,020 7,631 5,538 9,855 6,264 7,926

Ku RATIOmImI

Debt/Equity tatio 39/61 51/49 43/57 47/53 43/57 45/55Oprating Ratio 59X 62X 58X 5S5 63X 65XDebt Service coverage w 3.4 9.1 2.4 5.2 2.1 3.0Return on averae

let fixed asts 16.31 18.01 15.8x 26.6 10.71 21.6

j/ calculated an the basis of: (Gross Cash Flow + DepreciationM)Interst Zxpemae + _apa tof Principal); actual repa ment of principal. wbich is not hbon In the bowe fiamotealstatments is a follows: 1982, TD 371,971; 1983. TD 1.533,349; 1984, TD 2,382.419.

- 34 -

Annex 3Page 3 of 3

OPNT's Audited Financial Statements

1985 1985 1986 1987 1988APR ACT ACT ACT ACT

(TD 000)

ELC OM

Current Assets 3,345 17,986 19,840 10,890 13,994

Gross Fixed Assets 103,195 57,539 67,324 151,279 152,639Less Dproeciation 30,498 27,697 29,747 34,133 38,622Net Fixed Assetsin Use 72,697 29,842 37,577 117,146 114,018Other Assets 7,213 7,076 17,636 18,209

Work-in-Progress/New Investments 8,000 94,237 99,278 21,422 21,224

Total Assets 84,042 149,278 163,771 167,094 167,45

Current Liabilities 0 27,360 31,159 36,256 30,777Long-Term Debt 34,171 60,312 69,909 68,135 73,964Equity 49,871 61,606 62,703 62,703 62,703

Total Liabilities 84,042 149.278 162,771 167,094 167,U5

INCE STATENET

Revemnies 14,590 17,530 18,258 18,142 30,863Operating Expenses 6,715 11,786 11,781 15,385W 17,704Depreciation 2,730 1,779 2,051 4,386 4,489Operating Surplus 5,145 3,965 4,426 (1,629) 8,670Interest 2,681 538 940 6,322w 6,563Net Surplus 2,864 3,427 3,487 (7,951) 2,107Nan-Operating Expenses 150 993 2,390 2,497 2,302Net RevemieS 2,714 2,434 1,097 (10,448) (195)Gross Cash Flow 5,4U 4.213 3,147 (6,062) 4,293

KEY 3ATICSSIWDICATQ*S

Debt/Equity Ratio 41/59 49/51 53/47 52/48 54/46Operating Ratio 65X 77X 761 109X 721Debt Service coverag J/ 1.7 1.2 1.0 0.2 0.7Return an averag

Met fixed assts 7.5X 13.01 13.11 -2.11 7.5%

A/ increase in 1987 with respect to 1986 due mostly to mortization of engineering studies andinterest during construction, which was previously capitaUeld.

b/ increase in 1987 with respect to 1986 due mostly to change in interest on loans thatfinanced the project to interest charges, which were previously capitalized (a.o u/).

S/ calculated on the basis of: (Gross Cash Flow + Deprecistion)/(Interest Expenso + Repaymentof Principal); repayment of principal, which is not shown in the above financial itatementsis as follows: 1985. TD 4,061,151 1986, TD 5.414.417; 1987, TD 5.999.662; 1088, TD 11,361,398.

- 35. -

Annex 4

OPNT's Projected Investment and Financing Plan

1990 1991 19 t9 1994 1995

(TD 000)

Civil Works at Rados 1,055Civil Works at Sfax 380Contairer-handling equipment 210Dredging 2,661Petroletv Berth at Bizerte 5,000 6,000 4,000Expwnsion of the Port of Sousse 2,000 4,000Port modermization 4,991 3,000 1,600 1,600 1,000 1,000Loan Reiwbursement 16,004 9,144 7,904 7,211 6,737 5,220Tax Credit Reimbursement 605 605 454

Total Uss 25,906 19,749 19,958 12.811 7,737 6.220

Cash Flou 16,780 17,827 17,239 12,637 7,610 6,220Best Bank Credit (dredging) 316Italian Public Credit 2,345Repeyment from STAN 174 174 174 174 127Medium-Term Government Credit 4,549 1,513 560Other Local Financing 1,742 235 1,965

Totat Sources 25,906 19.749 19.958 12.811 7,737 6,220

Source: OPNT, March 1990

- 36 -

Annex 5

OPNT's Proiected Financial Statements

990 1991 1 19 1994 t9

(TD 000)

MALAIi NEJET

Current Assets 12,252 12,017 10,032 18,053 31,224 45,676

Gross Fixed Assets 200,101 212,074 224,544 238,383 246,105 249,228Less Depreciation 44,360 47,036 49,505 51,744 53,867 55,989Net Fixed Assets

in Use 155,742 165,039 175,039 186,639 192,239 193,239Work-in-Progress/New Investments 9,297 10,000 11,600 5,600 1,000 1,000

Totat Assets 177,291 187,066 196,671 210,292 22,463 239,915

Current Liabilities 32,519 30,456 28,915 27,838 27,333 26,965Long-Term Debt 64,565 56,329 48,531 41,320 34,583 29,363Equity 80,206 100,270 119,225 141,133 162,646 183,586

Totat Liabitities 177,2D1 187,056 196,671 210,292 226,463 234,915

INIVE STATEIIT

Revenues 40,213 41,822 43,495 45,235 47,044 48,926Operating Expenses 17,704 18,998 21,949 20,910 23,194 25,648Depreciation 2,936 2,761 2,591 2,416 2,337 2,337Operating Surplus 19,573 20,064 18,954 21,909 21,512 20,940Interest 5,729 4,998 4,306 3,667 3,069 2,606Net Revenues 13,844 15,066 14,648 18,242 18,444 18,335Gross Cash Flow 16,780 17,827 17,239 20,658 20,781 20,672

EY RATIOS/IWCATORS

Debt/Equity Ratio 45/55 36/64 29/71 23/M 18/82 14/86Operating Ratio 51X 52X 56X 52X 54X 571Debt Service Coverage * 1.0 1.6 1.8 2.2 2.4 3.0Return on Average

Net Fixed Assets 12.6o 12.51 11.11 12.11 11.41 10.9X

p/ calculated on the basis of: (Gross Cash Flow + Depreclation)/(Interest Ezpase+ Repayment of Principal); repayment of principal, sboam n Annex 2.

- 37 -

Annex 6Page 1 of 2

Cost/Benefit Analysis

Ports of Tunis/La Goulette/Rades

Benefits

Reduced Ship Ship Savings incargo- service waiting Land Avoidable Value ofhandling time- tim- Transport Diversion Reclaimed

Costs costs savings savings Savings Costs Lwnd

(US$ 000)

1980 3,0581981 58,3141982 24.3731983 19.1281984 14,7281985 30,3821986 5,4151967 126 1,086 3,324 10,204 243 19,7561988 323 1,218 3,726 10,362 2521989 77m 1,386 3,414 11,385 2891990 1,590 15,378 12,967 3051991 1,653 15,993 13,485 3291992 1,653 15,993 13,485 3291993 1,653 15,993 13.485 329 2,9711994 1,653 15,993 13,485 329 4,7321995 9,500 1,653 15,993 13,485 329 6,5631996 1,653 15,993 13,485 329 8,4681997 1,653 15,993 13,485 329 16,0921998 1,653 15,993 13,485 329 19,2641999 1,653 15,993 13,485 329 22,5632000 1,653 15,993 13,485 329 22,5632001 9,500 1,6S3 15,993 13,485 329 22,5632002 1,653 15,993 13,485 329 22,5632003 1,653 15,993 13,485 329 22,5632004 1,653 15,993 13,48 329 22,5632005 1,653 15,993 13,485 329 22,5632006 1,653 15,993 13,485 329 22,5632007 9,500 1,653 15,993 13,485 329 22,5632008 1,653 15,993 13,485 329 22,5632009 1,653 15,993 13,485 329 22,5632010 1,653 15,993 13,485 329 22,5632011 1,653 15,993 13,485 329 22,5632012 1,653 15,993 13,485 329 22,5632013 9,500 1,653 15,993 13,485 329 22,5632014 1,653 15,993 13,485 329 22,5632015 1,653 15,993 13,485 329 22,5632016 1,653 15,993 13,485 329 22,5632017 1,653 15,993 13,485 329 22,5632018 1,653 15,993 13,485 329 22,5632019 9,500 1,653 15,993 13,485 329 22,S63

- 38

Annex 6Page 2 of 2

Cost/Benefit Analysis

Port of Sfax

lanef i ts

Reduced Ship Ship Savings inCargo- Service Waiting AvoidableHandling Tine- Time- Diversion

Costs Costs Savings Savirgs Costs

(USS 000)

1980 51981 381982 5,8831983 8,1171984 5.9651965 2,065 75 97 2,2441986 112 57 80 2,0881987 17 62 102 1,9311988 72 34 1,6861989 67 136 1,8311990 70 2,255 2,0651991 6,717 181 2,273 2,0291992 188 2,255 2,0101993 196 2.295 2,0491994 204 2.478 2,2021995 212 2.582 2,3041996 220 2,669 2,3801997 229 2,758 2,4591998 6,717 238 2,872 2,560 141990 238 2,872 2,560 342000 238 2,872 2,560 552010 238 2,872 2,560 772011 238 2,872 2.560 992012 238 2,872 2,560 1232013 238 2,872 2,560 1472014 6,717 238 2,672 2,560 1722015 238 2,872 2,560 1992016 238 2,872 2.560 2262017 238 2,872 2,560 2552018 238 2,872 2,560 2842019 238 2,872 2,560 3152010 238 2.872 2,560 3152011 6,717 238 2,872 2,560 3152012 238 2,872 2.560 3152013 238 2,672 2,560 3152014 238 2,872 2,560 3152015 238 2,872 2,560 3152016 238 2,872 2,S60 3152017 238 2,872 2,560 3152018 236 2,871 2,S60 3152019 6,717 238 2,871 2,S60 315

TUNISIATHE PORTS SUBSECTOR MLLkANf Si A

GENERAL LOCATION . - , - '

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- International Boundaries )Built-up Areas El

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LA GOULEE i

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JUNE 1990