Document of The World Bank FILE COPY FOR OFFICIAL USE ONLY Report No. 4687-BEN STAFF APPRAISAL REPORT BE NI N FORESTRY PROJECT May 29, 1984 Regional Projects Department Western Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. PEOPLE'S REPUBLIC OF BENIN FORESTRY PROJECT CURRENCY EQUIVALENTS Currency Unit = CFA Franc (CFAF) US$1 = CFAF 418 1/ CFAF 1 million = US$2392 1/ The CFA Franc (CFAF) is tied to the French Franc (FF) in the ratio of FF 1 to CFAF 50. The French Franc is currently floating. ABBREVIATIONS ADB - African Development Bank CARDER - Center for Regional Action of Rural Development DEFC - Department of Forestry, Water and Hunting DRA - Agricultural Research Department (Direction de la Recherche Agronomique) FRG - Federal Republic of Germany GTZ - Gesellschaft fur Technische Zusammerarbeit KFW - Kreditanstalt fur Wiederaufbau MDRAC - Ministry of Rural Development and Cooperative Action (Ministere du D6veloppement Rurale et Action Cooperative) MFEEP - Ministry of State Farms, Livestock and Fisheries (Ministere des Fermes d'Etat, de l'Elevage et de la Peche) MESRS - Ministry of Higher Education and Scientific Research (Ministere de l'Enseignement Sup6rieur et la Recherche Scientifique) ONAB - State Wood Company (Office National du Bois) SNAFOR - National Forestry Development Company (Societl& Nationale pour le Developpement Forestier) UNSO - United Nations Sudan-Sahel Office FISCAL YEAR January 1 - December 31 PROJECT YEAR July 1 - June 30 FOR OFFICIAL USE ONLY BENIN Forestry Project Table of Contents Page No. I. Introduction . ............................. ^........... ............... 1 A. Background. . ................. ..... . 1 B. The National Economy . ................. ....... ....... . 1 C. The Forestry Sector . ............... . ..... .............. . 3 (a) Forest Resources ... ...... . . . .............. -...... ...... 3 (b) Production and Demand .. . ..... .............. 4 (c) Institutions and Training 5 .......... o .............. 5 (d) Forestry Policy and Strategy ...7o.............. 7 (e) IDA Involvement ................. o......... 8 II. The Project Area .* .... ..8.... . ... .. 8 III- The Project *-o ....................... - ....- -4-.0-0.0.0.0.0 10 A. General Overview ..................... 10 B. Detailed Features ... ........................ ......... 11 (a) Strengthening DEFO .. . . ..... ..... oo .. 11 (b) Lama Plantation . . .... .............. . .v. ........ .... 12 (c) Pilot Plantations . .. - .. .... .. ........ 14 IV. Organization And Management .................... ...... ...... 14 A. General .............. - . , .14 B. Plantations .......... o...... ..... ... o..o.-...... .... 14 V. Costs And Financing Arrangements . ... .... ..... 15 A. Project Cost Estimates .......o ...... P-................. 15 B. Proposed Financing ....... ... .. . ...... o.. ... 16 C. Onlending Arrangements ........... ..... . . 19 D. Procurement .... ..o ........................... 19 E. Disbursement . ......... ........ ......... 20 F. Accounts, Audit and Reporting Requirements ...... .......... 21 VI. Production, Markets, Prices And Financial Results ........ .. .. 21 A. Production ........ ....... 21 B. Markets and Prices .... ...21 C. Financial Results ...................... ..23 This report was prepared by Messrs. Fishwick and Crown and Ms. Jaisaard of the Western Africa Projects Department with the part-icipation of Mr. W. Hanover, consultant. Ms. Playfair-Scott was primarily responsible for report typing. Figures and calculations were checked by Mr. D. prayton. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosedl without World Bank authorization. - ii - VII. Benefits, Economic Justification And Risks .... ..... .... 25 A. Benefits ...... .. ......... ., 25 B. Economic Justification *...........................e..... 26 (a) Economic Analysis and Rate of Return (ERR) .......... 26 (b) Sensitivity ................................. .... .. 26 C. Risks .....* *..... ...O.....#.......... O.... 27 VIII. Assurances And Conditions ......................... 28 Annexes 3. Organigram ... ... .......... 29 5.1 Project Cost Estimates ..... . . . ...... . .... . ........... 30 5.2 Disbursement Schedule .................. .... ...... ,..... 31 6.1 Government Cash Flow .......*..#.*......... 32 Map - IBRD 17325 - iii - BENIN FORESTRY PROJECT Documents Available in the Project File Section I A. Basic Technical and Cost Tables Table 1 Calculation of Delivered Cost and Operating Costs of Project Vehicles and Equipment Table 2 Calculation of Fuel, Lubricant Requirements, Costings, Tax Duties, Foreign Exchange for all Engine Driven Equipment Table 3 Equipment and Labor Inputs/ha of Plantation Table 4 Plantation Costs/ha Table 5 Plantation Programme and Equipment Requiremnts Table 6 Teak Volume Production/ha Table 7 Teak Plantation Project Production B. Project Cost Tables Table 1 Investment Costs for Vehicles, Machinery and Equipment Table 2 Vehicles Operating Costs Table 3 Plantation Operating Costs Table 4 Civil Works Table 5 Additional Personnel: Lama Plantation Table 6 Road/Track Construction and Maintenance Costs Table 7 Lama Component--Technical Assistance Table 8 Pilot Plantation Program Table 9 DEFC Strengthening Summary Tables - Summary Account by Time - Project Component by Time - Summary Account by Project Component - Project Cost Summary Section II - Financial Tables Table 1 Teak Plantation Stumpage Value for Sawn Timber Table 2 Teak Plantations Stumpage Value for Poles and Fuelwood Table 3 Stumpage Value at Roadside of Salvage Logging in Lama Table 4 Production and Stumpage Value of Wood from Salvage Logging of 3,800 ha in the Lama Area Table 5 Calculation of Financial and Economic Salvage Value of Plantation Machinery at Project Year 5 Table 6 Debt Services Table 7 Calculation of Weighted Stumpage Fees According to Defferent Forest Products for Lama Forest Plantation Table 8 Calculation of Stumpage Fees - iv - Section III - Economic Tables Table 1 Teak Plantation Stumpage Value for Sawn Timber Table 2 Teak. Plantation Stumpage Value for Poles & Fuelwood Table 3 Stumpage Value at Roadside of Salvage Logging in Lama Table 4 Opportunity Cost of Existing Bush Savannah and Land Utilization by Farmers Table 5 Economic Costs of the Project Table 6 Economic Benefits, Economic Costs and Net Benefit Streams of the Project Section IV - Remarks on Proposal for the Establishment of a Fuelwood Plantation of Toui Forest Reserve Section V - Evaluation of Profitability of Charcoal Production Section VI - Forestry Research Also Available: Projeot Preparation Report: FAO/World Bank Cooperative Program Report No. 5/83 C1P - BEN9 Document No. 128.904 (2) v PEOPLE'S REPUBLIC OF BENIN FORESTRY PROJECT CREDIT AND PROJECT SUMMARY Borrower: People's Republic of Benin Amount: SDR 5.1 million (of which SDR 2.5, IDA; SDR 2.6 IDA Special Fund) Terms: Standard IDA terms Co-financing: Federal Republic of Germany Project Description: As principal objectives, the project would: (i) reorganize and increase the technical capacity of Government's Forestry and Hunting Department (DEFC), to increase its effectiveness in (a) collection and use of basic information for the formulation of an appropriate forestry strategy, (b) planning, coordinating and executing programs to implement the strategy, and (c) design and administration of fiscal measures influenc- ing the forestry sector; and (ii) execute an industrial plantations program to reduce future dependence on imported sawn timber, and generate revenues for further forestry development. To achieve these objectives, the project would consist of: (a) the establishment of a permanent unit within DEFC responsible for strategic planning and programming, and administration and control of sectoral finances, with material, logistical and technical support; (b) the establishment and maintenance of a 3,800 ha teak sawlog plantation in the Lama Forest Reserve; (c) the establishment and maintenance of 410 ha of pilot plantations within Toui and Lama Reserves to test improved species and sources of seed, establishment and maintenance techniques, and charcoaling methods; and (d) the execution of studies in support of the formulation of a forestry strategy, improved plantation establish- ment and preparation of possible future forestry development projects. - vi - Benefits and Risks: The project would result in reorganizing the DEFC so that it could formulate and execute Government's policy for the forestry sector. This would include planning and executing programs for reforestation as well as controlling forestry exploitation and managing revenues generated by forestry activity. The industrial plantations established would produce a total of 1.8 million m3 of sawn wood, poles and fuel wood and help Benin limit imports of sawn wood after the year 2015 when substantial deficits would otherwise be expected. The project does not face abnormal technical or managerial risks. - vii - Estimated Costs 1/ ----US$ million------- Local Foreign Total Strengthening DEFC 0.20 0.82 1.02 Teak Plantation 2.56 4.75 7.31 Pilot Plantations 0.20 0.38 0.58 Total Base Costs 2.96 5.95 8.91 Physical Contingencies 0.21 0.44 0.65 Price Contingencies 1.53 1.87 3.40 Total Costs (including taxes and duties) 4.70 8.26 12.96 Taxes and Duties 1.41 -- 1.41 Total Costs (net of taxes) 3.29 8.26 11.55 Financing Plan -------US$ million------- Local Foreign Total IDA Special Fund 1.00 1.80 2.80 IDA 1.10 1.46 2.56 FRG -- 5.00 5.00 Government 2.60 -- 2.60 Total 4.70 8.26 12.96 Estimated Disbursement (US$ million) IDA Fiscal Year FY85 FY86 F87 FY88 FY89 FY90 FY91 FY92 Amual 0.5 0.6 1.0 1.1 1.0 0.7 0.4 0.1 Cumlative 0.5 1.1 2.1 3.2 4.2 4.9 5.3 5.4 Ebonomic Rate of Return: 14.5 percent Appraisal Report: 4687-BEN dated May 29, 1934 Map: IBRD 17325 1/ Costs estimates are based on exchange rate of US$1 = CFAF392 which prevailed at the time of negotiations; November 1983. BENIN FORESTRY PROJECT I. INTRODUCTION A. Background 1.01 The Government of the People's Republic of Benin has requested IDA and IDA Special Fund credits totalling US$5.4 million equivalent to assist in financing a five-year forestry project with an estimated cost of US$13 million. The project would be the first IDA assisted project devoted entirely to the forestry sector in Benin. 1.02 The project was identified by a World Bank forestry sector mission to Benin in November 1981 based on earlier work undertaken by UNDP/FAO, and a forestry mission report prepared by a team from the Federal Republic of Germany in 1979. The project was prepared by a World Bank/FAO Cooperative Program team which visited Benin in October 1982, and was appraised by an IDA mission comprising Messrs. Robert Fishwick and Robert Crown, Ms. Rapeepun Jaisaard (IDA) and Mr. Wolfgang Hannover (consultant), which visited Benin in March 1983. B. The National Economy 1.03 The People's Republic of Benin is bordered by Nigeria to the east, Togo to the west, Upper Volta and Niger to the nrth and the Gulf of Guinea to the south. With a total land area of 112,000 km , the country is divided administratively into six provinces--Mono, Atlantique, Oueme, Zou, Borgou and Atacora (Map, IBRD 17325). The economy is predominantly agricultural and productivity is mainly dependent on rainfall. The agroclimatic zones in Benin are the equatorial zone to the south, with a bimodal rain distribution and the Sudano-Guinean zone in the north with a mono-modal rainfall pattern. The topography of Benin is generally flat with medium to low quality soil types. Mineral resources available include limestone, phosphate and off-shore oil. 1.04 Benin has a population estimated at 3.4 million (mid-1980) with a growth rate of 2.6% per annum. Seventy-one percent of the people live in rural areas and 95% of the rural labor force is engaged in agriculture. The country has three definable population regions: the northern region composed of Borgou and Atacora provinces, covers 73% of the area but has only 29% of the total population with an average density of 12 people per km2; the central region, covered by the Zou province, represents 17% of both the land area and of the country's population with an average density of 30 people per kmi2; and the southern region including Oueme, Atlantique and Mono provinces, covers 10% of the land area and has 54% of the total population with an average density of 164 people km . Thirty-six percent of the southern region's population is urban. The population is composed of a number of -2- ethnic groups of which the most important are the Fon (55%), the Yoruba (13%), and the Bariba (12%). While each ethnic group has its own language, French is the official language. The literacy rate is low; 11% for the population as a whole and only 5% for those over 35 years of age. The educational refor.m of 1975 emphasized primary school attendance and scientific and technical training. 1.05 Benin is one of the world's poorest countries, with per capita income estimated at US$310 (1980). In 1981 Gross Domestic Product (GDP) was US$733 million. The annual growth rate of GDP (constant values) averaged 3% during 1971-75, was stagnant during 1976-1980 and rose to 1.8% in 1981. Agriculture, commerce and the public sector were the major contributors to GDP representing some 76%. 1.06 Agriculture is the most important sector of the Beninese economy. It employs 74% of the active population and provides 45% of GDP and 55% of the country's foreign exchange. Benin is self-sufficient in food and has been able to generate significant foreign exchange earnings from the export of cotton, oil palm products and groundnuts. Benin has also recently exported about 20% of total food production to neighboring countries, mainly to Nigeria. In 1981 agricultural production was valued around US$330 million, of which 85% was derived from crops and 15% from livestock production. The area used for agricultural production in 1981 was 908,000 ha (only 15% of the arable land). Food crops, mainly yam, cassava, and maize represented 90'% of total agricultural production by value. Industrial crops, primarily oil palm products, cotton, and tobacco, contributed only 10% but this percentage is expected to increase substantially in the near future. Three major integrated rural development projects 1/ which began in 1981, 1982, and 1983 respectively and which are cofinanced by IDA, IFAD, CCCE and the Government, are expected to improve the productivity of both food and industrial crops. 1.07 The Government's first three-year development plan (1978-80) aimed to raise agricultural productivity, to improve the standard of living, strengthen economic policies, promote participation and implement economic and social change. The plan also allocated a large portion of the budget for industrial development. The ratio of investment to GDP in Benin during the first three- year plan period was 18% against 16.5% from 1972-76, reflecting the Govern- ment's effort to accelerate the development of its production capacity. A special incentive scheme in the plan aimed at stimulating investment including investment in smaller enterprises. Large and medium-scale projects were invested in by the State in association with foreign capital. Foreign aid to the public sector financed 65% of the investment program over the period 1978-80. 1.08 The country has recently successfully eliminated the national budget deficit by implementing rigorous measures with regard to the control of 1/ Bougou Province RDP, US$20.0 million IDA credit 1127-BEN, 1982; cofinanced with IFAD. Atacora Province RDP; cofinanced by IFAD and OPEC Fund, 1982; IDA administering. Zou Province RDP; US$20.0 million IDA credit 1314-BEN, 1983; cofinanced with CCCE, FAC. -3- expenditures and improvement of debt collection services. During the first three-year plan, the country had an average $7.6 million budget surplus. A number of public enterprises, which had been operating in deficit, were recently liquidated by the Government. Inflation averaged 11% per annum during the first three-year plan period which may be considered moderate as compared to developing country experience in general. 1.09 The second economic and development plan (1983-87) defines a develop- ment strategy, designed to secure greater economic independence with emphasis on increasing domestic demand and an adequate surplus for capital formation. The creation of a domestic market large enough to constitute a consumption base is necessary for industries producing consumer goods. Surplus production is required to generate savings and mobilize investment, reducing the country's dependency on foreign capital. Priority is again given to the improvement of agricultural productivity and the expansion of cultivated land for both food and export crops. Government is currently attempting to translate these general objectives into concrete investment plans. Nonethe- less, the forestry project is in line with Government strategy by providing raw-materials (logs) for saw mills which would generate surplus revenues that could be mobilized for future investment. C. The Forestry Sector (a) Forest Resources 1.10 About 60 percent of Benin's area of 11.2 million ha are covered with forests or bush of varying densities. Most of the productive high forest has been destroyed and converted to savannah woodland by farmers using fire as the major means of clearing land for agriculture use. The remaining area of closed semi-deciduous high forest now includes remnants of the forest reserve of Lama in the south, probably less than 5,000 ha in total. This reserve is being further reduced annually by new infiltrations through illegal farming. In addition, there are remnant islands of valuable high forest and gallery forests in the central west region covering about 870,000 ha. These are estimated to contain between 0.7 and 1.5 million m3 of timber over 40 cm in diameter, providing logs for veneer and sawn lumber. These forests have also been exploited by the Societe Nationale pour le D6veloppement Forestier (SNAFOR) to supply two small sawmills. These reserves are also being depleted by fire and uncontrolled conversion to farming. Most areas of Benin are relatively well wooded with extensive areas of savannah woodlands especially in the center where there is about 1 million ha of legally protected forest reserves, and about 1 million ha of national parks and "wildlife zones" along the northern grontier. The savannah woodlands are estimated to carry between 5 m3 and 25 md/ha of wood and produce mainly fuelwood and poles. They play an important role in the protection of the environment. 1.11 The forest plantation resource consists primarily of about 7,000 ha of teak plantations, of which 6,350 ha are located in the Lama region, namely in the Toffo, Djigbe and Agrimey forest reserves. They are between 9 and 32 years old. These plantations, which in the past have not been regularly - 4 - thinned or maintained present, however, a valuable saw log resource. A systematic thinning program has started recently to make use of the resource (para 1.12). Furthermore, in the more densely populated southern areas, small private teak plantations, producing mainly small poles and fuelwood can be found in considerable numbers. There is no census of these plantations. Other plantations include about 1,000 ha of Casuarina and 11,000 ha of cashew nut plantations which are established and productive. (b) Production and Demand 1.12 The demand for sawnwood in 1982 was estimated to be about 23,000 m3. Part of this demand or 11,000 m3 is supplied from exploiting existing natural forests, the logs being processed by small sawmills and pitsawyers. The balance is imported. This demand is expected to grow in proportion to the increasing urban population, and would reach 39,000 m3 in the year 2000, 71,000 m3 in 2020 and 128,000 m3 in 2040. With good management now being introduced with the support of a FRG Technical Cooperation project, the exlsting teak plantations could supply the bulk of this demand up to about the year 2015, after which substantial annual sawnwood deficits up to 43,000 m3 would be experienced. This would be equivalent to about 86,000 m3 of standing timber. 1.13 Roundwood or pole demand in 1982 was estimated to be about 17,000 m3. The private sector supplies about 12,000 m , of which 2,000 m comes from private teak plantatio3s. Government teak plantations provide from thinnings the balance of 5,000 mi. By the year 2000, the annual demand is expected to grow to about 37,000 mi, increasing to 66,000 m3 in 2020 and 119,000 mv in 2040. Adequate supplies of the most valued poles from the teak plantations would be assured up to about the year 2015, but thereafter substantial deficits of about 30,000 m3 could be experienced. 1.14 In the absence of development of new domestic supplies of wood, in addition to that provided by ongoing projects (para 1.20), Benin would experience dramatic increases in wood importation and/or over-exploitation of remaining natural forests to cover deficits projected to occur after 2015. This would be harmful to the Beninese economy and natural environment. An alternative would be to expand industrial plantations in the near future and replant existing plantation sites when mature trees are felled. The project would support Government efforts in this regard. Establishing the 4,000 ha of new plantations as proposed in this project would be within the executing capacity of Benin's forestry institutions (para 1.18) and would help meet expected demands after 2015 (para 6.03). 1.15 The current annual demand for fuelwood is estimated to be about 2.7 million m3. Of this total, the small towns and rural demand amounting to about 2.4 million m3 is supplied by uncontrolled exploiting nearby farm fallow land and woodlands. These traditional sources are expected to be sufficient to meet the increased demand in the future. The present demand, amounting to over 300,000 m3 annually, of the two coastal towns of Cotonou and Porto Novo is provided by exploiting the extensive natural woodland and farm fallow land adjoining the road network up to 200 km to the north. The annual consumption of fuelwood by these two towns is expected to reach 650,000 m3 by 2000 and 1.4 -5- million m3 by 2020. Increasing transport costs and low population densities would limit the radius of economic exploitation of the woodlands in the center of the country, and the more heavily farmed and populated region in the south would bear the brunt of the increased fuelwood cutting. Government plans include the planting of fuelwood plantation along the coast and 80 km to the north of Cotonou (para 1.20). These plantations when established and exploi- tation commences, together with fuelwood from logging and sawmill wastes of the intensified exploitation of the teak plantations would assure supplies for the increased urban demand. Nevertheless, Government should devote more efforts to the protection of the rural environment by the production and distribution of suitable trees to replace those cut for fuelwood, and by improved management of the natural woodland currently being exploited and burned without restriction. The special problem of fuelwood supplies for the wood-scarce region of the arid north, is being tackled by the Government with the assistance of an UNSO project (para 1.20). The project would assist Government in monitoring progress of these other projects through the establishment of procedures by the new DEFC Advisory/Policy Unit (para 3.05). (c) Institutions and Training 1.16 The Ministry of State Farms, Livestock and Fisheries (MFEEP) is responsible for all aspects of the forestry sector, covering legislation, planning, reforestation and the management including exploitation of the state forestry reserves and plantations. It executes its responsibilities for legislation, planning and forestry management through its Direction des Eaux, Forets et Chasse (DEFC) (para 1.17). Social and rural forestry projects, which are of comparatively small significance at present, and forestry surveillence are conducted by the provincial CARDERs under the administrative responsibility of the Ministry of Rural Development and Cooperative Action, but working in liaison with DEFC. Until 1982, a state company reporting to MFEEP, the Societe Nationale pour le DIveloppement Forestier (SNAFOR), under- took forest exploitation, sawnilling, marketing and reforestation, on Govern- ment's account. However, SNAFOR became over-extended financially and was dissolved in 1982. With a recent change in policy (para 1.21) Government has transferred responsibility for reforestation to DEFC. The remaining SNAFOR responsibilities are being assigned to a new commercially orientated state company, the Office National du Bois (ONAB), which can also carry out reforestation programs under contract (paras 1.17, 1.18). Forestry research is carried out by the Direction de la Recherche Agronomique (DRA) of the Ministry of Higher Education and Scientific Research (MESRS) and at present, adequate l iaison with DEFC is being maintained. Given a clearly specified program and the means with which to carry it out as would be the case under the project, the research staff would be able to expand its efforts. 1.17 DEFC currently employs or liaises with about 150 professional, senior technical and technical staff, whose mandate includes monitoring forestry exploitation and legislation, research, reforestation, liaison with CARDERs and administration and finance. Most of the 10 professional and senior tech- nical staff at DEFC headquarters are young and almost all lack practical experience since DEFC has had virtually no operating budget, equipment or vehicles with which to work. Thus, the field staff, numbering about 140 who are under the administrative control of the CARDERS, do not receive adequate -6- technical guidance or support from DEFC. This results in poor control of forestry resource use by farmers and loggers. The headquarters staff is organized in several fragmented units, each lacking the critical size necessary for efficient performance. All units report directly to the Director, as shown in the organigram (Annex 3). However, as the office of Director is considered to be advisory to the Minister, the incumbent has heavy commitments outside of managing DEFC, which limits his ability to give meaningful direction to daily operations. Government has recently confided the responsibility for forestry regeneration to DEFC; however, it has been found necessary to organize independent project units within DEFC, for the execution of recently negotiated reforestation projects (para 1.20) because of DEFC's weaknesses. Each of these units also reports directly to the DEFC Director, which further fragments DEFC's management and loosens control. Given that these projects would undertake to plant about 12,000 ha over the next six years, the present managerial and administrative capacity of DEFC has been exhausted. Moreover, there is a grave risk to the remaining forestry resources of delay in developing a coherent forestry strategy, proper admin- istration and monitoring of forestry exploitation and reforestation programs. Therefore, Government recognizes that it is critical that DEFC be reorganized and strengthened as rapidly as possible to allow it to lead this development and exercise its mandate (para 1.21). 1.18 The ONAB, which is in the process of assuming the commercially oriented functions of SNAFOR, including forest exploitation, processing ELnd marketing of wood and wood products, has and continues to receive substantial assistance under a project financed by the Federal Republic of Germany (FRG). The majority of the former SNAFOR field staff continues to be employed by ONAB. They are organized into units which include inventory, logging and extraction, saw milling and sales. ONAB also has a small staff for reforesta- tion, whose activities are currently confined to conducting trials, but which could be expanded to fulfill contracted reforestation works. An embryonic studies and planning unit has also been established, to provide DEFC with forestry inventory and tree measurement data. Its workshops, garages, and office buildings have been substantially improved as a result of the FRG supported project, and ONAB has begun mechanized forest clearing to establish forest sawlog plantations from which revenues from salvage logging are beginning to be generated. Government has now formally established ONAB, and is recruiting senior management personnel, and arranging for adequate working capital for the firm. 1.19 Professional staff are presently being educated at the Forestry Faculty at the University of Ibadan, Nigeria. Senior technical staff are educated at the Institute of Agriculture, Bouake, Ivory Coast. All candidates for forestry education must have completed an agricultural course at the Faculty of Agriculture, National University of Benin. Total staff employed by the public sector number about 150, of which only 10 are professional or senior technical grades. Thus, when the three professionals and several technical staff now in training in Nigeria and Ivory Coast return to duty in Benin, the level of formal training among this staff will be substantially increased. The professional and technical staff required by the ADB assisted fuelwood and the IDA/FRG sawlog plantations projects would number 11. Some of these would be supplied by a reorganization of the present staff duties, but -7- even with formal training considerable in-service training would be required for all staff. There is a forestry course at the Agricultural Polytechnic, Sekou, which trains controllers, most of whom are employed in rural forestry carried out by CARDERs. (d) Forestry Policy and Strategy 1.20 Government's present forestry policy objectives are to ensure ade- quate supplies of wood and wood products for the population, promote small and medi-um-scale forestry industries to supply these needs, and to manage the forest resources making use of sound environmental practices. Government has attempted to translate this policy into practice through rural and village tree planting schemes, and by reducing uncontrolled exploitation of natural woodlands by the establishment of plantations. Projects include: (i) assistance to ONAB to manage and exploit about 6,000 ha of teak planted between 1950-68, including the construction of a sawmill at Bohicon, and provision of technical assistance, financed by FRG; (ii) establishment of 3,500 ha of pole and fuelwood plantations in the coastal zone and 2,500 ha of fuelwood plantations in the degraded parts of the Lama forest reserve, financed by the African Development Bank (ADB); (iii) execution of rural forestry plantations and tree planting in the Atacora and Borgou provinces, financed by the United Nations Sudan- Sahel Office (UNSO); (iv) support for small scale, low cost village/rural forestry, with technical advisors and modest investments, through resident FAO staff; and (v) extension of charcoal technology with the participation of bilateral volunteer groups. The plantation program in the project would complement these projects by supporting expanded saw log production. 1.21 However, Government has not been able to strengthen the institutions required to sustain reforestation efforts in the long run, or to improve the level of management and control of forestry resources. This has resulted from a long-standing division and confusion over the responsibility for forestry policy and management. Before 1982, DEFC was given loosely defined monitoring and advisory functions without sufficient resources to be effective in the field. At the same time, SNAFOR was established both to conduct forestry exploitation, as if it was a private enterprise, and to regenerate forestry resources in the public interest. As a result reforestation has been minimal, amounting nationally to no more than 200 ha per year. Moreover, because DEFC did not have the staff, funds or experience it did not fulfill its monitoring, analysis and planning functions adequately (para 1.17). Thus, the support given the forestry sector to date has not been well coordinated or linked systematically to emerging needs for wood, forestry resource management and - 8 - environmental protection. Approaches taken to execution and costs of various projects have varied and analysis of costs and performance of the different approaches, which would lead to efficient use of forestry resources, has not been made. As a result, Government's forestry strategy is not soundly based. Moreover, funding arrangements for most forestry sector activities remain ad hoc, without a financially sound approach to the assessment and collection of forestry royalties, taxes, and exploitation fees (stumpage fees) being taken. As a first step in strengthening its strategy and strategy making process, Government has issued decrees reassigning forestry regenera- tion, which is in the public interest, to the Government department, DEFC. To the extent that there is state participation in forestry exploitation, it would be exercised through ONAB. As well as clarifying the mandates of Government's institutions, this arrangement avoids imposing the burden of investments with long gestation periods and needs for long term financing on a conmercial enterprise such as OB which is unsuited for the task. The strategy also opens the possibilities for future private sector participation in ONAB's development. However, making Government's new policy for forestry institu- tions operational will require a transition period, since experienced staff will have to be reassigned, long term funding arrangements developed, and working relationships altered. The project would aid this transition. (e) IDA Involvement 1.22 The project would be the IDA's first direct involvement in the forestry sector of Benin. The two areas selected for rural tree-planting in the UNSO financed project (para 1.20) are in the Atacora and Borgou provinces, where there are rural development projects assisted by IFAD and IDA, respectively, whose management, the CARDER's, would also be responsible for rural forestry. The project is in line with the Forestry Sector Policy of IDA which gives sawlog plantations equal importance to smaller-scale social forestry projects in overall forestry strategy, and stresses strengthening sectoral institutions. II. THE PROJECT AREA 2.01 Location: The project would involve tree planting in two separate, ecologically different areas. Project plantings would cover 4,210 ha. Of this, 4,000 ha would be at Lama about 75 km from Cotonou; the another 210 ha at Toui about 80 km from Parakou (Map, IBRD 17325). 2.02 Topography and soils: The Lama terrain lies at about 60 m above sea level and is formed from an ancient lake bed. The soils in this depression are derived from variable Eocene lake bed sediments. They contain a very high (up to 60%) clay fraction. As with all heavy clay soils, the differential swelling and contraction of successive horizons during wet and dry seasons create conditions which limit the period when mechanized operations can be carried out to about five months in the dry season. The Toui forest reserve is situated in a gently undulating plateau. The soils are variable and mainly - 9 - ferruginous or ferralitic. Some laterite formation occurs, but in general they are suitable for good woodland production. There are no anticipated technical problems in establishing productive plantations on these soils. 2.03 Vegetation: The Lama area is the last remaining example of the semi- deciduous high forest which once covered the southern part of Benin. Exten- sive illegal farm settlement has resulted in most of the forest being con- verted into a mosaic of temporary farmlands and forest, with the exception of perhaps about 3,000 ha in the center which remains relatively untouched. The rate of destruction is estimated to be about 250 ha annually and is increasing. Under a land use plan to be agreed to this area would remain untouched for scientific and ecological purposes (para 2.07). The Toui area carries good quality Guinea savannah woodland, about 1,000-2,000 ha of which have been cleared and planted with cashew nut trees (Anarcardium). 2.04 Climate: To the south of Lama, rainfall averages 1,200 mm annually, with maxima from April to June and August to October inclusive. The month of July has a lower rainfall than these months. To the north of Lama, a similar rainfall pattern occurs, with August having the lower rainfall. Toui is situated in the zone where the rainfall averages 1,100 mm from mid-April to mid-November, with a short dry spell in August. Temperatures do not limit forest growth in either area. 2.05 Infrastructure: The Lama component is well served by the all-season road from Cotonou to Bohicon. The railway also passes through Bohicon. Tne recently constructed saw mill at Saclo near Bohicon has workshops, offices and other services which would be expanded under the project. The main road and railway line north to Parakou passes along the western boundary of the Toui forest reserve, and in part forms the boundary of the reserve. A forestry service camp already exists on this boundary where the access road crosses the railway. 2.06 Population: Considerable numbers of illegal farmers have entered the Lama forest reserve even though few of them reside inside the reserve. Al- though these farmers can be evicted legally, the proposed plantation develop- ment in this reserve would require considerable numbers of seasonal labor. Wherever possible, the farming activities should be integrated with plantation establishment, and the farmers and their families would be concentrated in villages where they could be provided with amenities and land for vegetable gardening in addition to regular seasonal employment in the plantations. There are few reported cases of illegal settlement in the Toui forest reserve. Surrounding villages have a population of about 26,000 people and Parakou to the north has a population of 66,000, providing adequate labor and markets for wood products respectively. 2.07 Land Use Plan for the Lama Forest Reserve: Although the Lama Forest Reserve was gazetted in 1942-44, and an adequate land use plan for the reserve drawn up in 1978, no effective action was taken to implement the plan. As a result, farmers with no legal or traditional rights to the land have infiltrated the zone. Subsequently, plans have been made to establish fuelwood planta- tions in the most degraded parts of the Lama reserve for which saw-log plantations would have had a higher economic value and the last vestiges of - 10 - indigenous forest in the reserve, which have considerable scientific and ecological value are being threatened. Recognizing this situation, Government has launched a resurvey of current land use practices and soil types in the reserve to complement a completed resource inventory in the zone already planted in teak. This work is being supported with assistance from the FRG and would be used to produce new land use proposals for the reserve. However, less detailed surveys show that there is sufficient land of suitable quality available in the reserve for the establishment of the proposed plantations without conflicting with other desirable land uses. The contract between DEFC and ONAB for the execution of the proposed plantations would specify the final bounderies of the plantation site. III. THE PROJECT A. General Overview 3.01 Most of the population of Benin depends on forest products to meet its domestic energy and building material requirements. This makes assuring adequate wood supplies at reasonable cost an important national priority. Therefore, creating new sources of supply and strengthening institutions to permit optimal management of existing resources are primary Government objectives. To achieve these objectives, the project would: (a) enhance the capabilities of DEFC to manage the natural and plantation forest resources of Benin and provide resources for the collection and analysis of relevant data to develop an appropriate forestry strategy; and (b) execute a plantation program complementary to those already funded (para 1.20) to increase long term domestic wood supplies and reduce future dependence on sawn timber imports into Benin. 3..02 Over five years, project finance would be provided for: (a) establishment of a unit within DEFC responsible for planning, programming, administering and controlling the finances of the sector; (b) establishment and maintenance of 3,800 ha of species suitable for sawlog production (principally teak) in the forest reserve of Lama; (c) support of forestry research into increasing the wood production potential of the country by the establishment and maintenance of small pilot plantations on about 410 ha; (d) execution of specialized studies including a mid-term review of the project's execution; and (e) training of selected local personnel through arrangements made by FRG. 3.03 The plantation component would be executed by DEFC through a contract with ONAB. This arrangement would be advantageous in that it would utilize management capacity and infrastructure already available within ONAB, while allowing DEFC the time to evolve institutionally simultaneously the plantation program. Pilot plantations would be executed by forestry researchers in the DRA of MESRS. 3.04 The project is suitable for IDA and IDA Special Fund financing because of the emphasis given to institutional strengthening. The project is consistent with IDA's concerns for forestry development. Lastly, the project does not replace or retard processing of other agricultural loans or credits. Further identification and preparation of agriculture projects is scheduled to take place in the second half of FY84. B. Detailed Features (a) Strengthening DEFC 3.05 DEFC would be significantly reorganized and strengthened as part of the project. This would be the initial steps in the transformation that would allow DEFC to eventually assume full operational responsibility for forestry regeneration, in addition to fulfilling its traditional roles more effectively (para 1.21). Staff now employed and charged with monitoring forestry exploi- tation and legislation, research, supervision of reforestation, liason with CARDERs, and administration and finance would be regrouped into a new Advisory/Policy Unit. This unit would be the focus of DEFC's work in collecting data, programming analyses, organizing future forestry programs and coordinating projects to execute forestry regeneration. This grouping would reduce the number of individuals reporting directly to the Director from eight to five which would improve the direction given to DEFC (Annex 3). The Unit would be strengthened with the provision of appropriate light vehicles, office equipment and funds to cover vehicle and office running costs. An interna- tionally recruited forestry administration specialist, with terms of reference, experience and qualifications acceptable to IDA (para 8.01(a)) would be employed for about 60 months to head the Unit. Such terms and qualifications were discussed and agreed at negotiations. He would assume his duties about 6 months before the start of the project, supported by a PPF which has been awarded, in order to assist in the reorganization. This type of specialty is not currently available in Benin. The Unit would also contain financial and administrative services to develop a close working relationship between financing and budget concerns and programming functions. As qualified and experienced accountants are extremely difficult to recruit within Benin, an internationally recruited accountant would be employed for about 36 months as financial controller. He would direct the organization of DEFC's cash inflows, originating from donors and Government, and from forestry fees and royalties in anticipation of the future when exploitation of existing and project supported plantations begins. His duties would begin about 3 months - 12 - before the anticipated start of the project, financed under the PPF. The Unit would also have funds available to recruit up to 24 months of specialist sesrvices from consultants, with experience, qualifications, and term of reference acceptable to IDA (para 8.01(a)), leading to the elaboration of a forestry strategy, and preparation of a possible follow-up project. 3,06 Related to the transition of DEFC but not supported by the project, a studies and planning office within ONAB, supported by FRG, is being re-located so as to be in close physical proximity of DEFC. It would provide the Advisory/Policy Unit in DEFC with data on plantation yields, natural forest areas, and volumes of saw logs. This would also assist DEFC to formulate strategy for state plantations, and plan cost recovery. Likewise, the Director of DEFC, as the responsible official for the ADB and UNSO financed plantation projects (para 1.20) would evaluate progress under these projects as a basis for strategic planning. 3.07 With experience gained during the execution of the project, DEFC would evolve into an organization capable of formulating and executing most of Government's forestry policy objectives. An organigram of an organizational structure which has been found effective in managing and regenerating forestry resources elsewhere in Western Africa is annexed. Concrete plans for further reorganization of DEFC would be made only after a mid-term review of progress iDn project execution, as part of the preparation of possible follow-up projects. However, one scenario would be that: (i) the Advisory/Policy Unit would become concerned primarily with forestry monitoring and evaluation, planning and programming of regeneration and exploitation, and forestry legislation; (ii) areas of forestry administration, financial control, inventory, taxes and royalties assessment and collection would become the responsibility of an Administration and Finance Unit; (iii) state plantations activities now executed through various project units would become the respon- sibility of a State Plantation Unit; and (iv) social and agro forestry now undertaken through special arrangements, would become a Rural and Community Forestry Unit. The issues related to such a reorganization would be discussed during the execution of the project as part of IDA's dialogue with Government concerning the forestry sector strategy. (b) Lama Plantation 3.08 The project would support a 3,800 ha plantation program in the ];ama forest reserve which would augment the teak plantation already successfully established there. The principal species would be teak (Tectona grandis) but other sawlog producing species would be established in trials. Works to be financed would include forest clearing, the construction of about 15 km of access roads and 38 km of plantation tracks as required, and plantation establishment and maintenance. After the felling and removal of the indigenous wood produce for sawlogs, poles and fuelwood (or charcoal), the renaining residues would be burned. Appropriate mechanical means would be utilized in the heavy clearing and land preparation operations. These would include the windrowing of the residues before burning permitting draining operations and subsequent mechanical weeding, operations which cannot effi- ciently be carried out manually in this area of heavy soils. Over the five- year project period, the clearing, planting and maintenance program would be: - 13 - ClearirLg, Planting and Maintenances Program (in ha) 84/85 85/86 86/87 87/88 88/89 Total PYI PY2 PY3 PY4 PY5 Clearing and preparation 200 600 1,000 1,000 1,000 3,800 Planting 200 600 1,000 1,000 1,000 3,800 Maintenance 200 800 1,800 2,800 3,800 - 3.09 The main species selected for planting would be teak, already successfully established on 6,350 ha in the region over the past 30 years. Inventories of these plantations which in the past have not been correctly managed, show that mean annual increments (m.a.i.) o£ 12 to 14 m3 over bark (o.b.) per hectare San be obtained. Project yields have been calculated using an m.a.i. of 11.5 m /ha. A 40 year rotation with these growth rates would produce saw logs of increasing dimensions from the second thinning after PY 11, with final crop logs averaging 45 cm diameters. Provenance trials of teak would be initiated. 3.10 Project financing would cover the purchase of equipment for forest clearing of those areas which do not contain, any nat-ural regeneration. Main- tenance equipment, vehicles, construction of incremental offices, maintenance of access roads and plantation tracks and the hiring of labor would also be covered by project financing. A camp with limited accommodation would be constructed in the forest for staff and key specialized workers. Local farmers who would be a source of seasonal labor for the plantation would be encouraged to erect their own accommodations using building materials provided by the project, and water points would be installed. A nursery would be established to provide seedlings, and trials would be initiated to test the feasibility of direct sowing teak seeds in the plantation area. Existing support infrastructure such as workshops, storage sheds and garages already provided by a previous FRG assisted project with ONAB would be augmented as needed for the extra project equipment and vehicles, thus avoiding duplica- tion. Ten man-years of technical assistance in plantation establishment equipment repair and maintenance would be provided. In addition, provision would be made to finance a total of 10 man years of overseas training for selected staff of ONAB in forest clearing techniques, plantation establishment and maintenance, and equipment and vehicle repair and maintenance, details of which would be decided by Government in consultation with FRG and IDA. 3.11 The project would ensure the best land use of the forest reserve by controlling the unrestricted felling and burning of the existing forest and the replacement of unproductive forest by high valued species. The greater part of the area available would remain under tree growth minimizing adverse environmental effects. The central core of the reserve, only remaining example of the closed semi-deciduous high forest which once covered the whole of southern Benin, would be protected for scientific ecological purposes. - -4 (a) Pilot Plantations 3.12 Project funds would finance applied forest research into improved species and provenances, establishment and maintenance techniques, and improved charcoal production, to enable Government to evaluate its role in the economic supply of wood and fuel to the population, and to provide tree- Pplanting information for dissemination to the private sector. The pilot plantations would be established in two distinct regions (i) the northern area of the Toui (Kilibo) forest reserve where charcoal production from plantations on a limited scale for the town of Parakou would be investigated, and (ii) the southern area of the Lama forest reserve where group planting in exploited forest and species and provenance trials of sawlog species including improved trees from vegetative propagation would be carried out. About 410 ha of trials would be established during the project period. Project financing would cover the cost of equipment, vehicles, operating and the hiring of labour to carry out the work. Details of the program are provided in the Project File. IV. ORGANIZATION AND MANAGEMENT A. General 4.01 The project would be organized and managed by the DEFC. The Director of DEFC would have overall responsibility for project execution. The present Director has fully adequate qualifications and experience to lead the DEFC through its five year evolution. DEFC would make a contractual arrangement with ONAB for the field execution of the Lama saw log plantation (para 4.02), and a convention with the forestry researchers in the DRA for the pilot plantations (para 4.04). B. Plantations 4.02 The Lama sawlog plantation would be executed by DEFC through a contract with ONAB. ONAB would perform all field work required in planting and maintenance of the trees. Government would own the trees planted during the project and would market the rights to thinnings and harvesting at maturity as deemed appropriate (para 6.07). Major elements to be included in the establishment contract between DEFC and ONAB, were discussed at negotia- tions and would include inter alia definition of the area and site to be planted, operations to be performed by ONAB, technical specifications of the plantations and financial obligations of DEFC including the principles governing the disposition of revenues accruing to salvage logging. Signature of this contract, acceptable to IDA would be a condition of credit effective- ness (para 8.02(a)). - 15 - 4.03 The contract between DEFC and ONAB would cover a number of detailed executing arrangements. A steering committee composed of the Directors of DEFO and ONAB, and representative plantation management staff, would review and approve (i) annual work plans and budgets produced by ONAB, (ii) the hiring of consultants, and (iii) staffing of key posts. It would also discuss and resolve any issues or problems arising during execution of this com- ponent. ONAB would prepare detailed annual work plans and budgets for DEFC approval, hire field workers, make procurement arrangements, maintain plantations on behalf of DEFC, and prepare quarterly and annual accounts and progress reports. The first annual work plan and budget would be submitted for DEFC approval within 6 months following credit signature. DEFC would monitor these accounts and progress with ONAB staff. An internationally recruited plantation manager and a workshop engineer would be employed by the project for about 60 man-months each, to assist ONAB in the technical execution of the component. 4.04 The pilot plantation component would be executed by the forestry research staff of the DRA. Annual work programs and budgets would be prepared by the research staff in consultation with and approval of DEFC. A conven- tion, acceptable to IDA, specifying inter alia planting programs, administra- tive responsibilities of DRA, and financing obligations of DEFC would be made between DEFC and DRA, and would be a condition of disbursement for this component (para 8.03). 4.05 Within DEFC the head of the Advisory/Policy Unit would establish procedures for monitoring all plantation operations, as a basis for DEFC's annual work planning and budgeting. Government agreed that the plan would be prepared and submitted for IDA approval within six months after his arrival in post (para 8.01(b)). Monitoring fiscal matters would be carried out by the financial controller (para 3.05). He would make periodic control and verifi- cation visits to plantation sites to reconcile expenditures. A plan accept- able to IDA for monitoring financial matters would be made within three months after the assumption of duties of the financial controller (para 8.01(b)). Based on information received from ONAB and DRA and its own investigations, DEFC would propose annual work programs and budgets for submission for IDA approval by December 31 of each year. The first of these work programs and budgets would be submitted six months after credit signature. Government has agreed with these arrangements (para 8.01(c)). V. COSTS AND FINANCIAL ARRANGEMENTS A. Project Cost Estimates 5.01 Total project costs over the five-year investment period are esti- mated at CFAF 5,081 million (US$13.0 million), of which CFAF 3,238 million (US$8.3 million) would be foreign costs or 64%. Cost estimates include an estimated CFAF 552 million (US$1.4 million) of identifiable taxes. The - 16 - project cost net of taxes amounts to CFAF 4,529 million (US$11.6 million), of which foreign exchange represent 71%. A PPF of US$150,000 has been awarded, which is included in project costs. 5.02 Cost estimates are based on March 1983 prices and include (i) physi- cal contingencies which from experience in similar projects should be 10% of all costs except local personnel, technical assistance, consultancies and training, and (ii) price contingencies calculated on the basis of the expected local inflation rate in Benin and the international price index projected by the Bank: Rates of Increase in Project Costs, by Year (in percentage) 1983 1984 1985 1986 1987 Local Costs 11 11 11 11 11 Foreign Costs 8.0 7.5 7.0 6.0 6.0 Contingencies are equivalent to 45% of base costs and 31% of total costs. Esttimated project costs are summarized in the table, page 17, and detailed in Annex 5.1, and the project file. B. Proposed Financing 5.03 Project costs net of taxes would be financed by an IDA Credit (US$2.6 million), an IDA Special Fund Credit (US$2.8 million), financing from the FRG (US$5.0 million) and by Government (US$1.2 million). The FRG would channel US$3.8 million equivalent thorugh its Kreditanstalt for Wiederaufbau (KFW) and US$1.2 million equivalent through the Gesellschaft for Technische Zusammenar- beit (GTZ). External financing would cover all estimated foreign costs (US$8.3 million) and US$2.1 million (or 70%) of local costs net of tax. IDA sources would cover these local costs. The FRG would finance vehicles, equipment, machinery and technical assistance for the Lama Teak plantation, in parallel with IDA sources and Government. IDA and the IDA Special Fund would finance all vehicles and equipment, long-term and short-term consultants for DEFC and the pilot plantations. Government and the IDA sources would co.- finance Lama plantation establishment costs, including incremental local personnel, and operating costs for DEFC including pilot plantation establish- ment costs in the ratio of 78:22. Details of the financing plan are given in the table, page 18 a 5.04 Both the IDA Credit and the IDA Special Fund Credit would be made to Government on standard IDA terms. Of the FRG financing, the KFW loan is expected to be on the same terms as the IDA, and IDA Special Fund Credits and the GTZ contribution would be a grant. The fulfilment of all conditions precedent to the effectiveness of the FRG financing would be a condition of eff'ectiveness for the IDA and IDA Special Fund Credits (para 8.02(b)). BENIN FORESTRY PROJECT Project Cost Summary, by Component ------------CFAF Milliono---…---------S$ Thousands Local Forei8n Total Local Foreign Total % of Foreign Exchange % of Project Total Base Cost 1= Lama Plantation Vehicles, machinery & equipment 239 1,028 1,267 610 2,624 3,234 81.2 36.3 Plantation establishment 580 373 953 1,480 951 2,431 39.1 27.3 Buildings & roads 164 136 300 418 346 764 45.3 8.6 Technical Assistance & training 20 326 346 51 831 882 94.2 9.9 Sub-Total 1,003 1,863 2,866 2,559 4,752 7,311 65.0 82.1 2. Pilot Plantation Program Vehicles, machinery & equipment 26 112 138 66 288 354 81.2 4.0 Plantation establishment 53 35 88 135 89 224 40.1 2.5 Sub-Total 79 147 226 201 377 578 65.2 6.5 3. Strengthening DEFC Vehicles and equipment 8 34 42 20 87 107 66.4 1.2 Operating Costs 41 44 85 105 112 217 51.8 2.4 Technical Assistance & Consult. 29 245 274 75 624 699 89.4 7.9 Sub-Total 78 323 401 200 823 1,023 80.4 11.5 Total Project Base Cost 1,160 2,333 3,493 2,960 5,952 8,912 66.8 100.0 Physical Contingencies 82 173 256 210 442 652 67.8 7.3 Price Contingencies 601 731 1,332 1,532 1,866 3,398 54.9 38.1 TOTAL PROJECT COST 1,843 3,238 5,081 4,702 8,260 12,962 63.7 145.4 - 18 - BENIN FORESTRY PROJECT Table 2 Proposed Financing Plan (CFAF Millions) -----------Financing Plan---------------- (Net of Taxes) Total Cost Taxes Total Cost IDA IDA Special Fund FRG Govt. (with Taxes) (Net of Taxes) I. LAMA PLANTATION (a) Vehicles, machinery, equipment 1,764 270 1,494 - - 1,494 - (b) Plantation establishment 1,550 154 1,396 544 545 - 309 (c) Buildings and roads 427 34 393 153 153 - 8 (d) Technical Assistance 473 3 470 - - 470 - Sub-Total 4,214 461 3,753 697 698 1,964 397 II.PILOT PLANTATIONS (a) Vehicles & Equipment 183 30 153 76 77 - - (b) Plantation establishment 141 21 120 45 48 - 27 Sub-Total 324 51 273 121 125 - 27 III. STRENGTHENING DEFC (a) Vehicles and Equipment 56 16 40 20 20 - - (b) Operating Costs 124 20 104 20 58 - 23 (c) Technical Assistance&Consult. 363 4 359 180 179 - - Sub-Total 543 40 503 220 257 - 23 TOTAL net of Taxes 4,529 1,038 1,080 1,964 447 (%) (100) (23) (24) (43) (10) TAXES 552 552 TOTAL including Taxes 5,081 1,038 1,080 1,964 999 (%) (100) (20) (21) (39) (20) - 19 - C. Onlending Arrangements 5.05 Proceeds of the IDA and IDA Special Fund credits and FRG financing amounting to $10.4 million equivalent, and Government funds amounted to $1.2 million which would cover project costs net of taxes would be deployed as follows: (a) CFAF 3,752 million (US$9.6 million) would be deployed for the Lama Plantation component with (i) FRG contribution (US$5.0) passed on to ONAB through Government, and (ii) the IDA and Government contribu- tions (US$4.6 million) channelled through DEFC to ONAB under 4 conditions specified in the execution contract; (b) CFAF 273 million (US$0.7 million) would be utilized by DEFC following provisions of a convention to be drawn up with DRA for the establishment of the pilot plantation program; and (c) CFAF 504 million (US$1.3 million) would be used by DEFC to cover the cost of strengthening the organization including the provision of technical assistance. 5.06 Government funds would be channelled through a project advance account established at the Caisse Autonome d'Amortissement (CAA) into which Government would make an initial deposit of CFAF 32 million (US$82,000) as a condition of credit effectiveness (para 8.02(c)). At credit effectiveness IDA and IDA Special Fund would deposit in two Special Accounts (designated as A and B for IDA and IDA Special Fund Credits respectively), amounts equal to about CFAF 138 million (US$350,000), to bring the initial amount available for project financing to CFAF 170 million (US$433,000)- Opening these accounts at the CAA on behalf of the project would be a condition of effectiveness of the IDA and Special Fund Credits (para 8.02(d)). This is equivalent to 4 months' project costs net of FRG participation. Government agreed at negotiations that it would make its contribution, sufficient to bring the project advance account to its original amount, every four months in advance (para 8.01(d)). D. Procurement 5.07 Technical assistance, local personnel training and vehicles, equip- ment and machinery for the Lama teak plantation, valued at CFAF 1,965 million (US$5.0 million) would be procured following FRG procedures and would be largely tied to FRG suppliers. For the remaining US$6.6 million, to be financed by IDA, IDA Special Fund and Government and subject to the eligibility restrictions applicable to the contracts financed by the Special Fund, contracts of US$100,000 or more, would be awarded through international competitive bidding in accordance with IDA Guidelines and would require IDA's prior approval. Contracts below US$100,000 but more than US$50,000 would be awarded through local competitive bidding procedures which are acceptable to IDA while those of US$50,000 or less would be on the basis of quotations from not less than three reputable suppliers. - 20 - 5.08 Goods. Vehicles, machinery, equipment, office and house furniture, and building materials totalling about US$0.9 million would be grouped as far possible in appropriate bidding packages and procured through ICB according to the Guidelines For Procurement Under World Bank Loans And IDA Credits, with special provisions as required by the Special Fund when these funds are used. Additional goods valued at about US$0.3 million would be procured through LCB or on the basis of solicited price quotations from local suppliers, depending on the size of contract. 5.09 Services: Contracts for 96 man-months of long term technical assistance and about 12 man-months of short-term consultants' services would be procured following the Guidelines For The Use Of Consultants By World Bank Borrowers. 5.10 Works: The construction of offices, extension of the workshop and staff houses as well as road construction and maintenance for the Lama planta- tion valued at US$0.3 million would be executed on force account by ONAB. 5.11 Others: About US$3.3 million of project expenditures would be made for fuels, lubricants and spare parts for operations of vehicles and equip- ment, and for plantation establishment, following local procurement procedures. Incremental local staff services valued at $0.7 million would be acquired by Government in accordance with established practices, which are satisfactory. E. Disbursement 5.12 IDA funds (US$2.6 million, including the refund of the PPF advance) and Special Fund credits (US$2.8 million) would be disbursed over seven years together, according to the source of goods procured for which reimbursement was requested, as shown in Annex 5.2. This schedule is based on the expecta- tion that the credits will become effective in FY85 so that initial disbursements and repayment of the PPF would occur in that year, and that the remainder of the funds would be disbursed following experience in disbursing IDA credits in the West African region as shown in a standard profile. The IDA and Special Fund Credits would cover project expenditures as follows: - 21 - Disbursement of IDA and Special Fund Credits by Category Percenitage of IDA Expenditures Category IDA Special Fund Financed 1/ (US$000's) (USso$o's) 1. Lama Plantation 1,400 1,400 78 2. Strengthening DEFC (a) Vehicles and equipment 200 200 100 (b) Technical Assistance 430 490 100 (c) Plantation Establishment and other Operating Costs 80 130 78 3. Advance (Special Accounts A and B 170 180 respectively, para 5.06) 4. PPF Refund 150 - 5. Unallocated 170 400 2,600 2,800 1/ Expenditures for which 100% reimbursement is planned would be made, net of taxes, exdealership basis. Disbursement percentages on other categories would cover, non personnel share of their costs, net-of-taxes. Disbursements for vehicles, equipment and building materials and consultants services would be against full documentatation. Disbursements against pay- ments under the DEFC/ONAB Lama plantation contract and for DEFC plantation and operating costs would be against certified statement of expenditures. Supporting documentation would be retained by DEFC and ONAB, and made avail- able for review by IDA project supervision missions. 5.13 The project financial controller to be recruited for DEFC Head- quarters (para 3.05) would, in addition to his responsibilities for accounting and financial control of the DEFC components, coordinate the preparation of application for withdrawal from the IDA and Special Fund credits for all project components, and train local staff as required. F. Accounts, Audit and Reporting Requirements 5.14 DEFC would keep summary financial records for all project components, consistent with sound accounting practices and adequate to reflect the overall financial situation of the DEFC and monitor the release of funds to ONAB, the executing agency for the Lama teak plantation. As part of the Lama plantation execution contract (para 4.01) ONAB would undertake to modify their accounting system satisfactory to the DEFC financial controller by June 1984 to ensure that plantation costs can be satisfactorily identified and monitored. - 22 - 5.15 DEFC's project account would be audited by independent auditors acceptable to IDA, for review within six months after the close of the finan- cial year. The auditor's report would include, in particular, an opinion on the documentation supporting the statements of expenditures and credil; dis- bursements against which withdrawal applications were to be, or had been, made. 5.16 ONAB would submit quarterly progress reports to DEFC showing actual as against budgetted expenditures, and statements of progress achieved. Similar reports would be submitted by the forest researchers to DEFC. These procedures would be specified in the Financial Controller's plan to monitor project finances (para 4.05). VI. PRODUCTION, MARKETS, PRICES AND FINANCIAL RESULTS A. Production 6.01 Production of wood from the 3,800 ha teak plantation would begin immediately following the project investment period. Inventory work within the established teak plantations in the vicinity of the project zone, made by FRG experts (1978-82) showed that mean annual increments of between 11.5 m3/ha to 14.5 m3/ha had accrued, depending on variations in micro-climatic csndi- tions and soils. For the present project, an average m.a.i. of 11.5 m /ha was assumed, giving plantation production of about 1.8 million m3 of wood over 40 years or 460 m) per ha. After accounting for the thinning program required to maximize tree growth, the preparation team estimated that the major produc- tion categories would be sawlogs (59%), large poles (29%) and small poles and fuelwood (12%). The distribution of production by thinning period, over the period when the plantation is maturing would be 3% of the total volume in the first thinning (PY6-PY10), 4% for the second thinning (PY11-PY15), 5% for the third thinning (PY16-PY20), 7% for the fourth thinning (PY21-25), and 27% for the fifth thinning. The final felling would start from year 41 and would eLccount for 54% of total production. These production parameters were confirmed during appraisal. The production of thinnings is estimated to be 0.8 million m3 while the production from the final felling is estimated to be 1.0 million m3. 6.02 The clearing of 3,800 ha of natural forests in the Lama forest reserve for the plantations would yield an estimated 76,000 m3 of wood (or 20 m3 per ha) during project yea3s 1-5. It is expected that 9,500 m3 would be suitable for sawlogs, 9,500 m as poles and 57,000 m3 would be firewood. B. Markets and Prices 6.03 Markets for sawn wood poles and fuelwood purchased under the project are expected to be good through to 2030 when the trees would be mature. About 80% of the wood produced or 1.4 million m3 would be harvested in the years - 23 - 2015-2030. For this period the projected average annual deficit of poles in Benin would be to more than 30,000 m3 (para 1.13) and that of saw logs to more than 86,000 m3 (para 1.12). Production of saw logs and poles from the project plantation of about 88,000 m3 annually would substantially reduce these deficits, however, Benin would still be in a net import position. The market for large poles, which can ideally be used as transmission poles, might not expand fast enough to absorb the expected production. However, any surplus would be converted to sawn timber for which the demand would exist. 6.04 Fuelwood quantities from the plantation would not be substantial and are expected to be marketed mainly in the coastal towns. 6.05 The market price for local redwood sawn timber ranges from CFAF 64,000 to 94,000 (US$163-240) per m3 at Cotonou, depending on the dimensions and suitability for various uses. Imported redwood sawn timber, which enters Benin without restrictions or control, sells for a similar price. When avail- able, sawn planks of local teak, with dimensions similar to the redwoods, sell for a premium, with average prices towards the top of the redwood range. The average price for small teak building poles is currently about CFAF 25,000 (US$64) per m3 and for large poles mainly used as transmission poles, about CFAF 60,000 (US$153) per m . Fueiwood from teak fetches an average market price of CFAF 5,000 (US$13) per m in coas al markets and wood from "filao" (Casuarina) about CFAF 7,500 (US$20) per m . 6.06 The market for sawnwood is very competitive in Cotonou and is expected to remain so in the future. Teak sawnwood from the project planta- tions would be sold locally in response to the increasing demand for sawnwood for construction and furniture. Exports of teak would probably not exist because the local market will be large enough to absorb the full production and imports would not be controled. The production of poles and fuelwood would also be marketed locally. Thus, for subsequent economic and financial analysis, the prices of teak sawnwood are assumed to be determined on an import parity basis at a premiuam over redwoods, with real prices projected to rise by 1% per year (following World Bank projections). Prices of poles and fuelwood are assumed to continue to be determined in local markets. On this basis accounting for both growth in real prices, and a premium for teak over redwood, the market prices of teak sawnwood for the second to the fourth thinnings are expected to be, on average, CFAF 85,000 (US$217) per m in constant 1983 prices. The price of sawn wood from the fifth thinning is projected to be a 20% premi-um over redwood and in PY 33 would be CFAF 140,000/im3 (US$357/mi9) in 1983 prices. The price of sawnwood harvested at maturity is projected to be at a 40% premium over redwoods and in PY 43 would be CFAF 185,000/m3 (US$472/m3). C. Financial Results 6.07 The project would produce a valuable commodity and Government would have several ways in which it could market the wood. These include contract cutting, letting of concessions to the plantation land or selling the wood to ONAB. In the latter case, which is now seen as the most probable, ONAB would be responsible for harvesting, milling, transporting and marketing the produc- tion from the new teak plantations through depots already existing in the - 24 - major centers of the country. Sawmilling would be carried out by ONAB at the Bohicon sawmill which was financed under a previous FGR supported project. With adequate management the capacity of the sawmill would be sufficient to handle the production from existing teak plantations and the 3,800 ha new plantations, until the year 2000, when the mill would normally be replaced. 6.08 The Advisory/Policy Unit would advise Government on an appropriate wood marketing policy and stumpage fees to be charged when plantations were thinned and cut at maturity. The fee would have as its basis, that Government recover the establishment and maintenance cost of plantations, and earn an appropriate rate of interest on this investment. Making such calculations would eventually fall to the exploitation and contract section of the F'inance and Administration Unit (organigram, Annex 3). The st-umpage fees, in 1983 constant terms, which would allow Government to recover its investment in the proposed 3,800 teak plantation (net of income from salvage logging and salvage value of heavy equipment) plus a 10 percent annual return would be: CFAF/m3 US$/m3 2nd-4th thinning 30,100 77 5th thinning 38,850 99 Felling at maturity 58,700 150 These fees are below the values of standing teak, estimated, based on its sawn wood content and sawn wood market prices (para 6.06), net of all harvesting, processing, and marketing costs, to be US$83/m3, US$120/m3 and US$201/mr- for the different cutting stages. This indicates that on the strength of the sawn wood content alone, there would be an incentive for exploitation of the plantation. Residual fuelwood and poles would also be available. 6.09 Government's cash flow for the project has been estimated on the following basis: (i) outlays include costs for all project components, which have been estimated including price and physical contingencies (para 5.02), taxes and post-project recurrent costs for maintenance, plus the debt service on the FRG loans, and the IDA and Special Fund credits; (ii) revenues include credit and loan disbursements, indirect taxes paid on project expenditures, income from salvage logging of the Lama forest, and income derived from stumpage fees charged for logging of the proposed Lama plantation. These stumpage fees have been esti- mated to give Government full cost recovery plus a real rate of return on its investment arbitrarily placed at 10.0% (para 6.08); and (iii) costs and revenues have been inflated by appraisal report factors (para 5.02) during the project development period and have been kept in constant 1989 terms from year 1990 onwards. - 25 - The first annual positive cash flow would be about US$0.1 million, and would occur in PY2. The cumulative cash flow would become positive in PY6. The cumulative net cash flow over the project life will be US$358 million or about US$8.0 million annually (Annex 6). Simultaneously, the cash flow for ONAB, the agency executing the Lama Plantation under contract would be positive throughout the project period. ONAB would receive from DEFC funds necessary to execute the forestry works, and would earn income from marketing salvaged wood. It would pay establishment costs to suppliers and a stumpage fee to DEFC for the wood marketed. ONAB would have a cumulative cash flow of about US$1.4 million over the five-year execution period, which would represent about 13% of the value of the works executed. 6.10 The income generated for Government from the stumpage fees described above (para 6.08) demonstrates the potential which the proposed teak planta- tions have for the creation of a forestry fund, which the Benin Government intends to establish from part of the proceeds from the project, to finance future investments in industrial plantations and rural forestry. Defining the details of establishment, use, replenishment and control of this fund would be one of the high priority tasks of the strengthened DEFC. VII. BENEFITS, ECONOMIC JUSTIFICATION AND RISKS A. Benefits 7.01 Readily quantifiable benefits would result from the 3,800 ha Lama teak plantation component in the form of 1,748,000 m3 of wood produced over a 40 year production period, enabling Benin eventually to be less dependent on sawn lumber imports. Exploitable production would start with small quantities of sawn lumber, poles, and firewood being available in PY6 from thinnings. Eighty percent of the production would be realized after PY31 when substantial sawn wood defz'cits in Benin are expected. During PY1-PY5, it is estimated that 76,000 m9 of wood would be realized from salvage logging from the existing woodland, mainly as fuelwood. 7.02 The main non-quantifiable benefits of the project would be its strengthening of the forestry sector institutions. The project would assist in the development of an appropriate forestry strategy, coordinating the various development efforts and enhancing the capabilities of the DEFC to manage natural and plantation resources of Benin. Applied research into project-associated problems would benefit future reforestation projects. Finally, owing to the location of the plantation, which would vertually surround the reamining 5,000 ha of natural high forest in the Lama reserve, this area of natural forest would be better insulated from intrusions. - 26 - B. Economic Justification (a) Economic Analysis and Rate of Return (ERR) 7.03 An economic analysis has been made on the project including costs of the Lama Plantation, strengthening DEFC, and establishing the pilot planta- tions. Benefits include the wood produced in the Lama plantation, salvage logging at Lama and the production from the pilot plantations, valued at economic prices (para 7.04). The cost of technical assistance and training has been excluded as this would have mainly long term unquantifiable benefits. Costs and benefits have been estimated in 1983 terms. All costs have been taken net of taxes, and all non-labor costs include 10% physical contingen- cies. Wages and salaries of the skilled labor force working in the Lama plantation have been based on the pay scales of ONAB which reflect the scarcity value of trained manpower. Unskilled labor has been costed at CFAF 420 per day, which is comparable to that paid for similar work in agriculture in the Lama region. Opportunity cost of the proposed Lama plantation is estimated to be (i) the expected income foregone from the exploitation of the existing woodland for firewood and smallpoles and (ii) income foregone by about 200 subsistence farmers who would become permanent laborers on the plantation. The values of firewood and poles are estimated to be CFAF 10.8 million annually for PY1-PY15, while the income foregone by subsistence farmers would be CFAF 25.2 million annually until the end of the project. Details are given in the Project File. 7.04 The economic price of standing teak timber has been derived as a weighted average of the import parity price of teak sawnwood, cif Cotonou, and the prevailing market prices at Cotonou for poles and fuelwood, less the costs of cutting and extraction, transport, sawmilling (where appropriate) and marketing. The resulting values of standing teak saw logs are estimated per m at US$86 for 2nd to 4th thinnings, US$122 for 5th thinnings, and US$203 for trees felled at maturity; US$55/m3 for small poles, US$144 for large poles and US$4.50/m3 for fuelwood. 7.05 The economic prices of timber products from salvage logging in Lama forest reserve have been estimated at roadside value, since the cost of felling and extraction operations are part of the roject cost. The resulting economic prices are US$72/m3 for saw logs, US$59/in for building poles and US$15/m3 for fuelwood. The derivation all the economic prices is detailed in the project file (Project File Annex III Tables 1-3). 7.06 On the above assumptions, the economic rate of return of the project is 14.5%, with switching values at 12% estimated to be 38.5% for costs and -27.8% for benefits. The detailed cost and benefit streams used are given in the project file (Annex III Table 6). (b) Sensitivity 7.07 The projects economic rate of return is only moderately sensitive to changes in real costs and benefits. The switching values (para 7.06) show that a rise in real costs of 39% or a loss of real benefits of up to 28% would - 27 - be required to reduce the ERR to 12%. A rise in real costs of 47% or a loss of benefits of 89% would be required to reduce the ERR to 10%. Further the project ERR is equally insensitive to other factors which could influence it. Failure of real price increases for teak to materialize at one percent annually (para 6.06) would decrease the ERR for the project from 14.5% to 14%. A lag in the plantation program by one year without a proportional lag in costs, would reduce the project ERR from 14.5% to 13%. Finally, loss of growth and/or trees amounting to 10% due to fire -- which is considered unlikely since teak is fire resistant -- would reduce the ERR from 14.5% to 14%. C. Risks 7.08 No major or unusual technical risks threaten the success of the proposed project. In the project zone, normal risks of fire exist, and precautions to prevent them and to control them if they occur would be taken by plantation management staff. Once established, the main species teak, is fire tolerant, and ground fires which could occur would only slightly reduce annual growth increments. In the older teak plantations, losses have occurred from wind uprooting trees. This has been attributed to lack of proper thinning leading to over-crowding and shallow root systems. It is possible also that the practice of planting stump plants has lead to poor tap root development and invasion by root pathogens. To counteract this, direct sowing of seed in situ or the use of large container plants would be tested to improve rooting. Proper thinning schedules would be carried out to favor the most promising trees, and to develop strong root systems. 7.09 About 80% of the expected production will be harvested after PY31 when substantial domestic wood deficits (paras 1.12, 1.13) are projected to occur. However, there would be a possibility that the demand for large poles would not be sufficiently developed by the time the major output of this category of forest product is expected in PY23. In case the market would not be sufficient for this produce, large poles can be converted to sawn timber for which there is a market. In case the benefits from large poles are reduced by 50%, a percentage resulting from a complete conversion of all large poles to sawn timber, the ERR for the project would be reduced from 14.5% to 14%. VIII. ASSURANCES AND CONDITIONS 8.01 During negotiation, Government agreed that: (a) the posts of head of the Advisory/Policy Unit and financial controller in DEFC would be filled with internationally recruited personnel with qualifications and experience judged satisfactory to IDA. Likewise, short-term consultants to be employed would have terms of reference, qualifications and experience acceptable to the IDA (para 3.05); - 28 - (b) a detailed work program for monitoring of physical operations would be worked out and submitted for IDA approval within six months after his arrival by the head of the Advisory/Policy Unit and a similar program monitoring financial matters would be established by the financial controller within three months after his arrival (para 4.05); (c) annual work programs and budgets for the project plantations (including those for the pilot plantations) would be submitted by DEFC to IDA by December 31 of each project year, with the first being submitted for approval within six months following of credit signature (para 4.05); (d) Government would make its contributions to the project advance account, sufficient to bring it to its original level of CFAF 32 million (US$85,000) every four months, in advance (para 5.06). 8.02 Special conditions of credit effectiveness would be: (a) the signing of a contract acceptable to IDA between DEFC and ONAB, for ONAB to carry out forest clearing, planting and maintenance of the Lama teak saw log plantation (para 4.02); (b) fulfillment of all conditions precedent to the effectiveness of the FRG financing (para 5.04); (c) the opening by Government of a project advance account at the Caisse Autonome d'Amortissement with an initial deposit of CFAF 32 million (US$82,000) (para 5.06); and (d) the opening by Government of two special accounts at CAA under term and conditions satisfactory to the Association (para 5.06). 8.03 Both parties also agreed that a special condition of disbursement against eligible costs of the pilot plantation component would be the signature of a convention acceptable to IDA between DEFC and DRA (para 4.04). 8.04 Will these assurances and conditions, the project is suitable f'or an IDA credit of US$2.6 million and an IDA Special Fund credit of US$2.8 million equivalent. ~~~~~~~~~~~~~~~6 I z°t0StW0~~~~~ ht .0 FS.] 0~~~~~~~~ o N E C V W 8 W 0' 1__ _X LU li Lr0 0 ~~~~~~~~~~~~~~~~~~~~~5 S~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Z di *~~~~-- _ - ...L - ..L~~~~~ ..L~~~.L. ..J- -4 -- --- BENIN FORESTRY PROJECT Project Cost Estimates by Year (CFAF Millions) ------------------- - ------ - - - ---- - -- P-…CJECT Vs 0AS0 __--- _- _____-------------------------------- ------- FOREIGN EXCHANGE _ PYO PYI PY2 PY3 PY4 PY5 TOTAL . Amount I. Lama Plantatior. (a) Vehicles, Equipment - 574.5 357.2 232.8 72.2 31.1 1 267.8 81.1 1 028.8 (b) Vehicles Operating Costs 20.5 21.8 21.8 21.8 21.8 107.7 55.3 59.6 (cl Plantation Establishment - 51.2 99.1 168.8 176.6 183.0 678.7 46.1 313.1 (d) Civil Works - 191.3 32.0 4.7 4.7 4.7 237.4 41.2 97.7 (e) Local Personnel - 27.3 31.3 34.7 35.8 37.0 166.1 - (f) Road Construction&Maintenance - 6.7 11.4 21.1 21.5 1.2 62.0 60.8 37.7 (t) Technical Assistance - 62.5 74.7 74.7 70.8 63.1 345.8 94.2 325.7 Sub-Total Lama Plantation - 934.0 627.5 558.6 403.4 341.9 2 865. 5.0 1 862.6 II. rilot Plantation r (a' Vehicles, Equipment - 132.5 0.1 5.5 0.2 0.3 138.6 80.0 110.8 (b) Operating Costs - 10.0 11.4 13.0 15.1 17.1 66.6 56.0 37.0 (c) Local Personnel - 2.6 3.4 4.2 5.2 6.1 21.5 - Sub-Total Pilot Plantation - 145.1 14.9 22.7 20.5 23.5 226.7 65.2 147.7 III. 3thtentheming DEFC ( ) Vehicles, Equipment 21.9 3.7 - 16.4 - - 42.0 - (b) Operating Costs 5.9 18.7 18.7 17.2 13.9 11.2 85.6 - (c) Technical Assist.Consult. 24.0 59.0 59.0 61.8 42.8 t°-9 273.5 91.2 249.6 Sub-Total DEFC 51.8 81.4 77.7 95.4 56.7 38.1 401.1 80.5 322.8 Total Base Cost 51.8 1 160.5 720.1 676.7 480.7 403.5 3 493.4 66.8 2 333.1 Physical Contingencies 2.9 100.5 53.6 47.1 28.8 22.8 225.8 67.8 173.3 Price Contingencies 5.9 252.1 230.0 286.9 269.6 287.3 1 331.7 54.9 713.3 Total Cost (including Taxes) 60.6 1 513.1 1 003.8 1 010.7 779.1 713.6 5 080.9 63.7 3 237.7 > Taxes 9.6 186.7 108.1 107.7 78.6 60.8 551.6 - Annex 5-2 - 31 - Benin - Forestry Project Estimated Schedule of Disbursements (US$ '000) IBRD Fiscal Years Cumulative % of Loan and Quarter Disbursements Disbursement Disbursed FY85 3 16 16 .4 (PY1) 4 524 540 1.0 FY86 1 41 581 2.0 (PY2) 2 266 847 4.0 3 121 968 7.0 4 181 1,149 9.0 FY87 1 161 1,310 13.0 (PY3) 2 356 1,666 17.0 3 202 1,868 22.0 4 202 2,070 27.0 FY88 1 243 2,313 33.0 (PY4) 2 458 2,771 39.0 3 202 2,973 44.0 4 202 3,175 49.0 FY89 1 202 3,377 54.0 (PY5) 2 401 3,778 60.0 3 202 3,980 65.0 4 202 4,182 71.0 FY90 (PY6) 1 162 4,344 75.0 2 268 4,612 79.0 3 122 4,734 82.0 4 161 4,895 86.0 FY91 1 162 5,057 90.0 (PY7) 2 121 5,178 93.0 3 61 5,239 95.0 4 61 5,300 97.0 FY92 1 60 5,360 99.0 (FY8) 2 40 5,400 100.0 6/84 BENIN FORESTRY PROJECT INCREMENTAL CASH FLOW FOR GOVERNNENT/DEFC AND PLANTATION EXECUTING AGENT t/ (CFAF MILLIONS) -------------------------------------------- GOVV RNFENT/DEFC ------------------------------------------- ----------------------- -PLANTATION AGE NT------- ......................... INFLOIIS ........................ .. .... .. ............. OUTFLOW .................. ... MET CASH FLOW .... ....... INFLOW ........... .......... OUTNOW ......... NET CASH NOV IDA/ STUaPAGE TOTAL LANA PILOT DEFC DEBT 3/ TOTAL DEFC/ NET SALES ESTABL. STUMPAGE YEAR SPECIAL FUND FRG TAX REV. FEES 2/ INFLOW PLANT. PLANT. OPS SERVICE OUTFLOW ANNUAL CUO. GOVT. REVENUE TOTAL COSTS FEES TOTAL ANNUAL CUM. PYO/PYI t984/85 332 71 196 30 1271 1223 190 160 19 1592 (321) (321) 1223 54 1277 1223 30 1-252 25 25 PY2 85/86 321 521 108 100 1050 880 21 102 19 1022 28 (293) 880 179 1059 880 10 988 71 96 P13 86/87 433 396 108 190 1127 841 35 135 21 1032 95 (198) 841 332 1173 840 190 1030 143 239 PT4 87/88 395 200 79 210 884 659 35 85 22 801 83 (115) 659 370 1029 659 210 879 150 389 Pr5 88/89 327 142 61 234 764 611 43 60 24 738 26 ( 89) 611 408 1019 611 234 845 171 563 PY6 89/90 222 - 7 91 320 85 - 7 25 117 203 114 85 85 85 P17 90/91 87 10 272 369 65 7 26 98 271 385 65 65 65 PYS 91/92 13 453 466 33 7 29 69 397 782 PY9 92/93 11 453 464 .33 7 29 69 395 1177 PTIO 93/94 11 453 464 33 7 29 69 395 1572 95 6 176 182 33 7 29 69 112 1684 96 10 528 538 33 7 67 107 431 2115 97 15 880 895 33 7 67 107 788 2903 98 15 880 895 33 7 67 107 788 3691 99 15 880 895 33 7 66 106 789 4480 00 6 234 240 33 7 66 106 98 4578 01 12 705 717 33 7 66 106 611 5189 02 17 1175 1192 33 7 66 106 1086 6275 03 17 1175 1192 33 7 65 105 1087 7362 PY20 04 17 1175 1192 33 7 65 105 1087 8449 05 7 305 312 33 7 141 181 131 8580 06 14 914 928 33 7 140 180 748 9328 07 22 1523 1545 33 7 140 180 1365 10693 08 21 1523 1544 33 7 139 179 1365 12058 09 21 1523 1544 33 7 138 178 1366 13424 1o 3 - 3 33 7 138 178 (175) 13249 11 3 - 3 33 7 136 176 (176) 13073 12 3 - 3 33 7 135 175 (172) 12901 13 3 - 3 33 7 134 174 (171) 12730 P130 14 3 - 3 33 7 133 173 (170) 12560 15 18 1598 1616 33 7 132 172 1444 14004 16 46 4793 4839 33 7 132 172 4667 18671 17 75 7989 8064 33 7 131 171 7893 26564 18 75 7989 8064 33 7 130 170 7984 34548 19 75 7989 8064 33 7 129 169 7989 42537 20 3 - 3 33 7 128 168 (165) 42372 21 3 - 3 33 7 127 167 (164) 42208 22 3 - 3 33 7 127 167 (164) 42044 23 3 - 3 33 7 126 166 (163) 41881 24 3 - 3 33 7 125 165 (162) 41719 PY40 25 33 5203 5236 33 7 124 164 5072 46797 42 26 94 15608 15702 33 7 124 164 15538 62335 43 27 155 26013 26168 33 7 123 163 26005 88340 44 28 155 26013 26168 33 7 122 162 26006 114346 45 29 155 26013 26168 33 7 121 161 26007 140353 1/ Current terms PY1-PY5; constant 1989 ters thereafter. 2/ Stumpage fees estimated to yield 10% on investment in plantationw; PY1-PY5, payable by plantation executing agent; thereafter by forestry exploitation agents 3/ Debt earvice on all external finance, following IDA/IDA Special Fund repayment schedule. r : >,= ~~~N I G E R 2 ) 3" ]G T ' UPPER - \ C-OAST - 1 ~~~~~.( .__ ______'_____-_________ ATLANTiC OCEAN - ~ ~ ~ ~~ ~ ~~~~~~~~~~~~~~~~~~~AVIL S~~~~~~~~Agr == NIGERiA A .ZAN TJ e EA At F VO - T- A 3 M < S . t -=;~~~~~~~~~~~~~~~~~Ar~o Developmen=-t Bn >~~~~~~~~~~~~~~~~~~~~~~~~~~~olnn Plan= ton Plic y \Xassori ~~~~~~~ ~~ ~~fX-~~~; - -X---0-nerntio aG: oundarie__ _s z \ ~~~~~~~~~~~~~~~~~~~~~- Tol g,oSnn, . ._,h, .nd -,~ooe -_f ;o,; @on B,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~7 BJ.k-,, 'N K. =1d A , _ K:bi d-l \:uou?: - /---- _ & -- - = | X 1~~~~~. <=.tKJrov E- Bruo_ -.J T:kme 0 G> _ DE F C. 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