L-V 'K) VJ / - P7 L Doumpumt of The World Bank FOR OMCLAL USE ONLY port ND. P-6455-AL ND(OANDU AJID IEOHRND&TION OF THE PRESIDENT OF TUE INTERNATIONAL BANK FOR ECONSTRUCTION ANID DEVELOPNEIET KEXECwILv DIRECTOkS ON A PROPOSED LOAN IN THE AMOUNT EQIALENT TO US$51 MILLION TO THE DEOCRAIC AND POPULAR REPUBLIC OF ALGERIA FOR AN EMERGENCY RECONSIRUCTION PROJECT NOVEMBER 10, 1994 This doc_met has a resticted diStution and may be used by recipient only in th pefoman of their officia dutes. Its contents may not otws be dclosed witout Wod bk autoiabtiloM EXCHANGE RATE Currency Unit: Algerian Dinar (DA) = 100 Centimcs Equvalency of 1 US$ in DA since 1985 1985 5.03 1986 4.70 1987 4.85 1988 5.92 1989 7.46 1990 8.60 1991 17.35 1992 22.49 1993 22.00 1994 (Sept. 9) 38.00 ABBREVIATIONS I g.a 32.2 ft/s/si of gravitational acceleration bbl/d barrels per day ft feet: 0.30 meter ha hectare Km : kilometer MW/3 : cubic meters per second Mm3 : million of cubic meter Mnmt : million of metric tons GLOSSARY OF ACRONYMS AGID : Agence Nationale de RFalisation et de Gestion des Infrastructures Hydrauliques pour Irrigation e. le Drainage BAD Banque Algerienne de D6veloppement BEFL : Banque de D6veloppement Local CGS : Centre National de G6nie Parasismique DHW : Direction de l'Hydraulique de la Wilaya de Mascara DSA : Direction des Services Agricoles de la Wilaya de Mascara DTlP : Direction des Travaux Publics de la Wilaya de Mascara DUC : Direction de l'Urbanisme et de la Construction de la Wilaya de Mascara EPEOR : Entreprise de Production, de Gestion et de Distribution d'Eau d'Oran EPIC : Entreprise Publique, Industrielle et Commerciale GOA : Government of Algeria MA : Ministere de l'Agricutre ME : Ministere de I'Equipement MICLERA : Ministbre de l'Interieur, des Collectivit6s Locales, de l'Environmement et de la RWforme Administrative ONCTC : Organisme National de Contr6le Technique de la Constucton SONELGAZ : Soci&t6 Nationale de l'Electricite et du Gaz WILAYA(TE): Province(s) FOR OMCIAL USE ONLY PEMOCRATI An POPULAR REPUBLIC OF ALGERIA MASCARA EMERGENCY RECONSTRUCTION PROJECT Loan and Project Sumna Borrower : Democratic and Popular Republic of Algeria Beneficiaries Mistry of Agriculture, Ministry of Education, Ministry of Housing, Ministry of Public Health, and Ministry of Public Works Amount : US$51 million equivalent Terms . Repayable in 17 years, including S years of grace, at the standard variable interest rate povery CLategory : Not applicable Financi Plan Local Foreign Total -== -U-IS$ Million--- Requirements: 32.6 51.0 83.6 Financed by : IBRD : -- 51.0 51.0 Government: -332.6 TOTAL SOURCES M6 Eco0nomic Rate of Return : Not applicable Staff Appraisal Report No. : Not applicable - A Technical Annex is attached Ma: IBRD No. 26457 lils document has a resticted distrbution and may be used by recipients only in the performance of their ofricia dutes Ils content may not otherwi be dbclosed without World Bank authorization. i MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO TUE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA FOR AN EMERGENCY RECONSTRUCTION PROJECT I submit for your approval the following memorandum and recommendation on a proposed loan to the Democratic and Popular Republic of Algeria for the equivalent of US$51 million to help fmance an Emergency Reconstruction Project. The loan would be at the Bank's standard variable interest rate, with a maturity of 17 years, including 5 years of grace. 1. Background On August 18, 1994, at 1 Hour 13 GMT, an earthquake with a magnitude of 5.6 on the Richter scale, struck a mountainous area known as Beni Chougrane in the Province of Mascara in Algeria. The epicenter of the seism was located near the village of Sehadlia, with the mpture area extending over a radius of 13 kilometers. In the aftermath of the earthquake, ten aftershocks with magnitudes varying from 3.9 to 5.1 occurred within a period of 36 hours. The impact of the earthquake was devastating, as 172 people lost their lives, 295 were injured and had to be hospitalized, and 10,000 were left homeless. Basic infrastructures, public and residential dwellings suffered major damages that resulted in the interruption of road traffic and public services right after the seism. These damages, estimated at US$128 million, to a large extent occurr. because of the nature of the traditional village houses in the area. They were made of irregular stones bonded with clay, and covered with wooden-framed roofs. The whole structure was not conceived to resist the shock of an earthquake with a magnitude like the one that took place. 2. Algeria is prone to seismic hazard. The largest one measuring 7.2 occurred in the city of Chelf on October 10, 1980, causing widespread damages in this agglomeration. Tectonic activities and the associated seismicity in North Africa stem from the closing of the African and the Eurasian plates at an estimated rate of 0.9 cm per year. This convergence has generated major earthquakes along the Mediterranean coast over the last three centuries. The Algerian authorities are conscious of this risk, and have issued seismic safety regulations. With the assistance of foreign experts, they have proceeded with seismic zoning and microzoning, with a view to assessing earthquake hazard at different places in the country. They have also issued regulations spelling out prevention measures to put in place in case of natural catastrophes, and ways to orgadze relief efforts. 3. Government's Response. All vital sectors in the region were damaged by the earthupake. Potable water supply was cut off, four road sections were destroyed, and part of an irrigation system collapsed. Prior to the seism, most economic activities in this pastoral land consisted of livestock raising, supplemented by the culture of dry crops, such as grapes, olives, and almonds. The seism caused the loss of 1,400 heads of cattle. The Government was quick to respond to this emergency. Within hours following the earthquake, a rescue and medical team arrived ih the area. Its first action was to bury the dead and to transfer the injured to nearby hospitals. Next, 3,600 tents were installed to shelter the homeless population. To prevent epidemics, potable water was trucked to the area, and medicines and assistance given to the population. Food and clothing were distributed free to the population. 4. As the situation has now stabilized in the area, the authorities have begun to install weather-resilient steel structures for public dwellings, such as schools, health centers, and other offices, as well as for the affected population. This is necessary to protect the population from decreasing temperatures with the approaching winter. These structures will be integrated within the permanent dwellings that will be rebuilt for the homeless families. As most of them do not want to return to the land where they used to live for fear of more aftershocks, they will be housed in neighboring areas. These new settlements are in the same villages where the destroyed houses were located. The authorities are now planning the reconstruction phase with a view to restoring assets and economic activities in the affected region. 5. Bank Response and Strategy. On August 22, 1994, the Algerian authorities requested emergency Bank assistance for reconstruction of the earthquake-devastated area in Mascara. A reconnaissance mission visited Algeria between September 9 and 15, 1994, to assess the damages. This was followed by an appraisal mission in mid-October 1994, with negotiations taking place in Paris, France, in early November 1994. The Mascara earthquake came at a particularly bad time for Algeria. The country is going through a political turmoil with civil unrest stirred up by a depressed economy. Unemployment is at 25 percent. As a compounding factor, a severe drought since 1985 has substantially reduced water availability for urban supply and irrigation. The drought was so intense this summer that it generated a number of uncontrolled forest fires, particularly in the western part of the country, where Mascara is located. The losses resulting from these fires are estimated at US$50 million. 6. The Bank's assistance strategy for Algeria aims to support macroeconomic stabilization and accelerated structural reform. It is geared toward establishing the necessary conditions for a strong supply response that would help to meet the basic social needs of the population. This strategy is part of a broader effort by Algeria's external partners to promote economic reform, ease the debt service burden, and contribute to greater stability in the country. Under the proposed strategy, an economic rehabilitation loan, appraised in September, will support economic reform measures that would set the foundation for a new phase of adjustment lending starting in 1995. The proposed reconstruction loan would provide further badly needed external assistance to Algeria. It would help to minimize budget disruptions that the additional resources requwired to reconstruct the eartuake-devastated area, might have in other Government programs and initiatives. 7. The proposed project meets all the criteria for Bank emergency recovery assistance. The earthquake impact together with that of the continuous drought and of damages caused by the forest fies, are significant enough to furer increase the budget deficit and slow down the economic recovery process. A quick, effective Government response to the emergency in Mascara is vital for promoting further political and economic stability in the country. The Bank has gained much experience in disaster recovery, having so far participated in a large number of emergency reconstruction programs, and thus could be of great assistance to Algeria. 8. Pt ObLeje s. The proposed Bank assistance will focus on the short- and medium-term recovery of the sectors most affected by the seism. The project aims at rebuilding the economic, social, and physical assets that were destroyed by the earthquake, with a view to restoring essential facilities and services in the shortest possible time. To this end, it will assist the authorities in sefting up an effective organization to manage the reconstruction program. It will help to develop long-term measures for seismic damage prevention and mitigation. It will further evaluate the institutional framework for dealing with natural disasters, and make appropriate recommendations. Although the primary goal of the project is asset reconstrction, it will nevertheless proceed within a larger view of promoting more economic development in the region. 9. Past Experience in Emergency Operations. The Bank has not before given emergency assistance to Algeria, though the country has suffered major earthquakes like the one in Chelf City in October 1980. The Bank, however, has gained valuable experience in disaser- recovery assistance. The lessons learned in past operations have been taken into account in designing the proposed reconstruction project. As the project is essentially targeted toward restoring normal economic and social conditions, broader policy issues have been set aside and left to be pursued later. Project execution should begin immediately, since there are no up-front conditions to bet met. Such conditions have caused major delays in the execution of past emergency operations. The project advocates the establishment of a strong implementation unit, a key element for the success of those operations. Also, based on past experience, the project includes a public education program on disaster mitigation, and guidance in disaster-resistant building techniques. 10. Project Description and Implementation. The project would include the reconstruction and repairs to facilities in the following sectors: (a) in education, 2 schools would be rebuilt, and 10 others repaired (US$2.7 million); (b) in housing, steel structures would be provided to the homeless, repairs would be made to damaged houses, public buildings would be reconstucted, and 2,131 new housing units would be built (US$55.7 million); (c) in agriculture, repairs would be made to the irrigation system, 6 holding basins would be constructed at the foot of hills, damaged irrigation equipment would be replaced, and a reforestation program would be carried out (US$3. 1 million); (d) in public health, all health centers in the affected villages would be rebuilt (US$1.2 million); (e) in roads, six sections of three national roads would be repaired (US$11.4 million); (f) in water supply and sewerage, the water and sewer networks in the affected villages would be rebuilt, water and sewerage services would be provided in the new housing development areas, and lagoons would be constructed for reuse of treated water in irrigation (US$7.8 million); (g) in earthquake hazard reduction and prevention, seismic zonimng and microzoning studies would be carried out, a revision of seismic design coefficients and spectra followed by an evaluation of building codes would be undertaken, and a public awarencs program dealing with natural disasters would be implemented (US$1.5 million); and (h) in social rehabilitation, the needs of women and children affected by the earthquake would be addressed with a view to restoring their productive facilities and activities (US$0.2 million). -4 - 11. D:>amages to the power sector were minor, and the national power utility, SONELGAZ, should be able to repair them without outside assistance. Two factories, a wheat flour grinder and a brick making facility, were destroyed by the seism. The recommendation was made to the authorities to take advantage of this situation to sell these public enterprises to the private sector. This replacement cost as well as that of the livestock is not included in the proposed project. About two-thirds of the investments would be made in the housing sector, and to some extent this cost would need to be recovered within the limits of the population's income. The population in the area is largely rural, low-income, living on limited revenues from livestock raising and subsistence agriculture. On this basis, and given the losses suffered by the population as a result of the earthquake, the Government has decided to provide a subsidy of US$8,940 equivalent to each homeowner to start the reconstruction of his/her dwelling. It is estimated that this amount will finance only the core of the dwelling. To complete the reconstruction process, the Government is prepared to make sub-loans to the affected homeowners on concessionary terms. These sub-loans would be managed by the Banque de D6veloppement Local (BDL), an institution that the Government has been using to finance rural housing. For homeowners whose dwellings were only damaged by the seism, the Government will provide a subsidy of US$2,980 equivalent to each of them to fmance repairs to the dwellings. Sub-loans should also be made available to them for additional finishing works. 12. A Bank loan of US$51 million is proposed to finance the foreign exchange component of the project. Part of the loan equivalent to US$4.8 million, together with equal counterpart funds, will be used by the Government to make sub-loans to homewoners as previously desebed. The remaining proceeds of the Bank loan would be used to match the Government subsidies for reconstruction of the destroyed houses and public dwellings, and for rebuilding in the other sectors. 13. Agreed Actions. The proposed project is not conceived as a vehicle for policy changes, and as such there would be no conditionality attached to it. Nevertheless, certain actions need to be taken that would ensure speedy project execution, given its emergency nature, and adheence to existg policies. The first one dealt with project implemenation. Because of the involvement of several sectors, it was agreed with the Government to decentralize the project at the provincial level. In addition, a project implementation unit would be set up at this level to coordinate project execution among the different sectors. Staffing and managing this unit adequately would be an important parameter for project success. To this end, the Government appointed the project manager of the unit, who participated in the negotiations. It was further agreed that, not later than amnuvay 31, 1995, the rest of the unit staff will be appointed by the Govermnent. The unit organization, as well as staff qualifications, should be acceptable to the Bank. 14. As indicated before, BDL would make sub-loans to homeowners to finance finishing works in their dwellings. BDL is an established bank in the project area, with experience in providing loans for rural housing. One half of the funds for the sub-loans would come from the Bank loan proceeds, and would be onlent on the same terms of the Bank loan, except that the foreign exchange risk would be borne by the Government. The other half would be contributed by the Govermnent. To make the sub-loans affordable to the population, it was agreed that the Govenunent counterpart funds would be lent on a repayment term of 25 years, including 4 years of grace, at an interest rate of one percent. This will provide a blend of funds in equal shares between the Bank loan proceeds and the Government contribution for each sub- loan, with a resulting repayment term of 20 years, at an interest rate of 4.5%. In this context, the Govemment and the Bank are currently discussing policies in he housing sector, as part of a Housing Completion and Sector Development Project (Loan 3561-AL). Any new policies that would come out from these discussions would be applied for fimte loans that BDL would make in the earthquake aea. 15. Cost recovery will be fully achieved in the water supply sector. Under current policies in this sector, lease fees paid by operators of water supply systems should increase whenever new installations are built by the Government and handed over to these operators for exploitation. Accordingly, in conformity with the provisions of such lea'; agreemet, the Government will increase lease fees charged to the operator in the earthquake area, once the water supply works in the newly developed areas have been completed. 16. Project Benefits. The project would assist in restoring physical assets and economic activities in the earthquake-stncken area. It would alleviate human suffering through the provision of shelters to 2,131 families. It would provide the whole population with the necessary school and public health facilities, and with adequate water supply and sewerage services. A new impulse would be given to agriculture through repair of the irrigation system, the constuction of holding basins to increase the availability of water, and the execution of a reforestation program. The project would also spell out measures that the authorities should inplement to reduce damages by earthquakes, through a revision of the building codes, seismic zoning and microzoning, and preparedness of the population to the occurrence of natual disasters. Cost-benefit caklculations cannot be carried out readily, but the project's economic benefits are expected to be substantial. 17. Social and Environmental Aspects. The project will address the population's social and envirornental concerns that have surfaced in the aftermath of the eartquake. Particular attention will be paid to the needs of women and children. As part of project execution, a social survey will be carned out. Its aim would be to determine living habits of the population, so as to design a project which conforms to these habits. The survey would also look at the women's livelihood prior to the seism, to explore ways to restore it and possibly improve it. It would also invesdgate the pre-seism social environment of children, proposing an agenda for improving it. The population has been much traumatized by the devastation, and has to deal with its fear for the area. Counselling to this effect would be provided under the project. 18. The project will have a major positive impact on the environment. Through rebuilding of the area, the quality of the environment would greatly improve, as more strcturally sound and functional houses would be provided to the population, accompanied by good access roads, and better water supply and sewerage services. The project would also - 6 - ensure that education and public health facilities are made available to the population. Lagoons would be built to allow recycling of treated wastewater in agricultLue. Increased water availability together with the proposed reforestation program would promote a more pleasant, greener environment in the region. Because lagoons and the construction process in itself might have some limited adverse environmental effects, the project has been rated "Category B."- 19. &iLks. There are some risks associated with the execution of the proposed project. The current political instability in Algeria might disrupt bidding and construction, and project supervision. Project success depends on the selection of one or several experienced local finns for the construction of the housing component. If this does not materialize, construction might drag for years, making the project lose its emergency character. To minimize this risk, prequalification of bidders will be made, so as to ensure that only qualified and fiancially sound construction firms participate in the bidding. Additionally, the Government should engage itself to provide full security for the staff and the installations of the contractors. As long as the current security risk persists, the Bank will rely on trustworthy, qualified local consultants to carry out project supervision, with regular review of this task by Bank staff. 20. Other risks would be involved in the availability of construction materials in the country. To safeguard against this situation, contract documents should provide for the possibility for contractors to import materials, whenever they are not available on the market. To protect the Govermnent against possible speculation by the contractors, prices of imported materias should be quoted in bids. 21. Recommendation. I am satisfied that the proposed loan would comply vith the Articles of Agreement of the Bank and recommend that the Executive Directors approve it. Lewis T. Preston President Attacbments. Washington, D.C., U.S.A. November 10, 1994 -7- S&bgedule A DEMOCRATIC AND POPlULAR REPUBLIC OF ALGERIA MASCARA EMERGENCY RECONSRUCTION PROJECT ESTIMATED PRO COS AND FINANCING PLAN A. Estimated Cost In &rUc to be rebuiltin Local Fordm Total -US$ Million- E3ducation 1.1 1.3 2.4 Housing 19.1 30.1 49.2 Agriculture 1.0 1.7 2.7 Public health 0.3 0.7 1.0 Roads 3.7 6.4 10.1 Water supply and sewerage 2.9 4.0 6.9 Subtota 28.1 44.2 72.3 Social rehabilitation 0.1 - 0.1 Institutional development Microzoning, land slide study 0.6 0.8 1.4 Total Base Cost (Sep. 1994 Prices) 28.8 45.0 73.8 Physical contingencies 2.9 4.4 7.3 Price escalation 0.9 1625 TOTAL PROJECT COST 32.6 83.6 B. _nmgg Plan Goverment 32.6 - 32.6 IBRD - 51.0 51.0 TOTAL SOURCES 32.6 5.6 L/ Includes US$15.4 million equivalnt in taxes anm duties. -8- Schedule B Page I of 2 DEMOCRATIC AND OPULR RELIC OF AlGhRIA MSCARA EMICRGENX REONSM^UCTION PILOJECT 1. Siummarv of PrOf ow 4 curement Anasuements (US$ Xbr.zou Equivalent) PROCUREMENT METHOD PROJECT ELEMENT TOTAL ICB LCB OTHER N.B.F COST 1. Works 1.1 Housing developraent, schools, public dwellings 33.3 33.3 and bealth centers (21.2) (21.2) 1.2 Repairs to houses, 4.7 1.1& 5.8 irrigation, roads (2.4) (0.6) (3.0) 1.3 Water supply and sewer, 10.8 10.8 holding basins, road RN 17 (5.4) (5.4) 1.4 Steel structures, public 3.4 16.02 19.4 services, curbs and roads (2.4) (11.2) (13.6) 1.5 Land acquisition 5.3 5.3 2. Goods 2.1 Equipment and machinery: school, hospital, pumps, aerators, trucks, lorries 3.6 3.6 telephone, tansport (3.3) (3.3) 2.2 Materials: Pipes and fitings, 2.1 2.1 asphalt, seeds (1.8) (1.8) 3. Consultancies 3.1 Project implementation 1.6b 1.6 (1.3) (1.3) 3.2 nstitutional development 1.7b 1.7 (1.4) (1.4) TOTAL 5.7 52.2 20.4 5.3 83.6 (5.1) (31.4) (14.5) (51.0) NOME: Figures in parentheses ar the respeciive amounws finaced by die Bank loan. N.B.F.: Not Bank finaned. a. Direct connaccg. b. Procured in accordance with World Bank's Guidelins: Use of Cons4an by World Bank Borrowers and by dc World Sink as Executing Agency, August 1981. -9- Schedule B Page 2 of 2 DfEMQCATIC A OIPULAR REPIBLIC OF ALGERIA MASA EEGE RECONSTUCTION PROJECT 11. gsbursemet of the Loan Proceeds A. Disbursement Categories and Loan Allocaton Amoud of the Loan Allocated % Expenditures Category In US$ Milon Equivalent to be Fliced (1) Civil work: (a) Recons on of residential and public dwellings 27.8 70% (b) Others 6.8 50% (2) Equipment and matrials 4.6 100% of foreign expenditures and 80% of local expendius (3) Sub-loans for housing completion 4.3 50% (4) Consultants' services for: (a) project implention 1.2 80% (b) Earthquake studies 1.2 80% (5) Unalioaed TOTAL 1 B. I3t_d Loan Disbsemen s Bank FY 19 9 1997 1998 1_99 Annual 7.9 13.8 14.4 11.5 3.4 Cumulative 7 9 21.7 36.1 47.6 51.0 * Expectd to mn over four (4) calendar yeas, the tdwe nee4d to execute the project and me fnl payments on contrt. - 10- Schedule C DEMOCRATIC AND POPULAR REPUBLIC OF AIGE_RIA MASCARA EMERGENCY RECONSTRUCTION PROJECT KEY PROCESSING EVENTS AND RESPONSIBILIfIfIES Project identification August 22, 1994 First Bank mission to review the project September 9, 1994 .^Apraisal mission departure : October 20, 1994 Date of negotiations : October 31, 1994 Planned date of effectiveness January 31, 1995 List of relevant PCRs : Project Performance Audit Report No. 13203 on Loan 2379-CO Popayan Reconstuction Project Project preparation by A. Amir Al-Khafaji Division Chief Fritz Rodriguez Task Manager Frangois Amiot Sr. Economist Samia El-Baroudy Principal Country Officer, Algeria Charles Sterling Sr. Operations Analyst d~~~~~~~~~~~~~~~~~~ 0i 1 il~~~~~~~~~~~l V i 5 8 8 8 8 8.8 .8.8 8 S8 8 8.8]§~8.8 ; 9 *g U # - - - - - i- - -- -- 49~~~a 12 SchqSb (Peas20121 Semenat f IFC IEm t In b (AsOAUaut t31S19941 Fisal (US$Mmn) 1992 Hellos S.PA Chtmcal& & 10.00 - 10.00 Perochemico TotaWgrossoan ts 10.00 - 10.00 LeW CanclWons teoMdnaons. epaynon - sfesandfcaneadJust ToW omnttwnet held by IFC 10.00 - 10.00 of whicht undbursd 1.54 - 1.54 Does not ilude p _atpmt DEMORATIC AN) POPULAR REPUBLIC OFLE MASCARA EMRGENCY RECONSTRUCTION TECHCAL ANNEX DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA MASCARA EMERGENCY RECONSTRUCTION PROJECT Table of Contents A. BACKGROUND ......................................... 1 Seismic Activities ....................................... 1 The Mascara Earthquake ............... 1 Damage Assessment and Government's Response ................... 2 Seismic Damage Prevention and Mitigation ....................... 3 B. BANK RESPONSE AND STRATEGY ............................ 4 Rationale for Bank Involvement .............................. 4 Bank Strategy ......................................... 5 C. THE RECONSTRUCTION PROJECT ............................ 6 Overview ....................................... 6 Objectives of the Project ................................... 6 Project Description ...................................... 7 Education ...................................... 7 Housing ...................................... 7 Agriculture ...................................... 7 Public Health ..................................... 8 Roads ....................................... 8 Water Supply and Sewerage ......... ................... 8 Studies ...................................... 8 Social Rehabilitation . ................................ 9 Cost Estimates ....................................... 9 Project Execution ....................................... 10 Project Financing ....................................... 10 Cost Recovery ....................................... 11 Procurement ....................................... 12 Disbursement ...................................... 13 D. PROJECT IMPLEMENTATION ......... ...................... 13 Program Management . ................................... 13 Implementation Organization .......... ...................... 14 Proj'ct Accounts and Audit .......... ....................... 14 Reporting and Monitoring ........... ....................... 15 Risks ........................................... 15 Supervision Plans . ...................................... 16 E. AGREEMENTS REACHED AND RECOMMENDATION ............... 16 This report is based on the findings of a reconnaissance mission composed of Messrs. A. Amir Al- Khafaji, Fritz Rodriguez and Fran;ois Amiot, and Ms. Samia El-Baroudy, who visited Algeria in mid-September 1994. A subsequent mission comprising Messrs. Fritz Rodriguez, Francois Amiot, and Charles Sterling, appraised the project in late October 1994. DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA MASCARA EMERGENCY RECONSTRUCTION PROJECT List of Attachments Attac}unent No.: 1. List of Past Major Earthquakes in Algeria 2. Detailed Cost Estimates 3. Price Escalation Calculation 4. Project Implementation Schedule 5. BDL's Background and Operations 6. List of Contracts to be Placed for the Project 7. Estimated Schedule of Disbursements 8. Project Implementation Organization 9. Project Implementation Unit 10. Selected Photos of Earthquake Damages 11. Selected Documents and Data Available in the Project File Map No.: IBRD No. 26457 DEMOCRAfIC AND POPULAR REPUBLIC OF ALGERIA MASCARA EMERGENCY RECONSTRUCTION PROJECT TEC!INICAL ANNEX A. BACKGROUND Seismic Activities 1. With the exception of the Sahara desert in the south of Algeria, most of the remaining land in this country is subject to seismic hazard. It is particularly high along a line joining Algiers in the center, to Ain Defla and then Chelf in the west. Ground acceleration along this line, with 10 percent probability of occurring in 50 years, can reach 0.25g near the most active part located around Chelf. An earthquake with a magnitude of 7.2 hit this city on October 10, 1980. Available geological and seismological information shows that other parts of the country situated along the Mediterranean coast are also prone to moderate seismicity, with a mean acceleration of 0.15g. As one goes inland toward the high plateaux and the Saharan Atlas, seismic hazard diminishes greatly with a possible mean acceleration of about 0.08g. It is totally negligible in the southern desert. This is, however, the least populated area in the country. Less than 10 percent of the total population lives there. Most of the population resides in the northern region where seismic hazard exists. This is also the region with the best ferdle land, relatively adequate water resources, and better environmental amenities. 2. Attachment 1 lists major earthquakes that have occurred in Algeria since 1716. Quite recently, an earthquake with a magnitude of 5.1 rumbled the ground in Mont Chenoua in Tipaza Wilaya, on October 29, 1989. Prior to that, on October 10, 1980, a seism with a magnitude of 7.2 caused major damages in the city of Chelf. This seism was felt over an area of 250 kms long by 60 kins wide. A previous earthquake in 1954 had completely destroyed this city. Tectonic activities and the associated seismicity in North Africa are stemming from the closing of the African and the Eurasian plates at an estimated rate of 0.9 cm per year. This convergence has generated some major earthquakes over the last three centuries. Proof of this contraction is the occurrence, between October 1980 and March 1981, of three intense earthquakes in three areas along the Mediterranean basin, namely in Chelf, Algeria; irpina, Italy; and Gulf of Corinth, Greece. The Mascara Earthquake 3. On August 18, 1994, at 1 Hour 13 GMT, an earthquake measuring 5.6 on the Richter scale hit a mountainous area known as Beni Chougrane in the Wilaya of Mascara (see attached map). The epicenter was located near the village of Sehadlia. The shock is believed to have lasted 12 seconds, and at approximately 12 kms from the epicenter, had a horizontal acceleration of about 0.2g. In the aftermath of this seism, ten aftershocks with magnitudes varying from 3.9 to 5.1 occurred within a period of 36 hours. The rupture area, as inferred -2- from the distribution of aftershocks, extended over a radius of 13 kms. The earthquake caused damages particularly in the towns of Hacine and El Guetna located in the county of Bou Hanifia, and in the villages of Sehadlia and Sidi Ali CheAif situated in the county of Sig. Ihis seism exacerbated the depressed economic situation in this part of the country, where agriculture as the main economic activity has been hampered by a continuous drought since 1984. Damage Assessment and Government's Response 4. The housing sector suffered the most as a result of the earthquake. Some 2,131 residential quarters were destroyed and 385 others seriously affected. As a consequence, 172 persons lost their lives, 295 got hurt and had to be hospitalized, and 10,000 were left homeless. The victims were mainly children, women, and elderly people; more than half of the dead were children. Most public dwellings in the affected area, such as health centers, schools, -t offices, as well as the water and sewer networks collapsed, cutting off public services i. (de area. Three national roads (RN 6, 17, and 97) were damaged at different locations, and right after the earthquake, road traffic was interrupted in the region. The agricultural sector was also affected with the loss of some 1,400 heads of cattle, and extended damages in the irrigation system. In the industrial sector, a wheat flour grinder and a brick-making factory were destroyed completely. They were the only employers in the area, and with their disappeance, unemployment which was already substantially high in the region, has increased further. 5. The Government was quick to respond to this emergency. A two-pronged strategy was adopted immediately by the Government. First, a rescue and relief effort was organized within the hour following the earthquake. Within hours a rescue and medical team arrived in the area. Its first action was to bury the dead and to transfer the injured to nearby hospitals. Next, 3,600 tents were installed to shelter the deprived population. To prevent epidemics, potable water was trucked to the area , and medicines and assistance given to the population. The water quality was monitored closely to detect any possible contaminaton. In addition, some 400 tons of food were distributed free to the population. This distribution is expected to last about three months, as prescribed in the Algerian relief emergency procedures. 6. The first phase is now completed. The national effort in relief assistance was organized by the Protection Civile of the Interior Mistry, the Public Health Ministry, the Army, the National Police, and the Red Crescent. An operational unit made up of representatives of the above-listed organizations was set up in the seism area, while a command unit of similar composition was established at the seat of the Mascara Wilaya. At the same time, a steering committee made up of representatives from all the sectors affected by the earthquake, was put in place in the Ministry of Interior. Its role has been to provide effective support to the command unit in Mascara, and to centralize rebuilding efforts by the Government. So far, this organization has worked well, as effective assisance has been provided to the population. The situation has now been stabilized in the area. -3 - 7. International response has also been quick in providing relief assistance. This response was coordinated by the UN's Department of Humanitarian Affairs in Geneva,Switzerland, who made an emergency grant of US$30,000 to Algeria. Other cash contributions were given by Italy (US$382,165), United Kingdom (US$50,000), Sasakama Foundation (US$20.000), Secours Populaire Franpais (US$18,416), and Spain (US$15,267). In addition, France, Kuwait, Saudi Arabia, USA, Netherlands Red Cross, and the European Union made contributions in kind. 8. For the second stage coming after successful completion of the relief effort, the firs objective has been to provide weather-resilient steel structures to the affected population. With the approaching winter, shelter tents camnot protect from the low temperatures that prevail at that time of the year in the area. Weather-resilient steel structures need also to be provided for public dwellings such as health centers, schools, post offices, which were destroyed by the earthquake. To this end, the Algerian authorities are currently instlling about 1,200 steel strutures that will house the homeless families, and later on will be integrated in their permanent dwellings. In many instnces, for the homeless families it has not been possible to place these structures on the land they used to occupy, because of visible land slide, or the population's fear for the area affected by the earthquake. To accommodate the population, a number of new sites were selected to resettle the displaced population. All of them are close to the former living places of the population, and no population displacement will take place. The intent is to make the steel structures be a part of the permanent dwellings. 9. The operational unit has completed its assessment of damages incurred by different sectors, and based on this information, the steering committee has prepared a reconstruction program for each sector. The aggregate cost of this reconsuction project has been estimated at US$128 million (Sep. 1994 Prices). This project would include the rebuilding of all the facilities destroyed by the earthquake, the provision of earthquake-resilient steel structures to the homeless families, and repairs to damaged srcs. Project implementation is scheduled to begin in January 1995, together with a microzoning study in the selected sites for housing the homeless population. Seismic Damau Prevention and Migation 10. As previously mentioned, on September 9, 1954, a seism with a magnitude of 6.7 rocked the city of Chelf (previously called Orleansville and El-Asnam), causing 1,240 dead and major damages. Following this event, the authorities issued a seismic safety regulation known as Recommadaions AS 69, with the objective of ensuring seismic resistance of building structres. Tnis regulation, however, became mandatory only in 1979. Prior to that year, it was optional to engineers and homeowners to apply seismic safety design. Beginning in 1976, the Organisme National de Contr6le Techique de la Construction (ONCTC), with the assistance of Stanford University, Berkeley, California, began to prepare a building code with allowances for earthquake movements, and to cariy out a zonmg program. As a result of this work, a building seismic code was issued in March 1983 as Rtglement RPA 81. In addition, microzoning was carried out in Chelf, and seismotectonic maps were prepared for the cities of Oran and Chelf. Since January 1987, a seismological institute, Centre National de Geiie Parasismique (C(GS), has been in operation. -4- 11. In 1985 the Algerians authorities also issued regulations covering prevention measures to put in place in case of natural catastrophes, and how to organize relief intervention for each type of catastrophe. Public awareness has been raised through information dissemination, simulation exercises, and the establishment in advance of security groups that will automatically meet upon the occurrence of a natural catastrophe. These arrangements have worked well on the occasion of the Mascara earthquake, though there is room for further improvement, particularly in the use of microzoning. The proposed project makes recomnendations toward this goal. B. BANK RESPONSE AND STRATEGY Rationale for Bank Involvement 12. The Mascara eardtquake caine at a particularly bad time for Algeria. The country is going through a political turmoil with terrorism making it unsafe for foreigners. Even nationals who do not share the terrorists' approach have not been spared. In response to this situation, the government has hired a large number of security guards for protection of government officials and buildings. This political situation is compounded by high unemployment, a severe housing crisis, and shortage of basic necessities. Agricultural production has been down in the last five years as a result of a severe drought in the country, particularly in the Mascara region. This summer the drought was so acute that it generated a number of uncontrolled forest fires. The losses that have resulted from these fires are estimated at DA 2 billion (US$50 million). The damages caused by the earthquake have been estimated at US$128 million, i. e. about 1 percent of the 1995 budget. 13. With the technical and financial support of the IMF, the Government is currently implementing a stabilization program aimed at correcting macroeconomic imbalances and distortions. The key elements of this program are: (a) adjustment of the exchange rate and reform of the exchange regime; (b) trade liberalization; (c) domestic price liberalization; (d) deficit reduction; and (e) monetary restraint and higher interest rates. To make this program work, however, it is necessary to loosen the external resource constrint. The international community has launched a concerted effort to reduce Algeria's debt service burden and to provide it with additional resources. However, even with the IMF stand-by, the rescheduling of Paris Club debt together with a restructuring of London Club maturities, and disbursements from existing trade-linked loans, a residual financing need of about US$1.45 billion remains in 1994. The European Union, the African Development Bank, and the Islamic Development Bank, are expected to make total contributions of about US$700 million to fill this gap. Additional resources will come from the renewal of bilateral credit. 14. On its part the Bank is proposing to contribute about US$500 million through quick disblursements from a proposed rehabilitation loan (US$150 million), the emergency reconstruction loan (US$50 million) presented in this report, the second tranche of the EFSAL, -S - and the Housing Completion and Sector Development Loan. The proposed recostuction loan would provide fiurter badly needed extemnal assistance to Algeria. It would help to minimize disruptions that the additional resources needed to reconstruct the earthquake-devastated area. might have in the budget and in the implementation of the economic stabilization program. The proposed project meets all the criteria for Bank emergency recovery assistan. 15. On August 22, 1994, the Algerian authorities made an official request for an emergency Bank loan to assist in the reconstruction of the earthquake-devastated area in Mascara. A reconnaissance mission composed of Messrs. A. Amir Al-Khafaji, Fritz Rodriguez and Fngois Amiot, and Ms. Samia EI-Baroudy, visited Algeria between September 9 and 15, 1994. This mission assessed damages caused by the seism, and reviewed reconstuction plans and organizational arrangements. A second mission composed of Messrs. Fritz Rodriguez, Frangois Amiot and Charles Sterling, appraised the project in late October 1994. Negotiations were held in Paris, France, in early November 1994. Bank Srt 16. The Bank's assiae strategy for Algeria aims to support macroeconomic stabilization and acceleration of structural reform. It is geared toward establishing the necessary conditions for a strong supply response that would help to meet the basic social needs of the population. This strategy is part of a broader effort by Algeria's external partners to promote economic reform, ease the debt service burden, and contribute to greater stability in the country. Under the proposed strategy, an economic rehabilitation loan, appraised in September, would initiate a new phase of Bank support for Algeria's macro-economic stabilization and structral reform. Built on the achievements of two previous adjustment loans, it will establish the foundation for a more comprehensive SAL proposed for 1995 in parallel with the anticipated EFF. The proposed rehabilitation loan would also pave the way for the preparation of sector adjustment operations in the housing and construction sector, and in agriculture. 17. The Bank's investment lending program will focus on operations that support basic infrasucture and social needs. A sixth highway project has been appraised, and preparation of a social safety net project is under way. The possbility of a tecnical assistace loan in support c, the financial sector development and privatization is being explored. The lending program is supported by an ambitious ESW agenda, including the PER and PSA mentioned above. -6 - C. THE RECONSTRUCTION PROJECT 18. As previously mentioned, all sectors in the earthquake area were affected to some degree. As is usually the case for a seism, housing, roads, and water supply and sewerage were the most affected. The least affected were electricity installations. A wheat flour grinder and a brick-making factory were completely destroyed. The reconunendation was made to the Government to take advantage of this situation to sell these public enterprises to the private sector. Consequently, their reconstruction is not included in the proposed project. The authorities are also considering replacing the livestock that was disseminated by the seism. This replacement cost is not included in the project. As said before, damages to the power sector were minor, and the national power utility, SONELGAS, should be able to repair the network without outside assistance. Those repair expenses have not been included in the proposed project. Thus, the reconstruction program would basically cover the following sectors: education, housing including public buildings, agriculture, public health, roads, and water supply and sewerage. Objectives of the Prolect 19. The Bank's strategy is to focus on the short-and medium-term recovery of the sectors mostly affected by the earthquake. The proposed project aims at rebuilding the physical and economic assets that were damaged in the seism area with a view to restoring essential facilities and services in the shortest possible time. To this end, it will assist the authorities in setting up an effective organization for managing the reconstruction program. It will help to develop long-term measures for seismic damage prevention and mitigation. It will review seismic design prescriptions in the building code. It will furither evaluate the institutional framework for dealing with natural disasters, and make the appropriate recommendations. And finally, but not the least, it will ensure greater efficiency and economy of the rebuilding process through the use of international procurement and competitive bidding. Although the prinary goal of the project is asset reconstruction, it will nevertheless proceed with rebuilding within a larger view of future economic development in the area. 20. In the agricultural sector, for instance, the project includes the construction of holding basins that would increase water supply for irrigation. This constuction would not involve any resettlement or negative environmental changes. To the contry, it would lead to major environmental improvement in the region. It seems essential to try to increase the availability of water in this area just for the mere survival of the population. As part of the project, a social survey will be carried out. Its aim would be to determine living habits of the population, particularly women and children, and to design a project acceptable to the homeless families. The survey would look at the women's livelihood prior to the earthquake, and at ways to restore it and possibly improve it. It would also investigate the pre-seism social environment for children, and proposed an agenda for restoring and improving it. The proposed reconstruction project embodies social rehabilitation as an essential component in its design. -7 - Project Decpon 21. The proposed project would include reconstruction and repairs to facilities in the following sectors: Education: Two schools in the eardtquake area were destroyed, while the structure of ten others was damaged by the seism. The destroyed schools would be rebuilt, and repairs would be made to the others to render their structure resistant to earthquakes. Investments in this sector, including re-equipping the schools, are estimated at US$2.4 million based on September 1994 prices. Housing: As a result of the seism, 2,131 houses were destroyed, and 385 others endured some structural damages. These will be repaired with the necessary reinforcements to make them resilient to possible recurning earthquakes. Among the destroyed houses, 1,924 of them will have to be relocated because of possible land slides in their previous locations. The authorities have selected fourteen new sites for this relocation with a total area of about 450,000 rn2. The construction of streets and public services, such as water supply, sewerage, and drainage, is well advanced in five of them. Each lot in the newly developed sites will have an area of about 200 e2. A steel structure will be installed on each lot, and later on will be integrated in a core housing unit with an area of about 30 i2. Contractors retained through local competitive bidding (see para. 32) will build the strutural works of these units, consisting of their foundations, concrete floor and roof slabs, columns, and separation walls. Against these works, the Government has accepted to provide a subsidy of DA 300,000 for each unit. Finishing works of the units will be carried out by the homeowners, using small craftsmen and enterprises. The Government has agreed to make subsidized loans available to homeowners to finance the finiing works. Similar arrangements would be made for the 207 dispersed houses that need to be rebuilt. Meanwhile, for the dwellings that will be repaired, the Government will make a subsidy equivalent to DA 100,000 per unit to finance these repairs. Loans will also be made available to these owners to execute additional finishing works. The owners will receive guidance from an advisory committee that will be set up as part of the project implementation unit (see para. 40). In addition, administrative buildings such as town halls, telephone offices, and fire stations, which were destroyed by the earthquake, would be rebuilt. The housing program is budgeted for an amount of US$49.2 million. Agriculture: The irrigation system in the earhquake area received some serious damages that will be repaired in priority. In an attempt to alleviate water scarcity in the area, it is proposed the construction of about six (6) holding basins at the foot of a number of hills in the region. In addition, the project contains the replacement of irrigation equipment (sprinklers) damaged by the eartuake, and an intensive reforestation program. The total cost of this component is estimated at US$2.7 million. Public Health: Four health centers and a maternity hospital were destroyed by the seism. Besides, two other centers were seriously damaged, but still can be repaired. The project proposes the reconstruction of two health centers and a maternity in the village of Hacine, one health center in each of the villages of Sehaldia, Sig, Ouled Sidi Aissa, and Sidi Ali Cherif. Repairs will be made to a health center in Hacine, that stood the earthquake, and to another health center in the village of El Goetha. The total estimated cost for this sector is US$1.0 million. Roads: Three national roads, RN 6, RN 17, and RN 97 cross the Mascara region. In the rpture area of the seism, they were seriously damaged in four locations. Eight particular structures need to be consolidated as a result of land slide. In addition, 23 km. of RN 17 should be rehabilitated entirely. The total estimated cost of these works is US$10.1 million. Watr Supply and Sewerage: The water supply and sewer networks in the village of Hacine were devastated by the eardquake. They need to be rebuilt entirely. The same must be done for the main transmission pipe to Hacine. In addition, five new boreholes will need to be constructed to increase water production that has slipped as a result of a dropping in the water level of the aquifer. On the sewerage side, two lagoons would be built, one in Hacine, and the other in Bou Hanifia. The first one would have a capacity of 20,000 inhabitans equivalent; and the second 60,000 inhabitants equivalent. These lagoons would be made of aerobic basins with a retention time of about three days. The total estimated cost of this component is US$6.9 million. Studies: They would essentially cover seismic zoning and microzoning. The first objective would be to revise and expand seismic zoning in selected cities and regions to assess seismic riss. This revision wil be carried out on the basis of past earthquake occurrences and new seismological data. An evaluation of the seismological network in Algeria will be made to determine the need for consolidation and expansion. The existing zoning maps will be updated, and seismotechtonic maps will be prepared. As part of this work, a microzoning map will be prepared for the Mascara seism area. In conjunction with that, a risk assessment and reduction program will be carried out. Geotechnical and geological studies will be udrtaken to detect potential land slide in the region, and formulate ways to protect against this risk. A revision of seismic design coefficients and spectra wil be undertaken with a view to carrying out an evaluation of curremnt building codes. Parallel to this review, a public awareness program would be implemented in the earthquake area. These studies are esfimated to cost US$1.3 million. -9 - Social Rehabilitation: As usual in the aftermath of a seism, the population will remain traumatized for a while, with strong apprehension toward the areas where they used to live. An education program will be implemented to address the concerns of the population, explain the seism phenomena and outline measures they can take to protect themsolves against the destructive forces of an earthquake. A social survey will be undertaken to ensure that the planning and design of the new villages and houses are acceptable to the population. The survey would also determine losses suffered by women and children, and ways to compensate them under the reconstrucoton program. The social rehabilitation component is esfimated to cost US$0.2 million. Like for the cost of the education component, all the costs that follow have not yet been adjusted for physical and price contingencies. Cost Estimte 22. The estimated total cost of the reconstruction project is DA 4,199.9 million (US$83.6 million), with a foreign exchange component of DA 2,599.4 million (US$51.0 million), i.e., 61 percent of the total cost. A summary of the cost estimates is given in Table C-1. Detailed esfimates and price escalation calculation of project investments are provided in Attachments 2 and 3. Table C-1: Cost Estimates Sector Local Foreg Totl Locd Foreg Tota Percnt - ~DA Mlllion-~ -US$ Mtiion- Education 42.5 47.5 90.0 1.1 1.3 2.4 3.2 Housing 725.8 1143.8 1869.6 19.1 30.1 49.2 66.7 Agriculture 37.8 66.3 104.1 1.0 1.7 2.7 3.7 Public health 13.4 23.1 36.5 0.3 0.7 1.0 1.4 Roads 142.6 245.4 388.0 3.7 6.4 10.1 13.7 Water Supply and sewerage 109.8 148.2 258.0 2.9 4.0 6.9 9.3 Social rehabflitation - 7.6 7.6 - 0.2 0.2 0.3 Stuies 24.8 _.1A 47.9 _.7 0.6 1.3 1.7 Base cost (Sept. 1994 Prihs) 1097.7 1705.8 2803.3 28.8 45.0 73.8 100.0 Physical contngencies 109.8 170.5 280.5 2.9 4.4 7.3 10.0 Price escalation 393.0 723.1 1116.1 029 .L6 2. 3.3 TOTAL PRPOJECT COST 1600.5 24 SjW2 &6. 1.0 83.6 1133 (Curent prices) Percentage 38.1 61.9 100.0 39.0 61.0 100.0 - 10- 23. The cost estimates are based on an evaluation of the works that wfll need to be executed to put the infrastructures back the way they were before the earthquake. The estimates include taxes and duties. A 10-percent allowance has been added for physical contiDgencies. During project execution, local expenditures are projected to increase by 25 percent in 1995, 20 percent in 1996, and 15 percent in 1997. Foreign expenditures, meanwhile, are expected to increase by 2.0 percent in 1995, 2.5 percent in 1996, and 2.7 percent in 1997. Price escalation is forecast to amount to about 3.1 percent of the base cost in US dollars, but to 45.6 percent in DA. As a result of the differences between local and foreign inflations, the exchange rates are projected to be DA 44.3 for US$1.0 by mid-1995, DA 53.7 by mid-1996, and DA 61.5 by mid- 1997. 24. The project provides for an estimated 40 person-months of consulting services for project preparation including contracting documents, construction supervision, zoning and microzoning studies, and seismic risk assessment and protection. Protect Execution 25. A bar chart ilustrating the execution phases of the reconstruction program is shown in Attachment 4. Project execution is expected to begin in early 1995 and to be completed by the end of 1998. Bids for the three largest components, the housing, the roads, and the water supply and sewerage, are scheduled to be awarded by mid-1995. Constuction should start during the second half of 1995 to be completed by the end of 1998. Repairs to roads are expected to start in 1995. 26. The Ministry of literior, Local Affairs, Environment, and Admiistrative Reforms (.MICLERA), would be responsible for the execution of the reconstruction works. This rsponsibility would be carried out in concert with authorities in the sectors involved in the reconstruction program, and discharged to a project unit based in Mascara. This unit's works would be supervised by a coordination committee incorporated by representatives of all the sectors involved in the reconstruction program. In addition, the unit will be assisted by consultants who will carry out all necessary studies and environmental mipact assessments, and assist in construction supervtision. During negotiations, agreement was reached that these consuls would be retained not later than Jamnaly 31, 1995, in accordance with the Bank Group Guidelines for the Use of Consultants, under terms and conditions satisfactory to the Bank. EieaMA^£ 27. A Bank loan of US$51 million is proposed to finance the foreign exchange cost of the project. The loan would be made to the Government, to be repaid over 17 years, including 5 years of grace, at the standard variable interest rate. During negotiations, agreement was reached with the Goverment that a part of the loan equivalent to US$4.8 million will be used to make sub-loans to homeowners in the earthquake area to finance finishing works in their dwellings. These sub-loans would be made for a repayment term of 17 years, including 4 years - it - of grace, at an interest rate of 7.5% per annu. The foreign exchange risk on these sub-loans would be borne by the Government. To make the sub-loans affordable to the population in the project area which is essenially rural, the Govenment would provide equal counterpart funds that it would lend for a repayment term of 25 years including 4 years of gace, at an interest rate of 1 % per annum. The Government funds, combined in equal parts with the Bank's, would provide a blend of sub-loans that the rural population should be able to serve. 28. The sub-loans would be managed by the Banque de Diveloppement Local (BDL) under a subsidiary agreement with terms and conditions satisfactory to the Bank. Loan disbursements for sub-loans to homeowners would be made only after the subsidiary agreement has been approved by the Bank. The remaining Bank loan amount would be used to finance the structual works of the core housing units, repairs to damaged dwellings, rebuilding of public dwellings, and reconstuction costs in the other sectors. The balance of local costs would be financed by the Govermment. Cost Recoverv 29. The largest investment would be in the housing sector, and to some extent, the costs should be recovered. But given the mrual character of the program and the low-income level of the population, a grant element should be allowed in loans to homeowners in the earthquake area. As shown in past emergency reconstruction projects, post-disaster subsidies seem to be unavoidable. Cost recovery policies cannot strictly be enforced, as no government can risk aggravating the situation of disaster victims. In the past, BDL provided loans for rural housing at a subsidized interest rate of 1% per annum. Funds for these loans were made available by the Government to BDL, which kept a management fee of 0.5% on repayments of the loans. Under the reconstruction project, this lending practice would continue for only half of the sub-loans for housing reconstruction. The other half would be lent essentially on the Bank loan terms, except for the foreign exchange risk. The combined repayment of these two loans would be equivalent to that of a single loan with a repayment term of 20 years at an interest rate of 4.5%. This rate is below the cuTent cost of money in Algeria, but acceptable in rural areas, especially for reconstruction fo}lowing a natural disaster. 30. Government policies in the housing sector are currently under review as part of a Housing Completion and Sector Development Project (Loan 3561-AL), and any agreed policy changes should be applied to new loans by BDL to homeowners in the disaster area. Whenever a relocated family has the financial means to acquire the land where his new home would be built, the land would be sold to this family. Otherwise, it would be leased for 99 years. 31. Part of the loan will be used to rebuild water and sewerage installations in the affected region. Under the current sector arrangements, these installations will continue to be owned by the Government, but leased to the regional water uility, Entreprise de Prodion, de Gesion et de Distribion d'Eau d'Oran (EPEOR). Annual leasing fees are calculated on the basis of replacing assets at their current value over a 50-year period. After the water and sewerage works have been completed, they will be taken over by EPEOR for operation, and the - 12- lease fees will be increased accordigly. As a result, ful cost recovery would be achieved for the investments in the water sector. As called for in the lease agreement with EPEOR, the Government will increase the lease fees based on the cost of the investments in water supply reconstruction in the earthquake area. No direct cost recovery will be achieved in the other sectors. These investments, however, are justified in terms of the large economic benefits they will bring to society at large. Procurement 32. Proposed proement arangements for the project are depicted in Schedule B to the MOP. A list of contracts to be placed for the project is given in Attachment 6. The project elements have been distributed into packages that should ensure efficiency, economy, and speed in project execution. Contracts for their execution will be awarded in accordance witb the Bank's Guidelines for Procurement. Apart from the supply of equipment and materials, which would be procured through international cmpeuttve bidding (ICB), all the remaining contracts would be placed following local competitive bidding (LCB). Given the low cost and disparity of civil works conuracts that range in size from US$0.2 million to US$2.0 million, no foreign conhtors are expected to be interested in the construcdon of the project elements. However, they would not be excluded from bidding. The housing development program covers 14 sites, and will be bid on the basis of a slice and package system. Owners of properties will negotiate directly with small contractors for repairs to their houses. They will be reimbursed to a maximum of US$2,980 for a total of US$1.1 million. 33. With minor exceptions, local bidding procedures have been found acceptable to the Bank. All civil works contracts above US$10. milion and contracts for goods above US$300,000, will be subject to the Bank's prior review procedures. They will account for above 60 percent of the value of all contracts. Those below these thresholds will be subject to Bank post review on a selective basis. In evaluating bids for the supply of equipment and materials, a 15-percent margin of preference or the actual customs duties, whichever is lower, would be allowed for goods manufactred in Algeria. Consulting services would be procured in accordance with the Bank's Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency. 34. As mentioned before, to house the homeless families, the authorities purchased and installed steel stucus, fabricated in Algeria, at a total cost of US$10.0 million. These structures will be integrated in the permanent dwellings that wil be rebuilt for the homeless population. Only two local manufacturers provide this type of installation. Their entire stock was purchased on this occasion at current market prices. Because of the disruptions created by this purcbase in the budget of MICLERA, it was agreed to retroactively finance the foreign exchange component of the cost of the steel strucues. This retroactive financing is estimated at US$7.0 million. In addition, as indicated in para. 21, development works are well advanced in five housing sites. For these works, five contracts were awarded on an emergency basis, as extensions to existing/previous conrcts, that had been awarded through competive bidding. The cost of these works also will be partly reimbursed on a retroactive basis in an amount of US$3.2 million. Total retroactive financing would be US$10.2, which is within allowable limits. - 13 - Disbursnemnt 35. The Bank loan would be disbursed against: (a) 100 percent of foreign expenditures for itnported equipment and materials; (b) 80 percent of local expendites for goods procured locally; (c) 70 percent of total expenditures for civil works on the housing development program; (d) 50 percent of total expendiues for civil works on other contracts; (e) 50 percent of sub- loans made by BDL to affected homeowners in the project area; and (f) 80 percent of total expenditures of consulting services for project implementation and institutional development assistance. Overall, the Bank loan would finance about 61 percent of the planned investments. 36. Estimated quarterly disbursements of the Bank loan and Govermment funds have been derived from the Project Implementation Schedule (Attachment 4), and are given in Attachment 7. The estimates take into account the quick reconstruction character of the project. As discussed in the next chapter, some procedural changes should be made in the ways projects are usually implemented in Algeria, in order for the projected quick disbursement to materialize. 37. In order to make prompt payments to contractors and consultants, the Bank should agree to advance regularly funds for the establishment of a Revolving Fund in Algeria to cover these payments. The Fund would be maintained at the Central Bank of Algeria for a maximum amount of US$5.0 million, which would cover the Bank's share of eligible expenditures over a period of four months. The Fund would be maintained in U.S. dollars and replenished by reimbursement applications from the Government in US dollars. Applications with appropriate supporting documentation covering the use of the Fund, should be submitted when approximately half of the maximum allowed amount in the Fund has been spent. 38. The closing date of the loan would be December 31, 1998. D. PROJECT IMPLEMENTATION Program Managnment 39. Seven sectors, namely: education, housing, agriculture, public health, roads, water supply and sewerage, and social rehabilitaton would be covered in the reconstuction progran. Because of this diversity, the project will be budgeted as a decentralized operation at the wilaya level. There, each sector is managed by a Directorate which is normally responsible for project preparation, procurement, contract laying, constructon supervision, and contract payments. This practice will continue under the proposed project, but with the coordination and supervision of a project implementation unit. The Directorate of Urban Planning and Construction (DUC), would be responsible for implementing the housing program, including the reconstruction of public dwellings, such as schools and bealth centers; the Directorate of Agricultural Services (DSA), for the irrigation works; the Directorate of Public Works (DTP), for road repairs; and the Directorate of Hydraulic Resources (DHW), for water supply and - 14 - sewerage works. Disbursements would be processed by Banque AlgMfenne de Diveloppement (BAD), who would ensure that contracts have been placed in accordance with the procedures outlined in the loan agreement. 40. An advisory committee would be set up to provide guidance to the implementing agencies and the communities. Its main role would be to ensure that the population's needs and preferences are taken into account in the planning and design of the new facilities, with the least disturbance in its new locations. The committee would also provide guidance in relation to seismic risk assessment and protection. It will advise individual homeowners on the conduct of repairs that will make their dwellings resistant to earthquake. The committee will be conposed of a civil engineer, an earthquake expert, a sociologist, and an urban planner. The committee will also advise the implementing Directorates who will in addition receive technical assistance from consultants. hpIlementation Organization 41. The proposed implementation organization is shown in Attachment 8. The project would be implemented by MICLERA through the above-mentioned Directorates, under the coordination and supervision of a project unit based in the city of Mascara. The work of this unit would be supervised by a coordination committee made up of representatives of all the sectors covered by the reconstruction program. DUC will act as work-owner for construction of the housing development program and other housing constructions, such as schools, public buildings, and health centers. The agricultural component would be executed by DSA. The road component would be implemented by DTP. Finally, water supply and sewerage works would be constructed by DHW. 42. At negotiations, the organizadonal chart of the project unit, as shown in Attachment 9, was discussed and approved by the Government . The unit would comprise of four sections: procurement, construction supervision, disbursement, and accounting. The chart also indicates the staff that would be integrated in the unit. In addition to the project manager, this staff would include two engineers, one administrator, one accountant, two secretaries, and two drivers. The chief of the unit has already been appointed and participated in the negotiations. In addition, assurances were obtained that the Government would appoint the rest of the project unit staff, not later than January 31, 1995. Project Accounts and Audit 43. The project unit will maintain separate records and accounts of the works executed in each sector and for each contract. These records and accounts will be audited by independent auditors acceptable to the Bank. So far, this function has been performed by a government agency, the Inspection Generale des Finances (IGF), for previous Bank loans, and its performance has been rated satisfactory. During negotiations, agreement was reached that IGF will perform an annual audit of the project accounts, including the Revolving Fund account. Certified copies of the accounts as well as the auditors' reports should be submitted to the Bank not later tdan six months after the end of a fiscal year. - 15 - Reporting and Monitoring 44. In order to monitor progress in project implementation, agreement was reached during negotiations that MICLERA through the project unit will submit, to the Bank, quarterly progress reports on project activities in the different sectors. These reports would cover in particular: (a) progress in procurement of materials, equipment, and civil works, including revised timing of procurement actions such as bidding and contract awards; (b) progress in rebuilding in each sector, particularly in relocating homeless families; (c) expenditures on the project and updated cost estimates of remaining works; and (d) execution and evaluation of the institutional development assistance program. 45. Assrances were also obtained that, within six months following the closing date of the loan, MICLERA with the assistance of the project unit and agencies that were involved in the project execution, will prepare and submit to the Bank a completion report on the execution and initial operation of the project, its costs and benefits derived or to be derived from it, the performance and fulfillment by the Government, the concerned ministries and their agencies, and the Bank, of their respective obligations under the Loan Agreement, and the accomplishments of the objectives of the Bank loan. 46. There are some risks associated with the execution of the reconstuction program. The major one relates to the political instability in the country. Terrorist actions might disrupt project execution, particularly as it will be taking place in a relatively isolated rural area prone to these actions. Project success depends on the selection of one or several experienced, well organized construction firms to carry out the housing development component. If this component ends up with an unqualified firm, construction might drag for years, leading to project failure. One possible way to minimize this risk is to have bidder prequalification, so as to ensure that only qualified firms with the necessary financial resources, participate in the bidding. The Government should also make it clear that it will provide full security for the staff and the installations of the construction firms. 47. Other risks are related to the reliability of data used in project preparation. They were collected quickly after the seism, in the rsh of alleviating human suffering in the area. They might not be accurate enough to allow an optimum project design and reliable cost - 16- estimates. But, overall, the proposed works are relatively of simple design, and any variation in estimates should not be too far off the reality. Besides, given the nature of an emergency project, the Bank should be willing to accept relatively small changes in project design in the course of project execution. Supervision Plans 48. Extensive supervision will be necessary to ensure adequate, quick project implementation. However, because of the security situation in Algeria, particularly in the area where the project will be built, the Bank should refrain from sending frequent missions to Algeria, until security in the area improves. In the meantime, the Bank will rely on the use of trustworthy, competent local consultants to carry out project supervision. These consultants are expected to make a supervision visit quarterly, or more often if required. Two short Bank supervision missions per year in Algeria are envisaged, with more frequent and extensive discussions with the local consultants taking place outside of Algeria. Bank missions will comprise experts in the different sectors involved in the project. Services of an expert in seismic engineering will be needed, particularly at project inception. E. AGREEMENTS REACHED AND RECOMNDATION 49. During negotiations agreement was reached on the following issues: (a) consultants acceptable to the Bank should be hired not later than January 31, 1995, to carry out studies included in the project and to assist in construction supervision, under terms and conditions satisfactory to the Bank (para. 26); (b) the Government will make US$4.8 million from the Bank loan available to BDL for maling sub-loans to homeowners for housing reconstruction. The Government will match this amount withi equal counterpart funds and pass them to BDL under a subsidiay agreement, with terms and conditions satisfactory to the Bank. Any disbursement for this program will be made only after this agreement has been approved by the Bank (paras. 27 and 28); (c) retroactive financing up to US$10.2 million would be made available for works undertaken after September 1, 1994; (d) the appointment of staff of the project implementation unit should be made no later than January 31, 1995 (para. 42); - 17 - (e) project records and accounts including the Revolving Fund account, should be audited annually by auditors acceptable to the Bank. 'Ihe annual audit reports should be submitted to the Bank not later than six months after the closing of a fiscal year (para. 43); and (f) during project execution MICLERA should submit quarterly progress reports to the Bank, and within six months of the closing of the loan, will prepare and submit a completion report to the Bank ( paras. 44 and 45). 50. Agreement having been reached on the foregoing issues, the proposed project is suitable for a Bank loan of US$51 million to the Government of Algeria for a term of 17 years, including 5 years of grace. Washington, D.C. , U. S. A. November 10, 1994 - 18 - Attachment 1 Page 1 of 2 DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA MASCARA EMERGENCY RECONSTRUCTION PROJECT List of Past Major Earthauakes In Aaerla' Date Location Itenity Magnitude Remarks Febnrary 3, 1716 Algiers X Numerous casualties October 9, 1790 Oran X 3000 victims March 1819 Mascra X Nunmeous victims March 2,1825 Blida X 7000 dead February 9, 1850 Zamora/E Guenzet vnI November 22, 1851 Mascaa vn-vmiI August 22, 1856 Jijel ix Bejaia vIm January 2, 1867 Mouzaia X-XI November 16, 1868 Biskra IX About 100 dead Jamnary 19, 1885 N'Gaous vim January 8, 1887 Mansoura VmII November 29, 1887 Kala IX-X January 6, 1888 Mouzaia VmII 20 dead Januay 15, 1891 Gouraya X March 11, 1908 Blida VII-VIII August 4, 1908 Constantine vmII June 24, 1910 Masquery X 5.1 August 6, 1912 Oued Marsa VI 6.4 August 25, 1922 Bordj Abou-Hassan X 5.3 March 16, 1924 Batna IX November 5, 1924 Near Algiers vmI 5.6 Several dead June 10, 1925 Near Boghar vIm 5.0 August 24, 1928 Oued Rhiou vImI August 15, 1931 Djebel Dira VEII 5.4 4 dead September 7, 1934 El-Abadia IX 4.9 September 19, 1935 Near Chetaibi 5.0 Febnray 10, 1937 Near Guelma VImI 5.1 April 16, 1943 Near Maosoura IX 5.4 Februay 12, 1946 Hodna Mtns. VRI-IX 4.0 August 6, 1947 Oued-Ham Mine VII-IX 5.6 246 dead March 13, 1948 Asla vIm 5.3 Many victims February 17, 1949 Near Kerrata VIII 4.9 1 dead April 20, 1950 Near Aflou VI-VII 4.9 July 5, 1953 Near Ain Bessam VIII 5.1 August 29, 1953 Hodna Mtns. ViI-iX 1 dead September 9, 1954 Orleansville (El-Asnam) X 6.7 1243 dead, 20,000 ._._-____ houses destroyed - 19- Attachnment 1 Page 2 of 2 DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA MASCARA EMERGENCY RECONSTRUCTION PROJECT LIst of Past Maor Earh kes In Algeria1 Date Location Iest M de Rearks September 10, 1954 Orl6ansville IX 6.2 Aftershock February 4, 19S5 Orl6ansville vm Aftershock May 8, 1955 Beni Haoua VIll June 5, 1955 El-Asnam/Beni Rached VIll 5.7 February 14, 1956 Bordj Bou Hassan VI-VII 5.9 June 28, 1957 Sendjas VII 5.0 May 24, 1959 Zamora/El Guenzet VII-Vi 5.5 November 7, 1959 BoU Medfa VIII 5.5 February 21, 1960 Melouza VEII 5.6 47 dead, 88 injured December 2, 1961 Annaba (at sea) 5.5 September 4, 1963 Near Setif 5.7 1 dead, 100 injured January 1, 1965 M'Sila 5 dead, 24 injured 1304 houses destoyed July 13, 1967 Near Sig Vll 5.1 10 dead, 15 injured February 28, 1968 El Alen VIII 4.9 1 dead, 4 injured February 5, 1971 Ames 5.9 February 23, 1971 Rouina vIm 4.9 February 25, 1971 Asla 5.4 March 11, 1973 Near TdnFs (off coast) 5.7 November 24, 1973 B.B. Arerridj Vll 5.1 4 dead November 25, 1973 Guenzet VII 4.9 July 28, 1974 Setif VII 5.0 November 9, 1974 South of Bejaia VIII 4.1 July 11, 1975 Setif VmII 5.0 1 dead, 18 injured October 10, 1980 El-Asnam Xto Xi 7.2 October 10, 1980 El-Asnam 6.0 November 8, 1980 El-Asnam 5.6 September 1985 Constantine VII 5.6 October 29, 1989 Tipaza VIII 6.0 11 Source: Khemici. 1980 a/ Modified Merali Intensity Scale 20 Attachment 2 Page I of 2 DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA MASCARA EMERGENCY RECONSTRUCTION PROJECT DETAILED COST ESTIMATES DA Milon US$ Mlloa Local Foreign Total Local Forelg Total Percent SECTOR 1. EDUCATION Repairs to 10 schools - Type B.l. and reconstruction of 2 destroyed ones 42.5 47.5 90.0 1.1 1.3 2.4 3.2 1Il HOUSING Steel structures 121.6 288.8 410.4 3.2 7.6 10.8 Land acquisition 140.6 ... 140.6 3.7 ... 3.7 Pulling down of affected structures 3.8 3.8 7.6 0.1 0.1 0.2 Strengthening of existing structures 15.2 22.8 38.0 0.4 0.6 1.0 Construction of 2131 houses - Type F2 349.6 608.0 957.6 9.2 16.0 25.2 Roads, curbs, and public services 72.2 167.2 239.4 1.9 4.4 6.3 Public dwellings 22.8 53.2 76.0 0.6 1.4 2.0 Subtotal ) 725.8 1143.8 1869.6 19.1 30.1 49.2 66.7 Im. IRRIGATION Repairs to irrigation system 7.4 16.9 24.3 0.2 0.4 0.6 Construction of six holding basins 15.2 22.8 38.0 0.4 0.6 1.0 Reforestation program 3.8 3.8 7.6 0.1 0.1 0.2 Irrigation equipment 11.4 22.8 34.2 0.3 0.6 0.9 F- ~ Subtotal(I 37.8 66.3 104.1 1.0 1.7 2.7 3.7 IV. PUBUC HEA,TH Reconstruction of a maternity center in Hacine 5.4 9.6 15.0 0.1 0.3 0.4 Strengthening of 2 health centers in Hacine 2.1 3.9 6.0 0.1 0.1 0.2 Reconstruction of a health center in Sehaldia 1.9 3.1 5.0 ... 0.1 0.1 Construction of health center in Sig, Sidi Aissa, and S. Ali Cherif 4.0 6.5 10.5 0.1 0.2 0.3 Subtotal ON) 134 23.1 36.5 0.3 0.7 1.0 1.4 V. ROADS Repairs to RN 6 34.0 51.0 85.0 0.9 1.3 2.2 Repairs to RN 17 20.0 30.0 50.0 0.5 0.8 1.3 Rehabilitation of RN 17 88.6 164.4 253.0 2.3 4.3 6.6 Subtotal (V) 142.6 245.4 388.0 3.7 6.4 10.1 13.7 21 Attachmert 2 Page 2 of 2 DA Million US$ Milon Local Foreign Total Local Foreign Total Percent SECT OR VI. WATER SUPPLY ANI) SEWERAGE Renovation of w.s. and sewer in Hacine 13.0 52.0 65.0 0.3 1.4 1.7 Construction of five wells 7.5 22.5 30.0 0.2 0.6 0.8 Renovation of Mehiedine pipe 1.3 1.7 3.0 ... 0.1 0.1 Equipment supply (water trucks, tip-lorries) 10.0 30.0 40.0 0.3 0.8 1.1 Lagoons in Hacine and Bou Hanifia 78.0 42.0 120.0 2.1 1.1 3.2 F Subtotal (VI) 109.8 148.2 258.0 2.9 4.0 6.9 9.3 VII. STUDIES Microzoning 15.2 22.8 38.0 0.4 0.6 1.0 Land slide 6.8 8.7 15.5 0.2 0.2 0.4 Social rehabilitation 3.8 ... 3.8 0.1 ... 0.1 Subtotal (V) 25.8 31.5 57.3 0.7 0.8 1.5 2.0 VM1. BASE COST (Sept. 1994 prices) 1097.7 1705.8 2803.5 28.8 45.0 73.8 100.0 IX. Physical contingencies 109.8 170.5 280.3 2.9 4.4 7.3 10.0 X. Price escalation 393.0 723.1 1116.1 0.9 1.6 2.5 3.3 XXI. TOTAL PROJECT COST 160.5 2599. 4199.9 32.6 51.0 83.6 113.3 XII. Percent 38.1 61.9 100.0 39.0 61.0 100.0 DEMOCRATIC AND POPULAR REPUBUC OF ALGERIA MASCARA EMERGENCY RECONSTRUCTION PROJECT PRICE ESCALATION CALCULATION (US$ Million) FXED PART 1995 1998 1 97 TOTAL TEM LOCAL FOREIGN LOCAL FOREIGN LOCAL FOREIGN LOCAL POREIGN LOCAL FOREIGN 1. Education 0.1 0.1 0.2 0.3 0.3 0.4 0.5 0.5 1.1 13 II. Housing: Steel structures - land acquisition 6.9 7.6 .... .... .... .... .... .... 6.9 7.6 Pulling down - strengthening 0.1 0.1 02 0.2 0.1 0.2 0.1 0.2 0.5 0.7 Newconstrucfion 2.9 2.8 0.7 1.9 4.0 8.5 4.1 8.6 11.7 21.8 III. Irrigation .... .... 0.2 0.4 0.4 0.6 OA 0.7 1.0 1.7 IV. Public health: Reconstruction of health centers .... 0.1 0.1 0.2 0.1 0.2 .... .... 0.2 0.5 New constructon 0.1 0.1 0.1 0.1 0.2 s V. Roads: Repairsto RN8andRNI7 0.1 0.2 0.6 0.9 0.7 1.0 .... . 1.4 2.1 Rehabilitation of RN17 0.2 0.4 0.4 0.8 0.7 1.4 1.0 1.7 2.3 4.3 VI. Water supply aSfu sewerage: Renovation works .... 0.2 0.1 0.6 0.2 0.8 0.2 0.5 0.5 2.1 Equipment supply .... .... 0.1 0.2 0.1 0.3 0.1 0.3 0.3 0.8 Lagoons 0.7 0.3 0.7 0.4 0.7 0.4 2.1 1.1 VIl. Studies .... .... 0.3 0.2 0.4 0.3 .... 0.3 0.7 0.8 VIII. Base cost (Sept. 194 prices) 10.3 11.5 3.6 6.0 7.7 14.2 7.2 13.3 28.8 45.0 I)X Physical contingencies 1.0 1.1 0.4 0.6 0.8 1.4 0.7 1.3 2. 4.4 X Price escalation .... .... 0.1 0.1 0.3 0.6 0.5 0.9 0.9 1.6 Xl. TotalProjectoost 11.3 12.6 4.1 6.7 8.8 162 8.4 15.5 32.6 51.0 XII. Cost in DA million 429A 478.8 181.6 296.8 472.9 870.5 516.8 953.3 1600.5 2599.4 >> VIII. Exchange Rates 38.0 44.3 53.7 61.5 e ir DEMOCRATIC AND POPULAR REPUBUC OF ALGERIA MASCARA EMERGENCY RECONSTRUCTION PROJECT IMPLEMENTATlON SCHEDULE Estimated Annual Contractual and Other Payments (US $ Million Equivalent Project YearsToaRerk Project Elbent Payments 1995 1996 1997 1998 1. WORKS 1 ~~4.3 9.6 12.8 9.73A 1.1 HousIng Development LCB .8 3.3 2-0 ~~~~~~~~~~~~~~11.1 1.2 Sdiools, Holding Basins, Public Health, Road 17 ( (5.6) LCB (09) 2 (1.7) (1.9) 6.0 C 1.3 Repairs to Houses, Roads 4 (3.0) LCB (.) ( 1.0) . (0-1.56)737 C 1.4 Water Supply and Sewer (1 9) LCB (0.7) (.1 0.8) (0O4)03 C 1.5 Reforestation Program (0.3) LCB 1.6 Land Acquisition 5.4 . 12.3 1.7 Steel Stnuctures 6 (8.8) Direct Contracting 2. GOODS Is ~~~~~~~~~~~~~3.8 2.1 Equipment and Machinery (0 .3 (1.3) (3.0) ICe _ ~~~0.3 05n 2.2 Materials 05 1.3 ice (0.2) (0.4) (1.0) 3. CONSULTANCIES 3.1 Project Implementatlon -F _ 1.6 Short List (02) 0 7(0.5) 0 (4)(1.3) 3.2 Institutional Development (06 (0.2) (1.73) Short Ust -(0.6) - -i(0 5)- (1 2) -. TOTALS 27.0 21.2 22.4 13.0 83.6 (Bank-Financed) (15.2) (12.7) (14.7) (8.4) (51.0) 0 Lecend: DI Document Preparation Construction Study Period ~JBidding sads/w50721a - 24 - Attachment 5 Page 1 of 4 DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA MASCARA EMERGENCY RECONSTRUCTION PROJECT LOCAL DEVELOPMENT BANK BACKGROUND AND OPERATI3NS Background 1. The Local Development Bank, Banque de DMveloppement Local (BDL), was established on June 21, 1988, in accordance with Law 38.01 of January 12, 1988, when the parent institution, Credit Populaire d'Algerie (CPA), ceded its local enterprise (EPL) portfolio to the new bank. Since Febnrary 20, 1989, BDL has had an Entreprise Publique Economique (EPE) status, and as such, is fully autonomous, both administratively and financially. At first, BDL's clientele was limited to local enterprises owned and operated by Wilaya and municipal governments. In recent years, a number of EPLs have been either restructured or liquidated; the remaining ones are being considered for privatization. Consequently, BDL has been reaching out to an emerging private sector. Private contractors and industrial enterprises providing construction materials are now important clients. Besides its growing private sector portfolio, BDL's comparative advantage is its capacity to serve rural, as well as urban, customers through an extensive network of 146 branches. In the coming year, some 14 new branches will be opened. An operational strategy is currently under discussion. Oranization 2. BDL has a total staff complement of about 3,100, including about 1,000 professionals. An international firm has conducted a major institutional and financial audit of BDL, covering the period between January 1, 1991 and September 30, 1992, with a view to restucuing BDL, with Bank assistance under the ongoing Economic and Financial Sector Adjustment Loan (EFSAL). BDL has begun carrying out the recommendation of the audit. Its operations, which are decentralized, are nearly fully computerized. An organizational chart is shown on page 3 of this Attachment. Financial Position 3. BDL was initially capitalized in the amount of DA 500 million. Its present capital is DA 720 million, including capitalization of DA 220 million in 1994. In 1992, BDL made major adjustments in its balance sheet by removing non-performing loans to liquidated EPLs. As a result, it posted a significant loss in that year. To compensate for this loss, the Government agreed to swap Treasury bonds valued at DA 16 billion for an equal amount of BDL's losses. The swap is being carried out over a two-year period, 1993-94. As a result of - 25 - Ament S Page 2 of 4 these new revenue-producing assets, BDL's spread moved to a positive one, albeit 0.3%, in 1993. A second phase of auditing is underway, and the fnal report is scheduled to be issued by the end of December 1994. Audited fnancial statements for 1993 should reflect the real impact of those assets on BDL's fiancial position. Meanwhile, measures to mitigate the impact of the remaining losses are under consideration. Original and adjused fmancial statements and indicators are shown on page 4 of this Attachment. Mascara Emergency Reconstruction Project 4. To meet reconstruction needs in Mascara, the Government has decided to grant an upfront housing subsidy in the amount of DA 300,000 to each homeowner whose dwelling was destroyed by the earthquake. In areas where housing is scattered, the grant will be used entirely for self-help construction. In sites and services development areas, where 90% of the affected families will be living, the grant will cover the cost of the structural works of a 30 in2- core unit, to be built by contractors. This will leave the possibility for each unit to be expanded over time according to a flexible, prototype architectural design. An additional DA 150,000 will be needed to finish each core unit in these areas, through self-help construction. Within this famework, BDL's role will be to provide loans for fmancing finishing works in the core units and possible extensions. A subsidy of DA 100,000 will be given to each homeowner whose dwelling was damaged by the earthquake. This amount will be used to finance repairs to the dwelling. The Project Implementation Unit (PIU) will be in charge of managing the disbursement of the subsidies to approximately 210 families for rebuilding of their scattered houses, and to about 385 families for making repairs in their dwellings. 5. Bank loan proceeds in the amount of US$4.8 million have been earmarked to cover 50% of the cost of self-help constuction works needed to finish core units. The Treasury will channel Bank loan fumds in the amount of DA 75,000 per beneficiary homeowner and an equal amount in counterpart funds, through BDL. It will make Bank funds available to BDL at the current interest rate charged by the Bank with a maturity of 17 years and four years of grace. Concomitantly, it will lend an equal amount on current concessionary terms, i.e., 1% with a 25-year maturity and four years of grace. The Treasury will provide resources to BDL upfront in equal installments composed of Bank loan proceeds and matching counterpart funds. The Bank will reimburse the Treasury from the loan account on receiving proof of Treasury disbursement to BDL. BDL will make subloans to beneficiaries under the terms described above, and will receive a fee from the Treasuiy for managing these subloans. The Inspection Generale des Finances, within the Treasury, will audit project accounts annually and submit audit reports to the Bank within six months of the close of each fiscal year. 6. The Mascara Regional Office of BDL will process subloans in coordination with the PIU, which will develop a dossier for each sub-borrower. To be eligible for financial assistance through BDL, homeowners would have to provide, inter alia, property titles as collateral. In addition, BDL may engage the services of a local firm to supervise the works in progress. -26- Attachment 5 Page 3of 4 President General Manager I General I l l T ~~~~~~~IrnspectUon Deputy General Manager .jAudit j I ControlJ DptManae Deputy Marnager Dpt aae Loanommitent Rnarnce and Accounting "AnIstastIon 1 Private Sector Credit Departnent 9 Finance and Cash Management Department 2 Public Enterprise Credit Department 10 Human Resources Deparnent 3 Department 11 Information Systems Deear t 4 CommItment Control Department 12 Materia Means and Budt 5 Foreign Exchange Department 13 Regional Offices (15k 6 General Accounting Department 7 Banking Production Department 8 Treasury Department sads/W51041d - 27 - Attachment 5 Page 4 of 4 1991 1992* 1993 Audited Audited Utn-audited INCOM STATEM8NT Interest on Loans 2,720 3,082 5,033 Interest Expense (1,541) (1,604) (3,967) Depreciation Expense (19,393) (26,700) (840) Other Operating Expenses (490) (370) (799) Net Operating Income (18,704) (25,592) (573) Adjustments 74 (344) 724 Net Income before Taxes (18,630) (25,936) 151 BALANCE SiENT ASSETS Cash and Equivalent 2,182 1,531 5,620 Oustanding Loan Portfolio 10,591 12,597 11,130 Securities 120 162 15,526 Fixed Assets 358 435 872 Other Assets 719 4,157 32,229 TOTAL ASSBTS 13,970 18,882 65,377 LIABILITIES & EQUITY Notes Payable 4,844 9,715 10,060 Sight Depots 10,256 12,016 17,480 Medium- and Long-Term Borrowing 8,404 13,033 16,857 Other Liabilities 8,063 8,758 18,267 Reserves 534 796 865 Capital 500 500 500 Retained Earnings (18,631) (25,936) 1,347 TOTAL EQUITY & LIA'ILITIES 13,970 18,882 65,377 FINANCIAL INDICATORS Liquidity/Quick Ratio 14.5% 7.0% 20.4% Working Ratio 18.0% 12.0% 1S.9% Operating Ratio 731.0% 878.3% 32.6% Average Interes' Earned -119.3% -125.1% 6.4% Average Cost of. Resources 11.0% 8.5% 6.1t Spread -130.4% -133.6t 0.3* Return on Assets -133.4% -137.4% 0.2t * lTrough Sqember 30, 1992. - 28 - Attachment 6 Page 1 of 1 DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA IASCARA EMERGENCY RECONSTRUClION PROJEC1 UiST OF CONTRACTS TO BE PLACED FOR THE PROJECT TOTAL PROJECT COMPONENT PROCUREMENT iTEMS CONTRACT NO. PAYMENT US$ Million Housin-: Land acquisition MERP0 5.3 Steel structures MERP-H-1 10.6 Housing development MERP-H-2 37.1 Repairs to structures MERP-H-3 to 1.1 Agriculture Holding basins MERP-A-1 1.1 Reforestation program MERPA.2 0.2 Repairs to irrigaon MERP-A-to 0.6 Education: Reconstruction of schools MERP-E-1 to 10 2A Public health: Reconstruction of health centers MERP-P-1 to 6 1.0 Roads. Rehabilitation RN 17 MERP-R-1 7.5 Repairs to RN 6 and 17 MERP-R-2 to 5 4.0 Eauiement supooW School, hospital, pumps, aerators, truck MERP-S-1 to 3.6 SU1IV of materials Pipes and fittings, asphalt, seeds MERP-M-2 2.1 Water sUoohr & sera: Water & sewrage network MERP-W-1 2.2 Lagoons MERP-W-2 1.5 Consultancies Construction supervision MERP-C-1 1.6 zoning, microzoning MERP-C-2 1A Land slide study MERP-3 0.3 TOTAL - 29 - Attachment 7 Page 1 of 1 DEMOCRATIC AND PEPULAR REPUBLIC OF ALGERUI MASCARA EMERGENCY RECONSTRUCCTION PRECT ESTUMATED SCHEDULE OF DISBURSiEMENTS (US$ Millon) Bahnk Loan Govermnent Funds Bank FYI and Quarter In Quarter Cumulaive In Quarter Cumuladve2 1995 Third 4.0 4.0 3.0 3.0 Fourth 3.9 7.9 3.2 6.2 1996 First 3.7 11.6 2.9 9.1 Second 3.6 15.2 2.7 11.8 Third 3.3 18.5 2.3 14.1 Fourth 3.2 21.7 2.2 16.3 1997 First 3.0 24.7 2.0 18.3 Second 3.2 27.9 2.0 20.3 Third 4.4 32.3 2.0 22.3 Fourth 3.8 36.1 2.0 24.3 1998 First 3.5 39.6 1.9 26.2 Second 3.0 42.6 1.8 28.0 Third 2.5 45.1 1.6 29.6 Fourth 2.5 47.6 1.0 30.6 1999 First 2.0 49.6 1.0 31.6 Second 1.4 51.0 1.0 32.6 Rums from July Ist of the preceding year to June 30tI of the current year. Gives esdmated accumulated disbursements at the end of the conesponding quarters. DEMOCRATIC AND POPULAR REPUBUC OF ALGERIA MASCARA EMERGENCY RECONSTRUCInON PROJECT Project ImplemontatWon Organiza.on MINISTRY OF INTERIOR STEERING COMMITTEE AGRICULTURE EDUCATION I HOUSING PUBLIC HEALTH PUBUCWORKS MASCARAS WALI |COORDINATION COMMITTEE |3L)-:: |MPLEMENTAON UNIL | ISA* l l )DTP' O I COMMUNMFS DUC 0HW * BSA: Direction des Sertlces Agflcoles de la Ufllaye de Mascaa DTP: Direction des TIavaux Publics do la Wllaya de Mascara WUC: DirecIon de rurbanlse at de la Construcon de la Wilaya de Mascara DHW: DirectIon de rHydraullque de la WTlaya de Mascara sadsAN50721b -31- ~~~~~~~ATTACHMENTS iE~~~~~~~~~~~~~I IL Z 00 0F cc M c i~~~~U ~~~~~z~~~ 8~~~~ (wE~~~~~~~~~~~~~~u 0011 ~ ~~~~~....... - 32 - Attachment 10 Page 1 of 4 DEMOCRATIC AND POUL REPUBLIC OF AGERIA MASCARA EMERGENCY RECONSTRUCTION PROJECT Selected Photos of Earthquake Damages ''~~~~ist ~ 7-- strC3 -33 - Attachment 10 Page 2 of 4 DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA MASCARA EMERGENCY RECONSTRUCTION PROJECT Selected Photos of Earthquake Dames 8E~~~V it I *~~~~~ ~~~~ S 9 - 34- Attachment 10 Page 3 of 4 DEMOCRATIC AD PQOuAR REPWBLIC OF ALGE MASCARA EMERGENCY RECONSTRUCTION PROJECT SelectiedPhotos of Earthquake Damages -- -h--. X~~~~~~~~~~~~M - 35 - Atachmaent 10 Page 4 of 4 DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA MASCARA EMERGENCY RECONSTRUCTION PROJECT Selected Photos of Earthauake D =es ~~~~--3 1~~~' - AA - 36 - Attachment 11 DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA MASCARA EMERGENCY RECONSTRUCTION PROJECT Selected Documents and Data Available in the Project File 1. Reconstruction de la zone sinistite - Bilan et perspective 2. Reconstruction de la zone sinistr6e - Annexes - Fiches Techniques - I 3. Reconstruction de la zone sinistr6e - Annexes - Fiches Techniques - II 4. Esquisse Tectonique de l'Algerie (Alg6rie du Nord) Expose sur les connaissances actuelles de la structure de I'Algerie et presentation d'une carte tectonique, Maurice Kieken, Service de la Carte G6ologique de l'Alg6rie, Alger, 1962. 5. Le risque sismique en Algerie, Ministere de l'Habitat, Centre National de Recherche Appliquee en GEnie Parasismique, Alger, 1993. 6. Council of Europe - EUR-OPA Major Hazards Agreement--Report of the Post- Earthquake Mission to Algeria from 31 August to 2 September 1994. Strasbourg, September 22, 1994. IBRD 267 rW ) r ; . . 8 12r s7.s < t vZ / M e d i t e r a n e a n S e a Sid, o ALOU ~~~~~~~~~~~~~~~~~~~~t - _,. C4:j ;<4-iS - R - X S----- --> -- /X/ - f1\- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-9 °! a.. - y - - 'A<- DolS- ° d X v + n '~~~~~~~tO - KDODDIEA ' - - lersR flf t r{t t zer > t ror_DSDD .t VI]. 0K MASCARA ALGERIA 2 \i'For detail, sb MASCARA EMERGENCY RECONSTRUCTION PROJECT - \ N \ ) t. < . EARHQUAKE RECOVERY - PROJET LOCATION WILAYA NAMES. 2 / BECIIDA OUARCIA \ 23 biCENI R AOllS6 13 ANNMA 25 GUELMA 37 DELIA TINDOLIF -- FAUI- LT UNI S 2 TLEMCEN 14 EL TARf 26 S1UK AMSAS 38 E10(A PAVED NATIONAL ADS A AN TEO ENT SIDI BEt A8S 27 SADA TENC8ESA PAVED WULAYA ROAD$ 4CRAN M6AASCARA 28 TtARET1 TErES N. .02551 -+-4-'- VJ~~~~~~~~~~~~~~~~~~~~~~~~~~~LROADS 5 MOSTAGAE 17 EELIZANE 29 lSSSEMST 41 a Ocam F%.f t\, AI E(l sSRPORTS 6 CHU!F G7RUANEM 10ANDEL MEDEA I BECHARE .RVERS 7 TIPAZA S BLEDA 31 rSIiLA 43 GHArA rho .' M E *P. OET SND VIlLAGES 8 BOUMERDES 23 soa,A 32 MAEDA 44 OUIARGL TASNO1IANGSSETT WiI VIYCAITA aS fuzou 21 sOUZOECU a 32I R ELEORDJOU I TiR ARRERIDJ 33 O M 45 A Idpo of * NATIONAL CAPITAL IT BEJASA 22 SETIIF 34 NAAMA 46 ADM Th. Fo.k o WIILAVIA IOUNDDSIES 3tJJL2 MOICA $5 EL EAYADM 47 TAMANGNASSET AhaoatloiD- . - -* NTERNIATIONAL BOUNDARIES 12 SKI1DA 24 CONSTANTINE 36 lAGrOUAT 608r GD p°n°. of aooM | (*_-. TDA _ NOVEM8ERA 1149