Document of The World Bank FOR OFFICIAL USE ONLY Report No: 23880 IMPLEMENTATION COMPLETION REPORT (TF-23047; COFN-03580; PPFB-P2150; SCL-39080; SCL-39090) ONA LOAN IN THE AMOUNT OF US$30.5 MILLION TO THE REPUBLIC OF MAURITUS FOR A PORT DEVELOPMENT AND ENVIRONMENT PROTECTION PROJECT June 5, 2002 AYFTR Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. l CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2001) Currency Unit = Mauritian Rupees Rs.1 = US$ 0.033 US$ 1 = Rs. 30.3 FISCAL YEAR July 1 -June 30 ABBREVIATIONS AND ACRONYMS BPML Business Parks of Mauritius Ltd BPMLFS BPML-Freeport Services CHCL Cargo Handling Corporation Ltd CAS Country Assistance Strategy GOM Government of Mauritius HRD Human Resources Development IT Information Technology MCT Mauritius Container Terminal MPA Mauritius Ports Authority MMA Mauritius Marine Authority MFA Mauritius Freeport Authority PSEC Port Safety and Environment Committee PUC Port Users Council QAG Quality Assurance Group SCL Single Currency Loan SP Social Plan VRS Voluntary Retirement Scheme Vice President: Callisto Madavo Country Manager/Director: Hafez M.H. Ghanem Sector Manager/Director: Maryvonne Plessis-Fraissard Task Team Leader/Task Manager: Marc Juhel FOR OFFICIAL USE ONLY MAURITIUS PORT DEVELOPMENT AND ENVIRONMENT PROTECTION PROJECT CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings I 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 5 5. Major Factors Affecting Implementation and Outcome 14 6. Sustainability 15 7. Bank and Borrower Performance 16 8. Lessons Learned 18 9. Partner Comments 19 10. Additional Information 31 Annex 1. Key Performance Indicators/Log Frame Matrix 32 Annex 2. Project Costs and Financing 33 Annex 3. Economic Costs and Benefits 35 Annex 4. Bank Inputs 49 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 51 Annex 6. Ratings of Bank and Borrower Performance 52 Annex 7. List of Supporting Documents 53 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. Project ID: P00 1926 Project Name: PORT DEV. & ENV PROT Team Leader: Marc H. Juhel TL Unit: TUDTR ICR Type: Core ICR Report Date: June 6, 2002 1. Project Data Name: PORT DEV. & ENV PROT LIC/TF Number: TF-23047; COFN-03580; PPFB-P2150; SCL-39080; SCL-39090 Country/Department: MAURITIUS Region: Africa Regional Office Sector/subsector: BB - Public Sector Management Adjustment; ME - Economic Management; TP - Ports & Waterways; VV - Environment Adjustment KEY DATES Original Revised/Actual PCD: 05/28/1993 Effective: 03/04/1996 Appraisal: 12/15/1994 MTR: 03/26/1997 Approval: 06/20/1995 Closing: 12/31/2001 12/31/2001 Borrower/lImplementing Agency: Government of Mauritius; Mauritius Ports Authority/Mauritius Freeport Authority; Mauritius Ports Authority Other Partners: European Investment Bank (EIB); Japan Export-Import Bank (Jexim); Government of Luxembourg STAFF Current At Appraisal Vice President: Callisto E. Madavo E.V.K. Jaycox Country Manager: Hafez M. H. Ghanem Andrew P. Rogerson Sector Manager: Maryvonne Plessis-Fraissard Maryvonne Plessis-Fraissard Team Leader at ICR: Marc H. Juhel Alain F. Ballereau ICR Primary Author: Marc H. Juhel; Sati Achath 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: HS Sustainability: HL Institutional Development Impact: SU Bank Performance: S Borrower Performance: HS QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The overall objective of the project was to enhance Mauritius' transport and trade competitiveness in the maritime sector in an environmentally sound manner. To this end, the project aimed to help:(i) increase port productivity, efficiency and capacity to meet the demand of port users and operators at competitive rates through extension of facilities, mechanization and improved management of Mauritius Port Authority (MPA), formerly Mauritius Marine Authority (MMA), Cargo Handling Corporation (CHC) and Mauritius Freeport Authority (MFA); (ii) re-define the role of MPA as a landlord port authority working through a system of competitive concession contracts with performance indicators for port operations; (iii) support the development of MFA to promote Mauritius as an attractive tax-free base for regional entrepot trade; and (iv) accompany port development with sound environmental protection, including control of marine pollution, and port operations and vessels' safety enhancement. The objective of the project was clear, important, and realistic. It was also consistent with the Bank's 1994 Country Assistance Strategy (CAS), which focused on helping Mauritius achieve and sustain a higher level of economic performance based on increased competitiveness and diversification of production and exports, including the development of skills-intensive and service-based activities. Among other things, this required improving the efficiency and competitiveness of key infrastructure, such as the port in an environmentally sound manner. The Bank's involvement through this project aimed to contribute to achieve that goal. This economic competitiveness objective was also a main thrust of the following 1997 CAS, so by spanning two CAS periods, the project appears to be part of a continuous and consistent effort to adapt the Mauritian economy to the new global challenges it has to face. The project also aimed to supplement the Bank's existing programs such as the economic and sector work (Mauritius - Technology Strategy for Competitiveness, Report No. 12518-MAU, September 1994) and lending (Technical Assistance to Enhance Competitiveness Project, LN. 37360-MU). By supporting and guiding the modernization and extension of the port, and achieve the appropriate blend of institutional reform, capacity extension, and financial engineering, the project strengthened Mauritius' drive to reach a higher level of performance. In addition, the environmental component of the project was significant for its demonstration value for other countries in the area of marine pollution and vessel safety control. The project envisioned several benefits to Mauritius, which included: (a) developing international and regional entrepot trade by improving the competitiveness of the country's transport and trade; (b) lowering transport costs through reduced ship and cargo waiting time; (c) better land use, in particular for prime areas reclaimed from the sea; (d) better response to the needs of private investors and operators by strengthening the regulatory roles and organization of MPA and MFA; (e) substantial and positive social impact by providing more efficient and reliable conditions for Mauritian trade; and helping indirectly to generate new business in the intemational trading sector; and (f) reduced environmental risks through less polluted port water, better handling of hazardous cargo, and improved ship safety control. The project took into account lessons leamed from previous Bank-assisted projects in the environmental and transport sectors in Mauritius, which showed that the success of Mauritius' -2 - implementation performance stemmed mainly from (i) good institutional capacity; (ii) strong ownership as a result of involving institutions at the outset; and (iii) strong follow-up, once decisions were made. These lessons also demonstrated that whenever the focus of new operations were directed toward more complex institutional goals, and required the cooperation of various interest groups, there were slower pace of project preparation, delays in start-up and slower disbursement. In order to enhance project ownership and commitment of all stakeholders, the project was prepared in close cooperation with the Government of Mauritius (GOM), MPA/CHC and MFA, and in consultation with relevant private sector and trade union representatives. The project also focused specifically on strengthening MPA and MFA, increased transparency and efficiency in port operations through structural changes and expanded private sector involvement. The project also benefited from cofinancing from the Japan Export-Import Bank (Jexim), which granted an equivalent amount to the Bank loan to MPA for the new container terminal, from the European Investment Bank (EIB), which granted a loan to MPA to finance ship-to-shore container handling equipment for the new terminal, and from the Government of Luxembourg which offered a grant to MFA for the building of new warehouses. The project also recognized and took into account the following three risk factors which could affect project implementation, viz: * the possibility of partial implementation of the institutional changes, especially the labor redundancies at MPA and CHC. This risk was minimized through the use of client consultation and beneficiary participation. All the interested parties, including the government, MPA, CHC, port users and labor unions participated in the planning of the institutional studies, as well as in the review of conclusions prior to their adoption by GOM. * the effect of annual cyclonic stonns on the operations of the new terminal. This risk was mitigated by analyzing the possibilities of weather-related loss and building the appropriate level of precaution into the design of the berth to enable it to withstand waves of even exceptional storms. In addition, provisions were made to have gantry cranes secured to the ground, and yard equipment moved to safe shelters during such storms. * the interest rate risk, especially for MPA, associated with a LIBOR-based Single Currency Loan (SCL). While assessing this risk, it was estimated that the benefits of the reduced currency risk from SCL which Mauritius was eligible for, outweighed the interest rate risk. The project was responsive to the needs of the Borrower. It was timely and appropriate for boosting the image of Port Louis as a hub port in the Southern Indian Ocean for non-captive cargo, particularly in light of globalization and increased competition from the region. With increased productivity, competitive tariff and higher quality of service resulting from the project, it was expected to elevate Mauritius to a level where it would be in a better position to face the future with more confidence and competence. The project was also moderately complex and reasonably demanding on the Borrower because it involved significant sector reforms and changes in social plans. Implementing Voluntary - 3- Retirement Scheme (VRS) and declaring staff redundancies under the Social Plan (SP) was expensive as well as burdensome to both MPA and CHCL. Likewise, productivity parameters and their monitoring by the Bank and MPA were demanding to the CHCL. In addition, since CHCL was not fully conversant with terminal management, its staff had to be trained especially on container terminal operations. However, even though Mauritius had never before undertaken a project of this magnitude, in terms of resources both implementing agencies were well geared. But in terms of time, it was demanding for the management of MPA and CHCL, technicians, engineers and contractors. In addition, it was a challenging task to get the commitment of all stakeholders to develop the new facility at Mer Rouge. 3.2 Revised Objective: Not applicable. 3.3 Original Components: The project consisted of the following three components. The components were reasonably related to achieving the objectives. The implementing agencies, MPA and MFA, had sufficient administrative and financial capacity for successful implementation. Since this was a second port project in Mauritius, MPA staff had had previous experience in project management. (A). Port Development (MPA) Component. This included: (i) Institutional strengthening to make MPA a more commercially-oriented landlord port authority, with sole legal authority over port operations, standards, and land use, fostering streamlined port handling operations through concession contracts with port operators, including CHCL. Consequently, it implied that henceforth CHCL would buy or lease cargo handling equipment put at its disposal by MPA and would open its capital to private investors including an experienced container terminal operator. (ii) Improvement in the management and operations of MPA and CHCL through the implementation of their corporate plans, including organizational restructuring to achieve inter alia, cost containment and rational marketing and pricing. (iii) Construction of a new three berth container and oil terminal, and procurement of related equipment including two gantry cranes for container handling; fire-fighting and computer equipment; a passenger terminal building and an intemal road network for new port areas; civil works and pipelines to relocate oil and gas storage; and (iv) supervision contracts for civil works; and specialized short-term assistance to develop and implement actions needed to strengthen the institutional set-up, management and operations of MPA and training. (B). Freeport Development (MFA) Component. This included: (i) a study on the modalities for liberalization of the national regime governing air transport licensing, to allow for chartering of cargo planes to permit sea-air links, to facilitate sea-air transshipment activities to take into account, reciprocity in international air traffic agreements; (ii) implementation of a targeted trade development strategy through the execution of MFA's corporate plan to strengthen its organization and operations as well as rationalize its marketing and pricing; (iii) site preparation of 15 - 4 - hectares of land at Mer Rouge including the construction of roads and office and customs buildings; and (iv) supervision contracts for civil works, and specialized short-term assistance to develop and implement actions needed to strengthen management, operations and training at MFA. (C). Environment Protection Component. This included: (i) A study to define the requirements and to design facilities for collection and disposal of land and ship-based oily waste, and to draft regulations required to enforce safety in port operations and control vessels' sea- worthiness. (ii) Construction of facilities for collection and pre-treatment of oily waste. (iii) supervision of contracts for civil works and equipment and training to fight oil spills and control vessels' sea-worthiness. 3.4 Revised Components: Not applicable. 3.5 Quality at Entry: Since the project design predates the existence of the Quality Assurance Group (QAG), there is no official assessment of the project's quality at entry. Nevertheless, the ICR finds the quality at entry to be satisfactory As mentioned earlier, the project objectives were consistent with the CAS and the government priorities and met the critical needs of the transport sector. Since the implementing agencies had the required administrative, financial, and technical capacity, the quality of project design was generally adequate to meet the project's overriding objective. During preparation of the project, major risk factors and lessons learned from other earlier projects in Mauritius were considered and incorporated into the project design. The project design also included a noteworthy innovation to standard Bank financing arrangements in Africa. By allowing a better exchange rate risk management, the single currency, US dollar-based loan offered significant value to MPA, which earns most of its revenue in US dollars; the SCL's long tern, 15-year maturity spread better the annual financing costs for MPA, compared to its short-term and higher-cost alternative option. The same terms were secured for the project's co-financing arrangements with JEXIM and EIB. In addition, the private sector equity financing of equipment reduced reliance on debt financing. Such financing sources included Mauritius' emerging stock market, thus furthering the capital market-strengthening objective. As mentioned in Section 7.1 under Bank Performance, the project design adopted a participatory approach by involving port unions in project preparation as well as in the sector reform process. Likewise, the project design also included regular consultations with the private sector. In hindsight it might appear that the Bank took some risk by not formally linking disbursement with sector reform, in the event that the government did not fully implement the sector reform. However, the Bank decided to finance the container terminal without any conditionality in light of: (i) the substantial commitment from the government to proceed with the sector reformn as per the Bank's agreement with the Letter of Government Policy; (ii) the climate of trust and - 5 - confidence built upon past credentials of Mauritius as a country which keeps up its commitments; and (iii) the fact that this being an IBRD project, the Borrower had the choice of not accepting the Bank's conditionalities. In retrospect, it also became apparent that MPA lacked sufficient support to deal with the legal matters on sector reforms as well as on project implementation. Since it had to rely on the State Law Offices for legal advice, there were delays in taking timely decisions. On the other hand, having a legal expert on board to look into legal issues would have been very useful during critical periods of project implementation. However, legal advice was provided under project-financed technical assistance, in particular for the drafting of the new Ports Act and of the related regulations. Also, the HRD Plan could have been incorporated as part of the project right from the outset, which would have enabled MPA to look in detail on issues such as quality and capacity of resources, and capacity-building skills. Instead, the HRD Plan came into existence only after the Ports Act of 1998. Likewise, implementation of the Social Plan could have been one of the components of the project, so that it would have been financially less strenuous for both MPA and CHCL. It should be remembered, however, that when the project was negotiated in 1995, the possibility for the Bank to finance labor redundancy packages through investment lending operations had not been approved yet. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: Highly satisfactory. The project succeeded in achieving its project objective. Among other things, achievement of the project included completing the sector reform, and enhancing port productivity substantially, which in turn generated many economic benefits. The major outcome and achievements of the project are as follows: Sector reform: The new Ports Act was approved by the National Assembly on May 26, 1998 and became effective on August 1, 1998. Consequently, the Mauritius Marine Authority (MMA) was renamed the Mauritius Ports Authority (MPA) and became the Landlord Port Authority, whereas the CHCL formally became a full-fledged operator. Complementing the new Law, Port Regulations comprising port operations, safety, hazardous cargos, licensing, finance, and environment protection came into effect soon after, and a Port Users Council (PUC) was established as a permanent consultative forum. The new Freeport Act which was passed on 17th July 2001 along with Freeport Regulations, defined the new role of MFA as a regulator and promoter. With the enactment of Freeport Transfer of Undertaking Act on the same date, MFA's assets were transferred to Business Parks of Mauritius Ltd (BPML). Subsequent to these Acts, BPML established a subsidiary under the name BPML-Freeport Services to provide logistical support services such as warehousing, open storage yard, and office space to Freeport operators. Productivity. Since the start of operations on the Mauritius Container Terminal (MCT) on January 15, 1999, operational performance improved significantly throughout the year 2000, with September 2000 reaching 19.4 moves per gross crane hour, the best result so far, repeated in - 6 - August and October 2001. Average productivity per ship working hour also increased substantially reaching 28.7 in 2001, compared to 21.9 in 1999. The following table displays detailed monthly results of MCT operations: Month No. of No. of Moves per Moves per Moves per Ship Ships Moves Gross Crane Ship Working Hour at Berth Hour Hour (*) (*) 1999 TOTAL/ 386 108,043 A VERA GE 14.4 21.9 17.7 2000 TOTAL/ 429 127,521 A VERA GE 17.8 28.3 20.0 % 2000/1999 + 11% + 18% +24% +29% + 13% January 2001 38 9,773 18.0 28.0 24.6 February 2001 37 8,823 18.9 28.5 17.1 March 2001 45 11,777 16.9 25.8 18.1 April 2001 40 11,731 18.5 30.9 28.0 May 2001 43 11,746 17.3 28.0 20.3 June 2001 42 10,967 18.2 29.3 20.9 July 2001 44 12,019 19.1 30.6 22.1 August 2001 40 10,907 19.4 31.9 22.4 September 2001 43 10,729 18.6 26.7 19.1 October 2001 49 13,650 19.4 28.3 21.8 November 2001 42 11,248 19.1 31.1 21.4 December 2001 45 11,639 17.7 25.1 18.9 2001 TOTAL/ 508 134,809 A VERA GE 18.4 28.7 21.2 % 2001/2000 +18.4% +5.7% _____ _____ _ ___ __ __ _____ +3.4% +1.4% +6.0% (*) for large ships having been handled with two gantry cranes simultaneously for at least part of the call. These results show that ship productivity is on the rise, in particular for those vessels that can be operated with more than one crane. In fact, a closer analysis focussing only on those ships which can be operated with two or more cranes during the whole call, which is representative of the quality of service which can now be offered to the most demanding ships, shows ship productivity coming close to, and sometimes going beyond, 40 moves per hour, which is today the international standard required for competitive service. Mauritius is therefore now in a position to offer this quality of service to the most demanding ships which can be operated with two or more cranes during the whole call. In order to consolidate and improve these operational results, CHCL management is in the process of securing an agreement with all the four unions regarding staggered meal time with the objective of eliminating the loss of productivity stemming from the meal break. Furthermore, agreement was also reached on working systematically with two gantry cranes during the third shift. These changes are expected to help strengthen significantly the commercial performance of - 7 - the MCT and its credibility among shipping operators. Traffic: At the end of the calendar year 2001, the global traffic at Port Louis reached 4.81 million tons, providing a 7.62% increase rate in comparison with the previous year traffic of 4.46 millions tons. This was 1% above the SAR's estimated global traffic of 4.77 million tons for 2001. For reference, the1995 traffic stood at 3.42 million tons. Containers: During calendar year 2001, Port Louis handled 161,634 TEUs, providing a 2.7% increase in comparison with 157,420 TEUs in the calendar year 2000. This was 19% above SAR's estimate of 136,290 TEUs for 2001. For reference, thel995 traffic stood at 92,882 TEUs. Concession contract between MPA and CHCL: The concession contract for existing terminals, which became effective since June 1 st, 1997, was a key event in the port modernization which was the result of nine months of discussion between CHCL, MPA and the Unions, and was quoted as "..a new era in the history of the port". The concession introduced new working hours in the port, enhanced flexibility to carry out operations, and a clear commitment from MPA and CHCL staff and management to achieve measurable minimum productivity targets. Concession contract for the MCT: The concession contract between MPA and CHCL for the operation of the MCT was signed on January 9, 1999 for five years, and became fully operational in January 15, 1999. CHCL Institutional Evolution and Corporate Strategy: Complying with the spirit of the 1998 Ports Act on separating public landlord functions from commercial activities, the GOM decided to formally withdraw MPA's 40% shareholding from CHCL, thereby providing an opportunity for CHCL to enter into a strategic partnership with an international container operator. The involvement of such an operator would benefit Mauritius in terms of gaining shipping lines' better patronage in a competitive environment, and also for meeting CHCL's need to increase its container handling capacity, starting with new container gantry cranes and additional yard equipment, and higher investment and purchasing power. Furthermore, this opening of CHCL's capital could then be pursued in making it possible for domestic investors, as well as CHCL staff, to become shareholders of the company. This process is now underway (see para.6.2). Human Resources Development (HRD) Plan: On the basis of the recommendations of the HRD consultant, a new salary structure for the MPA staff was implemented with effect from July I, 2000, which has resulted in creating a motivated and better contented work force. A salary raise in the range of 12-16% was given to 85% of the employees and about 20% to the senior and middle-level management. A third shift was also introduced for the marine/operational department with effect from October 15, 2001. In addition, following the consultant report, MPA is also envisioning to introduce a Performance Management System (PMS) with effect from January 1, 2003 with the objective of gaining more efficiency. Training Center: With the support of a grant from the European Union (Euros 400,000), a full-fledged Port and Maritime Training Center was established in June 2001, for both public - 8 - and private sector staff. The Training Center has started the first phase of implementation by equipping it with appropriate equipment, and recruiting the training consultant. The first training courses started in February 2002. The Training Center is planned to be expanded to cater for broader national and regional training needs. In addition, in line with the govemment policy to transform Mauritius as a cyber island, and the need of MPA to set in place a port computer system, MPA has also set up a Computer Training Center, which started delivering courses since June 2001 to port employees and children living near the port area. At project closing, the Computer Training Center had given training to 90 MPA staff and to about 120 children as part of the social program. Port Safety Management Plan: MPA set up in November 2000, a Port Safety and Environment Committee (PSEC) under the chairmanship of the Deputy Director-General of the MPA and consisted of many related organizations including Mauritius Police Force, Fire Services, Department of Environment, Municipal Council of Port Louis, and CHCL. Since its inception, the Committee met about 15 times and sub-committees were established to fulfill its objectives. For the safety of port operations, and also for the harmonious development of both the port and the city of Port Louis, a Port Safety Management Plan was put into place. A Port Safety Seminar was organized on July 9-11, 2001, by PSEC, with Bank participation, which provided the opportunity to raise awareness on the critical importance of safety for port operations. Freeport Regulation and Operations: MFA withdrew from Freeport commercial operations, and under a new institutional scheme, MFA was split into two, fully independent entities: (i) a Freeport regulatory agency, only in charge of issuing Freeport licenses and of regulating Freeport operations; and (ii) an operating company, transferred to Business Parks of Mauritius Ltd (BPML), a company incorporated under the 1984 Companies Act, with a mandate to develop and implement business and industrial parks in Mauritius, and in the region as opportunities arise. In order to manage the assets transferred from MFA to BPML, the latter established a new subsidiary called BPML Freeport Services (BPMLFS), which was incorporated on November 19th, 2001. Thirty-eight former MFA staff were transferred to BPMLFS, thereby reducing MFA staffing to eight. This was a significant outcome which will help secure long-term involvement of industrial operators to boost Mauritius as a regional logistics platform and effectively play a critical facilitation role in attracting investments into the Freeport. LPG storage: MPA consolidated the conclusions of the consultant studies, into a series of recommendations submitted to the Government. The main thrust of these recommendations was to relocate, in the short-term, the existing above-ground storage to Mer Rouge, on the area dedicated to oil products. Oil Products Storage at Mer Rouge: Class A products storage will be relocated on the dedicated area on Mer Rouge. Storage capacity extension in the port will be undertaken on this area only. To the extent that available space permits, some Class B and C products would also be similarly relocated. To facilitate oil products handling at this location, MPA is planning the construction of a dedicated oil jetty, which will also improve the overall operational safety of the -9- facility. This jetty is scheduled to be completed by end-2003. Social Aspects of Sector Reform: The project facilitated implementing sector reform through an effective Social Plan. Even though the reform process involved staff reduction to the extent of 119 in MPA and 430 in CHCL, there was no social unrest or any disruption in the port operations because of the collaboration of the unions, secured through the following fundamental guarantees granted by both MPA and CHCL management: (a) a social plan for all redundant employees; (b) new conditions of service not less favorable than the ones previously enjoyed by the affected staff; (c) participation of the unions in the decision-making process for reform; and (d) for CHCL unions, a firm commnitmnent that, were CHCL to meet the agreed performance targets on container handling on the existing terminal, the concession contract for the MCT would be awarded to CHCL. 4.2 Outputs by components: Mauritius Ports Authority Mauritius Container Terminal (MCT). Construction of MCT (Terminal III) adjacent to the existing harbor of Port Louis was completed in July 1998. The major infrastructure works undertaken included the reclamation of an area with about 570,000 cubic meter of coral sand, the construction of a 560 m long quay, and installation of container crane rail track. Three units of Rail Mounted Quay Cranes (RMQC) were commissioned on September 30, 1998. Connection of the new oil berth to existing storage tanks: MPA pre-financed the pipelines connecting the new oil berth to the existing storage facilities. Accordingly MPA signed a contract for the laying of pipelines at the oil berth and the white oil pipeline from the berth to the existing pipelines. The main works were completed by November 1999, and the final connection to the existing white oil pipeline was implemented in April 2000, following the decision to finalize the allocation of the new storage areas among the oil companies. At the Borrower's request, the Bank is still assisting MPA in negotiating a final agreement with the oil industry on this issue, so as to reach a sustainable long term agreement on oil products handling and storage in Port Louis, consistent with the overall safety policy now being implemented in the port area. Negotiations to this effect took place in London in March 2002. Port Master Plan Update: MPA reviewed the 1996 Port Master Plan with a view to updating it to the 2025 horizon. MPA sees this exercise as an opportunity to rethink the role of the port authority as a main player in promoting economic development by better integrating port and urban development strategies. Wave Data Report. The Consultants submitted their 12-month wave data report in June 1998. The study confirmed earlier estimates of potential disruption of MCT operations due to swells, coming out with an estimate of up to 18 days a year. Experience so far shows disruption time limited to 10 days or less per year. Development of Vieux Grand Port at Mahebourg: The study concluded that strong - 10 - negative environmental impact, added to weak potential economic returns, leads to give up on developing alternative port facilities at Mahebourg. Transshipment study: The transshipment study, which aimed at assessing the potential market for Mauritius to provide regional container operation services, was not done during the project implementation period, mainly because of difficulties with mobilizing the financing initially proposed by the European Union. Commercial developments having taking place since the commissioning of the MCT in January 1999 led MPA, MFA and CHCL to rethink the scope of the study which will now be turned into a marketing instrument. Training: Training for both CHCL and selected MPA staff was organized with support from the International Labour Organization. (ILO), using the Portworker Development Training Package. About 950 trainees followed the course during the implementation period. An additional session was also organized for the benefit of the private sector. Cargo Handling Corporation MCT Information Technology (IT) System: CHCL selected the operating software to be implemented on the MCT. Customizing was being carried out at project closure and the system is expected to be effective by June-July 2002. MPA/CHCL tariff study: The study was completed and reviewed by MPA, CHCL and the Bank. Overall, the proposed amendments to the existing tariff reflected the costs of the new investments and the consequences of the new organization, their distribution between MPA and CHCL being devised in order to ensure the competitive position of Port Louis in the short run, with a view to develop transshipment activities on a regional basis, while guaranteeing full infrastructure cost recovery and a sound financial situation for both MPA and CHCL. The new tariffs became effective on January 1st, 2000. Mauritius Freeport Authority A Freeport Workshop was held on July 5-6, 2001, with Bank participation, which was quite successful in allowing all stakeholders in Freeport operations to voice their concerns and expectations as to the provisions of the new draft Freeport Bill. Further to the workshop, the new Freeport Bill was approved by Parliament on July 17, 2001, incorporating most of the recommendations coming out of the workshop. According to the new bill, MFA's mandate is now concentrated around the public regulation of Freeport activities. This institutional evolution now sets the stage for the new development phase of the Freeport, enhancing its chances of success and the long term sustainability of its operations. Environment Protection Component. The study to define the requirements and to design facilities for collection and disposal of land and ship-based oily waste was conducted. A private company has completed the construction of facilities for collection and pre-treatment of oily waste. - 11 - 4.3 Net Present Value/Economic rate of return: Results show the gross EIRR standing at 21%. Based on the SAR assumption that 75% only of the benefits would accrue to the Mauritian economy, the project EIRR would stand at 17%, against 19% in the SAR. In fact, increased competition on container shipping services coming from the global carriers now serving Port Louis on a regular basis, which is a significant change compared to the prevailing conditions at the time of project appraisal, would definitely warrant a corresponding increase in the proportion of benefits likely to accrue to the national economy, be it through lower freight rates or in the way of new adding-value services being developed in the wake of the agreements reached with the global carriers. Maersk Logistics, for instance, the logistics services provider subsidiary of Maersk-Sealand, has already set up a branch in the Port Louis Freeport to market additional logistics services to domestic and regional shippers. Based on these considerations, an 80% share of benefits for the Mauritian economy seems reasonable, which would put the ex-post Project EIRR at 18%. 4.4 Financial rate of return: Mauritius Ports Authority 1.1 Financial Performance From 1995 to 2000, MPA experienced a rapid expansion of its asset base, matched by improvement in its operating performance, funded by external borrowing. While this strategy did involve some financial risk, the materialization of additional traffic, resulting from improved handling performance and enhanced facilities, combined with the application of a revised tariff policy have fully justified this approach. MPA Asset Growth. MPA assets have grown by 80 percent between 1995 and 2000, to reach a total of RS3.6 billion (US$138 million equivalent), primarily due to a RS1.5 billion increase in net fixed assets. The increase in non-current assets between 1994 and 2000 was almost three time more than projected in the SAR. Operating Performance. The operating performance of MPA, as measured by its operating margin (excluding depreciation Including depreciation in operating expenses the Operating Margin has increased from 3% in 1995 to 32% in 2000.) has constantly improved over the period from a low of 42% in 1995 to 68% in 2000, a result consistent with the best case scenario in the SAR. Net operating income more than trebled over the period to RS380 million. The large investments by MPA and improved performance by CHC resulted in a sharp increase in traffic, which combined with the tariff adjustment in early 2000, contributed to raise the revenue from RS246 million in 1995 to RS560 in 2000. This result exceeds the SAR best case scenario. Profitability. The large increase in financial charges between 1995 and 2000 from RS28 million to RS 125 million (or 22% of revenues) has reduced the impact of improved operating performance on net income. Nonetheless profitability measured by the return on assets has increased to 2.6% in 2000, demonstrating the ability of MPA to draw profits from its new investments and exceeding the minimum objective of 2% established in the SAR. - 12 - 1.2 Financial Intemal Rate of Return Although no financial intemal rate of return assessment for MPA was provided at appraisal, an ex-post FIRR calculation is presented in Table 8. The following elements were taken into account: (a) on the revenue side, total revenue flows include: (i) the increase in berthing fee levied at the MCT (US$ 18 per TEU); (ii) the fixed part of the concession fee, made of a flat fee for the lease of the land, a flat fee for the use of the quay cranes, and the maintenance and insurance costs of the quay cranes, for a total amount of US$5,623,571; and (iii) the variable part of the concession fee, based on the number of TEUs handled annually and on the number of ship/hours alongside berths. To err on the conservative side, the average ship service time, estimated to be 14 hours in 2001 as noted above (Table 4), has been progressively brought down to 8 hours to account for increased productivity throughout the period, therefore limiting the corresponding amount to be paid to MPA. Note that it was agreed that in order to ease the financial burden on CHCL during the first years of operation, the total concession fee be frozen to US$6,757,000 annually until January 2003; (b) on the cost side, the total investment cost of the MCT and the related maintenance expenses, as they appear in the economic analysis, are factored in accordingly. Based on these assumptions, the Financial Internal Rate of Return for MPA comes out at 15%. Mauritius Freeport Authority. The Government intended to develop MFA over the five years of project implementation and to progressively ensure that it would become self-sustainable, recover the full costs of its business and yield a reasonable return on its investment. MFA's assets have grown twenty times since 1995, fuelled by large capital grants in particular from the Govemment (RS204 million). The fixed assets are now worth about US$12.6 million and include warehouses, buildings and a large area under development. MFA management has been successful in attracting local private investors, and is now also succeeding in attracting foreign investors albeit after a slow start. The new Freeport Act 2001 will definitely enhance the freeport's attractiveness in this regard. MFA has managed to significantly improve its operating performance since 1995, starting from a negative operating margin of 240% to reach a small yet positive operating margin of 9% in 2000. Accordingly MFA reached the goal of covering its operational costs through revenue generation by 2000, as projected during project preparation. Worth noting is the fact that with the enactment of new Freeport Act and Transfer of Undertaking Act on the same date, MFA's assets were transferred to Business Parks of Mauritius Ltd (BPML). MFA was split into two, fully independent entities: (i) a Freeport regulatory agency, only in charge of issuing Freeport licenses and of regulating Freeport operations; and (ii) an operating company, transferred to Business Parks of Mauritius Ltd (BPML), a company incorporated under the 1984 Companies Act, with a mandate to develop and implement business - 13 - and industrial parks in Mauritius, and in the region as opportunities arise. In order to manage the assets transferred from MFA to BPML, the latter established a new subsidiary called BPML Freeport Services (BPMLFS), which was incorporated on November 19th, 2001. Accordingly, the present financial assessment considers only the situation of MFA up to June 30, 2001, before the new Freeport Act was implemented. 4.5 Institutional development impact: Satisfactory. The project resulted in profound institutional development impact. The change in the role of MPA to become a regulator and landlord of the port, and that of CHCL as a full-fledged port operator consequent to the enactment of the Ports Act of 1998 have substantially transformed the port operation scenario in Mauritius. The concession contract awarded to CHCL and its monitoring by MPA has given a modem outlook and new approach to ports management. It has also resulted in significantly increasing productivity in port operations. Furthermore, the Government's decision to withdraw MPA's 40% shareholding from CHCL and to seek a Strategic Partner (with international container operating experience) for CHCL's operations is expected to add to the favorable institutional impact on port operations in consolidating the results achieved so far throughout the reform process, thereby further enhancing the already strong sustainability prospects of the institutional and operational transformation having taken place throughout the project. With the transformation of MPA as a landlord of the port, MPA has started getting substantial rental revenue (approximately $700,000 per year) directly from land lessees, including private operators, bulk sugar terminal operators, central electricity board, oil industry, and Mauritius Chemical Fertilizer Industry (MCFI). Sale of yard-handling equipment to CHCL in line with the provisions of the Ports Act, and royalty payment for the facilities of MCT are also additional sources of income for MPA. The Social Plan implemented under the project was instrumental in reducing staff at MPA and CHCL and improving their operational efficiency. It also facilitated in giving enhanced role for trade unions in decision-making processes. Frequent meetings between management and unions have helped foster a spirit of mutual understanding while addressing important issues related to port activities. Another major institutional development has been the inception of Port Users Council (PUC) consisting of shipping agents, operators, port and customs authorities, as a forum to raise strategic development issues such as master planning, promotion of the logistics platform, tariff policy, and regional competitiveness. It is playing a major role in pushing for the resolution of critical problems for the whole port and maritime community. The PUC has established several committees such as Marketing Committee, Rice Committee, and Cruise Committee to review important operational issues. Following an amendment to the composition of MPA's Board, the PUC Chairman is now a full member of the Board. This has enhanced the role and importance of the PUC in the strategic management of the port. Implementation of the higher salary structure for the MPA staff in July 2000 and the third shift - 14 - for the marine/operational department with effect from October 15, 2001 are expected to improve the efficiency and productivity of the port operations. Courses offered by the Training Center, especially on safety, cargo handling, performance parameters were instrumental in achieving the targets in terms of productivity as set up by the Bank. Computer training courses given by the Center will be useful in improving the efficiency of the MPA and private sector employees. The project has facilitated improving Freeport activities with the concept of integrated logistics platform which includes warehousing, office space, container parks, and service plots of land for private development. By strengthening Freeport facilities, it is expected that Mauritius would be able to attract more foreign investors. 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: Series of cyclones disturbed civil construction and port operations. Cyclone Daniella which hit Mauritius on December 9, 1996, caused considerable damages to the effect of MRs. 143 millions and a delay of four months in project implementation. As a result of the Cyclone Davina which hit in March 1999, the MCT was not operational for a few days because of the swell entering the port area. Following the tropical depression that passed close to Mauritius in January 2001, heavy flooding occurred on the MCT, disrupting operations for a couple of days. In addition, inclement weather during annual cyclone season was disrupting port operations as well as implementation activities for a few days during most of the project period. Because of the damage caused by the cyclones, particularly the Cyclone Daniella, the contractor had to get the compensation from the insurer which did not cover all the costs. The contractor subsequently presented a list of claims to MPA. After an amicable settlement, MPA agreed to pay a little more than $1 million, which was a reasonable outcome given the fact that the contractor's original claims were more than double this amount. Fluctuations in foreign exchange was detrimental to the financial standing of the MPA. MPA consistently suffered substantial foreign exchange loss since 1996 because of the appreciation of US Dollar vis a vis Mauritian Rs, and because of the difficulty to buy US Dollars on the local market to hedge against exchange rate variations. In FY 2001 alone MPA lost approximately US$5 million on this account. In addition, fluctuations in the LIBOR rate, which went up to 6.5% in mid-2000, also had an adverse financial impact on implementing agencies. 5.2 Factors generally subject to government control: Continuity in the commitment of the government despite change of administrations was a favorable factor which contributed to successful project implementation. 5.3 Factors generally subject to implementing agency control: Works Completion Report. Despite numerous requests from MPA, the consulting - 15- engineer for the civil works of MCT, did not deliver an acceptable Works Completion Report together with all associated maps, detailed layouts and as-built drawings. At project closing, MPA was in the process of taking necessary legal action to get the consulting engineer to comply with the contractual commitments. Structural Disorders on the MCT's Working Areas. MPA had a technical audit carried out by an independent expert team to assess the surface disorders appeared at one end of the MCT's Working Areas, establish the reasons for the disorders, and propose the remedial measures to be implemented to correct them and prevent them from occurring again. The audit report noted that insufficient attention might have been paid to soils compressibility both at the design and construction stage. Important settlements, localized on the areas where the thickness of the compressible layer is maximum, were responsible for the structural disorders noted at the surface of the terminal. MPA would soon be doing the remedial works required to restore the terminal to normal operational conditions by the time CHCL's Strategic Partner comes on board by end-2002. Delay in disbursements. Disbursements were delayed in the initial stages of project implementation due to relative lack of experience with Bank procedures. However, after attending the training course on disbursement procedures conducted by the Bank in Washington, D.C. in April 1998, it became easier for MPA, CHCL, and MFA staff to avoid bottlenecks and implementation subsequently became smooth. 5.4 Costs andfinancing: The total cost of the project was US$ 64.4 million compared with the SAR estimate of US$100.2 mnillion. The difference is mainly due to competitive bids received in respect of civil works and quay cranes contract; appreciation of US Dollar vis a vis French Franc under civil works contract for the MCT; and reduced scope of work for the oil berth. Upon the Ministry of Finance's request, the undisbursed amount of $1.4 million was cancelled from the Loan 3908-MAS on December 14, 2001, and the undisbursed amount of $8.0 million was cancelled from the Loan 3909-MAS in two stages, $7.0 million on July 1, 1999 and $1.0 million as of August 1, 2001. 6. Sustainability 6.1 Rationale for sustainability rating: The sustainability of the project is highly likely considering that the government has taken the steps to carry forward the institutional framework reforms and also handled well the social aspects of the sector reforns. In addition, the government's decision to go ahead with the finding of a Strategic Partner has enhanced credibility for future operations. With the good-will and the technical know-how that comes along with the Strategic Partner, the image of Mauritius as an intemational player would be further strengthened and the probability of attracting transshipment cargo would be higher. Increased productivity achieved during implementation period is likely to be sustained, in particular because of the dymanic and continuous use of monitoring indicators on port operations. In addition to the authorities monitoring the operations, clients are equally given the - 16 - opportunity to monitor them. Members of the PUC are given the Monitoring Indicators every month, vessel by vessel, which would also enable them to monitor their own vessels. Since the basis for improved productivity, quality and efficiency of port operations are already clearly laid out, it would be easier to sustain the project outcome. MPA's implementing the Corporate Plan 2002-2004 would also go a long way in carrying forward the results of the sector reform program, thereby strengthening the long term sustainability of the reform's achievements. In addition, MPA's updated Port Master Plan covering up to the 2025 horizon would be useful in improving the sustainability by redefining the role of the port authority as a main player in promoting economic development by better integrating port and urban development strategies. The sustainability of the Training Center is likely. EU has expressed its willingness to continue financing the Center for another year or two, in addition to the first grant of 400,000 Euros. PUC has also suggested two options for financing, either as a direct contribution from all stakeholders in the port community or by directly putting some toll on cargo for this purpose. Sustainability of Freeport activities is highly likely. The institutional evolution of MFA as regulator and the creation of BPML as a provider of Freeport services are expected to set the stage for the new development phase of the Freeport activities, which are likely to enhance the chances of success and the long term sustainability of its Freeport operations. With a regular source of revenue from rental income, storage of container fee and other service charges, BPML is expected to be financially self-reliant. Likewise, MFA is also expected to be self-reliant with the license fee received from Freeport traders. The government is also envisioning to create Freeport facility at the international airport in order to establish a link between sea and air cargo. The synergy created between sea and air cargo would be beneficial for increased trade. 6.2 Transition arrangement to regular operations: At project closing, the government's search for Strategic Partners for CHCL was in progress. It is expected that the new Strategic Partner would be in place by December 2002. Two issues to be sorted out during transition period are related to increasing productivity and reducing labor cost. CHCL is in the process of negotiating with the trade unions for introducing flexible shift which would improve productivity. It is expected that flexi- shift would be in place by June 2002. MPA has also expressed interest in seeking the Bank support in an advisory capacity for the next two years to overlook the continuing plans, such as in the selection of Strategic Partner, preparation of corporate strategy, review of Port Master Plan, implementation of PMS, capacity building in training, installation fully integrated IT system, and the launching of ISO Total Quality Management Plan. The Bank responded positively to this request in agreeing with the Government to include Transport as one of the priority sectors to benefit from Bank's technical support under the umbrella of the first PERL now consolidating Bank assistance to Mauritius, - 17 - which was approved by the Board on May 7, 2002. 7. Bank and Borrower Performance Bank 7.1 Lending: Satisfactory. The Bank was proactive in initiating the dialogue with the government for the sector reform. Project preparation was well organized and satisfactory. The Bank, which had a harmonious team with a good skill mix, brought in the state of the art expertise into project design, and was very clear in developing strategies. During the project appraisal, the Bank assessed the project's risks and benefits. The Bank had a consistently good working relationship with the Borrower during preparation and appraisal. The Bank adopted a participatory approach in designing the project. For instance, this was one of the first Bank projects which recognized trade union leaders as part of the negotiation team. The Bank had formally invited, with the government concurrence, the President of the Port Louis Harbor and Dock Workers Union to join in the negotiations conducted in Bank's headquarters in Washington, D.C. in 1995. The Bank also held regular consultations with the private sector, which led to the setting up of PUC for reviewing issues of common interest and participating in the long-term development of the port. 7.2 Supervision: Satisfactory. Over the six years of project implementation, there were 17 supervision missions, with an average of three missions per year. The Bank's client relationship was very cordial and productive. Supervision teams included the Bank's transportation specialist, port operations specialist, transportation economist, financial analyst, environment specialist, and disbursement officers. The Bank took a dynamic role in the supervision of the project implementation. Aide-Memoires were regularly prepared and transmitted, which alerted the government to problems with project execution and suggested remedies in a timely manner, in conformity with Bank procedures. The Form 590s and PSRs realistically rated the performance of the project both in terms of achievement of development objectives and project implementation. Whenever delays in implementation occurred, the Bank was able to define concrete steps and a timetable for putting the program back on track. Extemal consultants were used for specific aspects of project components. Bank staff worked closely with the government and the implementing agencies and provided them with extensive assistance, in terms of providing suggestions for drafting the laws and regulations, reviewing legal drafts, and giving technical comments. 7.3 Overall Bankperformance: Satisfactory. Overall, the Bank performance was satisfactory during project preparation, appraisal and implementation. - 18 - Borrower 7.4 Preparation: Satisfactory. During the preparation stage, the Borrower displayed an adequate level of commitment to the objectives of the project. The government officials and staff of the implementing agency worked closely with the Bank's project team on a continual basis, with full cooperation and enthusiasm. 7.S Government implementation performance: Highly Satisfactory. Despite change in administrations, the government consistently maintained its commitment throughout the implementation, and the thrust of sector reform was not challenged in any way. The government was very resilient and robust and had a good agreement with the Bank on macroeconomic policy unlike other African countries. It had established good project implementation units and the day to day implementation of the project was very smooth. 7.6 Implementing Agency: Highly Satisfactory. The project which was carried out by MPA and MFA, consisted of highly qualified people with professional capacity. The implementing units of these institutions were very well organized and effective in dealing with procurement, disbursement, progress reports, and in maintaining proper records of the project. Appropriate levels of review and approval were in place, expenditures were duly authorized before they were incurred and documentation was maintained properly for an adequate period of time for the purpose of review. In addition, complete transparency from the implementing agencies helped create a working environment conducive to enhancing good industrial relations. 7.7 Overall Borrower performance: Highly Satisfactory. The overall performance of the Borrower was highly satisfactory. 8. Lessons Learned * The success of the project was mainly attributable to consistency in political will, clear government commitment, and a strong level of government ownership on the project, irrespective of change in administrations. Because of its success, this project is looked upon as role model in the implementation of other projects in Mauritius. * Participatory approach and broad consultation process were helpful in diffusing social risks and clearing misunderstandings during project preparation, negotiations and implementation, especially with the trade unions. For a project of this nature where many types of stakeholders were involved, the Master Plan Study participative management and a good Project Steering Committee were very useful. * Continuity of the task manager from the beginning of project implementation for four years enabled the Bank to build a strong relationship with the government, trade unions, and all other stakeholders. - 19 - * Well documented monitoring indicators were very useful for measuring operational performance and productivity during implementation period. Monitoring indicators and closer supervision have likely helped in reaching increased productivity in port operations. In addition, port users also have benefited, especially in terms of faster settlement of claims. * The project was instrumental in creating a new vision for port management and social aspects. The concept of VRS introduced by MPA is now being replicated by other organizations in Mauritius, as in the case of sugar sector. * The exchange risk issue faced by MPA exposed the limitations of the existing financial market arrangements, which to a large extent were beyond MPA's control. It also conveys the message that the Government possibly should think of other financial instruments to provide more institutional ability to hedge against foreign exchange risks. This is an issue which could also be investigated under the upcoming PERL umbrella. In parallel, the Bank should consider introducing some mechanism/formula to limit client's exposure on foreign exchange as a percentage of its revenue. * Even though the contractor remains in all cases responsible for its design, a Bank-managed cross-checking process is seen as an added protection against design flaws, in particular in the case of key/critical designs on sensitive infrastructure projects. Even though it is not considered feasible to set up within the Bank a systematic mechanism for this purpose, seeking a second opinion in sensitive cases could be a way to mitigate potential technical risks in future projects. 9. Partner Comments (a) Borrower/implementing agency: A. Mauritius Ports Authority 1. Introduction Following the request formulated by the Government of Mauritius in September 1992, a World bank Mission visited Mauritius in April 1993 with main objective to identify port extension projects which could be jointly financed by the Bank and Government and whose goal would aim pirnarily at supporting:- The growth of the economic activities of the country and the Freeport Development and The development of Port Louis as a hub port in the Southern Indian ocean region. The main findings and recommnendations of the Mission were:- The Port was not operating on a 24 hour basis which lead to under utilisation of heavy capital investment. The tariff structure prevailing did not encourage a faster ship rotation while at quay. - 20 - The proposed construction of the Container Terminal at Mer Rouge to be considered only after a thorough review and updating of the Port Master Plan. This was to ensure that the new development was compatible with the planned land use and was not in conflict with any of the development schemes including the freeport development. The protection of the environment to be a prior consideration in Port development including safety. Major policy reforms were required and these should be based on increased in demand generated by a more competitive port policy and excellent service which may stimulate transhipment activity and turn Port Louis Harbout into a hub. 2. Port Development and Environmental Protection Project The main objectives of the Port Development and Environmental Protection Project were to: (i) Increase port productivity, efficiency and capacity to meet the demand of port users and operators at competitive rates through extension of facilities, mechanisation and improved management of Mauritius Ports Authority, Cargo Handling Corporation Ltd and Mauritius Freeport Authority. (ii) Re-define the role of MPA as a landlord port authority working through a system of competitive concession contracts with performance indicators for port operations. (iii) Support development of MFA (iv) Accomplish port development with sound environmental protection. 2.2 Implementation In order to achieve the above objectives, the Port Development and Environmental protection Project had to be implemented which composed three components, namely Port Development. Freeport Development and Environment protection. The Ports Authority was responsible for the Port Development and the Environmental Protection component, whereas the Mauritius Freeport Authority led the freeport development component. 2.3 Port Development The Port Development Components of their project and the budget estimate were:- (i) Construction of a Container Terminal including procurement of quay cranes - US$ 78.5 M (ii) Construction of Roads and Services at Mer Rouge - US$ 5.0 M (iii) Construction of a Passenger Terminal Building - US$ 0.7 M (iv) Relocation of oil handling storage facilities - US $ 2.7 M (v) Institutional Strengthening - US $ 2.4 M The total budget allocated for the port development components was US $ 89.3 M. 3. Project Implementation - 21 - 3.1 Container Terminal The new container terminal has been constructed adjacent to the existing harbour of Port Louis. The major infrastructure works undertaken comprise the reclamation of an area with about 570,000m3 of dredged coral sand, the construction of a 560 m long quay, the installation of container crane rail track supported on 1016 mm diameter steel tubular piles, casting of 560 m long by 37 m wide quay apron, the laying of concrete blocks over an area of 78,500 m2, together with 59,300 m2 asphalt concrete and provision for electricity, lighting, fresh water and surface water drainage. Building works include gate houses for access control to the Terminal and a substation to house electrical switch gear and transforrners. Construction works started in February 1996 and were completed in July 1998. The facility went into commercial operation in January 1999. The progress of works was severely affected by the passage of Cyclones Daniella in December 1996 and Anacelle in February 1997. 3.2 Contract MH35/2 - Procurement of Container Handling Crane for the New Container Terminal at Mer Rouge For the efficient loading and unloading of ships at the container terminal, the Port Authority decided to procure three post-panamax container handling gantry cranes. The Contract was awarded to Hanjung - Korea Heavy Industries & Construction Co. Ltd. in January 1997 and the three Quay Cranes were commissioned in September 1998. 3.3 Contract MH35/7 - Container Terminal Buildings at Mer Rouge The contract for the construction of the Terninal Buildings, Custom Verification Centre and Workshop/Stores Buildings was awarded to Gamma Civic Ltd. in December 1999. The project was completed in December 2000. 3.4 Contract MH41 - Infrastructure Development of Mer Rouge Area The project comprised the construction of 30,000 m2 of flexible pavements and associated drains, culverts, shoulders and footpaths. The ancillary works for the road network are the road lighting, new gatehouse and services networks such as electricity, water, telephone and wide area network for the future port facilities. The Works also include for the supply and installation of miscellaneous road equipment and furniture such as road signs, carriage way markings, cat's eyes, handrails, guardrails etc. The contract was awarded to Besix/Gamma Civic Joint Venture in May 1998 and was completed in June 1999. 3.5 Passenger Terminal Building The scope of works and the project proposal was split into two components as follows:- (i) Renovation of part of existing Shed E, to accommodate the Passenger Terminal Building - 22 - with a floor space of about I 000m2. (ii) Improvement and upgrading of the road network in the Peninsular area including construction of a dedicated new access drive to the Passenger Terninal and associated services. The contract for the Passenger Terminal Building was awarded to Messrs PADCO in August 2001 and is expected to be completed by mid April 2002. The contract for the Road Works was awarded to Trio Development in August 2001 and is expected to be completed in April 2002. 4. Port Performance 4.1 Introduction The Authority signed a Concession Contract with CHCL for Terminals I and II in April 1997 and established inter-alia the container handling performance parameters to be achieved by CHCL which were as follows:- (i) 8 Teus/gross gang hour for standard full container vessels; and (ii) 13 Teus/gross gang hour for modem full container vessels. It was clearly pointed out that the level of performance of CHCL would be one of the most important detenring factors for the appointment of the operation of the New Container Terminal. 4.2 Analysis of Performance Period June 1996 - Dec. 1998 Modern Full Container Vessels The Operator exceeded the targeted productivity of 13 Teus per gross gang hour in June 1998. Standard Full Container Vessels The targeted performance of 8.5 Teus/gross gang hour was reached in May 1998. 4.3 Analysis of Performance Period Jan. 99 - Dec. 2001 The average monthly productivity has shown marked improvement - from 10.4 ECM/gross CR hour at the start of operations in Jan. 99 to +19 ECM/gross CR hour, at present. The crane production progress are considered as satisfactory but do not meet the objective of the shipping lines which are more interested in ship's productivity which determines ship turn round and hence the total cost of vessel's call. Presently standing at around 28 moves, the number of moves per ship hour at berth should reach 40+ moves per ship hour which is the acceptable level of productivity for a full container ship operating at a modern container terminal. There is an urgent need to provide more efficient working practices in particular staggered meal break and the use of the 3 RMQC's during the third shift. - 23 - 5.0 Financial Aspect of Project 5.1 Proiect Costs and Financing At time of appraisal, the port component of the Port Development and Environment Protection Project was estimated to cost some US$ 89.3 M as highlighted in the table below:- Port Component Appraisal Actual/Latest _____ Estimate Estimate CONTAINER TERMINAL A. Quays (560m) 31.5 27.2 B. Earthworks 2.5 2.8 C. Yard Paving 6.4 4.5 D. Buildings 1.1 2.3 E. Services (Water, Electricity, Telephone) 6.6 4.2 F. Firefighting Equipment 2.2 G. Oil Discharge Equipment 0.7 H. Panamax Ship-to-Shore Gantry Cranes (2) 13.0 16.0 (3) I. Yard Equipments 9.2 J. Spare Parts 2.6 0.8 K Computer System, Office & Workshop Equipment 1.2 L. Technical Assistance 1.2 1.0 M. Training 0.3 0.1 ROAD & SERVICES A. Mer Rouge Road Network 3.3 2.5 B. Security & Services 1.5 C. Engineering 0.2 0.2 OIL STORAGE RELOCATION A. Pipelines 2.6 0.8 B. Engineering 0.1 PASSENGER TERMINAL A. Buildings 0.7 1.1 B. Engineering 0.0 0.1 - 24 - INSTITUTIONAL STRENGTHENING Mauritius Ports Authority (MPA) Training 2.0 0.1 Technical Assistance 0.4 0.7 TOTAL 89.3 64.4 However the actual costs linked to the implementation of the Project reached only some USD 64.4 M. This overall saving in cost has been achieved through the competitive international bid that has been secured for the civil works for the container terninal and also due to the fact that some projects such as the oil storage relocation projects have not been implemented in full. The significant reduction in loan financing was brought about by a multiple of factors involving amongst others, the substantial appreciation of the US dollar vis a vis the French franc during the loan period resulting in a beneficial effect on the draw down of the loan for the civil works contract which was largely denominated in French Franc. Secondly the local currency component of the contract for civil works was higher than what was anticipated.Lastly, various other sub projects such as the container terninal buildings and road network did not qualify under the loan financing, given that their foreign currency component was negligible.Accordingly a total amount of USD 15.8 M was cancelled from the joint World Bank/Jexim loan financing during the loan period in an effort not to pay unnecessary commitment fees and not to tie down loan capital unnecessarily. 5.2 Financial Performance Some salient points regarding the Authority's financial performance have been tabled below:- Prior to implementation of Project RS'M F/Year 1994 1995 1996 1997 1998 Operating Revenue 236.8 246.0 252.5 318.6 439.3 Operating Expenses 246.0 266.8 264.1 318.5 360.0 Operating Surplus (Loss) (9.2) (20.8) (11.6) (0.1) 79.3 Operating Ratio (%) 54.9 57.9 56.4 50.4 54.5 Return on Net Assets (%) (0.7) (1.7) (0.95) 0.01 5.0 Debt/Equity Ratio 0.30:1 0.31:1 0.35:1 0.71:1 0.98:1 Traffic ('000 Tons) 3,383 3,430 3,588 3,690 4,001 - 25 - Post implementation of Project RS'M F/Year 1999 2000* 2001 WB Operating Revenue 516.1 559.6 735.7 Operating Expenses 493.6 504.0 519.9 Operating Surplus (Loss) 35.5 55.6 215.8 Operating Ratio (%) 39.2 32.3 23.1 40 Return on Net Assets (%) 1.09 4.95 5.86 2 Debt/Equity Ratio 1.32:1 1.05:1 0.68:1 1.5:1 Traffic ('000 Tons) 4,184 4,323 4,675 *New Tariffs/Payment of Concession Fees implemented as from 14 January 2002 As it will be noted the financial performance has improved with the successful implementation of the project including its corollary implications such as payment of concession fees by the operator for the lease of facilities and the new tarrification system in place, reflecting the new system of container handling at Port Louis. The loan covenants attached to the World Bank loan pertaining to the operating ratio, gearing ratio and return on net assets are largely being respected. 5.3 Forex An interesting feature surrounding the World Bank & Jexim US dollar loan financing, is with regards to the evolution of the rate of exchange of the dollar versus the Mauritian rupee. as explained below: Movement of dollar rate over the last 5 years Date Rate of Percentage Exchange-Prevai increase for the ling year 01.07.1996 20.218 30.06.1997 20.990 3.82%} 30.06.1998 24.420 16.34%} 30.06.1999 25.389 3.97%) 30.06.2000 26.264 3.45%} 30.06.2001 29.383 11.88%} Average increase over last five years 39.46/5 = 7.890/o or 8% (approx.) - 26 - Movement of US$ over the last 5 years 30.000 29.000 28.000 27.000 q 26.000 ' 25.000 - Rate of Exchange- revailing 24.000 22.000 20.000 0 0 0 0 - _0 o 0 0~~~c 4 w CD~~~~~~~~~. Year end From the above, it can be gathered that the dollar has appreciated by an average annual rate of 8% over the financial years 1996-2001 with peaks of 16.34% and 11.88% for FY1997/98 and 2000/2001 respectively. This substantial appreciation of the dollar has caused the Authority to realise considerable losses associated to foreign exchange fluctuations over the years as follows: - (MRs.'M) Flnancial Year 1996 1997 1998 1999 2000 2001 Foreign Exchange (Losses)/Gain (41.0) (13.2) (81.9) (53.0) (45.0) (148.7) _ Foreiien Exchan-fe Ris Given that the interest rates attached to both the World Bank and Jexinm financing are floating rates, linked to the LIBOR, the Authority is suffering from both transaction risk and translation risk. The LIBOR, which reached as high a figure as 6.47% p.a. in July 2000 plummeted to 2.16% p.a in November 200e1. The above trend of the LEBOR clearly exposes the Authority to tranaction risk. - 27 - 5.3 Possible financial strateeies to mitieate Fore.x losses In an effort to address the problem of foreign exchange losses, the Authority has in the past substituted its costly foreign borrowings by local borrowings, through the issue of tax free secured debentures thereby limiting its exposure to translation risk. Additionally, the MPA has also resorted to the operation of dollar based accounts with the regular purchases of dollars and their locking up in fixed deposits with maturity dates matching the maturing dates of foreign liabilities. In a further effort to redress the onerous issue of forex losses, the Authority intends to implement the following financial strategies:- (a) early part redemption of the IBRD and JExim loans for a total amount of US$10.0 M over '02; (b) financing future port development projects though the Authority's own surplus funds. 6. Lessons Learnt 6.1 Financial Aspects: During the loan period, the Authority has been exposed to a considerable amount of transaction and translation risk resulting in substantial foreign exchange losses. The Authority would have to be careful in the future when resorting to loan financing and ensure that its interests are fully safeguarded. 6.2 Planning of the Container Terminal: The World Bank originally recommended that only a two berths quay be constructed at the Terminal. The MPA maintained the need for a third berth, which was approved by the World Bank on the condition that the third berth be designed to enable unloading of petroleum tankers. Accordingly a berth of 560m was constructed which was designed for three average vessel of 160 m long. At present the Port is already accommodating third generation vessels of 275 m long, and most of the time the 3 berths terminal is accommodation only 2 ships. With the present ship arrival pattern and the requirement of major shipping lines to obtain priority berthing on arrival, additional length of quay is required. The MPA is now proceeding with the extension of the terminal which will be commissioned in 2004/2005. 6.3 DesiFgn:Though a mathematical wave model study was carried out which confirned that the quay would be exposed to 8 m high wave, the consultants maintained the quay level at only 2.6 m above Chart Datum. A higher level of the quay deck would have reduced the risk of flooding at the terminal during passage of cyclones.Furthermore, some settlement has been observed behind the quay deck which is mainly due to a poor design of the interface between the fixed quay structure and the flexible pavement. 6.4 Operation at the Terminal: The terminal layout was designed for RTG operation with RTG running beams constructed. However, it was subsequently decided to operate the terminal using forklift truck and Reach Stackers which require a much larger area.The Port Authority is now proceeding with the construction of additional paved area which would enable the operator to continue with FLT/RS operation up to around 2005. 6.5 Consultants Performance:The consultants on the Container Termiinal Project has been unable to submit a complete set of as-made drawings and a completion report. Furthermore, the overall performance of the consultants mainly in respect of advice tendered and decisions taken on several issues were not to satisfaction of the Client. - 28 - 6.6 Finalisation of Claim: The assessment of the claim submitted by the contractor on the Container Tenninal project in respect to the passage of Cyclones Daniella, Anacelle and the Forex issue and the discussion held in finalisation of the claim was an enriching experience. 6.7 Participation of the Union: The participation of the union in the development programnme has been the key towards the successful implementation of the project including the Port Sector Reform. B. Mauritius Freeport Authority INFRASTRUCTURAL DEVELOPMENT OF FREEPORT ZONE #6 t BACKGROUND On 12th August 1997, the Mauritius Freeport Authority invited tenders from fifteen intemational construction firms in accordance with Intemational Competitive Bidding procedures of the World Bank. These fifteen fimis were prequalified following a prequalification exercise carried out at the beginning of the year. The whole prequalification exercise was done in full compliance with the guidelines of the World Bank (funding agency for the project) and the list of prequalified contractors was approved by both the Central Tender Board and the World Bank. The works to be carried out under the Infrastructural Development of Freeport Zone #6 are divided in two separate lots. Lot 1 consists in the site preparation and development of approximately 7 hectares and includes the construction of flexible and rigid pavements, engineering services (electricity, water, telephone, waste water disposal, surface water drainage, ducts for data communications, etc.), security fencing and foundations and industrial floors of 15 000 m2 for three warehouses. Lot 2 consists of the construction of an administration building of an approximate area of 4000m2, and including all the services. On 17th December 1997, the Central Tender Board approved MFA's recommendations: 1. Grinaker Construction Co. Ltd. be awarded the contract for Lot 1 for the tender amount of Rs 165 455 772.75; and 2. Beijing Chang Cheng/Sotravic Ltee Joint Venture be awarded the contract for Lot 2 for the tender amount of Rs 78 343 519.50. On 5th January 1998, World Bank gave its no objection to the award of both contracts. EXECUTION OF CONTRACT FOR LOT I- CIVIL WORKS Contract Agreement The Letter of Award was sent on 26th January 1998 and the Contractor's acceptance was received on 27th January 1998. The Order to Commence Works was issued on 20th February 1998 after receipt of the Performance Security and the Insurance Policy. The Contractual Start Date is 20th February 1998 and the Completion - 29 - Date shall be 21st December 1998, i.e. duration of works 305 calendar days. The Contract Agreement between MFA and Grinaker Construction Ltd. was signed on 27th February 1998. Progress of works The works have been completed in February 1999 and the Practical Completion Certificate has been issued on 8th March 1999. The defects liability certificate was issued on 12th February 2000. EXECUTION OF CONTRACT FOR LOT 2 - ADMINISTRATION BUILDING Contract Agreement The Letter of Award was sent on 27th January 1998 and the Contractor's acceptance was received on 29th January 1998. The Order to Commence Works was issued on 20th February 1998 after receipt of the Performance Security and the Insurance Policy. The Contractual Start Date is 20th February 1998 and the Completion Date shall be 21st December 1998, i.e. duration of works 305 calendar days. The Contract Agreement between MFA and Beijing Chang Cheng/Sotravic Ltee Joint Venture was signed on 3rd March 1998. A first extension of time of three (3) weeks without costs was granted to the Main Contractor and the Completion Date was revised to 12th January 1999. A second extension of time was granted to the Main Contractor owing to the construction of a fourth floor, which took the Completion Date to end September 1999. Progress of works The construction of the building has been completed in October 1999 and the Practical Completion Certificate has been issued on 7th October 1999. The defects liability certificate was issued in October 2000. 2 STATUS OF LOAN ACCOUNT ON PROJECT COMPLETION The total sum earmarked for the Part B of the project was USD 6M out of which USD 5.587M has been disbursed. 3 DESIGN AND PROJECT MANAGEMENT The consultancy services were financed by the Government of the Grand Duchy of Luxemburg and were procured through a restricted (to Luxemburg based consultancy firms) bidding exercise carried out in Luxemburg. The conceptual and detailed design, and project management for the project was awarded to Luxconsult S.A and the project team organization structure is depicted below: - 30 - The consultants' performance during the execution of the contract was satisfactory owing to the following: * Luxconsult S.A. has a local subsidiary, Luxconsult (Mauritius) Ltd, who has extensive knowledge of site conditions, fully versed with local regulations and has undertaken a number of infrastructural development projects in the country. * The other sub-consultants are local firms, again, who are familiar with local constraints and conditions. 4 WORLD BANK PERFORMANCE The broad perspectives (i.e. the project development in relation to the Staff Appraisal report, the progress of disbursements) adopted by the World Bank during the supervision missions were highly valued as they kept the project in focus, bearing in mind that MFA was at that time deeply involved in construction works. As regards the Bank's response to application for direct payment to contractors, both MFA and the contractors have noted a remarkable response time. It is worth mentioning that at the start of the project, a review mission took place in Washington in April 98 when officers of MFA had the opportunity to meet the disbursement officer in charge of this project when the procedures, documentation and other related matters were clarified. It was an enriching exercise that proved its worth during the course of the project when not a single application for disbursement was rejected. 5 PROCUREMENT On the issue of procurement of works, while the Staff Appraisal report indicates that the Freeport component would be procured under National Competitive Bidding, the actual procurement took place through Intemational Competitive Bidding upon instructions of the Bank. The ICB prequalification exercise took longer and costed more because of publication in UN Development Business and one other foreign publication. The net effect was a delay in the procurement of the works. 6 LESSONS LEARNED DURING PROJECT IMPLEMENTATION The following lessons were learned during the design and construction: I. Clear and precise requirements from the Client are required to ensure satisfactory project development, especially as regards the Client-Consultant relationship during the design stages. 2. The presence of a knowledgeable Client's representative to ensure that the technical aspects of the project are captured and retained by the Client, especially for further development and maintenance purposes. 3. The monitoring of specialist subcontractors is crucial during the construction works because of 1) coordination between trades 2) specifications of equipment that are mostly imported and have long lead times. 4. Avoid over-reliance on consultants for technical and cost-effective solutions - for example, during the construction of the warehouses and the administration building the contractors proposed alternative foundations design that were more economical and faster to construct. Similarly for the warehouse flooring, where the contractor proposed a floor using steel fibres instead of traditional steel mesh reinforcement. (b) Cofinanciers: - 31 - (c) Other partners (NGOs/private sector): 10. Additional Information Summarized Timetable of Key Steps of the Port Sector Reform Process and Project Implementation Dates Key Steps June 5, 1992 Freeport Act April 28, 1995 Port Reform Policy Statement by the Government of Mauritius May 30, 1995 Approval of the World Bank Port Development and Environment Protection Project April 4, 1997 CHC and Unions sign the Agreement on the CHC Social Plan April 30, 1997 MMA/CHC Concession Agreement on existing terminals September 17, 1997 Launch of MMA Social Plan May 26, 1998 New Ports Act approved by Parliament August 1, 1998 New Ports Act becomes effective January 9, 1999 MPA/CHC Concession Contract for the New Container Termnal January 15, 1999 Start of Operations at the New Container Terminal June 11, 2001 Decision by the Govermnent to seek a Strategic Partner for CHCL July 17, 2001 New Freeport Act approved by Parliament December 31, 2001 Closing Date of the World Bank Port Development and Environment Protection Project May 7, 2002 Board Presentation of the First Public Expenditure Reform Loan (PERL) to the Republic of Mauritius - 32 - Annex 1. Key Performance Indicators/Log Frame Matrix Outcome I Impact Indicators: F M " ,S R B 2 X |'aActuaULatest Estm . M X l I. MPA Financial Indicators 1994 95 96 97 98 99 '00 '01 1994 95 96 97 98 99 '00 '01 Salaries, wages, benefit & maintenance (20%) (10%) (20%) (16.7%) Working Ratio () 55 50 45 40 63.1 57.9 56.4 50.4 41.8 39.3 32.4 23.2 Tariffs (-^) +15% +8% +15% +10% Debt/Equity 1.5:1 1.5:1 1.5:1 1.5:11.5:11.5:1 0.30:1 0.31:1 0.35:1 0.71:1 0.98:1 1.32:1 '00 '01 '00 '01 1.5:1 1.5:1 1.05:1 0.68:1 Retum on net assets(-) 2% 2% .7% 1.7%.9% 0.01% 5.0% 1.0% 1.1%.2% II. MFA Financial Indicators Warehouse rental 7 Mau. Rs/ft2/mth 8 Mau. RsM2/mth at Ex Flour shed 9 Mau. Rs/ft2/mth at Airport Warehouse Land price 250,000 Mau.Rs/Arpent (revised from $4,200 per hectare per annum time to time to market value) Office 15 Mau. Rslft2/mth 35 Mau. Rsh/ft2mth at the Trade and Marketing Centre 15 Mau. Rs/ft2mth at Airport Freeport Zone Ill. Cargo Handling Rates 12/94 12/95 12/96 12/97 12/98 Gross TEUs per gang per hour (Class A&B vessels) 6.19 5.71 7.38 7.67 7.50 IV. Equipment Availability (%) 1994 1996 1998 2000 1999 2000 2001 Cargo Handling Equipment 45% 60% 70% 75% 90% 90% 90% Mobile quay cranes 55% 60% 70% 80% 90% 90% 90% Ship-to-shore Gantry cranes >95% >95% 90% 95% 97% V. New Container Terminal Dec.99 June'00 Dec.'00 Dec.'01 Dec.99 June'00 Dec.'00 Dec.'01 Handling rates forcontainervessels (moves 18 20 22 >22 17.1 18 19.4 21.2 per hour/crane) Handling rates for full container vessels 40 25 38 (moves per ship/per hour at berth) (*) Costs/Revenues (**) Average (***) Not less than Output Indicators: 71 .X r«idIca Aa% ; F^d tuaUatst'Estmaite i ;. Not applicable End of project - 33 - Annex 2. Project Costs and Financing Pect Cost by Component (in US$ million equivalent) A. Port Component Container Terminal 78.50 58.90 75 Roads and Services 5.00 2.70 54 Oil Storage Relocation 2.70 0.80 29.6 Passenger Terminal 0.70 1.20 171.4 Institutional Strengthening 1.40 0.80 57.1 B. Freeport Component Mer Rouge (Port) 7.90 5.58 70.6 Technical Assistance 0.90 C. Environment Component Marine Environment 1.60 Vessels Saftey 0.40 Total Baseline Cost 99.10 69.98 Physical ConUngencies 10.00 Price Contingencies 11.00 Total Project Costs 120.10 69.98 Interest during construction 7.00 Front-end fee Total Financing Required 127.10 69.98 Project Costs b Procurement Arran ements (Ap raisal Estimate US$ million equivalent) 1. Worics 56.30 5.50 0.00 2.60 64.40 (24.40) (25)(0.00) (0.00) (26.90) 2. Goods 19.40 0.00 0.00 10.30 29.70 (1.50) (0.00) (0.00) (0.00) (1.50) 3. Services 0.00 0.00 3.40 0.20 3.60 (0.00) (0.00) (1.10) (0.10) (1.20) 4. Miscellaneous 0.00 0.00 2.30 0.30 2.60 (0.00) (0.00) (0.90) (0.1 0) (1.00) 5. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 75.70 5.50 5.70 13.40 100.30 34 - (25.90) 1 (2.50) (2.00) I (0.20) 1 (30.60) ProJect Costs by Procurement Arrangements (ActuaULatest Estimate) (US$ million equivalent) 1. Works 44.28 6.70 0.00 0.00 50.98 (15.05) (0.00) (0.00 (.00) (15.05) 2. Goods 16.80 0.00 0.00 0.00 16.80 (0.00) (0.00) (0.00) (0.00) (0.00) 3. Services 1.70 0.30 0.00 0.00 2.00 (0.40) (0.00) (0.00) (0.00) (0.40) 4. Miscellaneous 0.00 0.00 0.20 0.00 0.20 (0.00) (0.00) (0.00) (0.00) (0.00) 5. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00 (0.00) (0.00) _ (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 62.78 7.00 0.20 0.00 69.98 (15.45) (0.00) (0.00) (0.00) (15.45) '1 Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. 2 Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units. Project Flnancing by Component (In US$ million equlvalent) A. Port Component container Terminal 20.90 10.60 4.0 15.10 15.20 28.70 722 143.4 6. Equipment Roads & Services 1.50 2.00 1.50 2.70 0.0 135.0 0.0 Oil Storage Relocation 2.70 0.80 0.0 Passenger Terminal 0.70 1.10 157.1 Institutional Strengthening 1.00 0.40 1.00 0.35 0.10 0.35 35.0 25.0 35.0 B. Freeport Component Mer Rouge (Port) 6.60 1.30 0.0 0.0 TA C. Environment Component Marine Environment 0.30 0.60 0.70 0.0 0.0 0.0 Vessels Safety 0.20 0.30 0.0 0.0 - 35 - Annex 3. Economic Costs and Benefits Annex 3a. Economic Analysis 1. Evolution of Port Traffic Maritime traffic in Port Louis between 1995 and 2001 followed the general trend forecasted in the SAR, as the Table 1 below shows. Variations appeared at the commodity level, but overall the growth rate as predicted was vindicated. Of particular interest is the fact that the shift from conventional general cargo to containers did materialize at a higher pace than expected, leading to a significantly lower volume of general cargo by the end of the period, and to a corresponding higher level of container traffic, as displayed in Table 2. - 36 - This faster growth of container traffic, while leading to an intensive utilization of the Mauritius Container Terminal, also resulted in the fact that it quickly became difficult to accommodate oil tankers on one of the MCT berths alongside container ships, as had been foreseen in the SAR. This was the result of the increasing number of vessels calls at the MCT on one hand, and on the other hand on calls from much larger container vessels, often limiting in practical terms to two the number of vessels which could be simultaneously accommodated at the terninal. This development is actually a testimony to the success of the MCT, since attracting major container carriers was part of the objective of making Port Louis a logistics platform of regional significance. So regular calls by global carriers like Maerks, Evergreen and Mitsui, operating large full containerships of 3,000 TEUs and above, signaled the fact that the MCT was indeed on track in offering cost-effective services of international standard. The next step on this route was actually reached in March 2002, when Maersk, the number one world container carrier, entered into a contractual agreement with MPA and CHCL for setting up in Port Louis the transshipment hub of two of its regional international services, the SAFARI and SAMBA lines. This kind of agreement of course carries with it the commitment by the Port Authority, MPA, to grant access to the termiinal within pre-determined time windows with little variations allowed, bearing in mind the tight scheduling of these calls. Which means a ceiling on the maximum tolerable berth occupancy rate in order to keep ship waiting times as low as possible (see below). The benefits of such arrangements are clear for both the carrier, which can rely on a guaranteed service time in port, and for the port, which can offer the regular services of world-class global lines to domestic and regional customers. The Freeport, in particular, stands to gain from this kind of arrangements, its developers and operators considering reliability and coverage of international shipping services as an important asset in attracting new investments. The immediate consequence of these developments, however, was the impossibility of making use of the MCT for oil tankers. As a result, MPA decided to go ahead with the construction of a dedicated oil jetty separated from the terminal, which is now due to be commissioned in 2004. In economic terms, as far as the Project is concerned, this means that the expected benefits of oil import cost reduction did not materialize, but this got compensated by the higher than expected benefits on the reduction in global turnaround times of more expensive containerships. - 37 - Table 1 - Port Traffic Comparisons: SAR Forecasts vs. Actual Traffic 1995-2001 (tons) Items 1995 1996 1997 1998 1999 2000 2001 BULK CARGO Imports Petroleum Products 688,600 746,400 790,400 815,500 855,500 908,000 944,300 673,851 758,848 858,397 873,632 925,713 935,157 963,729 Bitumen 23,500 24,500 25,000 25,000 25,000 25,000 25,000 17,187 13,767 12,861 9,727 7,378 9,881 6,346 Cement 605,000 632,000 661,000 697,000 737,o000 768,500 799,200 532,495 589,172 590,459 617,419 624,211 631,460 646,953 Coal 65,000 72,500 85,000 113,000 132,000 154,000 160,000 66,362 38,193 27,782 113,026 134,409 299,274 307,816 Edible Oil 21,000 21,800 22,800 23,800 24,600 26,600 27,600 22,602 31,794 27,414 26,700 29,450 29,026 30,000 Fertilizer 55,000 56,000 57,500 59,200 60,000 60,000 60,000 47,065 49,700 55,489 50,665 37,531 61,335 67,793 Liquid Ammonia 20,200 20,500 21,100 21,700 22,400 23,000 23,900 19,905 18,550 22,837 27,097 18,700 18,996 25,500 Maize 48,000 51.500 55.000 58.000 61,000 64.000 66.500 56,296 53,670 47,968 53,106 56,706 71,123 69,711 Soya Bean Meal 12,000 13,000 14,000 15,700 16,500 17,400 18,000 17,759 11,389 25,037 19,638 24,982 30,502 29,296 Tallow 4,500 4,500 4,500 4,500 4,500 4,500 4,500 3,435 5,522 4,109 4,080 4,629 3,391 2,432 Wheat 125,000 132,500 137,500 142,500 147,500 150,000 150,000 130,431 95,128 119,899 122,379 139,400 150,263 118,126 Exports Sugar 520,000 532,500 537,500 540,000 540,000 540,000 540,000 460,531 540,160 496,836 536,864 465,500 355,880 532,249 Molasses 132,500 137,500 142,500 145,000 145,000 145,000 145,000 116,741 97,963 112,043 153,284 107,234 88,711 151,440 Fertilizer 0 0 0 0 0 0 0 4,125 0 4,225 5,650 2,500 4,831 4,479 Bunker Pipe-Line 60,000 65,000 71,000 75,000 77,500 80,000 83,000 52,296 57,735 51,923 86,295 81,523 124,671 144,748 Bunker Barges 25,000 25,000 25,000 25,000 25,000 25,000 25,000 31,511 32,186 9,296 37,845 51,098 68,530 55,144 GENERAL CARGO Imports 267,50 281,75 293,25c 310,50 327,55 343,25 357,000 206,801 263,31 223,62, 201,70 203,113 178,05 144,254 Exports 6,00 9,25 13,50c 17,90s 19,70 21,25 22,100 59 58 1,16E 1,34 1,67 81 1,887 Transit 238 11] 48 429 1,361 11, 72 CONTAINERIZED CARGO Imports 547,00o 570,006 600,006 637,00 675,00 714,00o 745,000 581,72 642,85 691,067 743,161 770,28 837,23 893,714 Exports 275,00 290,00 323,00c 346,00 370, 00 389,00 405,000 303,17 343,32 342,986 352,55 379,96 432,721 463,393 Transit 11,707 10,731 11,58C 15,395 63,14 41,54 41,473 INTER-ISLAND Import 6,55 6,85 7,20( 7,55 7,95 8,40 8,750 1,031 1,1 1 794 1,22 73 1,133 1,666 Export 43,60 44,80 46,256 47,65 49,05 50,55 52,550 __________ _ 11,542 11,525 14,759 14,429 12,28 15,063 13,493 FISH - 38 - Local Market 24,50 27,30( 36,00i 36,90 37,90( 38,80( 40,300 27,00 25,936 26,894 25,40 25,23( 32,65S 44,836 Transit 23,85 25,70t 27,001 28,50 29,90( 31,50( 32,400 ______ 26,12 31,196 40,35E 46,47 38,84^ 47,30( 46,524 GRAND TOTAL 3,599,300 3,790,850 3,996,000 4,192,900 4,390,750 4,587,750 4,771,250 3,422,535 ,33,724,482 3,819,956 4,139,S44 4,207,603 4,469,675 4,810,204 Table 2 - Containerized Traffic Forecast Comparison: SAR Forecasts vs. Actual Traffic 1995-2001 (TEUs) Category 1995 | 1996 1997 1998 1999 2000 2001 Import Full 46,780 49,560 52,340 55,120 57,900 60,795 62,920 42,912 48,440 53,637 60,563 63,423 68,019 71,234 Empty 5,200 5,150 5,100 5,050 5,000 5,000 5,000 3,648 4,431 5,384 7,422 6,178 9,245 8,193 Total Imports 51,980 54,710 57,440 60,170 62,900 65,795 67,920 46,560 52,871 59,021 67,985 69,601 77,264 79,427 Export Full 25,186 26,866 28,540 30,220 31,90 33,500 34,670 22,363 24,91 26,42C 28,262 30,48( 35,000 37,002 Empty 24,68 26,26 2 7,84 29,420 31,00 32,556 33,700 22,89! 26,71 30,473 38,694 38,10 41,741 41,331 Total Exports 49,866 53,12 56,380 59,64 62,900 66,050 68,370 45,251 51,629 56,893 66,956 68,587 76,741 78,333 Transhipment 1,06 1,151 1,042 1,476 6,081 3,415 3,874 TOTAL TEUs 101,840 107,830 113,820 119,810 125,800 131,845 136,290 92,882 105,651 116,956 136,417 144,269 157,420 161,634 - 39 - 2. Container Handling Costs and Productivity The comprehensive Tariff Study carried out under the Project led to an adjustment of both MPA and CHCL tariffs, consequence in part of the new contractual relationship established between the two through the MCT Concession Contract, and of the realignment of tariffs with service costs. The tariff study also helped determine the amount of the concession fee to be paid by CHCL to MPA. Although there was an increase in Rupees denominated tariffs, in US Dollar terms the total cost of container handling actually varied little, while ship productivity more than doubled. MPA increased its berthing fee while CHCL actually reduced its overall charging level per TEU. The new tariff effective since January 2000 is now expressed in US Dollars. Table 3 provides a summary of the changes in cost per TEU before and after the implementation of the new tariff schedule for both MPA and CHCL. Table 3 - Handling and Berthing Charges for Containers US$/TEU Tariffs Without MCT (until 2000) With MCT (since 2000) MPA - Quay Fees 32 50 CHCL - Handling Charge 136 116 Total Charges 168 166 Table 4 shows the extent of productivity improvement brought about by the new operational conditions at the MCT. Table 4 - Productivity of Container Handling Operations Without MCT (1998) With MCT (2001) Moves/Gang Hour 8.2 18.4 Moves/Ship Hour at Berth 16 28.7 Working Hours/Total Hours 12/24 18/24 Average Moves per Call 300 300 Average Ship Service Time (hours) 37.5 14.0 3. Ship Turnaround Time The main source of economic benefits from the project was to be found in global reduction of ship turnaround time. Total ship turnaround time is made of ship waiting time for berth, ship service time at berth, and time for berthing and departure maneuvers. Table 4 above shows how improvement in handling productivity led to more than halve the - 40 - average ship service time compared to the situation prevailing before the MCT became operational. Table 5 displays the series of average ship waiting time statistics between 1998, last year before the commissioning of the MCT, and 2002 (the MCT started operations on January 15, 1999). Table 5 - Evolution of Ship Waiting Time 1998 1999 2000 2001 2002 (est.) Number of Ships 350 386 429 508 550 Average Waiting Time (hours) 18.0 2.7 1.6 1.1 0.9 Total Waiting Time (hours) 6,300 1,043 687 559 495 It is actually estimated that average waiting time will further decrease to about 0.7 hour with the regular and more precise advance scheduling of calls required by the agreements now negotiated between MPA and its main clients. When assessing the economic value of the total ship turnaround time reduction, it is necessary to take into consideration the changing structure of the fleet of container vessels now calling at Port Louis. As already mentioned, a growing number of large containerships are now using the terninal on a regular basis, and this trend is likely to continue as more contractual agreements are signed between MPA and major global carriers. And the daily running costs of such large modem containerships (above 2,500 TEUs or 3,000 TEUs) can reach as high as US$35,000 or US$40,000 per day. Consequently, based on the 2001 vessels calls statistics, Table 6 below proposes the weighed average daily running cost corresponding to the present MCT fleet structure. The market trend can only pushes this average amount higher over time. Table 6 - Distribution of the Fleet of Container Vessels Calling at Port Louis Ship Category % 2001 Daily Running Cost (US$) Cellular Ship < 1,000 TEUs 25 12,000 1000 TEUs < Cellular Ship < 2,000 TEUs 31 16,000 Cellular Ship > 2,000 TEUs 11 35,000 Non-Cellular Ship < 1,000 TEUs 27 11,000 Non-Cellular Ship > 1,000 TEUs 6 12,000 Weighed Average Daily Running Cost 15,500 4. Economic Internal Rate of Return The Table 7 below presents the EIRR calculation. Assumptions on future container traffic and vessels calls were made based on the recently updated (2002) MPA Port Master Plan 2002-2025, using the Low Case Scenario to keep with a conservative approach. Results show the gross EIRR standing at 21%. Based on the SAR assumption that 75% only of the benefits would accrue to the Mauritian economy, the project EIRR would stand at 17%, -41 - against 19% in the SAR. In fact, increased competition on container shipping services coming from the global carriers now serving Port Louis on a regular basis, which is a significant change compared to the prevailing conditions at the time of project appraisal, would definitely warrant a corresponding increase in the proportion of benefits likely to accrue to the national economy, be it through lower freight rates or in the way of new adding-value services being developed in the wake of the agreements reached with the global carriers. Maersk Logistics, for instance, the logistics services provider subsidiary of Maersk-Sealand, has already set up a branch in the Port Louis Freeport to market additional logistics services to domestic and regional shippers. Based on these considerations, an 80% share of benefits for the Mauritian economy seems reasonable, which would put the ex-post Project EIRR at 18%. Table 7 - Internal Rate of Return Calculation Year Year# #Ships Waiting Time Waiting Time Reduction In Reduction In Total Reduction w/o MCT w. MCT Waiting Time Service Time Tumaround Costs (days) (days) 1996 1 1997 2 1998 3 350 263 1999 4 386 347 43 $ 4,711,613 $ 4,270,929 $ 8,982,542 2000 5 429 386 29 $ 5,541,250 $ 4,746,706 $ 10,287,956 2001 6 508 457 23 $ 6,725,708 $ 5,620,808 $ 12,346,517 2002 7 550 495 21 $ 7,352,813 $ 6,085,521 $ 13,438,333 2003 8 578 520 22 $ 7,720,453 $ 6,389,797 $ 14,110,250 2004 9 606 591 18 $ 8,889,710 $ 6,709,287 $ 15,598,997 2005 10 637 621 19 $ 9,334,196 $ 7,044,751 $ 16,378,947 2006 11 669 652 19 $ 9,800,905 $ 7,396,989 $ 17,197,894 2007 12 702 684 20 $ 10,290,951 $ 7,766,838 $ 18,057,789 2008 13 737 719 21 $ 10,805,498 $ 8,155,180 $ 18,960,678 2009 14 774 813 23 $ 12,245,438 $ 8,562,939 $ 20,808,377 2010 15 813 853 24 $ 12,857,710 $ 8,991,086 $ 21,848,796 2011 16 853 896 25 $ 13,500,595 $ 9,440,640 $ 22,941,236 2012 17 896 941 26 $ 14,175,625 $ 9,912,672 $ 24,088,297 2013 18 941 988 27 $ 14,884,406 $ 10,408,306 $ 25,292,712 2014 19 988 1111 29 $ 16,776,852 $ 10,928,721 $ 27,705,573 2015 20 1037 1167 30 $ 17,615,695 $ 11,475,157 $ 29,090,852 2016 21 1089 1225 32 $ 18,496,480 $ 12,048,915 $ 30,545,395 2017 22 1143 1286 33 $ 19,421,304 $ 12,651,361 $ 32,072,664 2018 23 1201 1351 35 $ 20,392,369 $ 13,283,929 $ 33,676,298 2019 24 1261 1418 37 $ 21,411,987 $ 13,948,125 $ 35,360,113 2020 25 1324 1489 39 $ 22,482,587 $ 14,645,531 $ 37,128,118 Running Cost (US: 15500 - 42 - Containers Reduction Capital TA and Maintenance Maintenance Total (TEUs) Handling Costs Training Infra Equipment Benefits Charges 105,651 -14000000 -250000 116,956 -22000000 -250000 136,417 -18700000 144,269 -300000 480000 $ 8,982,542 157,420 $ 314,840 -300000 480000 $ 10,602,796 161,634 $ 323,268 -300000 480000 $ 12,669,785 171,332 $ 342,664 -300000 480000 $ 13,780,997 181,612 $ 363,224 -300000 480000 $ 14,473,474 192,509 $ 385,017 -300000 480000 $ 15,984,014 204,059 $ 408,118 -300000 480000 $ 16,787,065 216,303 $ 432,606 -300000 480000 $ 17,630,500 229,281 $ 458,562 -300000 480000 $ 18,516,351 243,038 $ 486,076 -300000 480000 $ 19,446,754 257,620 $ 515,240 -300000 480000 $ 21,323,617 273,077 $ 546,154 -300000 480000 $ 22,394,950 289,462 $ 578,924 -300000 480000 $ 23,520,159 306,830 $ 613,659 -300000 480000 $ 24,701,957 325,239 $ 650,479 -300000 480000 $ 25,943,191 344,754 $ 689,507 -300000 480000 $ 28,395,081 365,439 $ 730,878 -300000 480000 $ 29,821,730 387,365 $ 774,731 -300000 480000 $ 31,320,125 410,607 $ 821,214 5000000 -300000 480000 $ 32,893,879 435,244 $ 870,487 -300000 480000 $ 34,546,785 461,358 $ 922,717 -300000 -480000 $ 36,282,829 489,040 $ 978,079 -300000 -480000 $ 38,106,198 -43- ERR = 21% 17% 18% Total Costs TOTAL TOTAL TOTAL NET NET NET 75% National 80% National -14250000 -14250000 -14250000 -14250000 -22250000 -22250000 -22250000 -22250000 -18700000 -18700000 -18700000 -18700000 -780000 8202541.7 5956906.25 6406033.333 -780000 9822796.3 7172097.188 7702237 -780000 11889785 8722338.5 9355827.733 -780000 13000997 9555748.06 10244797.93 -780000 13693474 10075105.44 10798779.14 -780000 15204014 11208010.68 12007211.39 -780000 16007065 11810298.84 12649652.1 -780000 16850500 12442874.67 13324399.65 -780000 17736351 13107262.95 14033080.48 -780000 18666754 13805065.31 14777402.99 -780000 20543617 15212712.76 16278893.61 -780000 21614950 16016212.7 17135960.22 -780000 22740159 16860119.5 18036127.46 -780000 23921957 17746467.4 18981565.22 -780000 25163191 18677393.21 19974552.76 -780000 27615081 20516310.69 21936064.74 -780000 29041730 21586297.53 23077384.03 -780000 30540125 22710093.99 24276100.26 4220000 37113879 28890409.17 30535103.12 -780000 33766785 25130088.74 26857427.99 -780000 35502829 26432121.83 28246263.29 -780000 37326198 27799648.3 29704958.18 Annex 3b. Financial Analysis Mauritius Ports Authority (MPA) 1.1 Financial Performance From 1995 to 2000, MPA experienced a rapid expansion of its asset base, matched by improvement in its operating performance, funded by external borrowing. While this strategy did involve some financial risk, the materialization of additional traffic, resulting from improved handling performance and enhanced facilities, combined with the application of a revised tariff policy have fully justified this approach. MPA has become more aware of currency risk and related currency management through the project. It experienced a cumulative currency loss of RS237 million over the period. MPA started to define strategies to reduce its currency exposure. MPA financial statements, prepared in accordance with Mauritius Accounting Standards have -44 - been audited from 1995 till 2000 by Bacha and Bacha, a Member of AGN International Ltd, and received an except for opinion from auditors with two exceptions [No provision were made for a compensation receivable (transfer of 45.5 hectares of land reclaimed by MPA to MFA) and for a claim from a contractor]. Balance Sheet in RSO33 for the years ended June 30 B&sed on Ahbui*)AcwouSnlg Secndrds 1995 1996 1997 1998 1999 208t1 Assets Net Fixed Assets 1,194,032 1213,993 1620,146 1,543,282 2,783,327 2,718,952 Irrestments 47,475 50,475 60,975 50,975 82,975 62,975 Capital Works in Progress 401,880 502,469 501,070 1p020,782 109,746 122.607 Loan Receivable 17,726 22,845 22,968 23,705 25,198 27,102 Total Non-Currant Assets 1,661,113 1,7tM,782 2,215,159 2,648,7U 3,801,246 2,931,646 Current Asssi Stockirnrientory 39204 34221 34,761 37,186 54,059 50,176 Receivables 83046 167,350 109,055 117,260 121,957 199,542 Cash at bank and in,hand 258,010 209298 396 370 290,329 444,159 494,573 Due 'from Govermment of Mauritius 12,7 142 114428 11;428 11,428 Total CurmntAsset 423,038 412,297 550,614 456,2Q3 632,403 744,291 Total Aeet: 2.84,151 2,2,079 2,755,773 3,104,947 3,633,649 3,675,937 Equlty and LIabilItdes Current LlibilWtes 132,327 145,840 250,295 301,315 257,061 360231 Long Tern LIabIlltIes 420,347 529,714 954,556 1,343961 19I3,322 1,696240 Total LiabilMes 552,674 675,554 1 04,851 1,645,276 2,150,383 2P56.471 Equity Govemment Capital Account 48,059 48,059 48P59 48,059 48,059 48059 CapitalRes;erve 401,376 401,376 401,376 401,376 401,376 401,376 Reserve Funds 314,000 314,000 324200 243,014 263,014 461,014 Retained Surplus 820 :-4,132 10,065 3,595 2.400 Revaluation Reserve 767222 767222 767,2 767,222. 767 222 7065617 Total Equlty 1,531,477 1 ,26,525 1,550922 1,459,671 1,483,266 '.6t19,4 Total EquIty and LIabUlIes 2,834,151 2,202.079 2,755,773 3,154,947 3,63,649 3,675,937 1995 1996 1997 1998 1999 2800 UOUIDITY Currant Assets / Current Uabilities 2.8 2.5 2.0 1.4 2.1 1.9 Quick Assets / Current Uibilities 2.2 1.4 1.6 1.0 1.7 1.4 OPERATING PERFORMANCE Operating Margin (Vdo Depreciation) 42% 44% 50% 58% 61% 68% Operating Margin (incl. Depreciation) 3% 4% 12% 31% 25% 32% PROFITA31IUTY Retum'on;Assets 1.0% -0.2% 0.9% 1.3% 0.6% 2.6% RECE,VABLES Days ofAccounts Receivable 123 227 i25 '97 86 i30 CURRENT UABILITIES Days'of currant liabhitiss 339 373 568 598 '481 726 DEIT,'FINANCIAL LEVERAGE Interest Coverage 29.4 2.7 4.1 4.5 2 9 3.0 Total Debt/Equity 35% 44% 78% 113% 145% 127% -45 - MPA Asset Growth. MPA assets have grown by 80 percent between 1995 and 2000, to reach a total of RS3.6 billion (US$138 million equivalent), primarily due to a RS1.5 billion increase in net fixed assets. The increase in non-current assets between 1994 and 2000 was almost three time more than projected in the SAR. This rapid expansion has been funded through a large increase in the long-term debt of MPA, from RS420 million in 1995 to a peak of RS 1.8 billion in 1999 (against a maximum projected at RS 1.4 billion in the SAR). These investments enabled in particular the purchase of multipurpose tugs, the construction of the new Container Terminal and provision of container cranes, the construction of a Rice Handling facility, and the extension of quays and infrastructure development of the Mer Rouge Area. Operating Performance. The operating performance of MPA, as measured by its operating margin (excluding depreciation [Including depreciation in operating expenses the Operating Margin has increased from 3% in 1995 to 32% in 2000]) has constantly improved over the period from a low of 42% in 1995 to 68% in 2000, a result consistent with the best case scenario in the SAR. Net operating income more than trebled over the period to RS380 million. The large investments by MPA and improved performance by CHC resulted in a sharp increase in traffic, which combined with the tariff adjustment in early 2000, contributed to raise the revenue from RS246 million in 1995 to RS560 in 2000. This result exceeds the SAR best case scenario. Operating revenue in 2001 raised by a further 31 percent. In comparison direct operating cost increased by a mere RS41 million between 1995 and 2000. MPA experienced however a large increase in depreciation cost by RS 103 million over the period (more than doubling as a result of asset growth). MPA also experienced a significant annual increase of 6% in staff cost, despite a sizable severance program in 1998 (RS122 million). Profitability. The large increase in financial charges between 1995 and 2000 from RS28 million to RS 125 million (or 22% of revenues) has reduced the impact of improved operating performance on net income. Nonetheless profitability measured by the return on assets has increased to 2.6% in 2000, demonstrating the ability of MPA to draw profits from its new investments and exceeding the minimum objective of 2% established in the SAR. Preliminary 2001 figures indicate further improvement in profitability compared to 2000 with soaring revenue (31%) and stable expenditures (3%). -46 - Income and expenditure account in RSD00 for the years ended June 30 Based on llbu s Aeeoun*ng Sbndads 1995 1996 1997 1998 1999 2090 Operating Revenue Vessel Dues 89,03 96,328 114,655 154,657 194,161 181,567 Traffic Dues 73,075 73,031 99,126 124,193 138,174 120,058 Container Dues 83,916 83;189 104,801 160,410 178,777 175,618 Concession Fee 5,000 82,370 Total Operatinq Revenue 245,994 252,546 318,582 439260 516,112 559,613 Operating Expenses Salares, Wages and Benefits 73,498 77,638 87,997 102,063 99,356 104X86S Operation/Maintenance of Equipt 46,514 42,702 42,685 151,970 55,408 52,491 Administratwe expenses 16.698 16,073 24,270 24,991 44,983 20,690 Other Op. Expenses 5,905 6,153 5,888 4,806 3,045 3,033 Total Operating Expenses 142,615 142,566 160,840 183,830 202,792 181,079 Net Operating Income 103,379 109,980 157,742 255,430 313,320 378,534 Other Expenses Depreciation 95,620 100,358 118,864 120,559 182,496 198,003 Financial charges 28,571 21,149 38,782 55,587 108,348 124,949 Loss (gain) on exchange 3,513 41,061 13,245 81,960 S3,057 45,028 Total Other Expenses 127,704 162,568 170,891 258,106 343,901 367,980 Non Operating Income 44,965 47,636 37,546 43,411 54,176 85,838 Net Income before Exceptional Items 20,640 (4,952) 24,397 40,735 23,59 96,392 Exceptional Item (121,986) 39,811 Net Income 20,640 (4,952M 24,397 (1,25i1) 23,59i 136.283 Debt and Financial Coverage. The ratio of total-debt to equity increased from a low of 36% in 1995 to a high of 145% in 1999 (against a maximum covenanted at 150%), with a low interest coverage ratio of only 2.9 in 1999 and a current ratio of only 1.4 in 1998. Since then, this financial exposure has progressively been reduced through principal repayment. The level of cash flow from operation (in excess of RS200 million a year since 1997) provides a fair level of comfort regarding the port capacity to service its debt. Foreign Exchange Impact. The appreciation of the US dollar (about 8 percent a year) versus the Mauritian Rupee led to a sharp foreign exchange loss of RS238 million over the 1995-2000 period, equivalent to 6.5% of MPA asset and exceeding the cumulative net income of MPA. MPA also experienced an interest rate risk linked to the variable rate selected for the World Bank and Jexim financing. To address both this transaction and translation risk, MPA intends to improve the matching of its expenditures and sources of funds, through local borrowing in particular. MPA may repay some of its loans in advance. MPA will also increasingly self-finance future port developments. - 47 - Cash flow statement for the year ended June 30 Basd on Ailfurius Accounting Standard* 1995 1996 1997 1998 1999 2Z0 NetCa h fiuOperatngActies 161,271 59893 255.073 217,028 208.105 267.8S0 Cash flows from invesding acthves Net acquisition offixed assets 06,112) CM2 1357) (524X139) (2,001) (511,904) (107,622) DisposaV(Acquisition) of investments (29,468) (3pO0) (10 _-M) (25,0) 20,000 Net CAs froni Invsing Activities (235,580) (223,857) (534,939) f562pO1) F536,904) (87 2 Cash flows from financing activites DMvidend paid (10.000) Long Term Borrowings (Net of Repayment) 21,049 90,372 465,661 245,749 482,139 (131 218) Increase/decrease in Loans Given 642 (5,120) (123) (737) (1,492) (1,904) Net Cash from Finandng ActMhtes 21,691 85,252 465,53 235,012 480,647 (133,122) Net (decrease)/increase in cash and cash equivalents (52,618) (78,712) 186,072 (109,961) 151.848 47,136 Effect of exchange rate changes on cash and cash equivalents 4,920 1,982 3,278 Cash and cash equivalent on July 1 (FY-1) 288,010 209298 395,370 290,329 444,159 Cash and cash equivalente as of June 30 (FY) 29,010 209,298 395,370 290,329 44,159 494,573 1.2 Financial Internal Rate of Return Although no financial internal rate of return assessment for MPA was provided at appraisal, an ex-post FIRR calculation is presented in Table 8. The following elements were taken into account: (a) on the revenue side, total revenue flows include: (i) the increase in berthing fee levied at the MCT (US$18 per TEU); (ii) the fixed part of the concession fee, made of a flat fee for the lease of the land, a flat fee for the use of the quay cranes, and the maintenance and insurance costs of the quay cranes, for a total amount of US$5,623,57 1; and (iii) the variable part of the concession fee, based on the number of TEUs handled annually and on the number of ship/hours alongside berths. To err on the conservative side, the average ship service time, estimated to be 14 hours in 2001 as noted above (Table 4), has been progressively brought down to 8 hours to account for increased productivity throughout the period, therefore limiting the corresponding amount to be paid to MPA. Note that it was agreed that in order to ease the financial burden on CHCL during the first years of operation, the total concession fee be frozen to US$6,757,000 annually until January 2003; (b) on the cost side, the total investment cost of the MCT and the related maintenance expenses, as they appear in the economic analysis, are factored in accordingly. Based on these assumptions, the Financial Internal Rate of Return for MPA comes out at 15%. Table 8 - Financial Internal Rate of Return Calculation -48 - Year Year # # Ships Containers Berthing Concession Concession Concession (TEUs) Fees Increase Fee Fee Fee Fixed Part Variable Part Total 1996 1 105,651 1997 2 116,956 1998 3 350 136,417 1999 4 386 144,269 $ 5,623,571 $ 1,255,414 $ 6,757,000 2000 5 429 157,420 $ 2,833,560 $ 5,623,571 $ 1,435,686 $ 6,757,000 2001 6 508 161,634 $ 2,909,412 $ 5,623,571 $ 1,567,412 $ 6,757,000 2002 7 550 171,332 $ 3,083,977 $ 5,623,571 $ 1,712,020 $ 6,757,000 2003 8 578 181,612 $ 3,269,015 $ 5,623,571 $ 1,752,450 $ 7,376,021 2004 9 606 192,509 $ 3,465,156 $ 5,623,571 $ 1,889,483 $ 7,513,054 2005 10 637 204,059 $ 3,673,066 $ 5,623,571 $ 2,034,458 $ 7,658,029 2006 11 669 216,303 $ 3,893,450 $ 5,623,571 $ 2,079,536 $ 7,703,107 2007 12 702 229,281 $ 4,127,057 $ 5,623,571 $ 2,236,393 $ 7,859,964 2008 13 737 243,038 $ 4,374,680 $ 5,623,571 $ 2,402,390 $ 8,025,961 2009 14 774 257,620 $ 4,637,161 $ 5,623,571 $ 2,452,691 $ 8,076,262 2010 15 813 273,077 $' 4,915,390 $ 5,623,571 $ 2,632,338 $ 8,255,909 2011 16 853 289,462 $ 5,210,314 $ 5,623,571 $ 2,822,512 $ 8,446,083 2012 17 896 306,830 $ 5,522,933 $ 5,623,571 $ 3,023,834 $ 8,647,405 2013 18 941 325,239 $ 5,854,309 $ 5,623,571 $ 3,236,959 $ 8,860,530 2014 19 988 344,754 $ 6,205,567 $ 5,623,571 $ 3,462,580 $ 9,086,151 2015 20 1037 365,439 $ 6,577,901 $ 5,623,571 $ 3,701,435 $ 9,325,006 2016 21 1089 387,365 $ 6,972,575 $ 5,623,571 $ 3,954,300 $ 9,577,871 2017 22 1143 410,607 $ 7,390,930 $ 5,623,571 $ 4,222,002 $ 9,845,573 2018 23 1201 435,244 $ 7,834,385 $ 5,623,571 $ 4,505,413 $ 10,128,984 2019 24 1261 461,358 $ 8,304,449 $ 5,623,571 $ 4,805,458 $ 10,429,029 2020 25 1324 489,040 $ 8,802,715 $ 5,623,571 $ 5,123,117 $ 10,746,688 - 49 - FIRR= 15% Total Capital Maintenance Maintenance Total TOTAL Revenues Costs Infra Equipment Costs NET $ (14,000,000) $(14,000,000) $(14,000,000) $ (22,000,000) $ (22,000,000) $ (22,000,000) $ (18,700,000) $(18,700,000) $(18,700,000) $ 6,757,000 $ (300,000) $ (480,000) $ (780,000) $ 5,977,000 $ 9,590,560 $ (300,000) $ (480,000) $ (780,000) $ 8,810,560 $ 9,666,412 $ (300,000) $ (480,000) $ (780,000) $ 8,886,412 $ 9,840,977 $ (300,000) $ (480,000) $ (780,000) $ 9,060,977 $10,645,036 $ (300,000) $ (480,000) $ (780,000) $ 9,865,036 $10,978,211 $ (300,000) $ (480,000) $ (780,000) $ 10,198,211 $11,331,095 $ (300,000) $ (480,000) $ (780,000) $ 10,551,095 $11,596,556 $ (300,000) $ (480,000) $ (780,000) $ 10,816,556 $11,987,020 $ (300,000) $ (480,000) $ (780,000) $ 11,207,020 $12,400,641 $ (300,000) $ (480,000) $ (780,000) $ 11,620,641 $12,713,423 $ (300,000) $ (480,000) $ (780,000) $ 11,933,423 $ 13,171,299 $ (300,000) $ (480,000) $ (780,000) $ 12,391,299 $13,656,397 $ (300,000) $ (480,000) $ (780,000) $ 12,876,397 $14,170,338 $ (300,000) $ (480,000) $ (780,000) $ 13,390,338 $ 14,714,838 $ (300,000) $ (480,000) $ (780,000) $ 13,934,838 $15,291,719 $ (300,000) $ (480,000) $ (780,000) $ 14,511,719 $ 15,902,907 $ (300,000) $ (480,000) $ (780,000) $ 15,122,907 $ 16,550,447 $ (300,000) $ (480,000) $ (780,000) $ 15,770,447 $17,236,503 $ 5,000,000 $ (300,000) $ (480,000) $ 4,220,000 $ 21,456,503 $ 17,963,369 $ (300,000) $ (480,000) $ (780,000) $ 17,183,369 $18,733,477 $ (300,000) $ (480,000) $ (780,000) $ 17,953,477 $19,549,403 $ (300,000) $ (480,000) $ (780,000) $ 18,769,403 Mauritius Freeport Authority (MFA) Financial Analysis As per the original project objective, MFA expanded rapidly between 1995 and 2000, fuelled by large grants, and significant imnprovements in its financial performance. The generation of additional revenue based on the new assets MFA manages will be critical in ensuring that MFA can cover its debt and provide a reasonable return on investment in particular to the Government of Mauritius. MFA financial statements, prepared in accordance with Mauritius Accounting Standards have been audited from 1996 till 2000 by KPMG and received unqualified opinions from the auditors. - 50 - MFA Asset Growth The Government intended to develop MFA over the five years of project implementation and to progressively ensure that it would become self-sustainable, recover the full costs of its business and yield a reasonable return on its investment MFA's assets have grown twenty times since 1995, fuelled by large capital grants in particular from the Government (RS204 million). The fixed assets are now worth about US$12.6 million (see balance sheet below) and include warehouses, buildings and a large area under development. MFA management has been successful in attracting local private investors, and is now also succeeding in attracting foreign investors albeit after a slow start. The new Freeport Act 2001 will definitely enhance the freeport's attractiveness in this regard. The new Freeport Act which was passed on 17th July 2001 along with Freeport Regulations, defined the new role of MFA as a regulator and promoter. With the enactment of Freeport Transfer of Undertaking Act on the same date, MFA's assets were transferred to Business Parks of Mauritius Ltd (BPML). MFA was split into two, fully independent entities: (i) a Freeport regulatory agency, only in charge of issuing Freeport licenses and of regulating Freeport operations; and (ii) an operating company, transferred to Business Parks of Mauritius Ltd (BPML), a company incorporated under the 1984 Companies Act, with a mandate to develop and implement business and industrial parks in Mauritius, and in the region as opportunities arise. In order to manage the assets transferred from MFA to BPML, the latter established a new subsidiary called BPML Freeport Services (BPMLFS), which was incorporated on November 19th, 2001. Thirty-eight former MFA staff were transferred to BPMLFS, thereby reducing MFA staffing to eight. Accordingly, the present financial assessment considers only the situation of MFA up to June 30, 2001, before the new Freeport Act was implemented. The Mauritius Port Authority (MPA) has made major reclamation works in the Port Area at the location called Mer Rouge. Out of the total area reclaimed, an aggregate area of 45.5 hectares of land has been allocated to MFA by the Government. No provision has been made in the financial statements of MPA for any compensation receivable on the land excised. This would only be accounted in the MPA Financial statements in the year if compensation is received or if a contract or undertaking for payment of compensation is agreed. The Government has not indicated its willingness to compensate for the land. Balance Sheet in RS for the years ended June 30 Based on Mew*ius Accounfng Sbndbrds 1995 1996 1997 1998 1899 2000 Hon-Current Assets Tangible 18,913,354 52,440,511 58,018,426 136,684,652 333,400,908 382,764,810 Investment 10000 10,000 10o Total Non-CurrentAssets 18,913.354 52,440,511 58,018,426 136,694,552 333,410,908 382,774,810 Current Assets Stock 1,650 11,132 114,478 56,754 103,774 141,234 Receivables 1,984,589 2.60205 3,474,934 29.864,937 6,198,882 10,849,265 Cash at bank and in hand 27j112,278 34,741.262 41 p66.758 2,532,579 21.562,329 54,037,141 Total CurrentAmsts 29,0980517 37,254,399 44,646,170 32,453,370 27,864.985 66,027,641 TotalAssets 48,011,871 89,694,910 102,664,596 169,147,9Z 361,275,893 447,1112,451 Equity and Liabilities Current LiabiliMes 2,707,462 4,474,044 7,595,021 12,103,796 34,980,710 27,407,149 Long Terrn LiabilitIes 41,150,158 178,125,709 215,189,793 Total LIabilitles 2,707,462 4,474,044 7,695,021 53,253,954 213,106,419 242,596,942 Equity and Grants General fund 456304,409 85.220,866 9J874,532 5.643,686 (6,900 586 (13,261,8?7) Capital grants 85,195,043 110,250,282 154,087,987 204,500372 Grants from EDF - 13,179,517 Grants from Luxembourg 982,067 687,447 Total Equity and Grants 45X304,409 85,220, 58 95,069,575 115,893, 148,169,474 205,205,509 Total Equity and Liabilidtes 48,011,871 890694,910 1102,664,596 169,147,922 361,275,893 47,82,451 1995 1996 1997 1998 1999 2000 UQUIDITY Current Assets t Currert Liabilities 10.7 8 3 5.9 2 7 0.8 2.4 Quick Assets / Current Usbilities 10.0 7 8 5 4 0 2 0 6 2 0 OPERATING PERFORMANCE Operating Margin -240% -126% -102% -62% -48% 9% Operating Ratio 3.40 2.26 2.02 1.82 1.48 0 91 PROFITABILUTY Retum on Net Fixed Assets 128 0% 1 9% 5 3% -3 1% -3.8% -1 7% RECEIVABLES Days of Accounts Receivable 211 115 103 669 104 104 CURRENT LLABILTIES Days of current liabilities 85 91 111 149 395 289 DEBT, FINANCLAL LEVERAGE Interest Coverage -6.6 -3 9 -216 9 -8.9 -1.7 0 3 Total Debt:Equity 6% 5% 8% 46% 144% 118% Liquidity. MFA experienced a brief period financial strain in 1998 with an excessively low quick ratio of 0.2 (quick assets/current liabilities), but this was alleviated through the receipt of both new grants and long-term borrowing. Both the current and quick ratios where back above 2.0 in 2000, indicating that MFA has now sufficient liquidity to pay for its current liabilities. After the strong imbalance of 1998, the number of days of accounts receivable improved significantly in 1999 and 2000 underlining the better collection performance of the freeport. - 52 - Income and expenditure account in RS for the years ended June 30 Based on Meur*Ius A ccoufh.g Sanders 1995 1996 1997 1998 1999 201 Operating Revenue Licence fees 1 ,61Z,901 1 ,955.00 3P030,000 4,504,000 4,885,000 5,620,526 Rent ofwarehouse 1,372,200 2,646,B16 4,917.411 6,579,245 10,138,871 2i,073,422 ,Rent ofeland 2,436559 2,62,436 2,975.,75 3,384,212 3,223 257 Sundry receipts 172,880 300,597 649,399 399,212 Sales of declaration forms 370,775 68BSR6 1,061p00 I.536,175 3;397,225 5p25,725 Total Operating Revenue 3,433,756 7,90Bcft 12,320,246 16,293,507 21,303,308 37,942,940 Operating Expenses Administrative expenses 6,468,833 10,191,410 12,528,348 17,645,345 21 095,447 25,638,526 Marketing expenses 3,11,1,43 4,601,960 8P90,809 8.123,313 5,632,862 948,490 Freeport operating expenses 2,095.988 3,174,922 4;244,800 3,916,169 5,561,281 3.011.451 ToJtl Operating Expenses 11,67S5.959 17868W292 24,863,967 29,684,827 32,289.590 34,598,467 HetOperating Income (8.2422E3) (9.959,306) (12.543.711) (13,391,320) (10,486,282) 3,344,473 Grants Revenue/Govemment Grant 32.00p00 6.1.00 5,200,000 3,000g0 4p00,000 5,200,00 Arnortisation of capital grants 7P054,3 5.154,5S9 6546,698 18,917,602 20,131 ,23 Capital grants receied towards mark'eting expenses 8p90,809 8,123,313 Total Grants 32800P00W 12.354,993 1B,445,468 17,670,011 22,917,602 25,331,253 Other Income Gain on disposal of motor vehicles 678,155 Interest receivable 1,Q97,730 1,1D797 2,40 491 133.983 285,367 1,261833 ota er Income 1' 7 9 2 4 2 , 367 1 Other Expenses Financial charges 57,837 1,506,708 6,250,517 13,303,494 DeprecialionF 1,245,141, 2,553.034 5,154,659 6,546,698 10.725,846 17,221,S08 Loss on exchange 2,68,269 8,284,590 5,763,B04 Total Other Expenses 1245,141 2 831(34 5,212,496 10721,675 25,240,953 36,288,W6 Net Earmings for the year transferred to General Func,24 210208 971,450 3,094,177 (4,230,84) (12,544 j) (E,361 247) Operating Performance. MFA has managed to significantly improve its operating performance since 1995, starting from a negative operating margin of 240% to reach a small yet positive operating margin of 9% in 2000. Accordingly MFA reached the goal of covering its operational costs through revenue generation by 2000, as projected during project preparation. Operating income represents amounts invoiced by MFA in respect to Freeport licenses, rental of warehouses and land, and sales of declaration forms, as shown in the income statement. Operating income has increased sharply from Rs3.4 million in 1995 to Rs38 million in 2000, exceeding the revenue forecasted in the SAR (estimated at Rs26 million by 2000) but reflecting the large increase in assets managed by MFA. In relationship to the value of assets under MFA management, the generated revenues have not increased sufficiently in 1999 and 2000 as shown by the relatively low ratio of operating income/asset of 0.1. This indicates that the freeport will need to attract more business to justify the large investments MFA undertook over the past five years. Operating expenses increased three times within that period to reach RS34 million (more than the projected RS20 million in the SAR). Profitability. The marginally positive operating margin combined with increasing interest payments (about 30 percent of operating income) contributed to keep MFA non-profitable over the past three years, despite some significant grant [grants received in respect to capital - 53 - expenditures are credited to a capital gain account and amortized over the expected useful life of the assets towards which the grants have been received; grants in respect of revenue and marketing expenditure are released to the income statement in line with the expenses incurred during the year] contributions. Grants represented a total of RS 129 million over the 1995-2000 period, versus actual operating income of RslOO million. The increase in financial charges representing in 2000 about 30% of operating income and 3.5 times the net operating income, requires particularly close follow-up. This is now an issue for BPMLFS, which owns former MFA assets since November 19th, 2001. Debt and Financial Coverage. The ratio of debt-to-equity increased from zero in 1995 to 1 8% in 2000. This ratio can be borne by MFA at present, but since MFA's operating cash flow is currently negative, MFA would have depended on additional funding (loan/grant) to repay the principal of its debt. Since all liabilities pertaining to former MFA assets have now been transferred to BPMLFS, including the liabilities attached to the World Bank loan, BPMLFS operations will have to generate enough cash-flow to face repayment charges in the future. But freeport traffic expansion, which started to grow more significantly in 2001, will in all likelihood be furither strengthened by the new conditions created by the new Freeport Act, making it realistic to expect both MFA and BPMLFS to be in a position to balance their accounts in the years ahead. - 54 - Annex 4. Bank Inputs (a) Missions: Stagge of Project Cycle No. of Persons and Specialty Performance Rating ...( 2 Econbmists, 1 EMS, etc.) ." Implementation Development Month/Year Count Specialty Progress Objective Identificaffon/Preparation June/93 2 1 Transport Economist, 1 Port Engineer November/93 2 1 Transport Economist, I Port Engineer February/94 2 1 Transport Economist, I Port Engineer Appraisal/Negotiation December/94 5 1 Transport Economist, I Port Engineer, I Legal Counsel, I Procurement Specialist, I Financial Analyst Supervision March/96 2 1 Transport Economist, I S S Port Engineer October/96 3 1 Transport Economist, I Port S S Engineer, I Financial Analyst March/97 3 1 Technical Manager, I Port S S Engineer, I Financial Analyst June/97 1 I Port Engineer S S November/97 2 1 Transport Economist, I Port S S Engineer June/98 3 1 Transport Economist, I Port S S Engineer, I Consultant October/98 I 1 Port Specialist S S February/99 2 2 Port Specialists S S April/99 4 1 Port Specialist, 2 Financial S S Management Specialists, I Disbursement Analyst July/99 I I Port Specialist S S October/99 I I Port Specialist S S March/00 I I Port Specialist S S June/00 I I Port Specialist S S December/00 I I Port Specialist S S February/01 5 2 Port Specialists, I Financial S S Analyst, 2 Disbursement Officers July/01 I 1 Port Specialist S S ICR January/02 2 1 Port Specialist, 1 Consultant - 55 - (b) Staff: Stage of Project Cycle Actual/Latest Estimate No. Staff weeks US$ ('000) Identification/Preparation 83.9 287.0 Appraisal/Negotiation 32.1 124.3 Supervision 71.58 346.3 ICR 4.79 58.9 Total 192.37 816.5 - 56 - Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Lu Macro policies O H OSUOM O N * NA G Sector Policies O H *SUOM O N O NA L Physical O H * SU O M O N O NA LI Financial O H *SUOM O N O NA LI Institutional Development 0 H O SU O M 0 N 0 NA r Environmental O H OSUOM O N O NA Social LI Poverty Reduction O H OSUOM O N * NA n Gender O H OSUOM O N * NA El Other (Please specify) OH OSUOM ON * NA 3I Private sector development * H O SU O M 0 N 0 NA CJ Public sector management 0 H O SU O M 0 N 0 NA LI Other (Please spec6fy) O H OSUOM O N * NA - 57 - Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6.1 Bankperformance Rating OI Lending OHS OS Ou OHU [I] Supervision OHS OS OU OHU L Overall OHS OS OU OHU 6.2 Borrower performance Rating LI Preparation OHS OS OU O HU LI Government implementation performance O HS O S 0 U 0 HU OI Implementation agency performance OHS OS O U O HU O Overall OHS OS 0 U O HU - 58 - Annex 7. List of Supporting Documents 1. Aide Memoires, Back-to-Office Reports, and Project Status Reports 2. Project Progress Reports 3. Consultant Study Reports financed under the Project 4. Borrower's Evaluation Report dated April 26, 2002 5. Staff Appraisal Report for Republic of Mauritius: Port Development and Environment Protection Project dated May 30, 1995 (Report No. 13980-MAS) -59 - - 60 - MAP SECTION M A U R I T I U S J . PORT DEVELOPMENT AND I, M ENVIRONMENT PROTECTION PROJECT PORT LOUIS 5' I\/ X BIRD SANCTUARY OF F |El PROP05ED PORT FACILITIES F U,S i \ C O NT A I N E R \ TE R R E R O U G E _ P R O P O S E D R O A D S . , )pt+.//\PORT EXPANSION < . - -J ------ PROPOSED PIPELINE EXTENSION G x o |EXISTING STRUCTURES 0 ~~~~~~~~~~~~~~~~~~~~~EXISTING ROADS 20 H. ~~~~~~~~~~~~~~~~how on his map do not-iply, onthe porn of The World Bank Grop, nyjIdgm to thn _leg su o .n t y.. .-nrtanyonrement FREEPORT a ptn- f suh bo dari 20, - - -.R L 20 00 - PIANT %\ O f ' / CEMEINDIAN d-0d Cs 'S (CiCA< ; E ' E ;<- ;OCEAN ( 0 \ 2 5 5 MET R o 5 t O n s . RELATED ~~~~~~~~~~~~~~~~~~~~~~~~~~~Centre de FIocq 0 ~ ORos H,II I TER sNrl = ') > '' {kv ' 7---INELOUNAIES 2 EX[F NG GAb 4kN[,. 8\ N , Ce' tstALAWINDNSTAN lIt ~ ~ ~ ~ ~ ~ ~ a511NG,OLsAND k~~~~~~~~~~~~~~~~~~' Csha1anga~TAZAIA I0- I ~~~~~~' Sa~MLA IINtD IANs 0- - 250 SOOM~~~~~~ENERAL- n I - I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~IrU PASSENC.S -- INTERNATIONAL BOUNDARIES BE sN4s J ~~~~~~~~~~~~~~~~~~~~~4,0' so J 57'30' / MAURITIUS / ~~~~~~~~~~~~~~~~~~~~~~~BIRD SANCTUARY M A U R I TIU S -/f / \ 9FTERRE ROUGE U X PORT DEVELOPMENT AND / ENVIRONMENT PROTECTION PROJECT MERROUGE PORT LOUIS EXISTING FACILITIES " - o 1 OD ® 9 SELECTED EXISTING STRUCTURES , BOIS - EXISTING MAIN ROADS 57.30. 57=--A. S7°4 20-00 - 20'00. 00 INDIAN re dOr 000 OCEAN , .t9 it,.^. >° 0 5 MIIES 0 -ECLAIME ' e( Prt Louis,, Centre de FlacqO \~ RoeHill o-46 20,15' o0 IAM~~~~~~~~~~~~~~~~, -203 od 20,30 >fTANZANIA, 50 0 COMOROS Nnsr~o M~Rs INDIAN FR OCEAN MOZAMB QUE ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ADELAIDE 20,