Document of The World Bank FOR OFFICIAL USE ONLY AA/ 32z 3-MO#t X v 3Zq~~ Z 4 ° Reprt No. 8569-MOR STAFF APPRAtSAL REPORT KINGDOM OF MOROCCO PORT SECTOR PROJECT NOVEMBER 29, 1990 Infrastructure Operations Division. Country Department II Europe, Middle East and North Africa Regional Office Tbi document has a reshicted ditdibtbn and may be used by reints oly i nh perbDYt of dek officW duts Its contens may not othrie be diclosed wihout Wodd Bank atraga"t. KINGDOM OF MOROCCO CURRENCY EOUIVAlENTS (as of December 31, 1989) Currency Unit - Dirham (DH) US$1 - DH 8.25 DH 1 - US$0.121 WEIGHTS AND MEASURES Metric System British/US System 1 meter (m) - 3.28 feet (ft) 1 kilometer (km) - 0.62 miles (mi) 1 square kilometer (kn2) - 0.386 square miles (sq mi) 1 metric ton (m ton) = 0.984 long ton (lg ton) GLOSSARY OF ABBREVIATIONS CPA = Autonomous Profit Center (Centre de Profit Autonome) COMANAV - Compagnie Marocaine de Navigation DEP - Port Operations Directorate (Direction d'Exploitation Portuaire) DEPP - Directorate of Public Enterprises and Participations ,)MM - Merchant Marine Directorate (Direction de la Marine Marchande) DP - Directorate of Ports DPCM - Directorate of the Port of Casablanca and Mohammedia EDP - Electronic Data Processing ITPA - Industrial and Trade Policy Adjustment MOF - Ministry of Finance MOT - Ministry of Transport MPW - Ministry of Public Works (Ministere des Travaux Publics, de la Formation Professionnelle et de la Formation des Cadres) PDPN - National Port Master Plan (Plan Directeur Portuaire National) OCP - Office Ch6rifien des Phosphates ODEP - Office of Port Operations (Office d'Exploitation des Ports) ONCF m National Railway Authority (Office National des Chemins de Fer) ONE - National Electricity Board (Office National de l'Electricit6) ONICL - Cereals Board (Office National Interprofessionnel des Cereales et des Legumineuses) ONT Office National du Transport PERL - Public Enterprise Restructuring Loan RAPC - Regie d'Acconage du Port de Casablanca SIPROMAR - National Commission for Simplification of Foreign Trade Procedures (This report uses the acronyms of the French titles in those cases where the Moroccan practice is to refer to the agency In question by its acronyms). FISCAL YEAR January I - December 31 FOR OFFMCIAL USE ONLY KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Table of Contents Page No. Loans and Project Summary ...................... . iii I. THE TRANSPORT SECTOR . . . . . 1 A. Transport and the Economy .1 B. Transport Organization. 2 C. Transport Investments. 3 D. Sector Issues and Strategy. 5 E. Bank Experience in the Transport Sector . . . . . . . . . . . 6 II. THE PORT AND MARITIME SUBSECTORS. 7 A. Port Faciiities and Traffic. 7 B. Maritime Transport and Shipping . . . . . . . . . . . . . . . 9 C. Trade Facilitation and Logistics . . . . . . . . . . . . . . . 10 D. Port Organization .11 E. Port Operations and Maintenance . . . . . . . . . . . . . . . 14 F. Port Planning and Investment Program ... . . . . . . . . . . 17 G. Accounting and Auditing .... . . . . . . . . . . . . . . . 18 H. Tariffs and Cost Recovery .... . . . . . . . . . . . . . . 20 III. THE PROJECT .... . . . . . . . . . . . . . . . . . . . . . . . . 22 A. Project Origin and Objectives .22 B. Project Description .23 C. Cost Estimates .27 D. Financing Plan .28 E. Project Implementation . . . . . . . . . . . . . . . . . . . . 29 F. Procurement .30 G. Disbursements .32 H. Project Monitoring and Reporting .33 I. Environmental Aspects .33 J. Impact on Employment .35 This report is based on the findings of an appraisal mission to Morocco in March 1990 composed of Jean-Francois Maquet (Senior Port Engineer), Pathi Ben Slimane (Financial Analyst), Roy Knighton (Senior Economist). Christian Brossard (Environment Specialist) participated in the pre-appraisal mission. This Document has a restted distribution and may be used by reipien only in the peformance of their oMchtduses 1X contents may not otherwise be didosed wkhout World Bank authorizatio - ii - IV. ECONOMIC EVALUATION . . . . . . . . . . . . . . . . . . . . . . . . 36 A. General .36 B. Traffic Forecasts .36 C. Economic Analysis .40 D. Project Risks .44 V. FINANCIAL EVALUATION .45 A. Past and Present Financial Performance .45 B. Future Financial Performance . . . . . . . . . . . . . . . . . 47 VI. AGREEMENTS REACHED AND RECOMNENDATIONS . . . . . . . . . . . . . . 51 ANNEXES 1. Action Plan ......... .. .............. .. . 55 2. ODEP's Organization, Staffing and Training . . . . . . . . . . . . 65 3. Port Investment Program: 1990-93 ..... . ..... . . . . . . 70 4. Projected Tariff Structure and Level . . . . . . . . . . . . . . . 76 5. Procedures and Criteria for Economic Evaluation of Subprojects . . 78 6. Detailed Program for Project Execution . . . . . . . . . . . . . . 83 7. Review of Local Competitive Bidding Procedures . . . . . . . . . . 89 8. Estimated Schedules of Disbursements . . . . . . . . . . . . . . . 90 9. Project Monitoring .... . . . . . . ... . . . . . . . . . . . 91 10. Performance Indicators and Targets ... . . . ... . . . . . . . 94 11. Environmental Impact .... . . . . . .... . . . . . . . . . . 97 12. Economic Evaluation .... . . . . . ...... . . . . . . . . . 105 13. Past Financial Statements .... . . . ...... . . . . . . . . 118 14. Assumptions and Financial Projections ... . ..... . . . . . . 122 15. List of Project File Documents . . . . . . . . . . . . . . . . . . 131 TABLES 1. Port Facilities .... . . . . . . ...... . . . . . . . . . . 133 2. Distribution of Traffic by Port: 1988 . . . . . . . . . . . . . . . 134 3. Division of Responsibility between DP and ODEP . . . . . . . . . . 135 4. Productivity Data .... . . . . . ...... . . . . . . . . . . 136 5. Key Elements for the Contract Plan ... . . . .. . . . . . . . . 138 6. Technical Assistance and Consulting Services . . . . . . . . . . . 139 7. Initial Allocation of the Two Bank Loans . . . . . . . . . . . . . 141 CHARTS 1. DP Organization Chart ..142 2. DPCM Organization Chart ..143 3. ODEP Headquarters Organization Chart . . . . . . . . . . . . . . . 144 4. DEPC Organization of Casablanca Port Operations Unit . . . . . . . 145 IBRD 22288 Morocco Port System IBRD 22287 Casablanca Port Layout IBRD 22286 Jorf Lasfar Port Layout IBRD 22285 Tangier Port Layout - iii - KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Loans and Project Summary BORROVERS: Kingdom of Morocco, and Office d'Exploitation des Ports (ODEP) Kingdom of Morocco (for the loan to ODEP) BENKFICIARIES: Ministry of Public Works (MPW), Ministry of Fisheries and Merchant Marine, and ODEP AIOUNTS: Loan to the Kingdom of Morocco: US$33 million Loan to ODEP: US$99 million TRlW: Both loans will be repayable in 20 years including five years of grace at the standard variable interest rate. PRJET OBJECTIUES:. The project would support Government's efforts to liberalize trade and promote exports through increasing efficiency and financial viability of the port subsector. The main objectives of the project are to : (a) improve operational efficiency in the ports to cope with the growth and changing structure of foreign trade; (b) assist the Government in strengthening the economic viability of its investments in the port subsector generally and increasing the recovery of infrastructure costs; and (c) encourage policies and institutional measures aiming at better planning and coordination of port activities in relation to its promotion of foreign trade. P!ROECT DESCRIPTION: The project consists of an investment component to be financed under the two loans, and an institutional development component addressing identified issues in the port sector. The investment component would finance: (a) selected subprojects of ODEP's investment program for the period 1991-1993; (b) a portion of the investment and maintenance program of the Ministry of "14blic Works (MPW) in the port sector for the period 1991-1993; and (c) construction of a radar control tower for marine security. Selected subprojects for ODEP would specifically include: (i) a new container terminal at Casablanca; (ii) a coal handling facility at Jorf Lasfar; (iii) improved Ro-Ro facilities at Tangier; (iv) equipment for port security; - iv - and (iv) technical assistance and training. MPW's program focuses entirely on rehabilitation of breakwaters and dredging. The Development Programs of the port subsector and of ODEP provide a comprehensive time-bound framework for monitoring the key institutional development objectives under the project with particular reference to: (a) quality and efficiency of port services; (b) trade facilitation, particularly in respect of port procedures and information systems; (c) investment planning; (d) environment and safety; and (e) finance, including cost recovery and fixed assets management. BENEFITS: Port efficiency is an important element in stimulating trade. Modernization of port facilities under the country's port development program will also ensure foreign exchange savings on sea freight rates for both exports and imports. The ongoing Port Project, though limited in scope, has helped improve operational efficiency in the port of Casablanca and the management and financial viability of ODEP. Continued Bank involvement would help further improve investment planning, operational efficiency and cost recovery policies. Moreover, the project would assist in developing environmental capability and awareness in the agencies of the sector. Finally the project would contribute to marine security in heavily trafficked areas. RlISKtS: The main project risk is the uncertainty regarding future traffic levels and distribution between containerized cargoes and Ro-Ro. To minimize this risk, the new container terminal is designed to cope with both types of cargoes. Moreover, close control will be maintained on the overall port investment program through a process of anrr .' reviews. There is also some risk that delays would be encountered in the implementation of the institutional changes required in terms of trade facilitation and logistics. Although progress is now being made in improving documents and procedures related to trade flows, trade facilitation and logistics aspects will be closely monitored in the framework of the next phase of trade reforms being undertaken by the Government. It is not anticipated that slow implementation of related measures would frustrate the needed container and Ro-Ro investments proposed under the project. The risk of a possible shortfall in budgetary allocations for the program has been considerably reduced vith (i) the inclusion in the project of the essential core of the sector investment program, and (ii) the periodic reviews of the public investment program under the project. This risk affects primarily the Government component of the project. Estimated Costs: V Local Foreign Total --- US$ million - Civil Works 74.2 78.2 152.4 Equipment 24.8 37.5 62.3 Training 1.0 1.1 2.1 Construction Supervision 1.0 1.1 2.1 Studies 2.0 3.0 _Q50 Sub-total 103.0 120.9 223.9 Physical Contingencies 9.0 9.3 18.3 Price Contingencies 19.0 .39. Total Project Cost " 131.0 151.0 282.e Financing Plan V Local Foreign Total ---------_-- US$ million ---------- IBRD 21.1 110.9 132.0 Ongoing IBRD 4.4 4.4 Ongoing African Development Bank - 5.9 5.9 ODEP 75.1 15.7 9 90.8 Government 34.41 489 Total 131.0 151.0 282.0 Estimated Disbursements IBRD FY 1991 1992 1993 124 1995 1996 Loan to the Kingdom of Morocco Annual 0.5 4.7 10.3 12.0 4.9 0.6 Cumulative 0.5 5.2 15.5 27.5 32.4 33.0 Loan to ODEP Annual 1.6 25.1 25.3 29.6 14.2 3.2 Cumulative 1.6 26.7 52.0 81.6 95.8 99.0 Economic Rate of Return Overall Port Investment Program: About 25% Container Terminal: 19% Tangier Ro-Ro Improvements: 50% Coal Handling Facility: 50X 1/ Identifiable taxes and duties amount to US$ 79 million. Total project costs, net of taxes and duties, is about US$ 203 million equivalent. Z/ Discussions have been initiated for a Japan Ex-Im Bank contribution of US$38 million. Bilateral sources are also expected to contribute for about US$11 million. 2/ Mainly indirect foreign exchange on locally procured civil works. KINGDOM OF MOROCCO PORT SECTOR PROJECT I. THE TRANSPORT SECTOR A. Transport and the Economy General 1.01 Over the past six years, Morocco has undertaken import..nt structural reforms which have succeeded in achieving a modest growth rate with low inflation. In the recent past, the Moroccan economy has grown at an annual average of about 3.3%, slightly more than the increase in population. The proposed medium-term adjustment program, which is being supported by the Bank, seeks to reinvigorate the economy to achieve a growth rate of 4 to 5% per year. This program is based on the implementation of several policy tools including fiscal reform, trade liberalization, Public Enterprise reform, agricultural sector deregulation, and an increase in the level and efficiency of public investment expenditures (para. 1.06). In effect, while taking much of the brunt of fiscal adjustment in the recent past, a continued reduced level in public investment expenditures could constitute a major constraint to maintaining a high level of economic growth in the future. The project is consistent with the Bank's overall program for structural adjustment, and will provide support for a key phase in the modernization of Morocco's ports aimed at removing bottlenecks to export growth and facilitating continued growth in foreign trade. Transport and the Economy 1.02 The Moroccan transport sector plays an important role in the development of the economy. It provides direct support to industrial and agricultural development, plays a key role in encouraging exports, and reducing the cost of imports, -nd supports the growth of tourism. The land transport system is well-developed and includes some 28,000 km of paved roads out of a total network of some 58,000 km, and a railway network of about 1,800 km, of which about 970 km are electrified, and 240 km are double-track. There are 11 commercial ports, and about 20 airports handling scheduled flights. 1.03 Total interurban passengers and freight traffic are estimated at about 30 million passenger-kms and 15 billion ton-kms, of which about 93% and 70% respectively are carried by road transport. Although road transport dominates interurban passenger traffic, the share of the railway is much more important in the main rail corridor between Marrakech, Casablanca, Rabat, and Kenitra with its extension northward to Tangier, and eastward to Fes and Oujda (Map IBRD 22288). These routes account for about one-third of interurban traffic, with the railway handling about 25% of the total (33% for freight traffic other than phosphates, and 20% for passenger traffic). As a whole, rail passenger traffic increased at about 4% per year over the last decade, mainly as a result of the introduction of improved passenger services, particularly the high-speed trains between Casablanca and Rabat. During the same period road traffic also increased at about 4% per year. About 3 billion ton-kms of rail traffic, or 65X of the total, represent captive phosphate traffic, which moves towards the - 2 - ports of Casablanca, Jorf Lasfar, and Safi for export. The port system, like the railways, was also developed to serve phosphate exports, which have stabilized in recent years at 14 million tons annually. Total port traffic in 1988 amounted to 38 million tons of which 18 million tons were minerals, mainly exports of phosphates, and 10 milli,n tons were liquid bulk commodi.ies of which crude oil accounted for 5 million tons. of the eleven commercial ports, four ports - Casablanca, Jorf Lasfar, Safi and Mohammedia - handle about 90X of total traffic (Map IBRD 22288). The main port of Casablanca handled 17 million tons in 1988 including 10 million tons of minerals as well as imports and exports of industrial goods totallir.g 3.5 million tons. About 30X of general cargo traffic was containerized or handled as Roll-on Roll-off traffic. Further details on the port subsector are given in Chapter II. B. Transport Organization 1.04 The Government agencies involved in the administration of the transport system are: (a) the Ministry of Public Works (MPW), which is responsible for the construction and maintenance of roads and ports infrastructure through its Road and Port Directorates; it also oversees cargo handling and port operations which is the responsibility of the Office for Port Operations (ODEP); (b) the Ministry of Transport (MOT), which regulates road transport, and supervises the railways, civil aviation, the state-owned bus company, and the state-owned freight forwarding agency; (c) the Ministry of Fisheries and Merchant Marine which supervises shipping and marine security trough its Merchant Marine Directorate; and (d) the Ministry of Interior as the supervising body for local authorities, which are increasingly involved in the planning and maintenance of local road networks. 1.05 Given the large number of agencies involved in the management of the sector, there is sometimes an overlap of responsibilities between different aZencies. In the ports subsector, both ODEP and the Ports Directorate (DP) of MPW have responsibilities for planning port infrastructure and for overseeing port operations. The project will help improve coordination in these matters and will clarify the role of ODEP in overall port planning (para. 2.31). Similarly, with increasing decentralization and the mobilization of resources at the local authority level following the recent introduction of a value-added tax, newly defined responsibilities are required between central and local government. This has lead to a redefinition of responsibilities for the road network between MNPW and local authorities, provision for which is included under the recent Highway Sector Project (FY90). In parallel to increasing decentralization, there is also a move to introduce more autonomy for public enterprises in the transport sector. The financial restructuring of a number of public enterprises and the implementation of contract plans clearly defining the respective responsibilities of the Government and the enterprises, were part of the Bank supported Public Enterprises Restructuring Loan (PERL). A proposed PERL II will further strengthen the institutional framework for the management of public enterprises. The main elements of a Contract Plan to be agreed between the Government and ODEP are included in an Action Plan prepared for the purpose of facilitating project monitoring (para. 3.13 and Annex 1). C. Transilort Investments 1.06 Table 1.1 shows transport sector public investments broken down into road, rail, sea, and air transport modes, for the current 1988-92 Plan as well as the two previous Plan periods. Total transport sector investments have been relatively stable in real terms over the past decade amounting to about DH 2.5 billion (US$300 million) annually in 1987 prices. Generally, about one-third of investments have been allocated to highways, one-third to ports and shipping, and about one-fourth to railways. Although investment levels have recently fallen due to budgetary constraints, overall expenditures in the sector are likely to return to their former levels, in line with a need to provide the necessary support to the adjustment process and renewed economic growth. However, this increase in investment levels will be accompanied by a shift in priorities with much greater emphasis being given to the highway sector, which in turn will be compensated by a sharp decrease in expenditures on port infrastructure, the latter being limited to a high priority modernization program and to maintenance and rehabilitation. Since 1985, Government investments in port infrastructure have declined from around DH 450 million (US$53 million) to a current level of around DH 150 million (US$18 million) annually. At the same time, and in line with the Government's policy to increase the financial autonomy of its public enterprises, the transfer of government funds to the railway sector has been limited annually to DH 200 million (US$23 million) Fz'vce 1988. In all sectors, priority Is being given to the completion of ongoing projects, and to the optimal utilization of existing facilities. Under a Bank Structural Adjustment Loan (SAL), agreement was reached with the Government on a target investment program in the public sector for the period 1988-90. Details of the proposed port investment program during the period 1990-93, which is in line with agreement reached ui.der the SAL, are given in Chapter III. - 4 - Table 1.1 Transport Sector Public Investments A. Expenditures (DH millior. at current prices) Actual Actual ilanned 1973-19_LO 1981-1987 1988-1992 Road Highways a 1,781 4,133 6,526 1, Local roads ' 700 1,300 3,660 Road transport f 220 486 750 Subtotal 2,701 5,919 10,936 Rail Infrastructure E 1,344 2,350 2,044 Rolling Stock F 620 1.634 2.115 Subtotal 1,964 3,984 4,159 Maritime Ports Infrastructure V 1,764 4,464 700 Equipment V _ 379 1.118 1.600 Subtotal 2,143 5,582 2,300 Shipping ' 1.211 450 2.180 Total 3,354 6,032 4,480 Air Airports and navigation aids g 476 502 1,657 Air carrier RAM V 666 1.581 22377 Subtotal 1,142 2,083 4,034 GRAND TOTAL 9.161 18.018 23,609 B. Allocations in oercentage Actual Actual Planned 1973-1980 1981-1987 1988-1992 Road 29.5 32.8 46.3 Rail 21.4 22.1 17.6 Maritime 36.6 33.5 19.0 Air 2.5 17.1 100.0 100.0 100.0 I/ Sum of the initial Plan allocation (4,950) and of the Road Fund allocation (1,576) created in December 1988. 2.! Central Government financing i_ Local Government financing A/ Public Enterprises financing 2/ Mixed financing Source: Transport Sector Public Investment Review, World Bank, December 1987, and mission estimates. D. Sector Issues and Strategy 1.07 Bank dialogue with the Government on general sector issues and recommendations to solve them, concentrate on the following: (a) Improvement in the planning of investments and their coordination among modes and across sectors; (b) better use of existing facilities and services through trade facilitation and logistics, improved management of public enterprises, stepped-up deregulation, greater accountability of resources, and decentralization of decisions; (c) gradual elimination of subsidies by the Government and cross-subsidies among users through a more flexible tariff system, and correct pricing of resources used; and (d) increased budgetary allocations for the rehabilitation and waintenarnce of infrab.tructure. 1.08 In recent years the Government has made substantial efforts to improve planning and coordination of investments in the road subsector by submitting maintenance and construction programs to prior economic analysis (Third and Fourth Highway Projects). Further progress is now expected with the clarification of the maintenance responsibilities between central and local government and by building on the existing pavement management system under the recent Highway Sector Project. In parallel with these developments, the Government has also recently completed a road user charge study with the objectives of imrroving equity in the recovery of road user costs and, through the creation of a Road Fund, ensuring adequate resources for highway rehabilitation and maintenance. Although much progress has been made in the ports subsector, the planning functions within ODEP and DP need to be strengthened and greater coordination is requ4.red in order to ensure that due account is taken of operational considerations in planning infrastructure investments (para. 2.31). The project will address this issue and will also promote improved coordination with major ports users, particularly for bulk imports of coal. 1.09 Some of the key issues at the present time relate to the need to establish a planned program of investments in the main transport corridors as well as to the need for greater liberalization in the road transport market. In particular, the regulatory framework for the road transport industry needs to be improved, in order to promote greater efficiency and to ensure freer access to the market. These issues have recently been analyzed as part- of a National Transport Master Plan Study, which was financed under the Fourth Highway Project. On the basis of the study recommendations, an action plan for road transport reform is being finalized in the context of the Highway Sector Project and implementation would be followed up under the proposed SAL II. Attention is also being given to improving intermodal linkages with a particular emphasis on streamlining documentation and procedures related to the handling/management of Morocco's foreign trade transactions (para. 2.10). Assistance is currently being provided in this area through a UNDP Trade -6- Facilitation Project. Complementary analyses would be provided in the form of a trade logistics study focusing on the movement of key export and import cargoes (para. 2.11). 1.10 Overall, government policy towards public enterprises is changing with the emphasis on reducing budget dependence, increasing managerial efficiency, and transferring some of their operations to the private sector. In effect, the Government is now realizing that excessive control and interference in the management of the public enterprises, support for low priority or premature investments, limitations on market entry and below-cost tariffs have created distortions in the transport market, and excessive costs to the economy. In 1985, the Government took an initial step to reduce its intervention on the road transport market by raising the limit of trucks under route and freight assignment control by the Office National des Transports (ONT) from 5.5 to 8 tons. Further progress is now contemplated with a gradual change in ONT's role away from control of regulations towards freight forwarding and the provision of information on the road transport market on an optional basis. In the railway subsector, the Government intends establishing a Contract Plan with ONCF defining respective responsibilities and objectives. Railway restructuring is being followed under the Bank's Public Enterprise Restructuring Loan (PERL) operations. In the port subsector, in 1984, the monopoly of the cargo handling company was abolished. A reorganization study was carried out with Bank financing under the Ports of Casablanca and Mohammedia Project (Loan 2657-MOR) and has made recommendations for decentralization of port operations and streamlining of ODEP's organization (para. 2.20). In addition, the preparation of a Contract Plan between ODEP and the Government is currently underway and a draft Contract Plan, incorporating earlier Bank comments, was reviewed during negotiations (para. 3.13). E. Bank ExDperience in the TransDort Sector 1.11 The Bank has provided loans totalling US$337 million equivalent to the Moroccan Government from 1969 to 1990 for tl,e construction, improvement, and rehabilitation of main roads under five highway projects, and of rural feeder roads under ten agricultural projects. The first port project became effective in 1986 and provided a loan of US$22 million to improve institutions in the port subsector and help maintain infrastructure in the ports of Casablanca and Mohammedia (Loan 2657-MOR). Despite minor problems, the project is expected to be completed in 1991. Loan covenants are generally complied with. Most technical assistance and studies financed under the project have resulted in significant improvements in port management and operational performance. Rehabilitation of civil works in the port of Casablanca is underway with some delays due to a slow procurement process. With those improvements, the port of Casablanca has been able to handle increasing general cargo traffic at reasonable cost and efficiency. However, wit}- the rapid development of containerized and Ro-Ro traffic in recent years, it has now become vital to develop new handling facilities and modern procedures to support exports and to reduce costs of imported goods. 1.12 Although no railway operation has been financed by the Bank, ONCF was included under the Public Enterprise Restructuring Loan (PERL). The highway projects were designed to encourage investments with high returns to the economy, particularly maintenance and rehabilitation, and to help build ulu the staffing and organization of the agencies responsible for road construction and maintenance, and for transport coordination. The rural roads projects have met specific needs as part of agricultural development packages, and were designed as transport and agriculture integrated investments. The recently approved Highway Sector Project provides support for a priority program of road rehabilitation and maintenance, the strengthening of road maintenance planning in order to make best use of scarce resources, and the implementation of a sector wide action plan dealing with the regulatory framework for road transport, including road safety matters. The Project Performance Audit Reports for the First, Second, and Third Highway Projects, respectively Loan 642-MOR, Credit 167-MOR, Loan 955-MOR, and Loan 1830-MOR, which were designed to improve traffic conditions, highway maintenance, and transport planning outline their successful implementation, with rates of return above appraisal estimates despite cost overruns. Loan covenants have been generally complied with, but progress expected on transport planning did not materialize to the extent desirable, in particular because of split responsibilities and limited cooperation between MOT and MPW. Disbursement lagged considerably behind the physic:l implementation of the projects because of shortages of local funds. The situation has started to improve following implementation of the SAL, which addressed the budget execution issue at the country level. II. THE PORT AND MARITIME SUBSECTORS A. Port Facilities and Traffic Port Facilities 2.01 Morocco's port infrastructure has been rapidly expanded to cope with increasing demands on maritime transport and maritime activities. Until 1961 Morocco had only nine ports. It has now a total of 20 ports along its coast line of 3,500 km. There are 11 commercial ports forming three main groups: a northern group comprising Tangier and Nador; a central group comprising Kenitra, Mohammedia, Casablanca, and Jorf Lasfar; and a southern group comprising Safi, Agadir, Tan-Tan, Laayoune, and Dakhla (Map IBRD 22288). Agadir, Nador, and the main port, Casablanca, are well diversified. Some ports are somewhat specialized: petroleum products are handled essentially at Mohammedia, phosphate products at Jorf Lasfar and Safi, and passenger traffic at Tangier. Commercial ports also provide facilities for the Navy. In addition, there are nine small ports devoted to fishing activities and pleasure navigation. These ports are: Ras Kabdana, Al Hoceima, Jebha, M'Diq, Larache, El Jadida, Essaouira, Tarfaya, and Sidi Ifni. Recently, four ports have been developed exclusively for pleasure navigation. These ports are: Asilah, Restinga, Smir, and Sables d'Or. 2.02 The 11 commercial ports have a total of 150 berths with an overall length of about 21,500 meters and an average length per berth of 150 meters (Table 1). All ports use either mobile or fixed cranes (about 160) for vertical lifting of general cargo. Specialized equipment is available for solid bulk commodities, such as minerals and cereals (nine gantry cranes). Miscellaneous - 8 - cargo handling equipment comprises 548 tractors and forklifts, 70 loaders including portable belt loaders, 30 grain loaders, and 29 units of container handling equipment. 2.03 Whereas requirements for port expansion are expected to be minimal during the period 1991-1993, adaptation of existing port facilities to modern handling techniques is urgently needed. In effect, the major program of port infrastructure investments pursued by the Government in recent years has resulted in the provision of adequate general infrastructure. However, the rapid growth of container and roll-on roll-off traffic has increased the pressure on conventional berths that lack sufficient yard space and adequate access to handle containers and trucks. The situation is particularly critical at the container terminal of the port of Casablanca where congestion places a considerable strain on handling equipment. Similarly, congestion occurs at Tangier during the summer months when a steady flow of trucks conflicts with the peak period of passenger traffic. As a result, ferries call at the Ro-Ro platforms, thus delaying Ro-Ro ships. Moroccan ports are also ill-equipped to handle and store large volumes of grain, despite a steady volume of cereals imports. In addition, a planned thermal power plant at Jorf-Lasfar will require the upgrading of an existing berth to handle large coal carriers. These limitations, if not corrected, would increase the cost of foreign trade and, as such, there is considerable scope for substantial savings in foreign exchange through appropriate investments in upgrading and modernizing port facilities. 2.04 The port sector investment program for the period 1991-1993, to be supported by the project, will address the immediate problems of container, roll-on roll-off (including ferries), and coal handling facilities. Grain storage facilities are to be provided at Agadir through the Cereals Board (ONICL), the enterprise which currently handles all grain traffic. A study of future improvements of grain storage and handling facilities will be part of the updating of the National Port Master Plan to be supported by the project (para. 2.31). Traffic 2.05 Total Moroccani import-export port traffic was 36 million tons in 1988, of which 15 million tons (42%) were imported and 21 million tons (58%) were exported. This total traffic volume includes about 24 million tons of solid bulk cargo, 7 million tons of liquid bulk products, and 5 million tons of general cargo (Table 2). Four major ports handle 86% of the total import/export traffic. These are: Casablanca (42% of total traffic), Mohammedia (12%), Safi (15%), and Jorf-Lasfar (17%). While total port traffic has increased by just over 5% per annum during the period 1983-1987, it increased by 13% in 1988 mainly as a result of a jump in export traffic. Imports increased fairly steadily at a rate of 6 to 7% per annum over the period 1983-88, whereas exports increased at a lower rate of just over 4% per annum. The growth of unitized traffic is quite significant. Unitized traffic has increased by 6 to 7% per annum since the early 1980s. In 1988, container traffic at the port of Casablanca passed the 1 million tons mark--a 14% increase over 1987--while Ro- Ro traffic reached 454,000 tons--a 35% increase over 1987 traffic figures. The port of Tangier, which is second to Casablanca for unitized cargoes handled only - 9 - 41,000 tons of container traffic in 1988. TIR I traffic at Tangier, however, peaked at 370,330 tons in 1988, an increase of 40% over the previous year. On the other hand, cereals imports have remained steady at about 2 million tons per annum on average. Coal imports amount to 1 million tons, mostly through the port of Casablanca. Phosphate and mineral traffic has recently increased, reaching 19 million tons in 1988, a 14% increase over 1987. While the port of Casablanca's share in this traffic still exceeds 50%, the port of Jorf Lasfar is rapidly catching up due to its specialization in bulk traffic; it handled 3.7 million tons in 1988, a 295% increase over 1987, thus exceeding the 3.1 million tons handled through the port of Safi. 2.06 While future traffic growth is expected to be moderate, traffic distribution among ports and handling techniques will change. The development of the new port of Jorf Lasfar has already altered the distribution pattern of phosphate related traffic. A portion of this traffic is gradually shifting from Casablanca and Safi to Jorf Lasfar. Grain traffic distribution will also change as a result of the construction of new storage facilities. General cargo volumes are expected to increase at about 3% per annum in average over the next decade. Unitized traffic growth, however, is expected to be higher. The provision of adequate facilities in the ports of Casablanca and Tangier would allow unitized traffic to increase in these ports at a rate of 5% per annum and 7% per annum respectively. Barring these improvements, unitized traffic would increase at a lower rate, thus inducing increased transport costs. Further details of traffic patterns and forecasts of traffic are given in Chapter IV. B. Maritime Transport and Shiggins 2.07 Maritime transport accounts for 98% of Morocco's volume of foreign trade. Trade with Europe dominates, reaching about 50% of total foreign trade. The trade pattern of bulk traffic is quite contrasted. Whereas 70% of coal traffic originates from Colombia, about 75% of phosphate traffic goes to Europe. Most grain cargoes originate from USA and France. The origin and destination of Moroccan general cargo traffic is mostly Europe (66%) and North America (27%). Traffic with Europe is split between the Atlantic area (70%) and the Mediterranean area (30%). 2.08 Maritime shipping is largely based on two major public shipping companies in Morocco: COMANAV and MARPHOCEAN. COMANAV operates 20 liner vessels of less than 8,000 dwt, of which it owns 15. These consist of seven container vessels, two Ro-Ro vessels, four fruit carriers, and two ferries. MARPHOCEAN, a joint venture of COMANAV, the Moroccan Phosphate Office (OCP) and GAZOCEAN, operates 15 phosphate rock ships and chemical products carriers. Two public companies are specialized in the maritime transport of petroleum products (Petrocab) and citrus (Sofruma). There are also several Moroccan private shipping lines: Gen6rale Maritime, Navimar, Cogimade, Cotrama, UMM, Atlas Navigation, Conade, Comarit, and Limadet. These lines operate on specific trades, such as citrus products and ferries. Altogether, Moroccan shipping lines control about 20% of the total volume (33% of the total value) of Moroccan freight and about 50% of general cargo traffic. A number of foreign shipping I/ TIR: International Road Transport (Transport International Routier) - 10 - lines are quite active in liner shipping in Morocco. Major ones are: O.P.D.R. (Federal Republic of Germany), CGM and Chargeurs Delmas (France), and S.I.U.S. (Italy). Accordingly, there is some degree of competition in general cargo trade. The provision of a modern container terminal, to be financed under the project, will further stimulate competition by allowing a wider range of vessels to call at the port of Casablanca. 2.09 Maritime shipping is under the control of the Ministry of Fisheries and Merchant Marine acting through the Merchant Marine Directorate (DMM). Although DMM promotes local shipping lines through cargo sharing schemes, it has also promoted development of joint ventures with foreign partners. As a result, liner shipping and container services are relatively diversified and offer frequent calls by small vessels. The Moroccan merchant fleet includes 63 vessels with a total dead weight tonnage (DWT) of about 540,000. Moroccan shipowners will need prudent modernization and adaptation of their fleet, primarily through leasing arrangements, to keep it competitive in the changing environment of Europe and Maghreb. C. Trade Facilitation and Logistics 2.10 The efficiency of shipping and port services in meeting demands of trade and industry depends on the facilitation of information flows. In particular, the conduct of customs clearance services and harmonized documentation are critical elements of trade facilitation. In Morocco, there is an urgent need to simplify, rationalize, and standardize essential documents are procedures involved in the transit of cargoes through the ports. Although the transit time of import cargoes through the port of Casablanca has been reduced, it is still more than 15 days. To correct this, the Government has established a National Commission for Simplification of Foreign Trade Procedures (SIPROMAR) under the adjustment program supported by the Bank's Second Industrial and Trade Policy Adjustment Loan (ITPA II). Until recently, the objectives of SIPROMAR were far from being met. This should now change. In November 1989, a Customs expert was finally appointed to work full time for SIPROMAR. His activities will focus on four areas: (a) preparing a unified Customs declaration aligned with the UN layout key; (b) preparing a nationally aligned series of international trade documents; (c) recommending specific measures to reduce dwell times in the ports, particularly for containers at Casablanca; and (d) promoting the adoption of international standards for data elements and interchange, based on UN-ISO norms in general, and EDIFACT in particular. A draft initial customs document has already been prepared for review by all members of SIPROMAR. In addition, a study of the efficiency of current customs inspection practices has just been initiated, which would also seek to identify, with the Customs Cooperation Council, alternative modern and efficient customs inspection procedures. Issues raised by the customs inspection study are cross-sectorial in nature and thus would be addressed as part of the next phase of trade reform being undertaken by the Government. The Facilitation Project will monitor progress in applying procedural and documentary reforms, particularly through appropriate port performance indicators (para. 3.37), some of which are included in ODEP's Development Program for the project (para. 3.12). - 11 - 2.11 Improving information flows is but one vital element in the rapidly changing international tradirg environment. In addition, there is an increasing need to address other elements of trade logistics management. The efficiency of the whole logistic chain is important to the competitive position of Morocco's exports and to the domestic price of imports. The Government plans to undertake a trade logistic study which would analyze costs and identify existing constraints affecting Moroccan foreign trade logistics. The study would be coordinated by the Ministry of Foreign Trade. During project preparation, the Bank assisted in preparing terms of reference for the study. The investigations would cover typical logistics chains affecting Ro-Ro traffic, perishable goods and import and export of containerized goods. The main focus of the logistics study would be on the provision of shipping and freight-forwarder services. This would ensure complementarity with the activities and studies which have already begun under the Facilitation Project and the Highway Sector Project. The Government has confirmed its intention to launch the study under these terms of reference. The study would assist in defining appropriate measures to be implemented under future trade reforms. D. Port Organization 2.12 In December 1984, the Government carried out a reorganization of the port sector. The prominent feature of the new organization was to transfer all commercial port activities from the civil service to an autonomous enterprise. However, MPN retained overall responsibility for port administration, planning, construction, maintenance, dredging as well as safety of port operations. Since 1985, MPW discharges its responsibilities through the Ports Directorate (DP) in Rabat and the Office for Port Operations (ODEP). DP is under the civil service. DP is in charge of port planning and port policies. It also oversees port investment programs, coordinates non-commercial port activities, and regulates port operations (para. 2.14). ODEP is a financially autonomous enterprise with an industrial and commercial character which took over cargo handling from the former R6gie d'Acconage du Port de Casablanca (RAPC). Its responsibilities encompass a wide spectrum of port operations, especially cargo handling, and maintenance (para. 2.18). A Technical Committee of each port, chaired by the local port representative of the MPW is consulted on all matters connected with port operations and maintenance. Representatives of local administrations and users participate in the Technical Committees. 2.13 So far, the new sector organization has substantially achieved its objectives. These were: (a) to raise port efficiency; (b) to reduce subsidies; and (c) to restore the financial viability of the sector. First, most performance indicators for port operations are markedly better than before 1985 (para. 2.23). Second, although the Government still finances dredging and breakwater maintenance, maintenance of port facilities has improved without increasing the financial burden on the budget (para. 5.11). However, current plans foresee that ODEP will be responsible in the future for the construction and maintenance of port infrastructure, except for breakwaters and jetties which will remain the responsibility of the Government, along with maintenance dredging. Transfer of fixed assets (except breakwaters, jetties and other infrastructure belonging to public property) to ODEP will take place before December 31, 1991. These provisions are included in ODEP's Development Program (para. 3.12) and are to be reflected in the Contract Plan (para. 3.13). - 12 - Finally, ODEP's financial performance is satisfactory (para. 5.01). As a result, ODEP is able to finance the construction of the new container terminal with no Government funding. The division of responsibility between DP and ODEP is further detailed in the following paragraphs, and in Table 3. The role of the private sector is discussed in para. 2.21. Ports Directorate 2.14. The Ports Directorate (DP) is in charge of maintenance of breakwaters, dredging, and all harbor master functions: control and safety of ship movements, berth allocation, coordination of users toward maximizing port productivity, goods security, and leasing of port facilities to users. DP also plans investments in new port infrastructure, m-stly breakwaters and quays. DP carries its maintenance responsibilities either with its own staff, or through contracting out , e.g. for dredging. DP discharges its activities through local representatives of MPW at the port level. However, at Casablanca, the local representative of MPW is a directorate, the Casablanca and Mohammedia Port Directorate (DPCM{). This special status is warranted by the size and importance of the port of Casablanca and the proximity of the specialized oil port of Mohammedia (para. 2.17). 2.15. DP's current organization is shown on Chart No. 1. DP has four departments: operations, engineering, studies and planning, and lighthouses and beacons. While DP staff is of good quality, it should play a more active role in setting port development priorities, coordinating port planning and controlling environmental impacts. The project will help strengthen DP in this regard through the updating of the National Ports Plan (para. 2.31) and an environmental study (para. 3.40). 2.16. The local representatives of MPW and DPCM have the following responsibilities: security of ships and goods movements, maintenance of the breakwaters and control towers, and dredging. They also have a supervisory role over the other entities licensed to operate in ths ports areas, in particular: (a) ODEP; (b) the towage companies; (c) the pilots stations; (d) the grain silo operator, ONICL, which l-ases areas for its facilities; (e) OCP, the phosphate exporting enterprise, operating berths or piers which are leased on a long-term basis; and (f) the customs office which operates under the control of the Ministry of Finance. 2.17. The current organization of DPCM is shown on Chart No. 2. DPCM has four Departments: administrative services, engineering, Casablanca port operations, and Mohammedia port operations. Overall, its staffing is adequate and of good quality. The ongoing port project provides support to training and technical assistance of DPCM staff in port operations and port safety. This has helped strengthen the department of port operations in the areas of supervision of cargo handling and port safety. Fellowships and training to be provided under the project will help raise the awareness and skills of DPCM staff in the area of environmental protection. - 13 - ODEP 2.18 ODEP's principal functions are: (a) to operate the following 11 commercial ports: Casablanca and Mohammedia, Agadir, Dakhla, Jorf Lasfar, Kenitra, LaAyoune, Nador, Safi, Tangier, and Tan-Tan; (b) to handle cargo without exercising a monopoly; concessionary arrangements with other entities including private operators can be made by the Government; (c) to maintain all port infrastructure except for: breakwaters and dredging which is done by the Ports Directorate; and other infrastructure operated by specialized users such as the phosphates operator, OCP, and the grain silo operator, ONICL; (d) to collect revenues from cargo-handling tariffs as well as the port dues; and (e) to undertake, at Government's request, and for its account: (i) construction of new port infrastructure with proven financial viability, such as the oil berths at Mohammedia and the future container terminal at Casablanca; (ii) maintenance and repair of port facilities in the ports of Al Hoceima, El-Jadida and Essaouira; and (iii) maintenance and repair of lighthouses and beacons in ports operated by ODEP. 2.19 ODEP is managed by a Board of Directors with a strong ministerial representation. The Board, chaired by the Minister of Public Works, on behalf of the Prime Minister, includes representatives from nine other ministries, customs, DP, and DPCM. Users, such as ship operators, freight forwarders and prominent shippers, are also represented by six directors having the right to vote. The Board meets twice a year; between sessions, authority is delegated to the Management Committee, which meets once a month, and to the General Manager of ODEP, who is appointed by the Government. The Management Committee is chaired by the Secretary General of MPW. It includes representatives of the Ministries of Finance, Interior, Merchant Marine, Commerce, and Industry. 2.20 ODEP's present organization is generally very satisfactory, and no major changes are required. ODEP was reorganized in October 1987 following a reorganization study which was financed under the Ports of Casablanca and Mohammedia Project. ODEP has offices and personnel on duty in each of the ports where it operates, but its headquarters are located at Casablanca. Decisions on policy matters including planning, pricing, personnel management and procurement, and supervision of both finances and operations are carried out from headquarters. Local Port Operations Directorates (DEPs) are responsible for the day-to-day planning and execution of port operations. The result is a clear delineation of responsibilities. Chart No. 3 shows the organization of ODEP's headquarters. Chart No. 4 shows the organization of the DEP of Casablanca. Further details on ODEP's organization, staffing and training are given in Anmex 2. - 14 - 2.21 An area for future action is the role of the private sector. Although there is no de lure monopoly limiting private sector participation in port activities, such participation remains modest. Only a few activities are performed by private companies: pilotage and towage at Casablanca and Jorf Lasfar; line handling at Safi; stevedoring on board the ships at Casablanca, Agadir, Tangier, Safi, and Nador; and cargo handling and warehousing at Kenitra. Although the Government is willing to increase private sector participation in port activities, previous attempts to do so have met with little success. On the contrary, users have asked ODEP to take over from the private sector in a few instances, such as cargo handling at Kenitra. This is because the users see the positive results of ODEP's efforts to modernize port equipment and maintain port facilities. On the other hand, private port operators are of small size. Accordingly, they contribute only marginally to port investment. 2.22 In fact, the case for privatization is relatively weak as long as ODEP remains efficiently managed and financially sound. Still, a few positive steps could be taken to foster participation of dynamic and efficient private companies in port operations. First, ODEP should concentrate its investments in activities that fit in with its mandate, thus refraining from excessive diversification. Second, the Government and ODEP should aim at progressively eliminating price distortions, direct subsidies, and cross-subsidization among ports and between activities. Finally, the Government should identify which activities could most benefit from an increased participation of the private sector. For these activities, the Government and ODEP should define performance targets and investment criteria for private companies to avoid granting special privileges. While no specific action plan regarding privatization is deemed necessary at this stage, the situation will be revisited periodically during project implementation in the light of ODEP's actual performance. E. Port Operations and Naintenance port Operations 2.23 Port operations have substantially improved over the past five years, but there remains a need to hasten cargo documentation and clearance procedures (paras 2.10 and 2.25). Technical assistance financed under the Ports of Casablanca and Mohammedia Project helped streamline general cargo and container terminal operations. Although divided responsibilities between cargo handling on board the ship and on shore still prevail, better coordination of port operators has contributed to increasing productivity. There are several instances of significant improvements: in 1988, palletized fruits and vegetables reached 152 metric tons per gang per shift of eight hours; packaged woods reached 154 metric tons per gang per shift; steel products reached 572 metric tons per gang per shift. Overall, the average productivity per gang per shift has increased by 44.5% at Casablanca over 1984 figures. Similarly, average productivity gains at other ports over the period 1984-1988 range from 12% at Safi to 40% at Nador. Table 4 give more details on productivity figures. 2.24 On the other hand, handling of containers and grain still needs improvement. Container handling productivity reaches 14 boxes per hour per ship for imports and 9 boxes per hour per ship for exports. ODEP is currently - 15 - renewing its run-down fleet of yard equipment and one ship-to-shore container gantry crane has also been ordered. While provision of modern and reliable equipment is likely to boost productivity, it will not cure the problems resulting from the scarcity and inadequacy of storage areas. The construction of a modern container terminal at Casablanca, to be financed under the project, will provide adequate facilities to cope with the growing flow of containers. Productivity figures for grain handling range from 254 to 320 metric tons per gang per shift. Productivity would be four to five times higher with modern handling equipment and adequate storage facilities. ONICL plans to erect a silo and modern grain handling equipment at Agadir, with bilateral financing. The new facilities would be put in operation in 1993. A previous plan to erect similar facility at Tangier has been shelved because ONICL sees a decreasing need for cereals imports through Tangier. 2.25 Provision of modern equipment and construction of a new container terminal will not suffice to bring container operations up to European sŁondards of performance. Simplification of Customs documents and procedures re,ires a parallel effort in the port itself. ODEP plans to use the ongoing Port Project to finance a Port Expert to assist SIPROMAR in its work, particularly as far as port information systems and procedures are concerned. ODEP also plans to appoint a short-term computer expert. The computer expert's task would be to help ODEP commission the SIPOR project (computerized management information system) and to integrate the data elements requirements of EDIFACT norms in the ongoing computerization process. This would eventually facilitate data interchange between Customs, ODEP, and port users. At negotiations, assurances were obtained that ODEP would, as part of its Development Program (para. 3.12): (a) complete a study of the incidence and causes of delays in the transit of containers through the port of Casablanca by Maroh 31, 1991; (b) simplify trade procedures and do_umentation related to its activities by October 31, 1991; and (c) take measures to ensure that its computerized information system (SIPOR) interface effectively with the computer systems of the Moroccan customs authorities (SADOC) by the end of 1991 and with port users' computerized systems by the end of 1992. 2.26 Additional gains in port productivity are also possible through institutional improvements and training. First, the construction of a modern container terminal provides a uniqui opportunity to establish a single operator for its operations. In addition to being responsible for all container handling operations on the container berth and in its stacking area, the single operator would be responsible for the provision and maintenance of the needed mobile container handling equipment. Second, actual performance indicators for ca.go handling productivity should be compared to targets in addition to being compared to previous achievements. ODEP has established a comprehensive set of performance indicators which serve to monitor progress. A further step would be to monitor gaps between current achievements and targets. The targets would be established, and periodically revised, after review of similar operations in the most performing ports. Third, there is a need to update and develop port regulations in parallel with the ongoing modernization of port facilities. Finally, ODEP's efforts to train port staff should be intensified. ODEP's Development Program includes measures to monitor operations against defined targets and to prepare the future organization of the new cortainer terminal - 16 - (para. 3.12). In addition, the project would finance technical assi&xance and training to address these needs. For Mintenance 2.27 While port infrastructure maintenance is generally satisfactory, there is currently a backlog of breakwater rehabilitation and dredging. In the past, infrastructure maintenance was neglected, particularly in the port of Casablanca. Since January 1985, ODEP has been responsible for maintenance of port infrastructure, except -or breakwaters and dredging. ODEP is currently implementing a comprehensive program of rehabilitation of port infrastructure. This includes roads, storage areas, water supply, transit sheds, drainage, and electrical systems. Funding for this program comes from ODEP's own resources and Bank financing under the ongoing Port Project. However, more needs to be done to rehabilitate breakwaters and to cope with the dredging requirements in continuation of the programs currently supported by the African Development Bank (AfDB) and the Bank. The project will include a component to that effect (para. 3.09). Dredging and equipment maintenance are further discussed in the following paragraphs. 2.28 Dredging work is particularly critical for continued access to the ports by the larger vessels. The existing backlog of needed dredging has resulted from deferred maintenance dredging in several ports. It is estimated that annual maintenance dredging will amount to k.5 million me by 1992. DRAPOR, a wholly-owned subsidiary of ODEP, carries out dredging in all ports on behalf of the Government. While DRAPOR charges less than private companies, it cannot renew its equipment from its own resources. In fact, the Government provides most of the equipment used since it can obtain better financial conditions for its acquisi.-ion. Overall, DRAPOR's equipment is adequate. No major acquisition is required, at least in the near term. However, there has been little effort to determine the true cost of dredging and to pass these costs on to the users and beneficiaries. DRAPOR organizes dredging operations in a distorted cost framework, thus resorting to a low number of working hours for the dredges. Hence, there is a need for optimizing the operation and deployment of DRAPOR's fleet, and determining the cost of maintenance dredging. At negotiations, it was agreed that ODEP woule carry out a study to strengthen the maintenance dredging operations and furnish its results to the Bank for review and comments by December 31, 1991. Thereafter, ODEP would implement the recommendations based on this study as agraed with the Bank. 2.29 Mainten. rce of cargo handling equipment is adequately carried out by ODE2's workshops, supported by private companies. Qualified staff and effective use of computers have contributed to improving the quality and efficiency of equipment maintenanee. Equipment demand availability ratios range from 94X for forklift trucks tn 99.6% for cranes at Casablanca, which is satisfactory. Still, OEP w-nts to further rationalize equipment management and maintenance. This is no given .he size of the fleet and the importance of its efficient deploymen To this effect, ODEP is currently developing a maintenance management program including organization, performance indicators and targets, strategy and policies, and maintenance procedures. ODEP also strives to renew its equipment in a timely fashion. The project will assist ODEP in optimizing and financing its equipment investment plan. - 17 - 2.30 The Loan Agreement for the ongoing Port Project (Loan 2657-MOR) calls for ODEP to prepare a report for Bank review at the end of each calendar year on maintenance works carried out during the year and their costs, as well as works scheduled for each of the following calendar year. Although this requirement has been only partially fulfilled, maintenance management has gradually improved. Further progress on maintenance management will be monitored under the project through the normal supervision mechanism. P. Port Plannina and Investment Program Port Planning 2.31 Port planning needs to be strengthened and better coordinated. The recent port reorganization has weakened the port sector's capability to prepare a coherent and comprehensive ports development plan. The principal reason for this is the insufficient coordination among the agencies which are responsible for different parts of the planning process. Theoretically, DP is ultimately responsible for coordinating overall port investment planning. In practice, however, DP tends to focus on basic infrastructure needs and long-term plans with little operational analysis. In 1983, DP completed a 20-year National Port Master Plan (PDPN) to define port investment needs. The PDPN was partially updated in 1985 and 1987. On the other hand, ODEP prepares five-year rolling detailed port investment plans focusing on programs of immediate practical improvements for the use of existing facilities. ODEP's plans make little reference, if any, to the PDPN. Moreover, ODEP is not yet equipped with the specialized skills required for detailed port planning. As a result, medium- term planning of specific projects is being neglected. There is a need for a total planning approach by which all planning activities --rehabilitation, master planning and port operations and management review--are carried out concurrently, with the objective of achieving the full potential of the existing ports before resorting to the addition of new berths and related facilities. To improve the planning process, the project includes a study to update the PDPN giving special emphasis to its linkages with medium-term plans and operational analysis at the level of each port. While the study will be under the responsibility of DP, close cooperation with ODEP will be required. Training would also be provided to ODEP staff to strengthen ODEP's port planning capability. Investment Program 2.32 Since the creation of ODEP in 1985, its investments have varied from DH 300 million (US$35 million) to over DH 400 million (US$47 million) annually, with the main focus on modernization of facilities and the rehabilitation of storage areas and warehouses. During the same period, investments in port infrastructure have ranged from around DH 450 million (US$53 million) to over DH 600 million (US$71 million) annually. This high level of investment in basic infrastructure was accounted for by the completion of the new port of Jorf Lasfar in 1985 and by the construction of new berth facilities at Agadir during the period 1984-1988. However, the Agadir port extension was financed through extra-budgetary sources amounting to about DH 850 million (US$ 100 million) during the period 1985-1988. As such, port infrastructure investments financed - 18 - under the general budget averaged about DH 250 million (US$29 million) annually during the period 1985-1988. This level of investment is now expected to decrease substantially and will be limited overall to about DH 190 million (US$23 million) through the end of the current 1988-1992 Plan. Similarly, expenditures by ODEP are unlikely to exceed DH 450 million (US$55 million) annually during the same period, a level which would be in line with expected revenues, requirements for debt servicing, revaluation of the maintenance fee (para. 2.45) and the limits placed on future tariff increases. As a whole, this program reflects the current emphasis given to the modernization of the port s^-tor and to the rehabilitation and maintenance of existing infrastructure. The overall port investment program for the period 1990-1993 is discussed in Chapter III and further details are given in Annex 3. G. Accounting and Auditing Ports Directorate 2.33 DP keeps separate accounts which follow the Government system of budget accounting. In the general budget, the accounts are broken down into chapters and articles for recurrent expenditures, and lines and subsections for capital expenditures with no organic link between revenues and expenses. The budget is approved by the parliament and its execution is closely controlled. DP keeps two separate accounts for commitments and for payments, which at end of year show similar amounts, because outstanding commitments and related credits are cancelled in accordance with Gvernment practice. Only unused credits for capftal expenditures can be carried over with the approval of the Ministry of Finance (MOF). Accounting for the payroll is kept at ministerial level. 2.34 The Director of DP can commit funds within a DH 30,000 limit; above this limit the Financial Controller's clearance is required. Funds are w'thdrawn based on applications submitted by the director and disbursed by the Treasurer's representatives. The Ministry of Finance and the Cours des Comptes are responsible for auditing these accounts. While this system is commonly used in public accounting, it does not produce appropriate information for assets management. Data are recorded on a monthly basis at their historical value without reference to total cost and without application of any depreciation. ODEP 2.35 ODEP follows accounting rules applicable to all public enterprises in Morocco. A new national accounting chart has been published but it has not been yet approved by parliament. The current system is decentralized and fully computerized in all DEPs. The accounting system is kept in line with current rules derived from the French chart of accounts, dated 1957. It includes two sub-systems, manager's and budget accounts, kept at the port level and consolidated at ODEP's financial department. The accounting system has improved over the last years, but still shows weaknesses in analytical potential, cost accounting and budgeting, which will be addressed by ODEP's financial department assisted by consultants as appropriate. Further improvement will result from the implementation of the computerized management system SIPOR. A subcomponent of SIPOR, the COFI project, which deals with accounting consolidation and integration of sub-systems, is expected to be fully implemented within two years. - 19 - 2.36 The methodology for revaluation of government financed assets transferred te ODEP Las been reviewed with the Bank and is satisfactory. The Government financed assets to be carried in ODEP books will show depreciation and additions. Assets remaining with the Government, revalued from time to time as appropriate, will serve as a basis to calculate the fee that ODEP will pay to the Government for their use (para. 2.45). 2.37 The current budget follows a standard classification by chapter, article and paragraph. The capital budget lists expenses by article and paragraphs which are integrated in a rolling five-year plan. Draft budgets are prepared by each port manager and reviewed at Headquarters, based on the general corporate strategy and governmental guidance regarding port policy and overall economic development. The draft consolidated budget is reviewed by the Management Committee (para. 2.19). The final budget is submitted annually to ODEP's Board for approval. 2.38 The General Manager has extensive power to execute the budget and commit funds, sutject to the clearance by the Financial Controller for expenditures above DH 100,000 (US$12,000). The Financial Controller is permanently assigned to ODEP by the Ministry of Finance to ensure that government legislation is fully enforced, especially concerning bidding and salary policies; the Financial Controller also has authority to reallocate funds between articles, whereas their allocation between chapters must be authorized at ministerial level. The principle of a priori control is very constraining in accomplishing day to day management, while a posteriori control based on an approved budget execution would be more efficient. The intervention of the Financial Controller at each step of the management process makes the day to day financial management very cumbersome and constitutes a major bottleneck in ODEP's management. Aware of this situation, the Government and its public enterprises are increasingly using contract plans as a vehicle to improve the control procedures. The new principle will involve a posteriori control based on budget execution and review of expense limits requiring clearance of the Financial Controller. Consequently, budget preparation must be rationalized to ensure that authorized spending is fully justified economically and financially. Technical assistance under the project will provide additional expertise to strengthen and streamline budgeting system implemented recently under the first project, to set an internal audit function (para. 2.39) recommended by the organizational study, and to ensure that investment spending is financially justified. 2.39 The internal audit department at managerial level has not yet been established due to difficulties in hiring appropriate high level staff. The internal audit unit currently in charge of auditing accounting systems and related procedures is attached to the financial department. Its main objectives are to ascertain consistency and accuracy of financial data provided and financial statements presented to ODEP management. Internal audit is oriented towards control of financial data and procedures at DEP level, including billing and collections of port dues, operating expenses, capital expenditures, payroll and wages and liquidity management. ODEP's management plans to set up an internal audit department and to hire appropriate high level staff by the end of FY91. The internal audit department will be attached to ODEP General Manager and will focus on: (a) implementation and updating of the oveiall organization - 20 - principles, str,. ture and procedures; (b) budget execution; (c) human resources management; ar (d) control of overall financial equilibrium at ODEP's level. These activities will be monitored during project implementation. 2.40 Each pox,: produces monthly financial statements showing management accounts and budget execution. The accounts are consolidated at the end of each year and submitted to the board for approval. ODEP accounts have been audited by an independent local auditor since its creation in 1985. The first two audits were limited to identifying deficiencies in the accounting systems and procedures. ODEP's management has succeeded in solving some of the deficiencies identified by its auditors. Despite ODEP's commitment and improvement of its accounts, the 1987, 1988 and 1989 audit reports did not give a clean opinion on ODEP's financial statements for the following reasons: (a) lack of consistency in accounting principles, bad debts write-off and provision policy for uncollectible accounts receivable; (b) lack of information on the previous RAPC's accounts in ODEP's books; (c) absence of lenders' confirmation of the status of the ongoing loans; (d) absence of information on a contract that ODEP manages on behalf of the Government; and (e) restriction in the scope of auditors investigation. Items (a) and (c) above have been tackled by ODEP's financial department and should be resolved during fiscal year 1990. Items (b) and (d) above will be included in the terms of the proposed Contract Plan. Discussions between the Ministry of Finance and ODEP to solve these two problems are currently going on. Regarding the scope of auditors' investigations, new terms of reference have been proposed to ODEP to review the auditor's contract for FY 1990 and thereafter. The auditors' comments on ODEP financial statements have been taken into consideration ih the financial analysis in Chapter V. 2.41 At negotiations, it was agreed that ODEP and the Government would maintain appropriate accounts, including separate project accounts and would have their accounts and financial statements audited on the basis of appropriate terms of reference by independent auditors acceptable to the Bank, and that audit reports would be submitted to the Bank not later than six months following the end of each fiscal year. H. Tariffs and Cost Recovery 2.42 Current port tariffs, which were modified in August 1985 and September 1987, have enabled ODEP to reach an overall financial balance and generate a positive operating income over i.he period 1985-1989. However, the tariff structure is still inadequate and few tariffs are cost based. Actually, substantial cross-subsidies occur between port activities and traffics (para. 2.43). Conscious of this situation, ODEP has developed a new pricing policy aiming at four main objectives namely: (a) overall financial equilibrium at sector level; (b) balanced financial performance in each port; (c) balanced financial performance for each activity, or group of activities and traffic; and (d) uniform rates to be applied to all ports. Objective (d) is a short-term objective to be kept while every effort is made to reduce the costs of loss-making activities. In the longer term, the other three objectives will take precedence. - 21 - 2.43 In order to set up the appropriate tariff structure to meet the above objectives, provisions were made in Loan 2657-MOR for a tariff study which has been substantially completed. The main findings of the tariff study show that: (a) the port of Casablanca and more recently, Tangier are making profits which compensate for losses incurred in other ports; (b) port dues on and services to ships are undercharged; they are subsidized by port dues on goods and cargo handling charges; (c) some commodities, in particular ore and phosphate, do not cover their costs; (d) the ad-valorem portion of charges on goods is proportionally too large, blurring the relation between cost and service; and (e) containerized goods are sometimes penalized when compared to conventionally packed goods. The study recommends a simplified, more cost-related tariff structure and level, to be implemented progressively, starting in 1990. The new tariff structure, which will be introduced in early 1991, involves a simplification of tariffs for container handling as well as an increase in port dues on ships. The financial forecast in Chapter V makes allowance for such adjustments. ODEP is currently testing the proposed tariff to determine its impact on ODEP activities and on users of port facilities. ODEP has developed in selected ports a double accounting system to record simultaneously the proceeds of the existing tariff and those which result from the new tariff. If required, appropriate amendments will be introduced before generalizing the tariffs to the other regional ports, which is expected before the end of September 1991 (para. 5.08). Details of the projected tariff structure and level, particularly for container and Ro-Ro traffic are in Annex 4. 2.44 Although the tariff study covers a large spectrum of ODEP activities, further investigations are needed to establish: (a) appropriate fees for use of fishing ports facilities; (b) charges to private port operators; and (c) a tariff applicable to coastal traffic. Consultants could also be requested to assist ODEP in analyzing the results of the test runs referred to above. In addition, ODEP will need to improve: (a) investment planning; (b) accounting for fixed assets; and (c) cost accounting and budgetary systems. The project makes provisiorn for consulting services to assist ODEP in this regard. 2.45 Cost recovery of Government investments is based on a fee paid to the Government by ODEP and currently evaluated at about DH 45 million per annum. The current port dues which are paid by the port users have to generate sufficient revenues to pay the fee. By linking the fee to the value of Government assets used, non economic port expansion is discouraged. The fee has been revised, particularly in view of the transfer of assets from the Government to ODEP (para. 2.13). Its computation is based on fixed assets which will remain in the public domain. The fee should c.mpensate the Government for ODEP's share of expenditures on rehabilitation and maintenance of the assets remaining with the Government. Accordingly, ODEP should improve its assets accounting systems by preparing a revaluation of its fixed assets outside the existing accounting system. This would cover: (a) Government-owned assets in various ports valued at their historical and current values; and (b) maintenance and rehabilitation costs of the said assets. The system will apportion the expenditures on rehabilitation and maintenance among the various users in an equitable manner. These measures are included in ODEP's Development Program and are to be reflected in the Contract Plan (para. 3.13). - 22 - III. THE PROJECT A. Proiect Origin and Objectives 3.01 In 1985, the Bank had originally identified a possible transport sector operation covering all transport modes. However, in late 1987 it was realized that the preparation of a sector operation would take considerably longer then originally anticipated, given the time needed to (a) develop an integrated strategy for the sector; (b) begin implementation of some policy actions; and (c) reach a conclusion on some of the key investments under the 1988-1992 Plan. In the meantime, the railway enterprise, ONCF, had been included in the PERL (FY87) and the Government requested continued assistance with its priority program of road rehabilitation and maintenance which culminated in the recently approved Highway Sector Project (FY90). Subsequently, in early 1989, the Government and ODEP showed interest in Bank involvement in a port project focusing on the construction of a new container terminal to relieve congestion of the existing facilities at Casablanca. Given the recently improved capability of the agencies involved in the port subsector, the Bank suggested that a broader approach wfould be warranted. Accordingly, discussions opened in February 1989 on the prospects for a port sector project, oriented toward rehabilitation and modernization of the commercial port system, which would also address broader issues in the port subsector. 3.02 While the project takes a broad perspective on the interdependent issues in the transport sector, it confines its support to those actions and investments that are within the purview of the Ministry in charge of ports (MPWN) and the administration in charge of marine security (DMM). It includes institutional Development Programs providing the framework for an investment component. The Development Programs will support the strengthening of ODEP and Port Administration initiated under the Ports of Casablanca and Mohammedia Project, covering investment planning, cost recovery and assets valuation, trade facilitation and port procedures, port operations, and environmental aspects (para. 3.12). The loans will finance selected and appraised components of the port subsector's pluriannual investment and maintenance program during the period 1991-1993. 3.03 The project forms an integral part of the Bank's strategy to support Government's efforts to liberalize trade and to promote exports. Port efficiency is an important element in stimulating trade. Assistance in the country's port investment program will ensure foreign exchange savings on sea freight rates for both exports and imports. The project also supports the country's current economic policies with specific emphasis on increasing public enterprise efficiency, rationalizing public investment programs and facilitating trade. The ongoing Port Project, though limited in scope, has helped improve the operational efficiency of the port of Casablanca and the management and financial viability of ODEP. Continued Bank involvement would help further improve investment planning, operational efficiency and cost recovery policies in the port subsector as a whole. - 23 - 3.04 The objectives of the project are to: (a) improve operational efficiency in the potts to cope with the growth and changing structure of foreign trade, especially through provision of adequate facilities for unitized cargo; (b) assist the Government in strengthening the economic viability of its investments in the port subsector and increasing the recovery of infrastructure costs through inter alia appropriate changes in port tariffs; and (c) encourage policies and institutional measures aiming at better planning and coordination of port activities in relation with Government efforts to promote foreign trade. B. Proiect Description 3.05 The project includes the following: (a) ODEP's investment program covering the period 1991-1993, subject to annual updating; (b) Government's port investment and maintenance program covering the period 1991-1993, subject to annual updating; and (c) appropriate institutional measures to address selected sectoral issues concerning port planning, preparation and implementation of sub- projects, cost recovery, port operations and management, environmental protection, and trade facilitation. 3.06 During negotiations, agreement was obtained from the Government and ODEP on the project objectives and description. ODEP Investment Program 3.07 Evaluation of ODEP's estimated feasible expenditure levels from 1990 through 1993 is central to defining ODEP's investment program. During project preparation, ODEP and the Bank confirmed that annual expenditure levels of about DH 450 million (US$55 million equivalent) throughout the period are feasible and realistic. This takes into account ODEP's previous work programs implementation, NOFF's views on the current level of port dues and the need to reevaluate the fee paid by ODEP to the Government. On this basis, ODEP established a priority program which provides an adequate framework to project the financing requirements. At negotiations, ODEP agreed to furnish its annual investment program to the Bank by September 30 of each year for review and comments, and to implement a finalized program taking into consideration Bank comments. 3.08 Table 3.1 below summarizes the expected capital expenditures budgeted by ODEP for 1990 and estimated for 1991-1993. A more detailed breakdown is given in Table 1 of Annex 3. Any subproject concerning commercial ports under this program would be a potential candidate for Bank financing. Specific subprojects to be financed under the project will be identified on the basis of - 24 - agreed upon criteria and procedures for selection and implementation (para. 3.11). At appraisal, it was established that the following major subproject would be eligible for Bank financing under the loan to ODEP: a new container terminal at Casablanca, including the provision of equipment. The following would, subject to detailed appraisal demonstrating their economic and technical justification, also be suitable candidates for financing under the Loan: (a) a coal handling facility at Jorf Lasfar; (b) improved Ro-Ro facilities at Tangier; and (c) technical assistance and training. Table 3.1: ODEP's Rolling Plan of Capital Expenditures 1990-1993 (DH million) Total 1990 1991 1992 1993 1990-93 DUm USSm ODEP Infrastructure 85 300 235 255 875 106 Equipment 145 45 90 235 515 62 Other Programs 5 20 20 5 50 6 Studies/Training 20 15 20 55 7 Total Base Costs 235 385 360 515 1,495 181 Contingencies 21 65 86 144 316 38 Total 256 450 446 259 1.811 19 Government Port Investment and Maintenance Prop-ram 3.09 Government investments in the port subsector include planned expenditures by MPW on infrastructure rehabilitation and maintenance and by DNM for the provision of vessel traffic services along the Moroccan coast. The Government port investment program for the period 1990-1993 is presented in Tables 2 and 3 of Annex 3, and summarized in Table 3.2 hereafter. Planned expenditures under the program are estimated at about DH 190 million (US$23 million) annually, representing a substantial 60X reduction over expenditures during the period 1981-1987 which was associated with expansion of port infrastructure (para. 2.32). The proposed program focuses entirely on rehabilitation of breakwaters, dredging and marine security. Appropriate maintenance of breakwaters is critical to the operation of Moroccan ports, particularly because of the exposure of the Atlantic coast to powerful storms. MPW's breakwater rehabilitation program is designed to reduce the backlog that has accumulated over the years. The project will provide financing for priority subprojects of this program. In addition, financing would be provided for a time slice of dredging in Moroccan ports, subject to a satisfactory review of operational and environmental aspects of dredging (para. 3.11). An addition subproject consisting of providing a radar control tower on the Moroccan coast will assist navigation and its safety in the heavily trafficked area at the junction of the Atlantic Ocean and the Mediterranean Sea. The control tower will provide vessel traffic services facilitating an efficient maritime traffic flow to and from Moroccan ports. The cost is estimated at DH 108 million (US$13 million). At negotiations, the Government agreed to furnish its port - 25 - subsector investment program to the Bank by September 30 of each year for review and comments, and to implement a finalized program taking into consideration Bank comments. Table 3.2: Government Port Investment and Maintenance Program 1990-1993 (DH million) Total 1990 1991 1992 1993 1990-93 DP - DPCM D_Hm USSm Casablanca-Mohammedia 13 8 18 36 75 9 Other Brkw. Rehab. 30 35 47 59 171 21 Dredging 44 36 54 37 171 21 Other Programs 66 35 45 69 215 26 Studies/Training 2 10 5 6 23 3 Total DP-DPCM 155 124 169 207 655 80 3NMM Infrastructure - - 9 18 27 3 Equipmeat - _ 5 57 62 8 Total DMM 0 0 14 75 89 11 Total Base Costs 155 124 183 282 744 91 Contingencies 14 21 43 79 157 19 Total 169 145 226 361 901 110 Subi,roiects Eligible for Bank Financing 3.10 The Bank loans will finance subprojects related to: (a) civil works for eligible subprojects; and (b) purchase of coal handling, computer, radar, and telecommunications equipment. In addition, the Bank will finance equipment related to the container terminal and to the environment and training components as well as studies and technical assistance in support of subsector objectives. 3.11 For a subproject to be eligible for financing under the loans, it will have to be technically feasible, economically justified and designed in accordance with appropriate safety, health and environmental standard satisfactory to the Bank. For each subproject, an evaluation sheet will be prepared on which the key technical, design, cost, economic and tentative tender information is summarized. Eligible subprojects under ODEP's investment program should also have an economic rate of return of at least 12%, and a first year benefit exceeding 10%, calculated in accordance with a methodology satisfactory to the Bank. Details of the evaluation methodology and the eligibility criteria are given in Annex 5. Bank missions will review these data and confirm eligibility for inclusion in the project. At negotiations, agreement was obtained on the procedures and criteria related to eligibility of subprojects to be proposed for Bank financing. In addition, the execution of maintenance and rehabilitation dredging in selected ports will be subject to agreement with the Bank on environmentally sound disposal measures on the basis of the findings of a specific environmental assessment (para. 3.40). - 26 - Institutional Improvements 3.12 Development Proorams. To ensure smooth execution of the program and efficient management of the port subsector, a Port Subsector Development Program and an ODEP Development Program have been developed respectively with the Government and ODEP to include key measures drawn from the Action Plan (para. 3.35 and Annex 1). The Port Subsector Development Program refers to specific measures in the following areas: (a) trade facilitation; (b) investment planning; and (c) fixed assets management. ODEP's Development Program consists of measures in the following areas: (i) port operations, particularly on the new container terminal; (ii) trade facilitation including port procedures and information systems; (iii) investment planning; (iv) environment and safety; (v) cost recovery; and (vi) fixed assets management. ODEP's Development Program also refers to targets to be achieved by ODEP and indicators that can be monitored during project implementation (para. 3.37). At negotiations, assurances were obtained that the Government and ODEP would carry out their respective Development Programs with due diligence and efficiency. 3.13 Contract Plan. ODEP's good management and sound financial situation provide a suitable basis for establishing a Contract Plan. Its main objectives would be to clarify goals and in2rease managerial autonomy. Table 5 includes a list of items to be covered in the Contract Plan. Some of the Contract Plan issues, particularly the one regarding the "contr6le a priori" of expenditures will be difficult to solve on a case by case basis. Other issues, such as increased enterprise autonomy and setting of port tariffs, require intensive consultations between the parties. As a result, signature of the Contract Plan is unlikely to occur before 1991. During appraisal, the Bank commented on a first draft prepared by ODEP. This draft has been revised in consultation with the Directorate for Public Enterprises and Participations (DEPP), which is the supervisory agency of the Ministry of Finance for contract plans. A second draft Contract Plan was reviewed by the Bank during negotiations to ensure consistency with sector objectives and with the reform of the public enterprises sector being supported by PERL operations. At negotiations, it was agreed that a Contract Plan satisfactory to the Bank would be signed by June 30, 1991. 3.14 Training Program. Training needs have been identified for DP, DPCM, and ODEP. ODEP has prepared a three-year training program (1991-1993) for training of its staff (Annex 2). Training programs to be implemented locally make the fullest use of existing vocational and technical institutions and facilities in Morocco. In addition, the project will provide about US$2.2 million for: (a) purchase of training equipment, furniture and materials; (b) on-the-job training in project supervision to be provided by consultants who will also assist in the supervision of construction of the new container terminal at Casablanca; (c) training and fellowships abroad for port planners and managers; and (d) visiting experts to organize workshops and seminars in specialized areas (Table 6). 3.15 Consultant Services. About 410 man-months of consultant's services are included in the project to assist DP, DPCM, and ODEP (Table 6). For ODEP, these services would include 300 man-month of assistance in the areas of: (a) detailed design of subprojects; (b) civil works supervision; (c) information systems; (d) maintenance dredging study; and (e) supplementary cost accounting - 27 - studies. For the Government, about 110 man-month of assistance would be provided for: (i) updating of the National Port Master Plan; (ii) development of criteria for environmentally sound disposal of dredging materials; and (iii) detailed design of subprojects. Terms of reference for studies (b), (d), (i) and (ii) above have been drafted by the concerned agencies with Bank assistance. As in the ongoing project, consultants will provide the required services with a mix of local (about 190 man-months) and expatriate personnel (about 220 man-months). C. Cost Estimates 3.16 Total capital expenditures for the port subsector during the 1991-1993 period are estimated at about DH 2,329 million equivalent to US$282 million, with a foreign exchange cost of US$151 million. The local cost component amounts to DH 1,085 million equivalent to US$131 million, including DH 652 million equivalent to US$79 million in taxes and duties. The total project cost net of taxes is therefore US$203 million equivalent. Table 3.3 below shows the total project cost in summary form. At negotiations, the cost estimates were confirmed by the Government and ODEP. 3.17 Cost estimates for civil works are based on unit prices for similar works in Morocco, adjusted to March 1990 level. Equipment costs are based on recent price experience for similar types of equipment provided by foreign manufacturers in Morocco and in Bank-financed projects in other countries. Technical assistance costs are based on man-month rates for consulting services in Morocco. They include salaries, fees, international travel, and subsistence. Duties and taxes are estimated to amount to about 28% of total costs. Physical contingencies of 10% have been included for civil works, except for those included in ODEP's program for which physical contingencies are estimated at 15%. This is considered appropriate coverage given the status of design work of most subprojects and the assessed risks which include those for difficult terrain, especially dredging in hard materials. Price contingencies are based on local cost increases of 6.2% in 1990, 5.6% in 1991, 5.4X in 1992, 4.4% in 1993, 4.9% in 1994, and 5.5% in 1995, and on foreign cost increases of 4.1% in 1990, 5.3% in 1991, 5.4% in 1992, 5.4% in 1993, 5.2% in 1994, and 5.3% in 1995. The foreign exchange component of the civil works has been estimated at 50%. It assumes that local contractors will carry out a sizeable portion of the works, as has been the case in the ongoing Port Project. - 28 - Table 3.3: Summary of Project Costs (base costs March 1990) DH million USS million Local Foreign Total Local Foreign Total ODEP Infrastructure 395 395 790 48 48 96 Equipment 148 222 370 18 27 45 Other Programs 18 27 45 2 3 5 Studies/Training 28 27 55 3 -A 4 l Subtotal ODEP 589 671 1,260 71 82 153 DP - DPCM Casablanca-Mohammedia 36 35 71 4 4 8 Other Brkw. Rehab. 104 104 208 12 13 25 Dredging 51 76 127 6 9 15 Other Programs 29 44 73 4 5 9 Studies/Training 6 15 .21 1 2 l Subtotal DP - DPCM 226 274 500 27 33 60 DMK 38 51 89 5 6 11 Total Base Costs 853 996 1849 103 121 224 Physical Contingencies 74 77 15i 9 9 18 Price Contingencies 158 171 329 19 21 40 Total 1.085 218244 22329 ILl JU X D. Financinz Plan 3.18 Table 3.4 below summarizes the expected financing sources for the port subsector development program during 1991-1993. External funding will include IBRD and African Development Bank (AfDB). Bank financing will amount to US$132 million, thus providing funds covering 87X of the foreign exchange costs of the program through 1993. Discussions between the Government and Ex-Im Bank of Japan for a contribution of US$38 million to the project have been initiated. Should an agreement between those parties be reached in the near future on co- financing, the Bank intends to cancel an amount equivalent to Japanese participation. The Bank financing will meet the foreign exchange costs of the selected activities, plus a small amount of local costs which will partially offset the foreign exchange cost of the non-selected components. The selected components represent about 81X of ODEP's overall program and 471 of the Government program. Ongoing loans from IBRD and AfDB will provide financing for 71 of the foreign costs. Bilateral financing is being considered for floating equipment and the renewal requirements for conventional handling equipment. - 29 - Should bilateral financing materialize, it would reduce the contribution of the Government and ODEP by US$3.8 million and US$6.8 million, respectively. Table 3.4: Financing Plan Local Foreign Total ----------- US$ million ---------- IBRD 21.1 110.9 132.0 Ongoing IBRD - 4.4 4.4 Ongoing African Development Bank 5.9 5.9 ODEP 75.1 15.7 1/ 90.8 Government 34.8 14.1 48.9 Total 12L. 151.0 2HIMU Mainly indirect foreign exchange on locally procured civil works. Lending Arrangements 3.19 The Bank will provide two separate loans: one to ODEP for US$99 million with guarantee by the Kingdom of Morocco, and one to the Kingdom of Morocco for US$33 million. Both loans will be made on standard Bank terms and conditions for Morocco: 20 years' maturity, including five years of grace, at a variable interest rate. Table 7 represents an initial allocation of the two Bank loans of US$99 million and US$33 million to ODEP and the Government respectively. Cross-effectiveness conditions have been introduced in both Loan Agreements in view of the integrated nature of the Government's and ODEP's activities under the project. 3.20 Should the Government or ODEP, in the future, have to meet the port requirements with fewer resources than those presently foreseen, a reduction in the overall size of the program would first be made by reducing the components concerning lower priority activities, such as regional development, through postponement or scaling down of subprojects. E. Proiect Imvlementation 3.21 Each agency will be responsible for implementing its own component. MPW will be responsible for the implementation of its component through DPCM for the rehabilitation of the breakwater of the port of Casablanca, and through DP for rehabilitation of breakwaters in ports other than Casablanca and Mohammedia, dredging works, master plan studies, environmental assessment for dredging, and related institution building. ODEP will be responsible for the execution of its program. The Ministry of Fisheries and Merchant Marine will be responsible through DMM for the implementation of the marine security component consisting of a radar control tower and related vessel traffic services. 3.22 Design work is substantially completed for one major component, i.e. the new container terminal at Casablanca. Local consultants are preparing the bidding documents. Prequalification of civil contractors has been completed. Bids for the container terminal have been invited; they are due early 1991. - 30 - Final engineering of other subprojects will be prepared by qualified engineers of ODEP, DPCM, and DP, assisted, as appropriate, by independent engineering consultants acceptable to the Bank under agreed terms of reference. Technical assistance will also be provided to ODEP for supervision of construction of the new container terminal at Casablanca. Such technical assistance will include training of ODEP counterpart staff to enable ODEP to efficiently supervise all other cubprojects. Specifications are already available for container handling equipment. Experienced consultants are carrying out a detailed study of the radar control tower. 3.23 The project implementation period is expected to be about four years. A detailed prograu for project execution has been prepared (Annex 6). During negotiations, ODEP and the Government confirmed the program for project execution and the project implementation schedule attached thereto. F. Procurement 3.24 General. A General Procuremenc Notice for the Project has been issued on October 31, 1989. It will be updated periodically. Procurement for the Bank financed components of the project will be as follows: Table 3.5: Procurement Methods V Project Elements ICB LCB Other Total -------- US$ million V- 1. Civil Works 148 50 198 (85) (4) (89) 2. Cargo-handling equipment 44 S 49 (26) (0) (26) 3. Miscellaneous equipment 13 11 24 (7) (1) (8) 4. Consultant Services for Training/technical assistance 11' 11 (9) (9) Total 205 50 27 282 (118) (4) (10) (132) 1/ Amount in brackets show the allocations from the proceeds of the Bank loans / Costs include estimated contingencies lJ/ Includes amounts for items expected to be financed by bilateral sources Źi/ Limited international bidding or international shopping i. Employment of consultants 3.25 Civil Works. Three separate civil works contracts will be awarded after ICB to prequalified firms for the container terminal at Casablanca, the coal terminal at Jorf Lasfar, and the Ro-Ro terminal at Tangier. However, - 31 - dredging works in Moroccan ports and miscellaneous rehabilitation subprojects are scattered throughout the country, are of small magnitude, and are therefore unlikely to attract foreign bidders. Nevertheless, contracts for civil works estimated to cost US$2 million or more will be awarded on the basis of ICB in accordance with Bank guidelines for procurement. Contracts estimated to cost less than US$2 million will be awarded following LCB procedures satisfactory to the Bank, which are, in any case, open to foreign bidders. 3.26 Eguipment. Container handling equipment, coal handling equipment, radar equipment, and packages of equipment iith a combined value of US$1 million or more, totalling US$57 million, will be procured through ICB in accordance with Bank guidelines. For procurement of goods through ICB, local suppliers will be allowed a margin of preference equal to the existing rate of customs duty applicable to non-exempt importers or 15X of the cost-insurance-freight (c.i.f.) price, whichever is lower. Miscellaneous items of equipment estimated to cost less than US$1 million, but more than US$100,000, or packages having a combined cost between these thresholds, will be purchased through limited international bidding on the basis of comparison of bids invited from at least five qualified suppliers. For contracts estimated to cost less than US$100,000, procurement will be through shopping involving at least three quotations obtained from foreign or local suppliers, subject to an aggregate value not exceeding US$1 million per loan. Conventional cargo handling equipment (US$5 million), and floating equipment (US$10 millior.) are expected to be financed by bilateral sources and procured under their own procedures. 3.27 Consulting Services. Consulting services for training, studies, final design of subprojects, and supervision of constructior., amount to approximately US$ll million. These services will be provided by either consulting firms or individual experts, both selected in accordance with the Bank's Guidelines for the Use of Consultants. The qualification and experience of consulting firms and individual experts, as well as terms of reference and conditions of contract, should be satisfactory to the Bank. 3.28 Prior Review. The Bank will conduct a prior review of the first set of bidding documents for civil works and equipment to ensure that a satisfactory procurement process will be followed. Thereafter, a US$1 million threshold for civil works, and a US$600,000 threshold for equipment, will be applied for prior review, resulting in a coverage of about 90% of the contracts. Contracts that are not subject to prior review will be subject to random post review by the Bank after contract award. The Bank will have the right to reject the financing of any contract for which agreed-upon bidding procedures have not been followed. The consultants' terms of reference, their suitability for the specific assignment and the draft contract for all assignments will be subject to prior review and approval by the Bank. 3.29 LCB Procedures. Although Moroccan competitive bidding procedures are generally acceptable to the Bank, a few procedures are inconsistent with Bank procurement policy. These procedures and proposals to improve them are detailed in Annex 7. During negotiations, the Bank explained to the Government and ODEP the procedures required to be compatible with the Bank's objectives of ensuring economy, efficiency, and overall project soundness. - 32 - 3.30 During negotiations, all the above procurement arrangements were agreed upon with the Government and ODEP. G. Disbursements 3.31 Disbursements of the two Bank loans will be made on the following basis: (a) civil works: 64X of total expenditures; (b) equipment: 100l of foreign expenditures or ex-factory cost, and 70X of local expenditures for items procured locally; (c) consulting services and training: 100% of total expenditures. 3.32 Advance procurement of the civil works for the new container terminal at Casablanca is in progress. Retroactive financing up to a total of US$5.0 million is recommended for payments made by ODEP after July 31, 1990, but before the date of loan signature. This will allow an early start on some critical project items consisting of the new container terminal and consultants' services. 3.33 A Special Account, covering all categories of disbursement for the loan to the Kingdom of Morocco, will be established on terms and conditions acceptable to the Bank. The authorized allocation will be US$2 million (four- month average of eligible expenditures). Disbursement requests will be fully documented except for expenditures under contracts valued below US$100,000 equivalent, which will be made on the basis of certified statement of expenditures (SOEs). The Government and ODEP will retain supporting documentation for at least one year after the audit for the year in which the last disbursement from the loan account is made. This documentation will be made available to Bank staff during supervision as well as independent auditors acceptable to the Bank. The annual audits of the project accounts will include a separate opinion on the disbursements made under the SOE procedure. Agreement was obtained, during negotiations, on the establishment and operation of the Special Account, and on satisfactory procedures for disbursements under SOEs. 3.34 The closing date of the Bank Loans will be June 30, 1996. In the past, it has taken an average of seven years to complete disbursement of loans or credits to Morocco (all sectors), and transport project in the EMENA region have taken equally long. In the case of the ongoing Port Project, the disbursement period is likely to be five and half years. There is no standard Bank disbursement curve for a project based on a three-year investment program. This appraisal sets a disbursement period of five years on the basis of the time frame of the program (1991-1993) and the arrangements for project monitoring and supervision. The estimated disbursement schedules for the two loans are given in Annex 8.They are based on the assumption that the loans would become effective by March 31, 1991. - 33 - H. Project Monitoring and Reporting 3.35 The project will be supervised and monitored by the Bank through the normal supervision mechanism, and through provision of regular reports to the Bank on all phases of the project. The Bank has prepared a monitoring tool in the form of a detailed time-bound Action Plan which will serve as an indicative reference for Bank supervision missions (Annex 1). Key actions drawn from the Action Plan were agreed at negotiations and are included in the Loan Documents and in the Development Programs (para. 3.12). Project supervision will require about 50 staff-weeks over the four years of project implementation. The basic staff required will include a port engineer, a financial analyst, an environment specialist, and an economist. The Government and ODEP will prepare: (a) quarterly reports to the Bank on project implementation and expenditures together with key indicators for monitoring progress made in pursuing the objectives of the project; (b) semiannual reports on financial and operational results of port operations and on selected port performance data; and (c) a project completion report to be submitted to the Bank within six months of the closing date of their respective loans. The format, content and schedule of reports was confirmed at negotiations. Annex 9 provides details concerning project monitoring. 3.36 MPW and ODEP will meet at least annually with the Bank to: (a) assess the status of the project and the progress of institutional developments using the agreed Development Programs, targets and monitoring indicators established under the project (para. 3.37); (b) discuss and resolve outstanding issues and implementation problems; and (c) review the pluriannual investment and maintenance program for the port subsector, particularly for ODEP (paras 3.07 and 3.09). Performance Indicators. Targets and Monitoring 3.37 ODEP's Development Program provides targets and monitoring performance indicators. Accordingly, ODEP has established selected productivity targets of key activities based upon a detailed analysis of current port operations. ODEP will also continue to monitor operational indicators relating to the quality and efficiency of the maintenance operations. ODEP's project coordinator will include in the semiannual reports a set of comparative data, showing the actual values of the monitoring indicators compared to targets. Performance indicators and targets are presented in Annex 10. I. Environmental Asnects 3.38 The project is not subject to the provisions of OD 4.00, Annex A "Environmental Assessment" as the IEPS was issued prior to October 15, 1989. Environmental issues were assessed by Bank technical specialists in the course of project pre-appraisal and potential impacts were identified. Based on this assessment, an analysis of its potential environmental impact will be carried out and the necessary measures will be taken against any possible negative environmental effects. Potential impacts likely to result from the project are related to the following: (a) excavation of fill and disposal of dredging materials associated with the construction of a container terminal at Casablanca; (b) disposal of dredging materials associated with maintenance and rehabilitation - 34 - dredging in Moroccan ports; and (c) dust release during handling and storage of dry bulk cargoes. These impacts are discussed briefly in the following paragraphs and covered in greater detail in Annex 11. 3.39 Construction of the new container terminal at Casablanca involves the following quantities of materials to be moved: 3 million m3 of fill to be placed within the boundaries of the existing port, 0.75 million m3 of soft materials and about 50,000 m3 of hard materials to be dredged from the port area. The impact of heavy truck traffic associated with fill work could be mitigated through providing a portion of the required volumes through dredging of the sea bed. ODEP is currently investigating appropriate souices of sand in areas where no significant damage to marine ecology is to be expected. Concerning the dredging work, analyses of sediments have been carried out to identify any toxic or hazardous materials and define appropriate measures for their disposal in compliance with the London Dumping Convention. These measures show that the toxicity of the sediments is generally well under critical levels. Accordingly, disposal over a selected site in deep open-water is acceptable. The authorized site will be imposed on the contractor for civil works through adequate provisions in the bidding documents. 3.40 The maintenance and rehabilitation dredging program is a longer-term operation for which an environmental assessment is deemed appropriate. The annual volume of maintenance dredging in Moroccan ports is about 3 million i3, consisting mostly of sand, and a limited amount of mud (50,000 in), s-attered all along the coast. The environmental assessment will be prepared by DP with the assistance of a local laboratory and international consultants as appropriate. This environmental assessment will focus on the following analyses: (a) determination of the extent and potential impact of contamination of sediments to be dredged from the ports; (b) characterization of all the sediments in the ports where pollution effects could be potentially serious; (c) identification of measures likely to eliminate the sources of the contaminants; (d) selection of disposal methods; and (e) recommendation of long term monitoring procedures of the dredging and disposal systems. The detail and sophistication of analysis and recommended mitigative measures should be commensurate with the potential impact in each particular port. Accordingly, it was confirmed, at negotiations, that the environmental assessment would cover the ports of Agadir, Kenitra, Larache, and Safi. It was also agreed that the environment study would be completed by December 31, 1991 and that maintenance and rehabilitation dredging activities in the selected ports would be carried out in accordance with the recommendations agreed with the Bank on the basis of the results of the study. 3.41 The problem of reducing dust release is typically associated with activities involving bulk handling of coal and cereals. Controlling cereal dust in silos is particularly important to prevent the danger of explosion. These problems and specific environmental impacts of other activities will be dealt with during the design of the facilities involved. Assurances were obtaftaed, at negotiations, that all facilities to be financed as subprojects would be designed in accordance with environmental health and safety standards acceptable to the Bank. This requirement will be made part of the consultants' terms of reference for any design study. - 35 - 3.42 In addition to the above environmental analyses, the project will provide technical assistance and training to Government and ODEP staff to strengthen environmental capabilities and raise environmental awareness in the port subsector. ODEP has already undertaken a number of actions to improve employee health and safety of operations. Safety studies carried out in the major ports have analyzed the risks of port operations and identified measures to increase safety. ODEP is currently developing training programs for port employees in accident avoidance and handling procedures for hazardous cargoes. The storage facilities for hazardous cargoes in the port of Casablanca will be upgraded under the project. Furthermore, ODEP's Development Program (para. 3.12) identifies actions aiming at: (a) defining additional investments which would be required for compliance with international conventions in Moroccan ports regarding the prevention of pollution and the collection of ship generated sewage and garbage; and (b) establishing environment standards for port users, particularly future waterfront industries. These actions will contribute to the positive impacts which will result from the project. Moreover, the new container terminal will reduce movements of both vessels and vehicles in relative terms, which in turn will reduce water and air pollution as well as urban traffic congestion. Increased containerization will also reduce the risk of spillage, spoilage, and fire. J. Impact on Employment 3.43 Although the development of modern cargo handling techniques reduces the need for labor in ports, no major problem is foreseen in this area, particularly as containerization and Ro-Ro traffic are already well developed. ODEP's prudent personnel policy has already anticipated the reduction of the work force. More than 20% of ODEP staff are due to retire in the next five years. In addition, ODEP is currently preparing a study for estimating future staff requirements. The situation of employment in ODEP will be reviewed periodically by Bank supervision missions. This will allow early identification of problems if a change of external conditions were to negatively affect employment in the port subsector. - 36 - IV. ECONOMIC EVALUATION A. General 4.01 The project provides for a continuation of Morocco's port modernization program with the main emphasis on improved handling for unitized cargoes and for bulk imports of coal. As the project is concerned primarily with container and roll-on roll-off traffic, the focus of the traffic analysis is on general cargo traffic and the impact of unitization on this traffic. A specific economic evaluation has been undertaken for the key items of the port investment program, namely the new container terminal at Casablanca, improvements to roll-on roll-off facilities in Tangier, and the coal berth at Jorf Lasfar. An economic evaluation has also been undertaken for the cereals silo which will is planned by ONICL at Agadir. These priority items represent close to 60X of the total port investment program while a further 20% represents the completion of ongoing projects. Of ODEP's program, the key items which have been evaluated represent over 70% of the total. The Government program, which represents about 30% of the overall investment program, is concerned mainly with the maintenance of existing facilities and with marine security, as such no specific economic evaluation has been made. However, the overall feasibility of the program has been reviewed, the main components focussing on the ports of Casablanca, Tangier, and Agadir. Other items of the investment program will be evaluated during implementation of the project according to criteria agreed with the Bank (para. 3.11). In this respect, particular attention will be given by ODEP to establishing the needs for renewal of conventional handling equipment which is the single most important item after the priority components listed above. An outline of the general methodology and criteria to be used in the evaluation of the program components is given in Annex 5. B. Traffic Forecasts Recent Trends 4.02 Total traffic handled by Moroccan ports has increased from 29 million tons in 1983 to 36 million torts in 1988 of which 19 million tons were exports of phosphates, phosphoric acid and other minerals, while 12 million tons were imports of bulk traffic including crude oil (5 million tons), coal (1.1 million tons), cereals (1.9 million tons) and sulphur (2.9 million tons). Exports of phosphates and related traffic have generally been on the order of 17 to 18 million tons per year although this traffic increased to 19 million tons in 1988. However, phosphate exports subsequently declined in 1989 due to the loss of a single major market. The contract is being re-established in 1990. Bulk imports are mainly oil products which increased from 4.4 million tons in 1983 to 5.2 million tons in 1988 and cereals traffic which has ranged between 1.5 and 2.1 million tons since 1983. Imports of coal began to reach significr.nt levels in the mid 1980s, with the conversion in 1986 of the coal-fired Mohammedia power plant, the latter now requiring some 800,000 tons annually out of a total import volume of about 1 million tons. General cargo traffic has increased from 3.6 million tons in 1983 to 4 million tons in 1987 and 4.8 million tons in 1988. The substantial 20% increase in traffic in 1988, which affected both imports and - 37 - exports, reflected the Government's recent efforts towards trade liberalization and to unusually high demand for fruits and vegetables in Western Europe. Table 4.1: Growth of Foreign Trade: 1983-88 (thousand tons) Growth Rate % 1983 1985 1987 1988 1983-87 1983-88 Imports Oil products 4,379 5,233 5,049 5,197 3.6 3.5 Coal 244 451 1,059 1,051 44.3 33.9 Sulphur 1,349 1,469 2,093 2,925 11.6 16.7 Cereals 1,858 2,042 2,065 1,515 2.7 -4.0 Other bulk 698 788 829 906 4.4 5.4 General cargo 2.084 2.437 2.617 3.063 5.9 8.0 Sub-total 10,612 12,420 13,712 14,657 6.6 6.6 Exoports Phosphates 13,976 14,790 13,060 14,260 -1.7 0.4 Other bulk 3,125 3,415 3,609 5,240 3.7 10.9 General cargo 1.455 1.351 1,.454 l.754 0.0 3.8 Sub-total 18,556 19,556 18,123 21,254 -0.6 2.8 Total 29168 35.911 Source: Office des Changes General Cargo/Unitized Traffic 4.03 Although imports of capital and intermediate goods rose steadily between 1983 and 1987 at about 5.5% per year, this traffic jumped by 17X in 1988, partly as a result of pent-up demand following the Government's trade liberalization program. However, the growth of imports of unitizable cargoes followed a more regular pattern of between 7% and 8% per year between 1983 and 1988. During the same period, exports of manufactured goods declined by some 4% per year in tonnage terms, this decline being offset by continued growth in exports of fruits and vegetables and particularly by a substantial 40% increase in this traffic to Western Europe in 1988 V. 2/ In value terms, exports of manufactured goods have increased at about 12% per year since 1983. - 38 - Table 4.2: Growth of General Cargo: 1983-88 (thousand tons) Growth Rate X 1983 1985 1987 1988 1293-87 1983-88 Imports Non-Unitizable 1,024 1,142 1,180 1,450 3.6 7.2 Unitizable 1.060 1.295 1.437 1.613 7.9 8.8 Sub-total 2,084 2,437 2,617 3,063 5.6 7.8 Exports Fruits & Veg. 662 717 762 1,116 3.6 11.0 Non-Unitizable 63 61 81 90 6.5 7.3 Unitizable 730 _ 573 _ 611 548 A.4 -5.5 Sub-total 1,455 1,351 1,454 1,754 0.0 3.8 Total I=53 IM 4071 4.817 IA 64 Source: Office des Changes 4.04 In the longer term, it is expected that the growth of general cargo imports will be attenuated somewhat, a rate of 3.5X per year being retained for the period 1987-2000. However, for unitizable cargo imports, which are essentially capital goods, a growth rate of about 4X per year is expected. For exports of general cargo traffic, a modest growth rate of around 2% per year is forecast until the year 2000. A higher rate of increase, at least in the medium and longer term, is unlikely in view of the increasing difficulties Morocco is expected to experience in placing its products in the EEC market. Compared to 1988 traffic levels, these forecasts imply growth rates for unitizable cargo imports of 3.5Z per year and for unitizable exports of 2.6X per year up to the year 2000. Detailed forecasts by type of commodity are given in Table 1 in Amaex 12. 4.05 With a recent growth rate of about 71 per year, unitized cargoes have increased at a higher rate than for general cargo traffic as a whole. Currently about 601 of unitizable cargo in Moroccan ports is handled in containers or Ro- Ro trailers, this figure being about 651 for Casablanca, and about 801 for Tangier. Based on an analysis of the degree of unitization for various categories of traffic, Table 4.3 shows forecasts of unitized traffic for the ports of Casablanca and Tangier in 1994 and 2000. These forecasts imply growth rates for unitized cargoes of just over 51 per year for Casablanca and 71 per year for Tangier. In the absence of improved facilities, much lower growth rates would be expected, probably around 2.51 per year at Casablanca, and 51 per year at Tangier. With the planned improvements in facilities at Casablanca, the number of containers handled would increase from 94,000 TEU in 1987 to 190,000 TEU in the year 2000, while the number of Ro-Ro trailers would increase - 39 - from 10,000 units to 14,000 units. Further details of these forecasts are given in Annex 12. Table 4.3: Forecasts of Unitized Traffic (thousand tons) Annual rate 1987 1994 2000 _ A. General Cargo Total General Cargo g 3,309 4,000 4,890 3.1X Unitizable 2,048 2,590 3,172 3.8X B. Unitized Traffic Forecasts - Casablanca a) With Project Unitizable 1,538 1,938 2,370 3.4X Unitized 1,007 1,443 1,924 5.11 X 65X 731 811 Total residual 1,543 1,710 1,961 1.91 b) Without Project Unitizable 1,538 1,938 2,370 3.41 Unitized 1,007 1,230 1,400 2.61 X 651 641 591 Total residual 1,543 1,923 2,485 3.81 C. Unitized Traffic Forecasts - Tangier a) With Project Unitizable 189 300 444 6.81 Unitized 150 255 400 6.9X X 791 851 901 Total residual 69 115 171 7.21 b) Without Project Unitizable 189 300 444 6.8X Unitized 150 200 300 5.51 % 791 671 681 Total residual 69 130 230 9.7X L/ Excluding fruits and vegetables. Other Traffic 4.06 Forecasts of coal traffic depend on the policy adopted by the National Electricity Board (ONE) for the future thermal power plant at Jorf Lasfar and the relative costs of coal and fuel oil. Where freight costs can be reduced, coal appears a viable alternative to energy sources such as gas and imported oil. According to ONE, the power plant would need imports of about 1.5 million - 40 - tons beginning in 1995. To this would be added some 800,000 tons of coal for the Mohammedia power plant which are currently imported through the port of Casablanca and carried by road to Mohammedia. As a result, the traffic estimates which have been used for the economic and financial analyses of the proposed coal handling berth at Jorf Lasfar assume imports of 1.5 million tons in 1995 increasing to 2.3 million tons in 2000. 4.07 Morocco has been a net importer of cereals since 1971 and over the past decade imports have averaged just over 2 million tons (Annex 12, Table 2). Only 60X of the traffic is handled through port silos, namely about 1 million tons at Casablanca and 200,000 tons at Safi, the remainder of the traffic being spread among the ports of Tangier, Agadir, Jorf Lasfar, and Nador. Local production of cereals is generally around 5 million tons annually although this increased in 1988 to an all time high of 7.5 million tons, partly as a result of good weather and partly through efforts made during the 1980s to liberalize the sector and increase producer prices. As a re'sult, imports fell to 1.5 million tons in 1988 and will probably remain at a low level in 1989. However, with a population growth rate of about 2.6X per year, increased production is unlikely to offset the deficit in cereals supply. Imports of cereals are therefore expected to continue in the range of 1.5 co 2 million tons annually. C. Economic Analysis General 4.08 The main benefits accruing to port users resulting from improved container handling facilities and services are savings in ship waiting time, in ship service time and reductions in overall cargo handling costs. These savings are ultimately passed to producers and consumers in the form of lower freight rates. The project will have a marked effect on cargo handling productivity due to improved efficiency in handling container traffic as well as substantially higher productivity on cargoes otherwise handled as general cargo. This improved cargo handling productivity translates into reduced ship waiting and ship service times. The provision of improved berth facilities at Jorf Lasfar for bulk coal imports will ensure access to large 80,000 ton bulk carriers bringing substantial savings in sea freight rates. Similar freight rate savings will accrue to the cereals silo to be constructed at Agadir as well as savings in berth handling costs. Other benefits such as net reductions in cargo losses for general cargo and for cereals traffic, savings in packaging costs and other reductions in distribution costs have not been assessed. Moreover, the implications for Morocco's export trade of not continuing to improve facilities for unitized traffic cannot be realistically assessed. With many consignees now insisting or. containerized goods, Morocco would start to lose some of its export markets in the absence of an ongoing program of port modernization and trade facilitation. Container Terminal 4.09 On the basis of the forecast distribution of general cargo traffic among containers, Ro-Ro trailers and conventional general cargo for the with and without project scenarios (Annex 12, Table 3), an economic evaluation has been - 41 - undertaken of the proposed improvements to container handling facilities in the port of Casablanca. Details of the evaluation are given in Project File Document No. C.1 and a summary is provided in Annex 12. Tables 5 and 6 in Annex 12 show the calculation of benefits in the key years of the benefit stream, i.e. in 1994 and 2000, as well as the complete cost/benefit stream during a 20-year evaluation period. Benefits have been held constant from the year 2000 which is considered to be the capacity of the new berth facilities provided under the project. Investment costs are estimated in the first phase during the period 1991-93 at DH 462 million net-of-tax of which DH 109 million is for equipment. The first phase involves the creation of two berths with a length of 350 meters and a 20-hectare storage area. Provision of equipment includes two gantry cranes, one mobile crane and s xpporting yard equipment based on the use of straddle carriers. A second phase of infrastructure development involving the paving of an additional 10 h of storage area is scheduled for 1997 at a net-of-tax cost of DH 26 million. Provision is made in the cost stream for additional equipment to handle traffic up to the year 2000 as well as for appropriate renewal of equipment and for residual values on civil works. 4.10 Four major categories of benefits have been estimated as follows: (a) Ship Service Time. Savings in ship service time will follow from the increase in throughput with the improved facilities provided under the project. For container traffic the throughput will range from 2,300 tons to 4,500 tons per day according to type of container vessel, 2,000 tons to 2,300 tons for Ro-Ro vessels and around 500 tons for conventional general cargo vessels. For the latter, throughput would normally increase to around 700 tons per day in the year 2000. Details of the distribution of traffic by ship type, the associated cargo handling rates, and estimates of ship service time in the with and without project scenarios are given in Annex 12. Total ship service time benefits are estimated in 1994 at about DH 12 million (US$1.5 million). (b) ShiR Waiting Time. Savings in ship waiting time will also accrue primarily from reduced congestion for conventional general cargo traffic as two, and ultimately three, of the existing general cargo berths would have to be assigned to container traffic in the without project scenario. Ship waiting time is estimated as a function of total ship service time, taking into account the number of berths available and the related berth occupancy rate. Details are given in Annex 12. Total ship waiting time benefits are estimated at DH 24 million (US$2.8 million) in 1994. (c) Cargo Handling Costs. Savings in cargo handling costs will result from improvements in efficiency for container and Ro-Ro traffic in the with project scenario. Savings will also occur from reduced handling costs on estimated incremental unitized cargo, the latter representing traffic which in the absence of improvements to the container terminal, would remain as conventional break-bulk traffic. These savings are estimated at DH 9 per ton for Lo-Lo containers and DH 1.5 per ton for Ro-Ro containers and trailers, while the handling cost for conventional general cargo is estimated at DH 120 per ton. Details - 42 - of these costs, which exclude equipment depreciation, are given in Annex 12. Total cargo handling costs savings are estimated at DH 26 million (US$3.2 million) in 1994. (;) Cargo Handling Costs in Foreign Ports. Savings in cargo handling costs will also accrue from foreign ports through reduced handling rates applied to the estimated incremental unitized traffic in the with project scenario. The unit cost saving for this traffic is estimated at DH 50 per ton and the total benefits are estimated at DH 11 million (US$1.3 million) in 1994 (Annex 12). 4.11 A portion of the above benefits would not accrue to the Moroccan economy and would remain with foreign shipping lines and shipping agents. Given that about half of Morocco's general cargo maritime traffic is carried out in Moroccan vessels, it is estimated that about 75% of the savings in ship service and ship waiting will ultimately accrue to the Moroccan economy, both d.rectly and through reductions in freight rates. For savings in cargo handling costs, it is assumed that the full savings on handling costs in Moroccan ports will accrue to the Moroccan economy while only half of the savings from foreign ports will be reflected in reduced freight rates. On this basis, total benefits in 1994 are estimated at DH 59 million (US$7.2 million) and DH 134 million (US$16.2 million) in the year 2000. The estimated ER is about 19% with ship service time accounting for 16% of benefits, ship waiting time 30% and handling cost savings 54%. The first year benefit (FYB) is in excess of 10%. Tanrgier Ro-Ro Improvements 4.12 A preliminary analysis has been undertaken of the requirements for additional Ro-Ro facilities in the port of Tangier. Based on forecasts of unitized traffic which are expected to increase from the current level of about 150,000 tons to 255,000 tons in 1994 and 400,000 in 2000, two additional Ro-Ro ramps would be required in 1994 along with an additional storage area of about three hectares. These facilities would increase the efficiency of cargo handling and provide savings in ship service and ship waiting time. Based on a preliminary cost estimate of DH 50 million (US$6 million), the estimated ER is over 50%. However several technical alternatives need to be examined before detailed preparation can begin. These alternatives are currently being examined as part of an ongoing study for the port of Tangier. Detailed feasibility studies, prepared according to agreed procedures and criteria, will be presented to the Bank by the end of 1990 and the proposed improvements will be considered for financing under the project. Coal Handline Facility 4.13 The existing berth facilities in the port of Jorf Lasfar, completed in the mid-1980s, would only be able to handle bulk coal carriers of up to about 40,000 tons. However, by extending an existing berth by 50 meters and deepening the berth to 15.5 meters, bulk coal carriers of up to 80,000 tons could be handled with substantial savings ir. sea freight rates. The cost of these modifications is estimated at DH 110 million (US$13.3 million). However, in order to guarantee a rapid turnaround of the 80,000 ton bulk carriers and hence a reasonable level of sea freight savings, it will be necessary to provide higher - 43 - rated unloading equipment than the equipment previously envisaged. This equipment would require an overall rating of 2,000 tons per hour and would cost about DH 130 million (US$15.8 million) as opposed to DH 100 million (US$12.1 million) for the lower-rated equipment. 4.14 The expected savings in sea freight rates are estimated to be about US$3.50 per ton which on an annual traffic of 1.5 million tons of coal in 1994 increasing to about 2.3 million tons in 2000 will provide an incremental rate of return over a 20-year period of about 50%. Various alternative scenarios have been conducted to test the sensitivity of the results to the traffic forecasts. For instance, with coal imports of 1.5 million tons in 1994 increasing to 2.3 million tons in 2000, but ceasing completely thereafter, the berth facility would still provide an ER of about 20%. Similarly, the facility would still show an ER of about 10% with coal exports of only one million tons annually during a 20-year period, which would correspond to the current needs. Cereals Silo 4.15 The construction of a cereals silo which is planned by ONICL in a new extension at the port of Agadir would represent the first major investment for cereals import traffic in over a decade. The silo at Agadir at cost of about DH 120 million (US$14.5 million) would have a capacity of 50,000 tons and would be able to accommodate the large 60,000 ton bulk carriers. Annual throughput would ultimately rise to about 500,000 tons, an increase of some 280,000 tons over the existing traffic. The main benefits would be savings in sea freight rates estimated at about US$ 8 per ton, handling cost savings on existing traffic and traffic diverted from Jorf Lasfar, and distribution cost savings on part of the traffic diverted from Jorf Lasfar and Safi. The estimated ER is about 35%, although it should be noted that the ER would be lower if the apportioned costs for the recently completed berth infrastructure are included in the evaluation. Details of the evaluation are given in Annex 12. 4.16 The construction of a silo at Agadir would provide modern facilities for about one third of Morocco's cereals imports. The next step in the modernization of cereals handling would be to provide improved facilities for the remainder of the cereals traffic, particularly that part using the port of Casablanca. With access possible for only medium-sized vessels at Casablanca, and with related congestion problems, the provision of a new silo either in the deepwater port of Mohammedia or at Jorf Lasfar is being considered. The project provides for a the preparation of a medium term plan for port subsector development which will include the study of future improvements to grain storage and handling facilities in Moroccan ports (para. 2.04). Summary of Evaluation 4.17 The components of the port investment program evaluated above show ERs ranging from about 20% for the Casablanca container terminal to over 30% for investments in bulk facilities such as coal and cereals traffic. As these investments represent over half of the total port investment program and as the remainder of the program is related essentially to rehabilitation and maintenance of existing infrastructure and to renewal of conventional handling equipment, the overall ER for the port investment program is likely to be around 25%. - 44 - 4.18 The proposed port investment program will generate substantial savings in foreign exchange primarily through reductions in sea freight rates applied to Morocco's foreign trade. For the container port program, these savings are estimated at DH 50 million (US$6 million) in 1994 and DH 110 million (US$13 million) in the year 2000. Similar savings will accrue to the investments in coal and cereals handling facilities, the estimated savings in foreign exchange being around DH 25 million (US$3 million) and DH 50 million (US$6 million), respectively in 1994 and 2000. Overall, the port investment program will provide annual foreign exchange savings of at least DH 130 million (US$16 million) during the 1993-97 Plan, increasing thereafter as the full impact of the program is felt on foreign trade flows. D. Project Risks 4.19 Forecast traffic levels constitute the main risk for the viability of the port investment program. Conservative estimates have been used for the analysis and design of the proposed container terminal in the port of Casablanca. These forecasts imply an increase in unitized cargoes in the port of Casablanca of just over 5% per year through the year 2000 compared to a growth rate in the recent past of about 7% per year. Moreover, the design of the new terminal provides sufficient flexibility to accommodate higher increases in traffic should these materialize in the short-to-medium term. Traffic volumes will be closely monitored and should growth exceed the current forecasts, additional equipment can be provided at relatively short notice. There is also considerable flexibility in the phased implementation of the terminal's civil works, as the need for a second phase of storage areas can always be advanced if warranted by traffic growth. There is also some risk that the Government may lack commitment to the institutional changes required in terms of trade facilitation and logistics. While progress is now being made in improving documents and procedures related to trade flows, trade facilitation and logistic aspects will be closely monitored in the framework of the next phase of trade reforms being undertaken by the Government. However, slow implementation of related measures will not detract from the importance of undertaking the proposed container and Ro-Ro investments under the project. 4.20 There is a somewhat greater risk related to the forecasts for coal traffic, particularly as the latter depend on the policy adopted by ONE for the power plants. However, to the extent that ONE will benefit from a part of the sea freight savings brought about by the proposed Jorf Lasfar coal terminal, the use of coal-fired plants for generating electricity is likely to far outweigh the advantages of other energy sources such as oil and gas. However, even without the increase in coal traffic which is expected with the development of the Jorf Lasfar power plant, the proposed coal handling facility would still be justified even if it only handled the existing level of coal imports, particularly those required for the Mohammedia power plant. - 45 - V. FINANCIAL EVALUATION A. Past and Present Financial Performance 5.01 The financial performance of ODEP during the period 1985-1989 has been satisfactory, as shown in ODEP's summary consolidated financial statements in the following Tables 5.1, 5.2, and 5.3, and detailed in Annex 13. ODEP's working ratio is about 70% and the operating ratio is about 90%. Its operating income has improved from DH 61 million in 1985 to DH 76 million in 1989. Similarly, its rate of return on revalued fixed assets in operation has been satisfactory (para. 5.04). Table 5.1: ODEP - Income Statements for 1985-1989 (in current DU million) 1985 1986 1987 1988 1989 Total Revenues 590 684 772 916 957 Working Expenses 407 524 538 592 642 Depreciation/Provisions 122 126 j 171 243 239 Operating Income 61 34 63 81 76 Interest 11 20 34 27 36 Non Operating Expenses _43 4 23 24 55 Income before Taxes 7 10 6 30 -15 Income after Taxes _| Ratios Working Ratio (%) 69 77 70 65 67 Operating Ratio (X) 90 95 92 91 92 Operating Inc/Rev.(%) 10 5 8 9 8 5.02 Operating revenues consist of cargo handling (about 65%) wharfage and port dues (about 27%). The two components increased respectively from DH 373 million in 1985 to DH 509 million in 1989 corresponding to an average increase of 8% per year, and from DH 101 million to DH 223 million or an increase of 20% per year. During the period under review, overall revenues increased by 12% per year reflecting a combination of tariff increases implemented in late 1987 and increases in traffic of about 7% per year. 5.03 Salaries and wages, and maintenance represent ODEP's major expenses. They increased from DH 334 million in 1985 to DH 415 million in 1989 or 5% per year. These expenses decreased from 63% of total revenues in 1985 to 51% in 1989. However, considering the nature and composition of its assets, ODEP charges a relatively high depreciation rate on its fixed assets--about 12% of gross fixed assets base on average compared to an average of about 7% applied in the financial forecasts. - 46 - Table 5.2: ODEP - Balance Sheet for 1985-1989 (in current DH million) 1985 186 1987 1988 1989 Net Fixed Assets in Operation 547 490 885 859 940 Other Assets 120 260 320 471 621 Currents Assets 480 480 361 449 447 Cash 129 112 __51 38 go Total Assets a.M 1.342 I61 1AL7 Ł2U8 Equity 730 787 833 879 958 Long Term Debt (L.T.D.) 144 94 293 382 413 Current Liabilities 305 433 461 521 676 Short Term Debt 97 28 , Q30 35 41 Total Equity & Liab. 7 1, 4 617 21Z 2088 Ratios Current Ratio 1.5 1.3 0.8 0.9 0.7 Collection Ratio 112 111 101 54 54 L. T. D./(Equity.+L.T.D.) 24.8 13.5 27.9 32.2 32.2 Rate of Return on Net 13.3 12.1 11.3 10.6 8.8 Fixed Assets Rate of Return on Net 13.3 11.5 10.0 9.1 7.2 Revalued Fixed Assets Table 5.3: ODEP - Sources & ApDlication of Funds for 1985-1989 (in current DH million) 1985 1986 1987 1988 1989 Total Cash Generation 115 136 189 231 188 Working Capital(+/-) -175 128 147 -28 -156 Debt Service -23 .57 -53 -56 -70 Net Cash Generation -83 207 283 147 274 Equity Variation 727 54 45 27 110 Borrowings 252 -86 219 125 72 Available Funds 896 175 547 299 456 Capital Expenditures 767 192 608 311 414 Cash Increase (Dec.) 129 (17) (61) (12) 42 ,Ratio Debt Service Ratio (1) 4.9 5.9 2.6 4.2 5.04 Financial ratios indicate that ODEP meets its obligations under Loan Agreement 2657-MOR. Rates of return on unrevalued fixe-d assets in operation - 47 - range between 13.3X and 8.8X. Based on revalued net fixed assets, the rates of return range between 13.3X and 7.22, which is still satisfactory compared to the required 7.5X. ODEP's debt service coverage ratio has been around 3.0, far beyond the 1.4 target set under the ongoing project. The debt/equity ratio and the ratio of debt to total capitalization range respectively between 292 and 482, and 252 and 322; both are expected to increase due to new borrowing for investment financing but the ratio of debt to total capitalization will be kept within the acceptable limit of less than 502. B. Future Financial Performance Overall Financial Proiections 5.05 Financial projections assume that, with the exception of breakwaters and jetties, port infrastructure currently in the public domain will be transferred to ODEP as equity (para. 2.13) and that ODEP will continue to pay the fee to the Government for using port infrastructure remaining in the public domain, based on ODEP's share of the corresponding total revalued assets (para. 2.45). The projections also assume the implementation of a revised tariff structure from 1991 (para. 2.43) and take into account the auditor's recommendations (para. 2.40). 5.06 ODEP's financial forecasts are summarized below in Tables 5.4, 5.5, and 5.6 and detailed in Annex 14. Annex 14 also includes the assumptions made for financial projections. Table 5.4 below shows that profitability of ODEP's o-perations will remain satisfactory. Its working and operating ratios steadily improve from 672 in 1989 to 60% in 1995 and from 92X in 1989 to 852 in 1995 respectively, reflecting traffic trends in the coming years and the implementation of new tariff policy. Salaries and wages, maintenance and depreciation represent the major operating expenses. Salaries level reflect ODEP's willingne3s to improve staff efficiuncy. Salary expenses will decrease from 262 of operating revenues in 1989 to 192 in 1995 as a result of the retirement of 1,000 staff during the forecast period and a prudent recruitment policy. The average salary is expected to increase at the local inflation rate. Depreciation increases steadily due to transfer of public proper:y to ODEP and duie to ODEP's greater involvement in financing basic infrastructure such as the container terminal. The 72 average depreciation is appropriate and reflects ODEP's assets structure. - 48 - Table 5.4: ODEP - Income Statements for 1990-1995 (in current DH million) 1990 1991 1922 1993 1994 1995 Total Revenues 969 1,074 1,176 1,281 1,326 1,376 Working Expenses 652 724 780 777 817 837 Depreciation/Provisions 185 2Z 23I 269 31 333 Operating Income 132 143 159 235 208 206 Interest 22 22 23 30 47 70 Income before Taxes 117 123 137 208 167 140 Income after Taxes J8 1t -6-29 Working Ratio X 67 67 66 61 62 61 Operating Ratio Z 86 87 86 82 84 85 Operating Income/Revenues X 14 13 14 18 16 15 Table 5.5: ODEP - Balance Shee for 1990-1995 (in current DH million) 1990 1991 1992 1993 1994 1995 Net Fixed Assets 908 950 1,252 1,462 1,737 2,045 Other Assets 554 658 837 922 957 639 Currents Assets 395 450 454 352 310 332 Cash 55 17 31 92 83 _ 63 Total Assets 1.912 I A 2,O J 2.2 1AQ8 37079 Equity 982 1,024 1,324 1,406 1,474 1,519 Long Term Debt (L.T.D.) 488 627 765 940 1,072 1,118 Current Liabilities 397 380 445 443 444 348 Short Term Debt 45 44 . 40 39 97 94 Total Equity & Liab. 1.912 Q 7 2.5 a038079 Current Ratio 1.02 1.10 1.00 0.92 0.73 0.90 Debt/Debt & Equity % 33 38 37 40 42 42 Rate of Return on Net Fix. Ass.9.6 10.4 10.0 11.6 9.4 8.6 Rate of Return on Revalued 7.8 8.5 7.0 9.4 7.5 6.4 Fixed Assets - 49 - Table 5.6: ODEP - Sources & AiRlication of Funds for 1990-1995 (in current DH million) 1990 1991 1992 1993 1994 1995 Internal Cash Generation 217 223 253 311 343 371 Working Capital(+/-) 226 72 -61 -100 -42 118 Debt Service -83 -97 -104 -108 -118 -185 Net Cash Generation -91 53 211 304 268 68 Equity Variation -35 -4 248 5 5 8 Borrowings 119 183 178 214 229 140 Available Funds -7 232 636 523 502 216 Capital Expenditures 18 270 623 462 511 236 Cash Increase (Dec.) (25) (38) 14 61 (9) (20) Debt Service Ratio 0.0 1.5 2.9 3.5 2.1 1.4 5.07 The forecasts show that a 7% rate of return and a debt service coverage ratio of at least 1.5 can be achieved provided that current plans to establish a new tariff structure beginning of 1991 for port dues on ships and mid-year 1991 for container handling charges are implemented (para. 2.43). However, a sensitivity analysis shows that the rate of return is particularly sensitive to traffic fluctuations (Annex 14). Therefore, the financial situation will be closely monitored during project implementation. In addition, current estimates show th. t a tariff increase may be required in 1992 and 1995 in order to maintain a satisfactory rate of return. The rate of return is based on net fixed assets in operation revalued from time to time using the inflation rate of the forecast period. ODEP should also maintain a satisfactory financial performance as measured by a debt/equity ratio of less than 50X, and a positive current ratio; it should also maintain an acceptable internal net cash generation of at least 40% for its development program. 5.08 At negotiations, it was agreed that ODEP would: (a) implement the new tariff structure for port dues related to container handling and Ro-Ro traffic by September 30, 1991; (b) achieve an annual rate of return on its revalued assets in operation of at least 71 per year; and (c) maintain a debt service ratio of not less than 1.5. Container Terminal and Coal Handling Facilities 5.09 The financial viability of the Casablanca container terminal and coal handling facilities in Jorf Lasfar has been assessed based on a rate of return on fixed assets in operation for the container terminal and cost recovery for coal handling facilities. The financial forecasts are summarized respectively in tables 5.7 and 5.8 and detailed in Annex 14. Assuming the new container tariff will be effective in mid-1991 and traffic growth of unitized goods of 5X a year, additional tariff adjustment for local inflation rate beginning in 1995 will maintain for the container terminal a rate of return on revalued fixed assets in operation during 1994-1999 of 91. Container terminal financial performance will be monitored during the project (see Action Plan, Annex 1). - 50 - Table 5.7: Container Terminal - Income Statements for 1993-1999 (in current DH million) Income Accounts 1993 1994 1995 1996 1997 1998 1999 Total Revenues 155 169 152 213 232 257 281 Working Expenses 23 32 37 40 38 42 43 Depreciation 12 23 29 32 32 37 37 Interest 28 37 39 36 33 30 40 Net Income 55 47 52 63 77 89 96 Net Income (Revalued) 52 42 47 57 72 82 87 Net Fixed Assets 296 552 842 1,047 1,134 1,227 1,336 Rate of Return % 26.7 14.3 10.2 8.9 9.3 9.1 9.6 5.10 The coal handling facility at Jorf Lasfar will be built for ONE in order to supply coal to its proposed power plant at rate of 1.5 million tons a year. ODEP will enter into an agreement with ONE which will govern recovery of the investment cost, operating expenses and financial charges. The average fee that ONE will pay to ODEP is based on the long run average cost which is expected to be about US$ 3.4 per ton. The financial viability could be further increased by transferring coal imports currently handled through Casablanca to the new facility at Jorf Lasfar. At negotiations, it was agreed that ODEP would not begin procurement of the coal terminal until an agreement, satisfactory to the Bank, has been concluded with ONE. Table 5.8: Coal facility - Income Statements: 1994-2000 (in current DH million) Income Accounts 1994 1995 1996 1997 1998 1999 2000 Total Revenues 13 36 43 44 44 44 44 Working Expenses 3 14 16 16 16 16 16 Depreciation 2 9 11 12 12 12 12 Interest 7 13 16 16 16 16 16 Net Income 0 0 0 0 0 0 0 Import (million tons) 0.75 0.75 1.5 1.5 1.5 1.5 1.5 Revenue/ton (DH) 17.1 48.4 28.4 29.2 29.2 29.1 29.1 Revenue/ton ($) 2.0 5.7 3.3 3.4 3.4 3.4 3.4 Overall Impact of the Project on the Government Budget 5.11 Table 5.9 below summarizes expected income in the port sector from 1990 to 1995. Overall, the situation is satisfactory because of the positive net contribution of the sector to the national budget. Moreover, indirect taxes earned by the Government on port activities are not taken into account, thus underestimating the real revenues earned by the Government through sector activities. - 51 - Table 5.9: Income in the Port Sector (in current DH million) 1990 1991 1992 1993 1994 1995 Govern. Revenues 88 161 175 226 203 _163 From ODEP 81 154 168 219 196 156 Others 7 7 7 7 7 7 Govern. Expenses 67 67 77 86 87 85 Operations 41 41 41 41 41 41 Debt Service 26 26 36 45 46 44 Net Inc. from/Op 21 94 98 140 116 77 Sector Net Inc. 79 141 151 216 178 114 Government 21 94 99 139 116 77 ODEP 58 47 52 77 62 37 5.12. Over the forecast period, sector net income amounts to DH 879 million of which DH 546 million represent net revenue to the Government budget. Compared to the Government investments in the sector, net revenue to the budget will represent 63X of the investments in the 1991-1993 period and 841 of investments in the 1991-1995 period. VI. AGREEMENTS REACHED AND RECOMMENDATIONS 6.01. During loan negotiations, the Bank and the Borrowers agreed on the project objectives and description (para. 3.06), and auditing requirements (para. 2.41), and confirmed the program for project execution (para. 3.23), and the project monitoring and reporting procedures (para. 3.35). 6.02. During loan negotiations, assurances were obtained from the Government on the following points of particular significance: (a) transmission of the Government port subsector's investment programs to the Bank by September 30 of each year for review and comments and implementation of a finalized program taking into consideration Bank comments (para. 3.09); (b) procedures and criteria related to eligibility of subprojects to be proposed for Bank financing (para. 3.11); (c) carrying out of the Port Subsector Development Program with due diligence and efficiency (para. 3.12); (d) signature of a Contract Plan between ODEP and the Government by June 30, 1991 (para. 3.13); - 52 - (e) completion of an environmental assessment of maintenance and rehabilitation dredging in four selected ports by December 31, 1991, and implementation of dredging activities in the selected ports in accordance with the recommendations agreed with the Bank on the basis of the results of the study (para. 3.40); and (f) design of all facilities to be financed as subprojects in accordance with environmental health and safety standards acceptable to the Bank (para. 3.41). 6.03. During loan negotiations, assurances were also obtained from ODEP on the following point of particular significance: (a) completion of a dredging study by December 31, 1991, and implementation of the recommendations based on this study as agreed with the Bank (para. 2.28); (b) transmission of ODEP's investment programs to the Bank by September 30 of each year for review and comments and implementation of a finalized program taking into consideration Bank comments (para. 3.07); (c) procedures and criteria related to eligibility of subprojects to be proposed for Bank financing (para. 3.11); (d) carrying out of ODEP's Development Program with due diligence and efficiency (para. 3.12); (e) signature of a Contract Plan between ODEP and the Government by June 30, 1991 (para. 3.13); (f) design of all facilities to be financed as subprojects in accordance with environmental health and safety standards acceptable to the Bank (para. 3.41); (g) appropriate measures to be taken by ODEP to: (i) implement the new tariff structure for port dues related to container handling and Ro- Ro traffic by September 30, 1991; (ii) achieve an annual rate of return on its revalued assets in operation of at least 7X; and (iii) maintain a debt service ratio of not less than 1.5 (para. 5.08); and (h) conclusion of an agreement, satisfactory to the Bank, between ODEP and ONE before beginning procurement of the coal terminal at Jorf Lasfar (para. 5.10). 6.04. Retroactive financing of up to a total of US$5.0 million should be provided for payments, incurred by ODEP under the project after July 31, 1990 for engineering services, civil works for the Casablanca container terminal, technical assistance and training (para. 3.32). - 53 - 6.05 With the agreements on the above, the project provides a suitable basis for a Bank loan of 1;S$99 million to be made to ODE? with the Guarantee of the Government of Morocco and a Bank loan of US$33 million to the Government of Morocco. The loans would have a repayment period of 20 years, including a grace period of five years, at the standard variable interest rate. - 55 - Annex Page 1 of 10 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT DRT SECTOR PROJECT Actiou Plan KINGDOM OF MOROCCO PORM SeCTOr PROJECT cston FLan ACTIVITIES PRESET SITUATIO OBJECTIVES ACTIONS to OE TAKEN "WM I8M A. WMUT? OF URlEI Establish internatfonal standards E_ 3 LATIOUS for Moroccan ports. Ensure hish quality of service and improve external relations (a) Port Operations Recent actions have brought Reach productivity levels Monitor physical performance ODEP, Anumal review substantlat improvements in cc-parable to efficient foreign indicators compared to targets and ulth Sank productivity but ship service ports (see Amex 10) analyze reasons for variation time and cargo dwell time need to be iwproved, particularly for containers Red4ce cargo d&tlI time, Collect and analyze data on dwell ODEP particularly for containers in time for contalners at Casablanca. arch 31t 199t Casablanca Identify and implement measures to reduce dwell time Encourage development of Maintain list of activities open to Governnet ODEP selected effieient private prfvatesector. Establishguidelines sector activities in port oper- for participation in port sector ations (b) Trade Facilitati0n ODEP participates in the work Ensure that port procedures are Uith assistanceof short-termexpert, COEP of the National Commission for adapted to requirements of simplify trade procedures and October 31, 1991 Trade Simplification and action foreign trade documentatfon related to ODEP, in has been initiated under UNDP Line with improvements to customs project. ODEP has started data procedures and doucments exchange with foreign ports. 0al 0 Action Plan ACTIVITIES PRESENT SITUATION OBJECTIVES ACTIONS TO BE TAKEN RESPONSIBILITYI TIMING QUALITY OF SERVICE ELTEN3AL RELATIONS Trade Facilitation (continued) When SIPOR and SADOC are Ensure optimal exploitation of with assistance of data processing ODEP installed good communications SIPOR and SADOC and full experts, establish efficient and by December 31. 1991 and cooperation vith user facilitfes for easy linkage to rapid interface between SIPOR and systems will be essential to commercial systems SADoC systems and ensure facilities port efficiency for similar links to other retevant systems. Implement use of EDIFACT interchange standards and check quality of common data capture Cc) Marketing and Marketing activities to be Improve contacts with users Strengthen marketing contacts with ODEP 1991-93 Conmmnications further developed at ODEP users (shipping lines and agents) with objective of improving operations and forecasting traffic Training in marketing techniques ODEP 1991 -4 In early years, ODEP's efforts Focus improved communications Continue action initiated by ODEP ODEP - Users - focussed on internal And marketing actions on port particularly : port user matnl, port Shipping agents comnunications users rather thangeneral pubkic brochure for truck drivers, traffic 1991 signs within port areas Develop external links giving Establish systems providing quick ODEP priority to existing and access to data by users End 1991 potential commercial partners (d) Multimodal Action by ODEP to improve its Develop coordinated action The logistics study will focus on Ministry of Foreign Transport and Trade operations is only part of a programforiimprovementintrade three logistic chains affecting Ro- Trade Logistics wider program involving other logistics management. Ensure Ro traffic, perishable goods and links in the transport chain. complementarity between import .and export of containerized Reform program for road logistics study and facilitation goods transport currently being activities/studies fotlowed up prepared by Ministry of by SIPROMAR Transport. Study taunched on international road freight traffic. A study will identify and analyze existing constraints affecting Moroccan foreign trade togistics 0 Action Plan CTIVITIES PRESENT SITUATION 08JECTIVES eCTIONS TO BE TAKEN RESPONSIBILITYI TIMING B. JUTM IOt OF Pursue implementation of most Strengthen capabilities to identify 1U llETHODS TO appropriate techniques for new requirements and to adopt to new OiEET tWUICti6 handling port traffic developments TRAFFIC sEIS (a) Growth of Project includes construction Ensureappropriateorganization Prepare organization of new terminal ODEP Containerization of a new Casablanca container of rw terminal thereby and define key performance targets by December 31. 1992 terminal. Implementation encouraging maximum efficiency supported by institutional measures designed to make best Devetop for atl cormercial ports a ODEP use of facilities for container monitoring system for container and and Ro-Ro traffic Ro-Ro traffic (b) Sulk Traffic Modern bulk handling methods Promote development of modern An analysis of cereals storage and DP need to be further developed in hand inc methods for cereal handling in Moroccan ports will be 1991 - 92 Moroccan ports. particularly for traffic included in the Ports Master Plan cereals tratfic Study (see E(a) below) Study will identify further silo needs and required institutional measures for their implementation and operation (c) Maintenance Eauiarent: ODEP maintenance Optimize equipment fleet given Monitor ratios for availability ODEP Management function is fairly well performance and quality utilizationandefficiency. Prepare developed, spare part supply objectivs a rolling investment plan for need to be improved equipment Infrastructure: ongoing Sustain the benefits of recent Prepare an anmual maintenance plan ODEP rehabilitation effort (financed rehabilitation programs for infrastructure identifying by ODEP and the 8ank) objectives and costs Dredgina: maintenance dredging Optimize operation and cost of Establish a modernization plan for ODEP - DRAPOR financed by the Government and maintenance dredging in Moroccan dredging operation Including by December 31, 1991 performed by a fully owned ports organization, size, composition and subsidiary of ODEP deployment of dredging fleet, and costs (d) Telecoucnications Rapid development of Efficient use of modern Prepare with assistance from ODEP telecommunications in teleconnmmication methods to consultants a Master Plan for June 1991 international trade, enhance support given by port Telecomunications related to ODEP Review with Sank ea particularly in relation to port sector to development of needs taking into account user needs December 1991 operations, requires ODEP to Morocco's foreign trade and the cost effectiveness of define strategy in this area measures proposed o Action Plan ACTIVITIES PRESENT SITUATION OBJECTIVES ACTIONS TO DE TAKEN RESPONSIBILITTYI TIMING C. ORaIZATION Am IProve services to users and Establish structures and adapt NAhhTEN increase productivity through management tools to ODEP's general inproved organization rd ademrn objectives management methods (a) Organization ODEP Introduced a new Ensure appropri ate Adept maintenance and environment ODEP 1991 administrative technical and organizationaL structures by functions to changing needs and to financial organization in 1988. providing flexibility in requirements identified by ongoing This organization is now firmly adjusting to needs of sector studies estab ished and witl be integrated into the SIPOR data processing network Cb) Data Processing Implelentation of a data Facilitate use of port Complete installation of system ODEP SIPOR processing system -SIPOR- began facilities and improve ODEP s taking Into account the need to: before in Jamuary 1988. ODEP has productivity i) test the system before full December 31, 1992 undertaken a mid-term review of operation and the system to enable corrections ii ensure compatibility with the and changes to be made Custom SADOC system and user needs within the introduction of EDIFACT I standards tc) Procurement The volume of CDEP*s investments Ensure that ODEP's procurement Establish standard formats to ODEP require a rationalization of procedures meet obJectives for facilitate preparation of bidding December 1991 procurement procedures econmy and efficiency documents Improve quality of bid evaluation ODEP through use of ODEP internal December 1991 guidel ines for selection criteria end preparation of evaluatian reports * 4 0 Action Plan AC71VITIES PRESENT SITUATION OBJECTIVES ACTIONS TO BE TAKEN RESPONSIBILITY/ 9. NU n Ready availability of qualified Plan human resources management, tB@Mii!t staff suited to sector needs provide motivation to staff and encourage loyatty to enterprise (a) manpower Plarning Human resources management is Provide ODEP with means to Pursue implementation of ODEP - Consultant well developed. In 1989, ODEP prepare and implement a manpower recommendatIons from master plan for 1991 prepared a master plan for plan adapted to its development human resources employment and human resources strategy Review annuatly with Bank impact of ODEP ODEP's program on employment (b) Training Welt structured training program Intensify and adapt training Develop a training program for each ODEP is being implemented through effort to ODEP's needs port Annually Port Training Center (CFP). ODEP has prepared a pluriannual Review training program annually with ODEP training program Bank with view to updating needs for by December 31 of each financing under project year starting 1991 0c 0 XI! 0 Ch, Action Plan ATIVITIES PRESENT SITUATLON OBEcrTvIEs ACTIONS TO OE TAKEN RESPONSIBILItrI TIIG E. PLANINGA Ernsure balanced development of Improve plaming capabilities in the Df]lUXw Eft port sector in order to meet sector and define a development needs of economy by optimizing strategy taking into account investment decisions white at enirotmental aspects same time meeting ervirormental concems (a) Investment Ptaming Preparation and ipplementation Ensure coordination betueen With assistance of consultants update uP of projects to be improved investments in infrastructure ports mester plan according to terms Review with Sank and equipment in the port sector of reference agreed with the Bank before Deceber 31, 1991 Investment program during period Availability of a modern Provide Bank with five year rolling ODEP - oriwtnment 1990-93 should be limited iaqnning system with appropriate plan and anmual budgets for port Befora Septefber 30 overatl to following levels: cr4t.eria for project evaluation sector. Provide Sank with terms of of each year from 1991 DP-DPCM ON 700 million reference for technical studies of ODEP ON 1,800 million eligible sub-components (b) Project Management Improve coordination between Implement a project monitoring system ODEP - Goverrnent and Monitoring plaming, programming and implementation of projects (c) Envitronmnt and Major efforts made to improve Iprove capacity to prevent and Procure appropriate equipment ODEP Safety safety for passenger and cargo fight accidents included in the project, undertake 1992 traffic training in each port and provIde information to port users Project includes dredging, rock Limit impact of project on Specific measures to be inplemented COEP dredging and earthworks. marine envirorment during construction 1991 - 93 Specific provisions included in bidding documents Maintenance dredging is Application of international Undertake a study in four ports to OP currently urdertaken without any agreements to limit negative define : Completion of study particular reference to impact impact of dredging i) a methodology for testing and and review of the on marine environment analyzing dredging samples results with the Bank ii) status of selected sites for by December 31. 1991 disposal of dredging materials, and Implementation of iii) specific measures to limit appropriate measures e pollution due to dredging based on thisreview X Action Plan CTIVhtIES PRESET SITUATION OBJECTIVES ACTIONS TO BE TAKEN RESPONSIBILITYI PLMIN; N Envirosuent and Safety (continued) Procedwre for removal of wastes Appicertfon of international EstablIsh additional Investments ODEP from shfps to be established agreements (Narpol) required In Noroecan ports by Oecember 31 1992 Water quality In port of lmprove quality of water in Identify measures and investments to ODEP Casablanca affected by existing Norocean ports rem0ve waste water currenty Owecenter 31t 1992 urban and Industrfal waste water emptying directly Into ports No specfic provisions to limit Limit pollution risk by port Analtyze air and water pollution risks COEP potential pollution risk from users in Moroccan ports and set appropriate Study completed future industrial plants standards to be met Decemter 31 1992 0'a 0 Action Plan ACTIVItlES PRESENT SITUATtON OBJECTIVES ACTIONS TO BE TAKEN RESPONSIBILIT7Y TIMING F. FINANCIAL ASPECTS (a) Tariffs A tariff study was financed Objectives are to reach cost Test, adapt and implement study ODEP - NPW under the previous project recovery by activity and recommendations. Prepare and sepvember 30, 1991 (Loan 2657-NOR) ultimatelybyport. Limitcross implement appropriate lesislation subsidies and simplify tariffs Ccmplementary study for tariffs ODEP related to conventional general 1992 cargo, fishing ports, etc. lapact on improved productivity ODEP plans to invest in coal Ensure the recovery of the Conclude an agreement governing cost ODEP - ONE handling facilities at Jorf investment cost, operating recovery between ODEP and ONE. Before beginning Lasfar expenses and financial charges Agreement to be satisfactory to the procurement Bank (b) Fixed Assets Certain investments in public ODEP to be responsible for Revalue fixed assets. Transfer net ODEP domain made available to ODEP in infrastructure costs including fixed assets (except breakwaters and by Deceaber 31. 1991 1984 have already been renered maintenance and renewal of jetties and other infrastructure by ODEP assets transferred from public belonging to pubtlic property) toODEP domain Include provision in contract plan to be implemented from 1991 Pubtic accounting does not Use assets valuation to: Develop and iwplement a system, DP produce adequate infoemation for (i) record and capture previous outside the public accounting system December 31, 1991 assets management at the level and new assets; and (ii) def ine of DP the share of assets between users for calculating the fees Developa tariff system enablinn Undertake revaluationof fixedassets ODEP - Goverrennt full cost recovery. Ability to outside existing accounting system by December 31, 1991 estimate real financial return and make provisions for renewal. On investments Users fee to be limited to Ensure appropriate pricing Establish procedures and define the ODEP Goverunent breakwaters ard jetties policy with ODEP being share of infrastructure assets to be December 31, 1991 responsibte for a share of allocated to oOEP (contract plan) infrastructure costs d Action Plan ACTIVITIES RPIESENT SITUATION OBJECTIVES ACTIONS TO BE TAKEN RESfSISILITY1 FIMClAIM (contimed) (c) Financial Control Financial control is too rfigd Implement a system of g Mod{fy legislation sccordingly ODEP - "EPP materiori control (Contract plan) Internal audit is limited to an Ensure full internal audit Estabilsh procedures for ODEP accounting audit I) audit of menagement and budgetary June 30, 1991 proceures ii) accounting audit of financial statements Establish and staff an internal audit ODEP department Deraeber 31, 1991 td) Budgetary Process A new budgetary process to be Availability of budgetary system Estabtish performance indicators and ODEP implemented in line with new which facilitates planning and system for evaluating differences December 31. 1991 organizatfon monitoring of expenditures and between actual expenditures and nalyses of results planned budgets (a) FinancfalManagement Procedures have been defined and Modernf2ed financial management Accelerate implementation of data SDEP system being implemented of ODEP processing systems Deemuber 31, 1991 0% progressively Budgetary accountfng is in place Improve budgetary procedures ODEP December 31. 1991 Cost accounting is to be further Adapt cost accounting to needs Estabtish cost accounting system SOEP developed of usme data propessing integrated with other information December 31 1991 system and planning and systems budgetary procedures (f) financialObjectiv. The financial objectives are: a rate of return on total revalued ODEP fixed assets of at least 7X FT 1990-1995 - a rate of return on revalued fixed SDEP assets of a t least 9X for the new FY 1994-2000 container terminal in Casablanca - a debt service coverage ratio of CDEP at least 1.5 FT 1990-1999 - 65 - Annex 2 Page 1 of 5 KIkGDOM OF NOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT ODEP's Organization. Staffing and Training General 1. The Office for Port Operations (ODEP) was established on January 1, 1985 as a state-owned commercial and industrial enterprise, with financial and administrative autonomy, under the tutelage of the Ministry of Public Works (MPW). ODEP took over cargo handling from the Regie d'Acconage du Port de Casablanca (RAPC) and assumed some maintenance responsibilities previously assigned to the regional Port Directorates. Organization 2. Technical assistance, supported by the Ports of Casablanca and Mohammedia Project (Loan 2657-MOR), assisted ODEP's in carrying out a reorganization study to establish an appropriate organization. The study was implemented with an extensive participation of ODEP's staff, thus building up commitment. The basic principle of the new organization is decentralization of operational action. At the central level, the Direction Generale (DG) defines strategy and decides on policy matters. It also consolidates and controls actions and results of local Port Operations Directorates (DEPs). At the level of each port, the DEPs are responsible for managing operations. Each DEP has a number of Autonomous Production Centers (CPA) and functional services. The CPAs are organized to manage the operations of homogenous geographical or functional sections. The result is a clear delineation of responsibilities between the three levels: (a) CPAs are in charge of physical operations; (b) DEPs, as profit centers, are responsible for budget execution; and (c) DG plays the role of a holding company, providing guidance to and integration of the DEPs. The organization at ODEP's headquarters is given on Chart No. 3 and further discussed below (para. 7). The organization of the DEP of Casablanca is given on Chart No. 4 and further discussed below (para. 8). 3. Several steps in implementing the new organization have been cleared, e.g monitoring systems, CPA accounts, accounting procedures, port management information system project (SIPOR). Further action will be required to consolidate and sustain the positive results of the study. In particular, ODEP will need to validate the organizational processes, update the organizational scheme and procedures on a permanent basis, ascertain coherence between procedures, and get DEPs permanently involved in the process. ODEP has also to make sure that the SIPOR project takes into account users needs, integration and cross reference between sub-components of the system, organization findings and recommendations, definition of adequate equipment and setting up of an - 66 - Annex 2 Page 2 of 5 appropriate training program. Above actions will be carried out by ODEP staff with the assistance of short term missions of consultants as appropriate. ODEP Headguarters 4. The Board. The composition of the Board is established by decree. Although the users and providers of logistics services are represented at the Board, there is still a strong ministerial representation. While the Prime Minister is formally the chairman of the Board, in practice, he permanently delegates the chairmanship to the Minister of Public Works (MPW). Members of the Board are the Ministers of Public Works, Finarces, Interior, Commerce and Industry, Economic Affairs, Merchant Marine and Fisheries, Agriculture, Energy and Mines, Employment, and Transports. Two representatives of ODEP staff are appointed to the Board by the Prime Minister. Users are represented by the Chairman of: (a) the Federation of Chambers of Commerce and Industry; (b) the Federation of the Chambers of Agriculture; and (c) the General Economic Confederation. Port related activities are represented by the Chairman of: (a) the Central Shipowners Committee; (b) the Association of Maritime Agents, Consignees and Stevedores; and (c) the Freight Forwarders Association. In addition, the Prime Minister may appoint members who qualify as having competence in port activities. Other members with no right to vote are: the Wali of Greater Casablanca, the Secretary General of MPW, the Directors of relevant Central Agencies (Ports Directorate, Customs, DPCM). 5. The Board meets twice a year; between sessions, authority is delegated to the Management Committee, which meets once a month, and to the General Manager of ODEP. However, the Board decides about approval of the accounting statements, budget, statute of personnel, and tariffs. The Management Committee is chaired by the Secretary General of MPW. It includes representatives of the Ministries of Finance, Interior, Merchant Marine, Commerce and Industry. The General Manager (GM) of ODEP is appointed by the Government, he attends and reports at the meetings of the Board and the Management Committee. 6. The Technical Committees. In each port, a Technical Committee, chaired by the regional Director of MPW, is consulted on all matters connected with port operations and maintenance. The Technical Committee meets at least four times a year. The members of the Technical Committees are representative of local administrations (Province, municipality, customs, ODEP, Maritime Affairs), and users (Chamber of Commerce and Industry, Chamber of Agriculture, Association of Maritime Agents, ar.' Freight Forwarders Association). 7. Headquarters employs about 90 professional staff assigned to 8 departments and 4 missions (Chart 3). The missions are the following: Secretary of the Board and the Technical Committees, Central Services, Audit and Management Control, Risk Management. The departments are the following: Development, Finance, Human Resources, Organization and Information Systems, Engineering (civil works and equipment), Legal, Social Affairs, ar '.egional Ports Coordination. Eight local DEPs are established in the main c, rcial ports and report to the General Manager. Small ports are operated by small units reporting to DEPs or directly to the regional ports department. - 67 - AnnexA 2 Page 3 of 5 ODEP in the Port of Casablanca 8. ODEP operating unit in the port of Casablanca (DEPC) has a more developed organization than the other DEPs given the size and importance of the port. DEPC had about 2,600 staff at the end of 1989, distributed among ten departments (Chart 4). There are five operational departments (cargo handling, civil works, equipment, fish market, and ship repair yard) and five functional departments (marketing and forecasting, finance and accounting, management information and EDP, legal, and human resources). The cargo handling department is subdivided in six Autonomous Production Centers (CPAs). These are: container terminal, conventional general cargo berths, citrus fruit terminal, ore and oil terminal, backup areas, Ro-Ro terminal. Further adjustments to DEPC's organization will involve generalization of CPAs to all activities. Staffing 9. ODEP had a total staff of 4,675 at the end of 1989. Of the total staff, 335 are management staff with university degrees and 2,807 are skilled workers and technicians with appropriate training in port activities taken either locally or abroad. The average age of staff is between 42 and 43 years. More than 20% of staff is older than 55 years and will retire within the next 5 years. However, the management staff is younger with an average age between 35 and 36 years. Permanent dock workers' age structuve is bipolar with 40% of staff being under 40 and 58X of staff over 45. While the average employee has been 15 years with the port enterprise more than 60% of high level staff has been hired within the last five years. ODEP also hires casual labor in an amount of about 240,000 man-days. 10. ODEP management devotes a great deal of attention to human resources. Actually, good human resources management is crucial for ODEP's success, given its dimension and ambitious objectives of improving port efficiency and productivity. ODEP has developed several actions related to manpower issues. First, a new chart and rules for staff management dealing with recruitment, career development and remuneration has been progressively implemented. Second, a safety study has been carried out in several ports to analyze risks and hazards in port facilities and operations. As a result, a policy is being implemented to improve working conditions and safety at work, first-aid and social centers are established in the major ports. Finally, an ongoing manpower planning study is aiming at evaluating manpower requirements for the future. The study covers the following aspects: (a) identification and definition of the current activities and related employment; (b) impact of ODEP's development on employment; and (c) diagnostic and analysis of the gaps between employment and human resources in terms of quality and quantity. Training 11. ODEP is fully aware of the importance of training. The Port Training Center (CFP) was established at Casablanca in 1984 with the assistance of UNCTAD to develop the TRAINMAR program. The CFP is open to administrations and private - 68 - Annex 2 Page 4 of 5 firms. Since 1985, the CFP has accomplished several goals: updating port operation courses to fit into the new sector organization and needs; updating statistics courses and data gathering in port operations; organizing five courses on: port operations; international transit operations, improvement of port throughput, management and compilation of port statistics, and port maintenance; organizing the first TRAINMAR seminar on container terminal management in Morocco; and introducing new courses for rescue squads, engine drivers, maintenance technician, and security staff. In addition, seminars have been held on the following topics: investment planning and selection, scientific approaches to decision making, preparation of a data processing master plan, design of a management information system, equipment management and procurement, and overall ODEP management. The CFP has also organized workshops on safety at work in ports. 12. ODEP's objective is to train its entire staff through the CFP for an average of ten days every two years. Every newly recruited dock worker is to be trained in the CFP. This entails committing about 5X of wage costs to training. In 1989, training involved more than 1,000 staff (21X of total staff) spending an average of 10 days each in training. Nearly 50% of training was carried out in the CFP. A greater effort was devoted to higher level staff, 261 of which received training abroad with an average duration of 16 days. Future needs for training high level staff have been discussed with ODEP and will be supported by the project. The following table gives ODEP's three-year training program for high level staff. - 69 - Annex 2 Page 5 of 5 Breakdown of Training Requirements Topics Number of Staff 1991 1992 1993 Human resources management Courses abroad 4 4 4 Planning methods Courses abroad 1 1 1 Seminar in Morocco 25 - - Project Management Courses abroad 3 3 3 Seminar in Morocco 25 - - Environmental Protection Prevention and control of oil-related pollution Courses abroad 2 2 2 Prevention and control of fire Seminar in Morocco - 25 - Commercial and Marketing Courses abroad 4 4 2 Seminar in Morocco - 25 - Cost accounting and finance Courses abroad 4 4 2 Group training in port operations technical visits abroad 20 20 20 Total 88 88 34 - 70 - Annex 3 Page 1 of 3 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Port Investment Program: 1990-93 I. Introduction 1. The core port investment program during the period 1990-93 is expected to amount to about DH 2.2 billion (US$265 million) of which ODEP would account for DR 1.5 billion (US$180 million), DP-DPCM for DR 650 million (US$75 million) and DMM for DH 90 million (US$ll million). Taking into accotut physical and price contingencies, the overall program is likely to reach DH 2.3 billion (US$280 million) in current prices. In addition, ONICL is expected to invest some DH 120 million (US$14.5 million) in two cereals silos. Emphasis is being given to the modernization and rehabilitation of port facilities in order to meet increasing demand for unitized cargoes and for bulk traffic. Details of the program are shown in Tables 1 to 3 for ODEP, DP and DPCM respectively. The following summarizes the content of the investment program (all costs are given in 1989 prices). II. ODER Program Container Terminal Tnfrastructure 2. In order to meet the increasing demands for container traffic, growing at 7X per year since 1983, a new container terminal is planned in the port of Casablanca to the north of the existing phosphate/coal handling facility. The project involves the construction of two berths over a length of 350 meters with a depth of 12 meters and the creation of a 20 hectare storage area. An additional 10 hectare storage area is planned before the year 2000 and the berth facilities can be extended in the longer term. In establishing the proposed scheme, several alternatives were analyzed including a 400 meter berth as well as varying dimensions for the related storage area. In addition, in view of the need to undertake rock dredging, a minimum cost approach was adopted in locating the site of the new berth which minimizes the combined costs of rock dredging and earthworks. The cost of the infrastructure is estimated at DH 465 million (US$56 million). Container Handling Equipment 3. ODEP is currently renewing its fleet of straddle carriers in use at the existing container terminal in Casablanca (Mole Tarik). This involves the purchase of nine straddle carriers at a cost of DH 50 million (US$6 million). An order has also been placed for a new container gantry crane for use on the - 71 - Annex 3 Page 2 of 3 existing terminal for which payment is covered under the 1989 budget. Two mobile cranes are also being procured at a cost of DH 50 million (US$6 million) under the 1990 Budget, one of which is for the port of Tangier. Further renewal and expansion of equipment is planned during the period 1991-93 involving the purchase of two gantry cranes, four straddle carriers and 19 tractor-trailer units, this equipment being planned for use on the new terminal. The cost is estimated at DH 175 million (US$ 21 million). Road Bridge - Gate Four 4. A four-lane bridge is planned over the main railway line at Gate Four in order to improve general access to the port. The proposed bridge will also service the new container terminal located just to the north of the bridge. The estimated cost is DH 20 million (US$2.4 million) and financing is being provided partly under the ongoing Bank port project. Coal Berth - Jorf Lasfar 5. Improvements are planned to an existing berth in the port of Jorf Lasfar in order to provide a 15.5 meter depth which is required by 80,00 ton bulk coal carriers. The project involves extending the berth seaward by 50 meters in addition to constructing a new quay wall to a depth of 15.5 meters. The cost is estimated at DR 110 million (USS 13.3 million). Two high-rated 1,000 ton/hour unloaders will also be provided at a total cost of DH 130 million (US$15.8 million). Renewal Conventional Handling Equipment 6. About DH 60 million (US$7.3 million) is allocated for the renewal of conventional cargo handling equipment. No increase in capacity is expected to be required as this type of traffic will not increase substantially in the future. Financing for conventional handling equipment is expected to be provided mainly through bilateral sources. Tangiers Ro-Ro Terminal 7. DH 50 million (US$6 million) is foreseen for improvements to the port of Tangiers including provision of two additional Ro-Ro ramps and extension of related storage areas. Other Infrastructure Investments 8. About DH 200 million (US$24 million) is allocated to miscellaneous infrastructure investments including DH 40 million (US$4.8 million) for the completion of paving works and superstructure at the port of Agadir and DH 30 million (US$3.6 million) for infrastructure works related to the ongoing restructuring of the port of Safi. Some DH 30 million (US$3.6 _illion) is allocated to the improvement of fishing port facilities, particularly at Agadir, Nador, Tangier and Casablanca. Part of this program is expected to attract Japanese concessionary financing. Roughly DH 20 million (US$2.4 million) is - 72 - Annex 3 Page 3 of 3 allocated to the development of facilities for pleasure craft, particularly for an ongoing development in the port of Agadir, while DH 10 million (US$1.2 million) is allocated for the development of port industrial sites mainly at Jorf Lasfar. Miscellaneous SupRort Investments 9. A total of DH 85 million (US$10.3 million) is allocated for a number of miscellaneous expenditures including data processing, training, studies and investments in port security. III. DP-DPCN Program Breakwater Rehabilitation 10. DH 51 million (US$6.2 million) is allocated to breakwater rehabilitation in the port of Casablanca in addition to DH 24 million (US$2.9 million) allocated to an ongoing maintenance program for the ports of Casablanca and Mohammedia. A further DH 171 million (US$20.7 million) is allocated to rehabilitation of breakwaters in other ports including an ongoing program of DH 83 million (US$10 million) for the ports of Safi, El Jadida and Essaouira financed by the African Development Bank (AfDB). The remainder of the program includes breakwater rehabilitation for Tangiers and Agadir. Dredging 11. Expenditures on maintenance dredging average between DH 35 and 40 million (US$4.2 to 4.8 million) annually and are concentrated on the eleven main ports. Part of this program has recently been financed by the AfDB. Other DP-DPCM Investments 12. DH 67 million (US$8.1 million) is allocated to various infrastructure projects scattered over the Moroccan ports. Some DH 80 million (US$9.7 million) is allocated to equipment for port security, dredging and environmental protection. About DH 23 million (US$2.8 million) is allocated to studies and training. IV. DMK Radar Control Tower 13. Investments are planned by DM14 in a radar control tower with a total estimated cost of DH 89 million (US$10.8 million). The tower would provide vessel traffic services to enhance marine security and facilitate efficient maritime traffic between Spain and Morocco on the Moroccan side. This equipment is part of a worldwide effort to provide modern and efficient vessel traffic services in heavily trafficked areas. - 73 - Annex 3 Table 1 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT ODEP Investment Program: 1990-1993 (DH million 1989 prices) 1990 1991 12 1993 total TARGETED COMPONENTS Infrastructure Container Terminal - 190 150 125 465 Tangier - - 20 30 50 Jorf Lasfar - - 30 80 110 Eouipment Gantry Cranes - - - 130 130 Straddle Carriers - - 30 - 30 Tractors/Trailers - - - 15 15 Coal Unloaders - - 50 80 130 Miscellaneous Data Processing - 5 5 - 15 Port Security - 5 5 5 15 Assistance/Studies/Training _ 20 15 20 55 Sub Total - 220 305 485 1010 OTHER PROGRAMS Road Bridge (Gate Four) - 20 - - 20 Warehouses-Casablanca 25 25 - - 50 Agadir 10 10 10 10 40 Safi 10 20 - - 30 Fishing Ports/Tourism/Misc. 40 35 25 10 110 Equipment 125 20 10 10 165 Tugboats-Mohammedia 25 25 - - 50 Industrial Zones - - 10 - 10 Ship Repair - 10 _ _ 10 Sub Total 235 165 55 30 485 General Total 1 38E Q 1L.49 - 74 - Annex 3 Table 2 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Ports Directorate (DP) Investment Program: 1990-1993 (DH millions 1989 prices) ONGOING 1990 1991 1993 Total Breakwaters (AfDB) 20 35 28 - 83 Dredging (AfDB) 4 6 15 - 25 Port Security (AfDB) 6 6 - 12 Other Breakwaters 10 - - - 10 Other Dredging 40 16 7 2 65 Other Infrastructures 40 - - - 40 Miscellaneous 16 I 16 Sub-total 136 63 50 2 251 PLANNED Targeted Components Dredging - 11 32 31 74 Tangier Breakwater - - 6 39 45 Agadir Breakwater - - 4 8 12 Other Breakwaters - - 9 12 21 Port Security (Equipment) - - 3 2 5 Studies-Training - 7 3 2 12 Sub-total - 18 57 94 169 Other Programs Const. Infrastructures - 17 29 21 67 Dredging Equipment - - 5 39 44 Miscellaneous - 10 3 - 13 Sub-total - 27 37 60 124 Total DP 136 18 144 15 6 - 75 - Annex 3 Table 3 KINGDOM OF MOROCCO STAFF PPRAISAL REPORT PORT SECTOR PROJECT DPCM Investment Program: 1990-1993 (DH millions 1989 prices) ONGOING 1990 1991 3 Toal Breakwaters 13 5 - 18 Miscellaneous 4 2 - - 6 Studies 2 - - - Sub-total 19 7 - - 26 PLANMED Targeted Coumonents Casablanca Breakwater - 3 14 34 51 Dredging 3 4 7 Studies Training - 3 2 4 9 Environment - 2 3 Sub-total - 9 17 44 70 Other Programs Mohammedia Breakwater - - 4 2 6 Miscellaneous - - 4 9 Sub-total - - 8 7 15 Total DPCM .2 in Investment Progrxa DMN (Marine Security): 1990-1993 (DH millions 1989 prices) Radar Control Tower Civil Works - - 9 18 27 Equipment 5 57 62 Total DM1 - - 15 - 76 - Annex 4 Page 1 of 2 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Projected Tariff Structure and Level Port dues on ships(PDS) 1. Port dues on ships will be expressed in ECU (European currency unit) but payable in DH. This transfers the foreign exchange risk to users and is being presently opposed by the national shipping companies. PDS will be assessed on volume (instead as presently on GRT) with higher bracket on large vessels. This will essentially affect ships under foreign flag. PDS will be reduced for vessels with frequent calls, a substantial advantage for national shipping companies. Ad-valorem tax 2. The tax will be maintained as presently at 0.2% per 10 day-period of storage but applied for a maximum of three 10 day-periods of storage (excluding containers and trailers). Containers and trailers 3. Tariffs will be assessed on unit (containers or trailers) and no more on tonnage. The change is to be applied progressively over a period of three years. The ad-valorem tax will be reduced to 0.2% on containers for only one 10 day-period of storage, and 0.1% on trailers for only one 10 day-period of storage. Handling charges will be raised to compensate for the reduction of the ad-valorem portion. A discount will be applied to export traffic. Level of tariffs for containers and trailers 4. After the three year period of progressive implementation, handling charges will be as follows in DH per unit: 1991 1993 Import Export Import Exort (i) containers full 20' 812 622 1057 805 40' 952 743 1221 944 empty 20' 225 225 250 250 40' 393 393 400 400 (ii) RO-RO Tir 1278 958 1136 852 cont. full 20' 832 634 740 564 40' 961 942 855 660 empty 20' 225 225 200 200 40' 393 393 350 350 - 77 - Page 2 of 2 5. While a comparison between tariffs applied in different ports is often difficult, particularly vhen part of the charge is ad-valorem based, there are clear indications that the proposed tariffs compare favorably with those applied in the origin destination ports of Morocco's trading partners. - 78 - Annex 5 Page 1 of 3 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Procedures and Criteria for Economic Evaluation of Subproiects I. Introduction 1. This annex provides background information on the general approach used in the preparation of sub-projects and the eligibility criteria for their inclusion in the project. II. Evaluation Methodology 2. The general approach and procedures described below have been employed in the preparation of all sub-projects on which implementation would begin during the first 12 to 18 months of the project. The same methodology will be used for the preparation of sub-projects for inclusion in subsequent years of the investment program. All costs would be estimated net-of-tax and net cost streams would be developed taking into account the alternative investment scenarios considered and related maintenance costs. The following illustrates the kinds of benefits to be considered within a range of types of investment. New Berth Facilities 3. The economic effects of the construction of new beith facilities are similar, regardless of the type of traffic considered. Generally, these effects involve shifts in the distribution of traffic towards more efficient ship-types which are made possible by the new facilities, with corresponding changes in cargo handling rates and the number of trips required for a given traffic. Although the daily ship costs involved in the use of such vessels may be higher, these are offset by the greater productivity involved. Savings in sea freight rates may therefore constitute the major benefits for certain types of traffic, particularly bulk commodities. In the case of unitized cargoes, the provision of new facilities will involve more rapid penetration of unitizable cargoes with substantial increases in cargo handling rates for traffic otherwise handled as break-bulk cargo. As such, the principal benefits of a new container/Ro-Ro port facility are substantial reductions in shio service time. In addition, there may be savings in ship waiting time as a result of avoided congestion following the improvement of the facilities. Ship waiting time is estimated as a function of ship service time using empirical curves which take into account the number of berths available and assume a Poisson distribution for the arrival of vessels. Details of the methodology are given in Project File Document No. C.1. Additional benefits include savings in handling costs which will apply to traffic otherwise handled as break-bulk cargo. Savings in handling costs may also apply to existing unitized traffic due to better organization and operating conditions on a new terminal. This general approach has been used in evaluating the new Casablanca container terminal as described in Annex 12. - 79 - Annex S Page 2 of 3 Rehabilitation of Storage Areas 4. The economic effects of rehabilitation of existing facilities are similar to those described above but they may differ in the degree of impact. Such improvements will certainly have an effect on the productivity of port handling equipment which in turn has an impact on shin service time. In addition, the life expectancy and/or maintenance costs of such equipment may be lower in the absence of well-maintained storage areas. Savings in eguipment costs would therefore constitute an additional benefit. ReRlacement of Conventional Handline Eouioment 5. The renewal of cargo handling equipment can be justified using a similar approach to that described above. As equipment ages, productivity declines and shig service time is affected. However, a more practical approach is required for establishing the requirements for equipment renewal and for additional equipment capacity based on realistic traffic forecasts for various categories of traffic and taking into account existing equipment availability and cargo handling rates. Within this framework, threshold criteria need to be defined for each type of equipment in respect to percentage of down-time, age of equipment and maintenance costs. An approach to this problem would be developed as part of the project. Dredging Works 6. Generally, no specific economic evaluation is necessary for maintenance dredging operations as these works are considered necessary in order to maintain access for the types of vessels currently using a particular port. Should these works not be undertaken, then the average size of vessels would decrease thereby contributing to higher sea freight charges. Ship waiting time may also occur in the absence of dredging operations. Capital dredging is usually included as part of a specific port improvement scheme and as such the costs and benefits are included in a wider economic evaluation of the scheme as a whole. III. Eligibility Criteria 7. For a sub-project to be eligible for financing under the loans, it would have to meet well defined technical and economic eligibility criteria. For each sub-project, an evaluation sheet would be prepared on which the key technical, design, cost, economic and tentative tender information is summarized. An example for the Casablanca container terminal is shown in Table 1. 8. Before approving a particular sub-project, the Bank would require the following: - 80 - Annex S Page 3 of 3 (a) for sub-projects related to new construction, irprovement and rehabilitation of port infrastructure: (i) at the preliminary stage, a basic data sheet for each subproject substantially similar to the sample included in Table 1; (ii) during the design stage, quarterly progress reports of ongoing design activities under a format satisfactory to the Bank; and (iii) at the final stage, upon completion of detail engineering, an updated basic data sheet if changed during the design phase of the subproject and the schedule of execution showing the sequence of tendering and construction; (b) for purchase of cargo-handling equipment: (i) at the preliminary stage, for each port where equipment is to be purchased a basic data sheet for each equipment package substantially similar to the sample included in Table 1; and (ii) at the final stage, upon finalization of requirements and technical specifications, an updated basic data sheet if changed, and the schedule of execution showing the sequence of tendering and delivery; (c) for purchase of equipment other than cargo-handling equipment, the list, type and estimated value of the equipment, schedule of execution, and the justification in relation to the requirements; and (d) for studies and technical assistance, detailed terms of reference, manpower requirements, cost estimates and schedule of implementation. 9. Eligible sub-projects would have an economic rate of return of at least 12X, and a first year benefit exceeding 10, calculated in accordance with the methodology described above. - 81 - AnnexS Table 1 Page 1 of 2 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROM=CT Summary Data Sheet for Tydical Sub-Project Casablanca Container Terminal 1. Basic Data New container terminal located in area to north-east of existing phosphate/coal handling berth. First phase involves provision of two berths totalling 350 meters in length and creation of a 20 hectare storage area. An additional 10 hectare storage area would be provided in 1997. These facilities provide adequate capacity up to year 2000. Provision of container handling equipment including two quayside gantry cranes, four straddle carriers and 19 tractor-trailer units. This excludes ongoing renewal and extension of straddle carrier fleet involving procurement of nine units in 1990. The new terminal would continue to operate alongside the existing terminal (Mole Tarik). 2. Economic Impact Project will relieve congestion in port of Casablanca and enable unitized traffic (container and Ro-Ro) to continue increasing. Project benefits include savings in ship service and ship waiting time through more efficient handling for container/Ro-Ro traffic and for traffic which would otherwise be handled as break-bulk general cargo. Equipment operating costs would also be reduced through a better organization of terminal operations. A large portion of benefits would be felt in terms of savings in foreign exchange. 3. bpecial Works Location of terminal took into account minimization of costs of rock- dredging and earthwork fill. 4. Cost Estimates Infrastructure: DH 465 million Equipment: DH 175 million 5. Traffic Forecasts ('000 tons) Actual With Project_ W/o Proiect 1987 1994 2000 1994 2 Container 695 1039 1443 849 966 Ro-Ro 312 404 481 381 434 General Cargo 1543 1710 1961 1923 2485 - 82 - Annex 5 Table 1 Page 2 of 2 6. Cargo Handling Rates and Costs (averages) Rates Tons/day ith Project W/o Proiect 1994 1994 2000 Container/Ro-Ro 3,000 3,200 2,100 2,100 Conventional 600 700 600 700 Handling Costs DH/ton With Project WXo Project Container 41 50 Ro-Ro 6 7.5 Conventional 120 120 Handling costs foreign gorts DH/ton 130 (unitized cargo) 180 (general cargo) Ship waiting Time Savings 1994: 20X of general cargo ship service time 2000: 50X of general cargo ship service time 7. ShiR Costs (typical values) Container ship $ 6,500 Ro-Ro ship $ 6,000 Conventional ship $ 4,500 8. Economic Return Based on 20 year project life with benefits constant from year 2000: FYB > 101 ER -19 9. Tnde*r Tentative Tender Date: October 1990 Completion Time: 40 months Budget allocations: 1991 DH 190 million 1992 DP. 180 million 1993 DH 270 million - 83 - Annex 6 Page 1 of 6 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Detailed Program for Project Execution 1. Execution of the Government part of the project will primarily be the responsibility of the Ministry of Public Works (MPW), through the Directorate of the Port of Casablanca and Mohammedia (DPCM) for the rehabilitation of the breakwater of the port of Casablanca, and through the Ports Directorate (DP) for rehabilitation of breakwaters in ports other than Casablanca and Mohammedia, dredging works, National Port Master Plan studies, environmental assessment for dredging, and related institution building. In addition, the Ministry of Fisheries and Merchant Marine will be responsible for the marine security component through the Merchant Marine Directorate (DMK). ODEP will be responsible for the execution of its investment progrim. ODEP would also be responsible for managing the consultants contract for the dredging study. Although this study is not part of ODEP's program proper, ODEP has the staff and facilities which would be required to make the best use of the consultants input. Each agency would be responsible for implementation and monitoring progress, including the preparation of quarterly progress reports for IBRD and the Government. The agencies will follow the steps and time frame of the Development Programs and comply with the physical targets for the project given in the implementation schedules of this Annex. ODEP will be responsible for monitoring performance indicators, and ensuring compliance with targets, for cargo handling productivity and equipment management (Annex 10). 2. For each subproject to be proposed for Bank financing, the individual agencies would prepare an evaluation sheet on which the key technical, design, cost, economic and tentative tender information is summarized (Annex 5). The Bank missions will review these data and confirm eligibility for Bank financing. The individual agencies would prepare, advertise, tender, and award contracts, subject to review with the Bank. The time allowed for preparation of bids would be at least 60 days for contracts having an estimated value of US$5.0 million equivalent or more, and not less than 45 days for smaller contracts for International Competitive Bidding (ICB) and not less than 30 days for Local Competitive Bidding (LCB). After completion of the contract.ng process, the individual agencies would send to the Bank: (a) an updated evaluation sheet; (b) a copy of the tender documents; (c) the evaluation report showing the award decision and its rationala; and (d) the signed contract. For contracts valued at US$100,000 or less, for which disbursements are made on the basis of Statements of Expenditure, the contracts will not be sent to the Bank for review, but instead would be kept on file by the individual agencies for inspection and review by Bank staff during supervision missions. - 84 - Annex 6 Page 2 of 6 Casablanca Container Terminal 3. Civil Works. Bids have been invited from prequalified bidders. Environmental protection measures are included in the bidding documents as well as additional information on geotechnical conditions and analyses of sediments and rocks to be dredged. Bids are due mid-January 1991. Execution of the works should take about two years under normal circumstances. However, rock dredging and difficult soil conditions may cause unexpected delays of about six to eight months. 4. Equipment. ODEP staff is experienced in the procurement of container handling equipment similar to that included in the project. The specifications will be prepared following the Bank Guidelines and taking into account the latest developments in technology. Manufacture, transport and erection on site should take about 24 months for the gantry cranes and 12 months for the straddle carriers. 5. Consulting Services. ODEP will appoint a foreign consultant to assist in evaluating the bids and finalizing the civil works contract. Civil works supervision will be done by ODEP staff assisted by consultants. Local expertise is available in Morocco given the number of large port projects which have been executed during the previous years. Accordingly, ODEP will be able to recruit most of the required personnel locally. Consultants assistance will focus on: (a) setting up appropriate procedures and methods for supervision; (b) checking drawings and calculations; and (c) providing backup support and short term expert assistance for specific aspects. Jorf Lasfar Coal Terminal 6. DP will prepare the bidding documents for civil works with the assistance of a specialized consulting firm. The consulting firm will be required in its terms of reference to cover environmental aspects during construction. ODEP will prepare the bidding documents for equipment with the assistance of a consultant for drafting the technical specifications. ODEP should appoint a specialized consultant to look into the environmental aspects of the operation of the facility, particularly dust control and compatibility with neighboring facilities. The timetable for this subproject should be consistent with the estimated completion date of the power plant to be constructed by the National Electricity Board. This should not be a problem since the execution of the port component of this project should take about three years, including design and procurement, i.e. two years less than for the power plant. Tangier Ro-Ro Facilities 7. ODEP is currently preparing a master plan for operations at the port of Tangier. Further studies to be financed under the project will be required for the detail design of this subproject. Execution of civil works should start at the end of 1992 and would take about a year to complete. - 85 - Annex 6 Page 3 of 6 Breakwaters Rehabilitation 8. DP has ample experience in preparing this type of project with the assistance of consultants. Design studies are already available for the Tangier breakwater. Bidding documents are being prepared by the consultants which were responsible for the design. DP has a portfolio of subprojects at a preliminary or detailed design stage. DP will employ consultants as appropriate for the final design and preparation of bidding documents related to other subprojects. In particular, minor rehabilitation subprojects will be prepared by DP staff. 9. DPCM will be responsible for the rehabilitation of the Casablanca breakwater. Surveys and soundings are underway under the ongoing Ports of Casablanca and Mohammedia Project to provide technical data to be included in the bidding documents. Marine Security Eguipment 10. This component relates primarily to the construction of a control tower to monitor circulation of ships in the vicinity of the straits of Gibraltar. Detailed design studies are underway with the assistance of specialized foreign consultant. Detailed design will be reviewed by the Bank before preparation of the bidding documents. Dredginz in Moroccan Ports 11. Dredging t, be financed under the project should start only after an environmental assessment at four ports has been carried out satisfactorily and the results discussed with the Bank. ODEP will also undertake a study to strengthen the maintenance operations of DRAPOR. Terms of reference for both studies are available in the Project File Documents Nos. B.10 and B.8 respectively. The environmental assessment is discussed in Annex 11. The dredging study is discussed below. Dredging Study 12. The objectives of the dredging study are to: (a) optimize the dredging fleet taking into account port needs, equipment productivity of each equipment, and operating conditions; (b) improve dredging techniques with appropriate use of modern technology; (c) increase productivity through improved equipment availability and better planning of maIntenance operations; (d) establish indicators for monitoring technical and financial performance; (e) develop human resources management; and (f) prepare a development plan for a ten-year period including a feasibility study of the proposed investment and/or measures. Terms of reference have been prepared by ODEP with the assistance of a foreign expert. ODEP will be the contracting agency for this study. Accordingly, ODEP will provide the consultants with adequate facilities and technical support. The results of the study should be available for review with the Bank by December 31, 1991. - 86 - Annex 6 Page 4 of 6 National Ports Master Plan (PDPN). 13. The Bank has reviewed and commented on terms of reference prepared by DP for an update of the previous PDPN. Bank comments focused primarily on following points: (a) the time horizon for the plan; (b) the need for coordination between long-term plans and short-term actions; (c) the environmental aspects to be included in the analysis; and (d) the evaluation of the capacity of existing facilities including possible short-term improvements. Final terms of reference are available in the Project File Document No. B.9. The duration of the study is approximately 12 months. Its results should be available for the preparation of the Government five-year plan for the period 1993-1997. - 87 - Page 5 of 6 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT PROJECT IMPLEMENTATION SCHEDULE: ODEP 1990 1991 1992 1993 1994 Project Element and Activity 1 2 3 4 1 2 :3 4 1: 2 3 4 1 2 3 4 1 2 3 4 Board Approval * Loan Effectiveness : : A. New Container Terminal : Civil Works Prepare bidding documents .--- - :. . . Invite bids : Execution _ . . : :: i . Buildings : : : : : : : : : : : Prepare bidding documents : : : Invite bids _ _ _ : Execution : : : : : : - __n: :: Gantry Cranes : Prepare bidding documents : : : Invite bids -. Manufacture and Erection : : _ _ Straddle Carrier Prepare bidding documents : : : - : Invite bids : _ - Manufacture and Erection : _ _ - B. Jorf Lasfar Coal Terminal , Quay: Quay ~: : : : : : : : : : : : : : : Prepare bidding documents - - _ : : : Invite bids -: Execution : : : _ _ _ Equipme: : : : : : : : : : : : : : : Eguipment;: Prepare bidding documents : : : Invite bids - : - Manufacture and Erectionn: ,D: C. Tangier Ro-Ro Terminal Civil Works Prepare bidding documents ; _ : ; : : : Invite bids : : : : : * : : Execution D. Dredsins Study Prepare Terms of Reference : : Invite proposals --- Implementation November 1990 - 88 - Annex 6 Page 6 of 6 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT PROJECT IMPLEMENTATION SCHEDULE: DP-DPCM 1990 1991 1992 1993 1994 Project Element and Activity 1 2 3 4 1: 2 3 4 1 2 3 4 1: 2 3 4 1 2 3 4 Board Approval * __ Loan Effectiveness * A. Dredging Prepare bidding documents Invite bids - Execution . . B. Breakwater Rehabilitation : Prepare bidding documents : * Invite bids : Execution . . . C. Marine Security Equipment : Prepare bidding documents : Invite proposals Manufacture and Erection : D. National Port Master Plan Prepare Terms of Reference Invite proposals : :: : Implementation : : in: E. Environmental Study Prepare Terms of Reference ::: :: : : : : : : : : Invite proposals Implementation : . . November 1990 - 89 - Annex 7 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Review of Local Competitive Bidding Procedures Decree Article Issue AcceRtable Procedures (a) 2-76-479 33 Bid evaluation committee may No bidders should be not only seek clarifications requested nor permitted to from bidders, but may also alter his bid after bid request bidders to modify opening. their bids after bid opening. (b) 209-65 1 The CCAG applies only to When reference is made to 151-66 1 civil works. Although in those decrees bidding practice the CCAG appears to documents should clarify what be used for goods as well as general conditions apply to vorks, the basis on, and goods and services and extent extent to which, they are to which they are applicable. applicable is unclear. (c) 2-76-479 28 Advertising period may be as Advertising period should be short as 15 days about 45 days, with an absolute minimum of 30 days. (d) 2-76-479 27-35 Bidders may either submit a Bidding documents should proposed price (offre de specify that bidders be prix) or a discount on the required to submit price price established by the offers in their bids. Government (rabais) In some cases a tentative After public opening of bids, designation of award is made, information relating to the subject to further analysis. examination, clarification and evaluation of bids and recommendations concerning awards should not be disclosed to bidders or other persons not concerned with this process until the award of contract is announced. - 90 - Annex KINGDOM OF NOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Estimated Schedules of Disbursements Loan to the Kingdom of Morocco _US$ milliun FYI9l FY92 Y93 FY94 FY95 Pi Annual 0.5 4.7 10.3 12.0 4.9 0.6 Cumulative 0.5 5.2 15.5 27.5 32.4 33.2 % 2 16 47 83 98 100 Loan to ODE USA million 91 EY92. FY93 FY94 FY95 FY96 Annual 1.6 25.1 25.3 29.6 14.2 3.2 Cumulative 1.6 26.7 52.0 81.6 95.8 , X 2 27 53 82 97 100 - 91 - anlex 2 Page 1 of 3 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Project Monitoring General 1. The Government and ODEP management need to receive continuous feedback on implementation and to identify actual or potential successes and problems as early as possible to facilitate timely adjustments to project implementation. Regular reports should also be provided to the Bank to permit satisfactory monitoring of project progress. To this effect, each implementing agency will prepare: (a) compreherzive quarterly progress reports covering all aspects of the project; (b) semi-annual reports on financial and operational results of port operations and on selected port performance data; and (c) a project completion report. These reports will be reviewed through the normal supervision mechanism involving at least two supervision missions per year. In addition, the Government and ODEP would meet at least annually with the Bank to: (i) assess the status of the project and the progress of institutional developments using the agreed Development Plans, targets and monitoring indicators established under the project (Annex 1 and Annex 10); (ii) discuss and resolve outstanding issues and implementation problems; and (iii) review the pluriannual investment and maintenance program for the sector. 2. To the extent possible, reports to be sent to the Bank will be in the format selected by the project agencies for their own use in order to minimize additional work and avoid unnecessary duplication of effort. Proiect Quarterly Progress Reports 3. Progress reports should be submitted quarterly, no later than one calendar month after the end of each quarter. The first report should cover the quarter ending December 1990. 4. The quarterly report should contain the following information: (a) General Information (i) the pnysical progress accomplished to date of report and during the reporting period; (ii) actual or expected deviations from the project implementation schedule; - 92 - Atmex 9 Page 2 of 3 (iii) actual or expected difficulties or delays and their effect on the implementation schedule and the actual steps taken or planned to overcome the difficulties and avoid delays; (iv) expected changes in the completion dates of the project; (v) key personnel changes in the staff of ODEP, the consultants and the contractors; (vi) matters which may affect the project cost; and (vii) any development activity likely to affect the economic viability of the project components. (b) A bar-type progress chart, based on the project implementation schedule, showing the progress in each project component and including a planned and actual expenditure graph. (c) A financial statement showing details of the expenditures incurred under the various components of the project and the withdrawals from the loan and from the cofinanciers loan together with a statement showing: (i) original cost estimates; (ii) revised cost estimates, if any, with reasons for changes; (iii) original estimated expenditures to date; (iv) reasons for variations of (iii) above from actual expenditures; and (v) estimated expenditure for the remaining quarters of the year. (d) Brief statement of the status of action in each of the covenants of the Loan Agreement. Semi-annual Reports S. The following reports will be prepared semi-annually or annually and submitted to the Bank for the annual reviews: (a) investments by port ( ) previous year expenditures for infrastructure and equipment; and (ii) investment budget for the following year and five year pluri- annual rolling program. (b) finances and operations (i) financial statements and audit reports for ODEP; - 93 - Annex 9 Page 3 of 3 (ii) financial indicators; (iii) traffic statistics and forecasts; and (iv) operational indicators. (c) studies and training: progress made, budget and time schedule; and (d) progress on other items of the Development Program Project Completion port 6. The Borrowers will prepare a Project Completion Report (PCR), to be submitted to the Bank not later than six months after the Closing Date. 7. The primary objective of the PCR is to reinforce self-evaluation by the Borrowers and the Bank's operating departments and to facilitate dissemination of lessons learned through the project. In particular, the PCR should include an assessment of the following: (a) the performance by the Borrowers and the Bank of their respective obligations under the Loan Agreement and whether the Bank could have been more helpful; (b) the results that can be expected from the project, as compared with expectations at appraisal, and whether the original expectations were realistic; and (c) whether in retrospect the project was worth doing or could have been done better. 8. For those components of the project for which a rate of return was estimated during appraisal, the PCR should contain a new estimate of the return the project is now likely to yield and analyze the reasons for physical or economic deviations. An annex with the relevant information supporting this analysis should be included. 9. The basic documents to be referred to are: (a) Appraisal Report; (b) Loan Agreement Documents, Supplementary Letters, etc.; (c) Supervision Reports; (d) Quarterly Progress Reports; (e) Project Correspondence Files; and (f) Miscellaneous Evaluation Reports. - 94 - Annex 10 Page 1 of 3 KINGDOM OF MOR2CCQ STAFF APPRAISAL REPORT PORT SECTOR PROJECT Performance Indicators and Targets 1. ODEP is already collecting a wealth of data on port activities and is computing a number of operational, technical and financial indicators. The performance indicators which are presented below will be computed to assess the progress in achieving the objective of improving efficiency and productivity of port operations. For some indicators, targets to be achieved in 1991 and 1993 are provided. The actual or computed values of the indicators compared to targets will be periodically provided in the progress reports. This information and actions to be taken to remove obstacles and increase accomplishments would be reviewed with the Bank at the time of the annual review on project progress. Cargo-Handling Productivity 2. ODEP computes gang output in tons per gang and per shift for most commodities. While this a good measure regarding the performance of labor, it fails to give a clear indication of how good cargo-handling operations are as a system. To assess the efficiency from the shipowners' viewpoint, ODEP agreed to measure ship output in tons per ship day at berth. Although targets have been computed by taking into account the average number of gangs per ship and the L>'erage number of shifts per day, actual values of the indicators will be derived from direct data collection. Gang Output Ship Output Cargo Category T/Gang/Shift T/ShiR/DaY 1989 1989 1991 1993 Packaged timber 174 1390 1700 2000 Bark 446 3600 4300 5000 Sugar in bulk 422 1700 4000 5000 Fertilizers in bags 60 480 570 800 Citrus and produce 153 920 1200 1600 Round logs 172 1400 1700 2200 Cereals 250 1700 3000 3000 TSP in bags 360 800 2200 3000 Barytine 2100 5500 7500 9000 Sulfur 3000 6000 6000 6000 Containers (boxes) 64 130 240 320 - 95 - Annex 10 Page 2 of 3 Use of Berthing Space 3. The Autonomous Production Center (CPA) for conventional berths at Casablanca prepares graphs presenting the following data: traffic, berth throughput, berth utilization (hours), stoppages, cargo-handling rates, berth occupancy. These indicators will also be derived from data collected at the container and Ro-Ro terminals. ShiR Services 4. The following indicators will be computed separately for conventional general cargo ships, container ships, passenger ships and Ro-Ro ships, in the ports of Casablanca, Safi and Tangier: Average Ship Waiting Time: Total time (in Hours) between arrival (at outer anchorage)and berthing of all ships of the category divided by the number of ships of the category berthed. Actual average for all ships calling at the port of Casablanca was 0.5 day in 1988. Average Ship Service Time: Total time (in hours) at berth (including berthing and unberthing time) of all ships of the category divided by the number of ships of the category. Dwell Time of Cargo and Containers 5. The dwell time of general cargo and containers at the port of Casablanca will be broken down into elements allowing analyses of the causes of delays and determination of necessary corrective actions. In addition, for selected transit sheds and open storage areas, the following data should be collected: (a) tons of cargo cleared within free period; (b) tons of cargo remaining uncleared for more than 2, 3 and 6 weeks; (c) number of containers (TEUs) cleared within free period; (d) number of full containers (TEUs) remaining uncleared for more than 1, 2 and 3 weeks; and (e) number of empty containers (TEUs) remaining uncleared for more than 1, 2 and 3 weeks. 6. Dwell time indicators will be computed as the number of tons/TEUs- days in storage divided by total tons/TEUs stored. The average dwell time for import containers is currently 19 days. The target to be achieved would be not more than 14 days in 1991 and not more than 10 days in 1993. For other cargoes, the targets would be a reduction of dwell time of at least 25% by 1991, and at least 50X by 1993. - 96 - Annex 10 Page 3 of 3 Equipment Management Indicators 7. ODEP establishes targets for key indicators of equipment maintenance. The categories of equipment to be monitored under the project will be: six-ton cranes, four-ton forklift trucks, and straddle carriers. The following indicators are selected: Average number of working hours per equipment categor : Total number of working hours of equipment pertaining to the category divided by the number of items in the category. EguiRment Availability (Td): Total number of pieces of equipment in working condition divided by the total number of items in the category. This indicator should be computed on the duration of the shift rather than at the beginning of the shift. Breakdown Indicator (UTp: Total hours of breakdown (or maintenance during the working shift) divided by the sum of working hours and hours of breakdown. 8. Current base values and targets are given below for Td and Tp. EouiRment Categorv IndLcator 1989 1991 1993 Straddle Carriers Td 73X 80X 80X TP 6X 4X 4X Six-ton Cranes Td 862 881 881 Tp 0.6X 0.61 0.61 Four-ton Forklift Trucks Td 811 851 88Z - 97 - Page 1 of 8 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Environmental Impact I. Introduction 1. In the areas surrounding maritime port installations environmental quality indicators, i.e., for water, air and land, are for the most Rart dependent on two main factors: - the quality control of urban liquid effluent discharged by the generally large conurbations that border on these port areas; - the controlled management of the various pollutants discharged by industrial plants (handling, storage, processing, manufacturing) established in the immediate vicinity of the land-sea transit point for the raw materials on u'ich these industries are based. 2. The port function proper, strictly related to the presence of the ocean-going vessels and to their loading and unloading operations, must, of course, be covered by safety measures and attention to the protection of the marine environment. However, the application of international regulations on board the vessels and the customary police measures of the Harbor Master's office do, in most situations, facilitate appropriate control over impacts directly linked to maritime transport. 3. Moroccan Port installations are highly dependent on the industrial and urban environment in their close proximity, when examined from this particular aspect of environmental protection. The willingness of the authorities to take this aspect into account is clearly evidenced by some of the special efforts they have recently made: e.g., the recent establishment of the ballast water discharge station for oil tankers at the Port of Mohammedia, which has the latest technology and is well operated. On the other hand, it must be borne in mind that a collective national effort is needed- -particularly in the area of the purification of urban and industrial effluent before it is discharged into the coastal marine environment--to monitor the protection measures that are to be introduced in the technical projects planned as part of the Port Sector Project. Their relative efficiency is directly related to the overall implementation of a general marine environment protection policy. II. Present Situation in Moroccan Ports 4. The rapid economic development of countries in the process of industrialization and the resulting effects in terms of urban concentration and - 98 - Anngx 11 Page 2 of 8 the adaptation of all infrastructure facilities have, in Morocco as in all other countries with similar economies, been translated into priority being given to the appropriate adaptation of production capacities. Thus, in terms of coastal port infrastructure, several new ports have been built, while existing ports have been expanded and developed (the quay of Casablanca, the Ports of Mohammedia and Jorf Lasfar, and the doubling of the size of the Port of Agadir). At the same time the Moroccan Government, which has been involved in formulating international conventions on marine environment protection, has ratified various treaties obligating signatory countries to adopt national measures to guarantee the integrity of the ocean environment. 5. The Government structures needed and the appropriate internal Moroccan legislation are either already organized or under study: - the Environment Directoiate (Direction de l'Environnement), within the Ministry of the Interior; - the Merchant Marine Directorate (Direction de la Marine Marchande), within the Ministry of Fisheries and Merchant Marine, in respect of marine environment; - the National Council on the Environment (Conseil National de 1'Environnement); and - the draft law on marine environment protection and preservation (being prepared by the Government). 6. rhe threat of pollution to the Moroccan coast from the discharge of oil in the open sea resulting from the accident that occurred to the oil tanker "KHARG V" in January 1990 has made the authorities and public opinion acutely aware of the economic consequences that can be caused by serious disasters along the coast. As a result, the Government is currently going ahead with the preparation of a program of regulatory and technical measures that should be implemented in the very near future. Moroccan legislation 7. The draft Moroccan Maritime Code prepared by the Services de la Marine Marchande et des Peches (Merchant Marine and Fisheries Departments) is to be adapted and put before Parliament for discussion. It contains, in particular, in Volume III, a set of provisions on "Marine Environment Preservation and Protection, I application of which will bring Moroccan regulations up to the international level of Western countries. All the legal instruments needed for signature and ratification of the various international conventions formulated by the International Maritime Organization (IMO) on the subject of marine environment protection are to be submitted for Government regularization proceedings. - 99 - Annex 11 Page 3 of 8 Technical measures 8. The Government has started implementation of a program for the provision of equipment to fight accidental pollution from oil spills with support measures. The program includes the following: - floating barriers to protect sensitive areas of the coast; - three reconnaissance aircraft (ongoing); - three coastal surveillance patrol boats able to take part in lifesaving efforts at sea (under construction); - a radar control tower to provide modern and efficient vessel traffic services on the Moroccan side of the straits of Gibraltar; - draft regulations to govern thc maritime navigation along the Moroccan shoreline of vessels carrying hazardous materials are under study. They will provide for the str ngthening of the resources of the Safety Centers responsible for checking on the condition of the vessels putting in at the ports and on their compliance with international regulations; and twenty Administrators of Maritime Affairs and DeLegates from Safety Centers will be receiving long-term training in Western European countries. 9. All this is evidence of the determination of the Moroccan authorities to provide the country with an organization that is consistent with the risk level entailed in the protection of 3,600 km of shoreline, given the intensification of maritime traffic in and out of its ports. Provisions are included in the project to develop analysis methods through environmental and impact studies and to train technical staff in how to incorporate concern for environmental quality into technical projects. The following is a discussion of environmental impacts of the project. III. New Container Terminal at the Port of Casablanca 10. The execution of the project to build a new container terminal at the port of Casablanca will require a few precautions during construction. The quality of the marine environment in and around the Port of Casablanca is dependent, first and foremost, on what is discharged by the various collection facilities for untreated urban and industrial wastes from all the conurbations of Greater Casablanca. Means of improving this situation are the subject of studies currently under way and plans for collection facilities and treatment plants have been submitted to the Bank as part of an Urban Sector Project. These are priority activities and will have a major impact in improving the coastal marine environment adjacent to the port. There are still, however, two technical operations linked to the execution of the project that call for careful action in terms of their impact on the marine environment, namely the adequate disposal - 100 - Annex 11 Page 4 of 8 of dredging materials and the provision of sand fill within the boundaries of the existing port. DisRosal of Dredging Materials 11. Nautical access to the berth to be constructed (access channel, turning circle and camber of c. ntainer quay) and also the site for the berth itself will have to be cleared by dredging one layer of variable depth (1-6 la) of sand or silt-mud sediments prior to executing the infrastructure works. The estimated volume of materials to be dredged is 0.7 million i3. The physical nature and particularly the size of the sediments does not justify the reuse of the material as fill for the foundations to be put in. It was decided to discard this material outside the project area. 12. The Moroccan authorities are signatories to the London Dumping Convention (LDC), dated October 30-November 13, 1972, on the prevention of ocean pollution resulting from dumping of wastes at sea. Accordingly, this operation of dumping the dredged materials will be subject to techri:al and administrative procedures for the issue of a dumping permit (special or general) in accordance with the provisions of the LDC, i.e.: - the Convention and its three Annexes (I, II and III); - directives for the implementation of Annex III adopted by the Eighth Consultative Meeting of! Contracting Parties to the LDC held in London in 1984; and - general directives relating to the implementation of the three Annexes on the dumping of dredged material adopted by the Tenth Consultative Meeting of Contracting Parties to the LDC held in London, October 13- 17, 1986. 13. The sedimentary origin of the materials to be dredged can, for the most part, be traced to sources outside the port area. The finest elements of these materials are recognized as being primarily caused by the settling on basin bottoms of the various effluent dumped by urban waste collectors and by the accidental discharge into the ocean of products handled in bulk during port operations (phosphates, coal). An investigation was first made into the possibility of landing these products in a permanent confinement enclosure close to the terminal to be built. Investigations by ODEP led to confirmation that it would be difficult to create a dumping area with the necessary capacity within a sufficiently close distance from the extraction site. Envisaged first on the western side of the earth foundations for the new secondary breakwater, a dumping area would have to be created by cleaning the site where there is an outcrop of bedrock. The cost of the work is considered prohibitive. 14. The technique of dumping dredged materials in the ocean was used constantly in Casablanca during the depth maintenance campaigns, which were conducted every five to seven years. The small volumes (annual average of about 50,000 m3) of such dumping did not have any significant impact on a coastal site - 101 - Anmex 1 Page 5 of 8 which was also periodically subjected to extreme ocean turbulence. During project preparation, a sediment sampling program was agreed upon with ODEP and LPEE (Laboratoire Public d'Essais et d'Etudes) with a view to proceeding with the physical, chemical and bacteriological identification of the materials to be dumped. However, the weather and ocean conaditions experienced at the project site during the winter of 1989/90 made it impossible to carry out the sampling in accordance with the agreed technique. There are now plans to collect samples with the use of a mechanical dredger available at the port. The analyses ware carried out in June 1990 and the results are available in the Project File Document No. B.7 (e). They indicate that the sediments to be dredged have toxicity level well below critical values. Accordingly, ocean dumping on a selected site is -ppropriate. 15. The following considerations apply to site selection for ocean dumping. First, dumping should be planned for depths of at least 25 m in order to guarantee the stability of the deposit of dredged spoil, avoid the expansion of the cover of the natural substratum over too vast an area and the dilution of pollutants in complex liaison with the silt. This requirement can be met without increasing costs excessively because depths of 25 m or more are prevalent at a short distance from the head of the Moulay Youssef breakwater. Second, the contract documents for the works will include provisions concerning the site which will be granted a dumping permit. Fill Work 16. Fill work for the construction of the terminal and the associated works calls for 3.2 million m3 of sandy fill material. The surveys carried out on land on the use of quarry products has shown numerous constraints such as: hauling distance, intensity of road traffic generated, high cost. The amount of quarry products would be limited to 800,000 me and adequate measures would be taken to mitigate the negative impact on road traffic. The remaining fill volume (2,400,000 m3)would be extracted from the sea bed. A recent operation of the same nature resulted in the local supply of sufficient aggregate to provide a volume of 1 million ma. The dredging was undertaken along a coastal strip at depths of -15 m between Casablanca and Mohammedia. 17. Government authorization will have to be issued to define the technical conditions governing the extraction, following interministerial processing organized by the Ministers responsible for the Merchant Marine and the Environment. A formal requirement will have to be imposed on the contractors to position the extraction between the depths of -25 m and -15 m in order to guarantee the stability of the underwater profile of the foreshore and the offshore dune bar along the coast. The thickness of materials to be dredged should not exceed 2 m for the same reasons. Since ODEP was unable, before winter set in, to undertake the geotechnical exploration work needed to locate extraction sites that met these requirements, the price structure in the bidding documents allows for variations in the distances from the extraction site to the project site. - 102 - Annex 11 Page 6 of 8 IV. Rehabilitation Dredging in Moroccan Ports 18. Although the maintenance and rehabilitation dredging program is a longer term operation for which an environmental assessment is deemed appropriate, it must be noted that Morocco does not have a serious problem in this respect compared to other more industrialized nations of Northern Europe and North America. Maintaining the nautical characteristics of Morocco's main ports (besides Casablanca and Mohammedia) requires annual volumes of dredging of between 2.8 and 2.3 million e3 of sand and between 60,000 m3 and 100,000 mn of silts. The maintenance needs vary widely from one port to the other. In some ports, such as El Jadida and Essaouira, the annual volume of dredging, 10,000 in/year, is tnlikely to cause much disturbance to the marine environment. Higher volumes of dredging are required in the case of estuary ports such as Kenitra (600,000 n3) and Larache (between 300,000 ma and 400,000 e3), and in the case of coastal ports subject to heavy littoral drift such as Safi and Agadir (between 400,000 e3 and 450,000 i3). This sedimentation thus raises questions concerning the identification of the dredged materials and the appropriate selection of dumping sites in the offshore marine environment. 19. With the exception cf the ports of Casablanca and Mohammedia, the ports most affected by sedimentary deposits are not located in dense urban or industrial environments. As a result, high levels of contamination of the sediments to be dredged are unlikely to occur in most sites. But the concerns related to maintenance dredging are not limited to the physico-chemical nature of the sediments. Deepening channels by dredging alters water circulation. This in turn causes changes in salinity, dissolved oxygen and velocity profiles in the sections treated. The increased turbidity of the water brings about a drop in light penetration, which affects all the processes of primary production and life of the benthic, planktonic and demersal fauna. Lastly, selection of sites for the dumping of dredged materials must be governed by strategic decision making based on the best available knowledge of the future of the materials dumped: stability, diffusion, reincorporation into the transport movements interrupted by port works, effect on beach levels in sections experiencing erosion. Analysis of these various factors must be based on a detailed study of the environmental conditions of the individual port site and of the coastal area in the immediate vicinity. 20. The project would support a pilot study in the form of an environmental assessment focusing on dredging in the ports of Agadir, Kenitra, Larache and Safi. Carrying out an environmental assessment at those sites with a variety of contexts (estuary and coastal with littoral drift) will provide a training opportunity for the engineers and managers of the staff of the Directorate of Ports, thus p;oviding a comprehensive approach to the impact of dredging activities on sensitive shallow coastal areas. The terms of reference for this study are available in the Project File Document No. B.10. V. Water Ouality in the Port of Casablanca 21. The direct dumping into the ocean of untreated urban effluent from all Morocco's largest urban areas is a cause of concern and requires remedial action. - 103 - Page 7 of 8 The condition of the Port of Casablanca must, in this respect, be brought into line with the declaration of the Tenth Meeting of the Contracting Parties to the London Convention held in Octcber 1986. This declaration recognized that the cause of contamination of sediments that are to be dredged is the dumping of hazardous material, into inland and coastal waterways and that these problems would continue to occur unless dumping is more strictly controlled at the source. /ny program of action to control port water quality must have as its first priority the building of structures for the collection and treatment of wastes that are currently discnarged into the port basins (Hansali collector). In the fisheries sector, in particular, the elimination of collector dumping is a measure that is urgently needed to improve the health conditions of the sector. 22. Second, there seems to be a need for regular measurement of the parameters of the physicochemical quality of watershed water and of the coastal marine environment within external proximity to the port protection structures. The systematic collection of data over a long period is a prerequisite for: (a) implementing sanitary suiveillance of consumer products originating from the ocean or of sea bathing; and (b) defining the conditions for the difficult task of disposing of effluent from the purification stations which ar- included in the plans. The Directorate for Merchant Marine (DMM) has the ,ervices oGf an Institut Scientifique des Peches Maritimes (ISPM), staffed by experts and equipped with laboratory facilities geared to the operation of a Reseau National d'Observation du Milieu Marin (RNO). VI. Control of Air Pollution from Dust Emissions 23. The high volume of traffic in heavy goods handled in bulk at the main ports, i.e., Casablanca and Jorf Lasfar, causes atmospheric pollution from dust emissions from phosphates and coal, which are noxious to the quality of the environment in the immediate vicinity. In addition, cereals dust is an explosion hazard in silos. The introduction of measures and procedures designed to prevent and reduce these sources of atmospheric pollution will be part of all new projects. Adequate provisions will be included in the terms of reference of consultants in charge of design work for new cereals and coal handl.ng facilities. 24. Concerning existing facilities, a mission of consultants at the two main ports would carry out a study with the following objectives. First, an inventory would be made of possible situations where air pollution is incompatible with, and hazardous to industrial activities in the neighboring areas which are affected by sigr.ificant levels of these dust emissions. Priority attention should be given to the risks of contamination of nitrate fertilizer operations from the emission of organic materials. Second, a review would be made of handling techniques likely to create situations of instantaneous dust concentration equal to or higher than 150 mg per nano m3 of surrounding air. For such situations, solutions have been introduced under identical circumstances in other ports: covering of hatches, intermediate hoppers under negative pressure, covered dump trucks. - 104 - Annex 11 Page 8 of 8 VII, Training in Maritime Environment 25. Training is required to strengthen environmental capabilities and raise awareness to environment issues in the port and maritime subsectors. The Moroccan Interministerial Co'uneil on the Environment, having been made aware of the conditior, f port operateQns by the accident of the oil tanker "KHARG V," is examinii. vrious areas in which changes need to be made as regards technical equipment and staff training with a view to building up an efficient national organization to control marine pollution in the event of another disaster of similar proportions. DMM has already instituted a series of training co-rses for 20 managers of Centres de '.ecurite Maritimes Commerce et Peche (Centers for Commercial and Fisheries Maritime Safety) at similar institutions in France. 26. Training on a simila; scale will be organized in the port sector so that marine environment concerns will be taken into account by all the departments involved. The project provides support for training of (a) two engineers of DP and DPCM; (b) three harbor officers and engineers of ODEP; and (c) 15 engineers or senior personnel on the staff of the regional ports. This training will take the form of two to three-week courses at specialized agencies of foreign countries and ports in Europe. This should be subsequently supplemented in Morocco by organizing one or two one-week seminars in order to make this training available to a wider gro.,,p of middle managers and supervisors who are more directly involved in port operations, particularly where the introduction of floating dams and skimmers is concerned. - 105 - Annex 12 Page 1 of 7 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Economic Evaluation I. Introduction 1. This annex provides background information on the analysis of a key sub-project in the port investment program, namely the Casablanca container terminal. It also presents the analysis of the Agadir cereals silo to be constructed by ONICL. The analysis of the container terminal in the port of Casablanca is based on a feasibility study prepared by consultants CATRAM entitled: Etudes de Factibilitd Liees a la Preparation d'un Eventuel Projet Portuaire, Janvier 1990. The study was prepared according to a methodology and terms of reference provided by the Bank and was reviewed in detail by Bank preparation missions. The study is available as Project File Document No. B.1. II. Traffic Forecasts 2. Based on foreign trade statistics, Table 1 shows details of import and export traffic growth for major commodity groups during the period 1983-1987. The traffic data is broken down into bulk and general cargo commodities, the latter being further broken down into unitizable and non-unitizable traffic. Compared to recent growth rates of around 61 per year, import traffic is expected to increase at more modest rates in the future of around 3X per year through the year 2000. However, unitizable imports, mainly intermediate and consumer type goods, will probably increase at around 41 per year. Bulk imports, particularly oil products, coal and culphur, will continue to increase in line with population growth, namely at about 3X per year. However, imports of cereals are likely to remain around their current level of 1.5 to 2 million tons annually, any increase in local production being offset by increases in consumption due to population growth. Table 2 shows trends in cereal imports, including a breakdown by port port, from 1978 to 1988. Exports of general cargo traffic are expected to increase at about 21 per year while exports of bulk commodities, mainly phosphates, will remain at their current level. 3. With a recent growth rate of about 71 per year, unitized cargoes have increased at a rate which is higher than for general cargo traffic as a whole. Using 1987 data, a detailed analysis has been made of the degree of penetration of unitizable cargoes and the prospects for continued increases in the level of unitization in the future. This level is already very high for Morocco, namely about 601 for the country as a whole as opposed to about 301 for Turkey and less than 101 for Algeria. About 651 of unitizable cargoes are unitized in the port of Casablanca and about 801 in Tangier. For unitized traffic, two forecast scenarios have been developed, the first corresponding to continued growth in container traffic, the second to a slow-down in the rate of containerization - 106 - Annex 12 Page 2 of 7 while still maintaining growth in roll-on roll-off traffic. The first scenario would correspond to the development of new container handling possibilities in the port of Casablanca and under this scenario, unitized traffic would increase at a rate of about 5% per year through the year 2000. The rate of unitization for the port of Casablanca would increase from 65% in 1987 to 74% in 1994 and 81% in 2000. In the without project scenario, unitized traffic would increase only at about 2.5% per year, the level of unitization remaining constant at about 60-65%. For the port of Tangier, unitized traffic is expected to increase at 7% per year in the scenario corresponding to the planned improvements to this port as opposed to increases of about 5.5% per year in the without project scenario. Table 3 provides details of the forecast tonnages for the port of Casablanca, distributed between containers on container vessels, containers on Ro-Ro vessels and trailers on Ro-Ro vessels. In the with project scenario, the number of containers handled by the port of Casablanca would increase from 94,000 TEU in 1987 to 190,000 TEU in the year 2000, an increase of just under 6% per year. In the without project scenario, the number of containers in the year 2000 would only reach 132,000 TEU and there would be a residual volume of unitizable general cargo handled by conventional means, compared to the with project scenario, amounting to over 500,000 tons in the year 2000. III. Casablanca Container Terminal 4. Benefits fromi the container terminal development in the Port of Casablanca will accrue to port users primarily through the impact of the project on cargo handling rates. rhese in turn provid. reductions in: (a) the time ships spend at berth; (b) ship waiting time; (c) cargo handling costs; and (d) cargo handling costs in foreign ports. The analysis assumes that the existing terminal (Mole Tarik) would continue to operate as a container terminal but would specialize primarily in Mediterranean traffic. However, a recent 4 hectare extension of the existing terminal on the adjacent Mole de Commerce will cease to operate after the new terminal is inaugurated. As Mediterranean traffic is predominantly Ro-Ro traffic, the existing terminal would essentially become a Ro-Ro terminal. Ship Service Time 5. The main basis of the analysis is to estimate the time taken by ships to load and unload their cargoes in the "with project" and "without project" scenarios. Based on an analysis of the likely distribution of traffic among different types of ships under these two scenarios and the cargo handling rates associated with each, estimates of ship service time are derived. These estimates are then converted into total ship costs based on the hourly operating cost of vessels expected to handle the forecast traffic. The distribution of traffic in the without project scenario assumes that shipping lines will be unable to introduce larger and more efficient vessels, as increasing congestion would result in unacceptable levels of ship waiting time. However, in the with project scenario, there would be a gradual shift in traffic distribution towards larger vessels for both container and Ro-Ro traffic. The following provides a summary of the ship types, ship costs, forecast traffic distribution and related cargo handling rates: - 107 - Annex 12 Page 3 of 7 Traffic Distribution X ShiR Type SiR Cost Cargo handlinz Rate w/proiect L w/out project (US$/day) (tons/day) with without 1994 2000 1994 2000 Container Ships 250 TEU $5,000 2,300 2,000 45 30 95 90 500 TEU $6,500 4,000 N.A. 50 60 - - 700 TEU $8,000 N.A. 2,000 - - 5 10 1600 TEU $12,000 4,500 N.A. 5 10 - - RO-RO vessels 103 TEU+30 Tr. $4,500 N.A. 2,200 - - 50 40 150 TEU+60 Tr. $6,000 2,500 2,200 45 30 50 60 250 TEU+lOOTr. $7,500 2,500 N.A. 50 60 - - 500 TEU+370Tr.$15,000 2,500 N.A. 5 10 - - Conventional 4000tons $4,500 600 V 600 V 100 100 100 100 1/ increasing to 700 tons per day in 2000. N.A. not applicable 6. Based on the above assumptions, estimates of ship service time savings in 1994 amount to US$ 1,530,000 in 1994 increasing to US$2,717,000 in the year 2000. As Moroccan shipping lines handle about half of the total traffic and as part of the sea freight rate savings for foreign lines would also ultimately accrue to Morocco, 75X of total ship service time savings are assumed to accrue to Morocco. ShiR Waiting Time 7. In the without project scenario, priority will be given to container and Ro-Ro traffic in order to minimize waiting time for this traffic. In order to achieve this objective, initially two and later three general cargo berths would need to be assigned to container/Ro-Ro traffic. Ship waiting time would therefore increase for conventional general cargo traffic. Estimates of ship waiting tire for this traffic are derived from empirical curves which relate ship waiting time as a proportion of ship service time, to the berth occupancy rate, the latter being a function of the number of berths available and the required ship service time. The following table summarizes these estimates: - 108 - Annex 12 Page 4 of 7 Ship Waiting Time Iraffic Cargo Rates Barth Occ. Occ.Rate Waiting timeV ('^00 ton) (ton/day) (day) X ,/o Project 1994 1,923 600 3,200/13berths 821 201 2000 2,485 700 3,500/12berths >90% 502 wL Project 1994 1,710 600 2,850/15berths 631 OX 2000 1,961 700 2,800/15berths 62X OX 1/ Based on annual availability of 300 days 1 As a percentage of ship service time Cargo Handling Costs 8. Savings in cargo handling costs will follow from increased efficiency in handling container and Ro-Ro traffic as well as from reduced handling costs on incremental unitized cargo which would otherwise be handled as break-bulk cargo. 9. Container Traffic. Container handling in the existing terminal (Mole Tarik) is relatively inefficient in that six or seven movements are required for each container between the quayside and the storage area and between the storage area and movement out of the terminal. With the current congestion in the terminal, a straddle carrier is only able to make 10 movements per hour and the productivity of each shift is only about 60 containers (600 tons). Based on the current situation, the handling of 60 containers requires 36 straddle carrier hours, two gangs per shift (one on board and one in the storage area) and seven hours of quayside crane. Given the improvements currently underway on the Mole de Commerce, efficiency should increase marginally, with each straddle carrier handliiag 60 containers in 30 hours rather than 36 hours. The cost per ton is estimated as follows: DP (net of depreciation) Straddle Carrier 540/hour Quayside Crane 1,000/hour Labor (2 gangs) 6,000/shift For 60 containers or 600 tons: DH 16,200 + 7,000 + 6,000 - DH 29,200 i.e. DH 50 per ton. 10. With the development of the new container terminal, containers will be handled with straddle carriers working in combination with tractor-trailer units. Each straddle carrier would be accompanied by two tractor-trailer units. This will enable straddle carrier movements to be halved (five) for each container while the output per shift will increase from 600 tons to 900 tons due to the use of container gantry cranes. Hence, some 90 containers can be handled - 109 - Annex 12 Page 5 of 7 with six hours of gantry crane, two gangs per shift and 30 hours of straddle carrier/tractor-trailer combinations. The cost per ton is estimated as follows: DH (net of depreciation) Straddle Carrier/two 640/hour Tractor-trailer units Gantry crane 2,000/hour Labor (2 gangs) 6,000/shift For 90 containers or 900 tons: DH 19,200 + 12,000 + 6,000 - DH 37,200 i.e. DH 41 ger ton. 11. Ro-Ro Traffic. For Ro-Ro traffic, similar improvements in efficiency will follow from implementation of the project. At present, cargo handling rates for Ro-Ro trailers are about 2,200 tons per day for loading/unloading and 900 tons per gang-shift in the storage areas. Based on a gang shift cost of DH 3,000, a tractor operating cost of DH 100 per hour and required inputs of three tractors, half a gang in the storage area and a full gang on the quayside, for 900 tons of traffic the cost per ton is as follows: DH 4,500 + 2,100 - DH 6,600 i.e. DH 7.5 per ton In the with project scenario, Ro-Ro traffic handling rates should incre.ise to 2,500 tons per day and the productivity per gang-shift should increase to 1,100 tons. The cost per ton, therefore, is reduced to DH 6 Rer ton. 12. General Cargo Traffic. For conventional general cargo traffic, the current throughput is about 75 cons per gang-shift. Two gangs are required, one on the quayside and another in the storage areas, three fork-lift trucks and a 6-ton quayside crane. The costs are as follows: DH (net of depreciation) Fork-lifts 70/hour Crane 400/hour Labor (2 gangs) 6,000/shift For 75 tons, the cost is DH 6,000 + 1,500 + 2,800 - DH 10,300 or DH 140 Rer ton. However, a cost of DH 120 Der ton has been adopted for the economic analysis, in order to take into account expected improvements in productivity. Cargo Handling Costs in Foreign Ports 13. Through increased unitization of general cargo traffic, the project will also provide savings in cargo handling costs in foreign ports. These savings are based on current tariffs in representative foreign ports, which are about DH 180 per ton for conventional cargo, and about DH 130 per ton for container cargo. Only 501 of the corresponding benefits are assumed to accrue to the Moroccan economy. - 110 - Annex 12 Page 6 of 7 Project Costs 14. The project provides for a phased program of improvements involving the construction of a 350-meter quay which would be sufficient to accommodate traffic growth beyond the year 2000. However, the quay could be extended by a further 150 meters in the longer term. The related earthworks and storage areas would be implemented in several phases, the first phase involving an area of about 20 hectares. An extension of the storage areas to provide an additional 10 hectares would be undertaken in 1997. For the economic evaluation, project costs include 50% of the cost of the road bridge proposed at Gate 4. Table 4 summarizes the civil works costs which amount to DH 353 million net-of-tax. 15. A container gantry crane has recently been ordered by ODEP for delivery in 1990 and will be used on the existing terminal. Procurement of a mobile crane is planned for late 1990 and will be used on the temporary extension of the existing terminal located on the Mole de Commerce. In the without project scenario, a further mobile crane would be required in the medium term. With the proposed new terminal, two container gantry cranes would be procured in 1993 for operation on the new terminal. The mobile crane would also be allocated to the new terminal. The net-of-tax unit costs used in the evaluation are DH 40 million for a gantry crane and DH 16 million for a mobile crane. 16. Requirements for supporting yard equipment are based on the current technology used in the Port of Casablanca which involves the use of straddle carriers. However, in order to provide a more efficient operation, tractor- trailer units would be used in combination with the straddle carriers. Of the eight existing straddle carriers, six will be retired in the next two or three years when nine new units, currently on order, are delivered. A further four straddle carriers will be required in 1993 providing an overall total of 15 units which will be adequate to handle traffic through 1997. The straddle carriers would operate with a total of 19 tractor-trailer units. Because of the generally inefficient operation on the existing terminal, six new straddle carriers would be required in the without project scenario in 1993, in addition to the existing order for nine units. An additional four straddle carriers and eight tractor- trailer units would be required in 1997 in order to handle traffic up to the year 2000. The net-of-tax unit costs used in the evaluation are DH 4.5 million for a straddle carrier and DH 300,000 for a tractor-trailer unit. Cost Benefit Analysis 17. Table 5 summarizes the calculation of ship costs and cargo handling costs in 1994 and 2000 while Table 6 shows the 20-year cost-benefit stream. Residual values have been allowed at the end of the evaluation period on the basic infrastructure (quay wall, earthworks and dredging). For equipment, appropriate renewal costs have been included in the cost stream based on a 10 year life for straddle carriers and tractor-trailer units. Project benefits have been held constant from the year 2000 onwards which corresponds approximately to the capacity of the terminal under the initial phase. The estimated ER is 19X. Even with a 20% increase in costs combined with a 20% decrease in benefits, the ER would still exceed 12%. - 111 - Annex 12 Page 7 of 7 IV. Cereals Silo General 18. At the present time, only the ports of Casablanca and Safi are equipped with cereals silos, the respective capaciti-i being 70,000 tons and 24,000 tons. Casablanca normally handles about 1 million tons of cereals annually and Safi about 200,000 tons, equivalent respectively to about 50% and 10 of total imports of cereals. The remainder of the traffic - about 800,000 tons - is spread fairly evenly among four other ports, namely Agadir, Tangier, Jorf Lasfar and Nador. None of the ports are able to accommodate the large 60,000 ton bulk cereals carriers and hence sea freight rates are high. In fact, the ports of Casablanca and Safi, although equipped with silos, are only able to handle ships in the range of 30,000 tons. In addition, port handling costs are high where no silos exist and there are additional distribution and ship waiting time costs associated with the concentration of traffic in the port of Casablanca. Agadir Silo 19. The investment in the Agadir cereals silo will provide sea freight savings of about US$8 per ton on an expected annual throughput which would gtadually rise to about 500,000 tons, an increase of 280,000 tons over the current traffic. In addition, handling cost savings of about US$2 per ton would be achieved on the existing Agadir cereals traffic of 200,000 tons per year as well as on some 200,000 tons of cereals which would otherwise transit through Jorf Lasfar. The handling cost savings represent the avoided cost of operating front-end loaders, each handling rome 30 tons per hour with a direct operating cost of DH 500 per hour. Finally, in capturing some 180,000 tons of traffic from Jorf Lasfar and some 100,000 tons from Safi, primarily for distribution in the southern part of the country, the silo would provide savings in land distribution costs on at least half of this traffic, estimated at about US$7 per ton. This is based on an average distance saving of about 150km and a direct truck operating cost of US 50 cents per ton-km (DH 0.4 per ton-km). Based on these benefits and on a silo cost of about DH 90 million net-of-tax, the ER of the Agadir silo is estimated in the range of 35 to 40%. - 112 -Annex 12 Table 1 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Growth of Foreign Trade ('000 tons) PRODUITS IHPORTES A C SUI L GRO VRACS/HO11OGEN1S 1983 1a 198 1887 2IM Z:00 1983-87 1988-93-19-94-2000 VRACS/HOMLGENES BLE / MAIS 1858 2500 2042 1475 2085 2192 2350 2.68 1,00 1.00 SOUPRE 1349 1418 1469 1672 2003 2100 2100 11.61 0.00 0.00 PDT ENERGETIQUES 4623 4955 5684 5542 6108 7203 8970 7.21 3.00 3.00 H9ILES VEGETALES 165 172 212 238 184 220 270 2.78 3.00 3.00 SUCRES 248 283 238 297 297 365 464 4.61 3.50 3.50 ENGRAIS 285 367 338 463 348 440 579 5.12 4.00 4.00 S/TOTAL VRACS 8528 9785 9003 9687 11095 12610 14733 6.80 2.63 2.25 DIVERS BATEAUX 4 24 32 25 16 16 18 0.00 0.00 0.00 DIV ROULARTS 24 14 20 22 25 27 30 1.03 1.00 2.00 VEHICULES TOURISME 12 0 _ 9 9 10 J -6.94 1.00 2.00 S/TOTAL ROULANT 36 23 29 32 34 37 41 -1.42 1.00 2.00 BOIS GRUMES 105 128 123 119 160 214 230 11.10 5.00 1.00 FER / RAILS 385 317 128 80 96 06 96 -29.34 0.00 0.00 TOLES/FEUILLARDS 130 146 160 137 161 204 268 5.49 4.00 4.00 PATE A PAPIER 28 23 24 25 23 24 28 -4.80 1.00 2.00 LIANTS/CIMENTS 32 30 35 38 40 54 71 5.74 5.00 4.00 PROD CHINIQUES 110 113 133 130 149 7.88 BILLETTES 194 356 _J7 413 501 634 834 26.80 4.00 4.00 S/TOT NON UNITARISABLE 984 1113 1081 942 1130 1226 1527 3.52 1.37 3.18 BOIS 212 265 246 229 367 492 692 14.71 5.00 5.00 PDTS LAITIERS 30 23 24 28 27 30 37 -2.60 2.00 3.00 CAPE/THE/TABAC 38 47 42 49 54 64 79 9.18 3.00 3.00 AUTRES ALIMENTS 109 165 124 190 186 235 310 14.29 4.00 4.00 GRAINES/FRUITS 35 30 51 18 39 47 57 2.74 3.00 3.00 LAINE/COTON/FIMRES 35 31 34 38 43 i58 81 5.28 5.00 5.00 PDTS BAUTS VEGETAUJX 66 65 67 75 80 101 133 4.93 4.00 4.00 FIBRES SYNTHETIQUES 25 25 26 26 30 40 53 4.66 5.00 4.00 DIV.BRUTS/MINERALE 79 74 80 76 81 110 135 0.63 3.00 3.00 PDTS CHIMIQUES 110 113 133 130 149 189 232 7.88 4.00 3.00 HAT. PLASTIQUES 61 58 73 76 81 115 162 7.35 6.00 5.00 PAPIER/CARTONS 60 84 84 78 94 112 138 11.88 3.00 3.00 FILS/FIBRES 16 18 20 20 19 25 36 4.39 5.00 5.00 PRDTS EQUIPMEMENT 109 132 198 90 80 90 103 -7.44 2.00 2.00 PDTS FINlS CONSOMMABLES 48 51 56 57 79 106 149 13.27 5.00 5.00 f0wES TERRE 27 25 37 _32 28 30 __2 0.01 1.00 1.00 S/TOT UNITARISABLE 1060 1206 1295 1212 1437 1844 2429 7.90 4.11 4.02 TOTAL DIVERS 2084 2366 2437 2211 2617 3123 4013 5.75 3.10 3.65 TOTAL GENERAL 10612 12151 12420 11898 13712 15717 18790 6.62 2.30 2.54 PRODUITS EXPORTES VRACS PHOSPHATES 13976 14951 14790 13696 13060 13060 13060 -1.68 0.00 0.00 AUTRES PDTS MINERAUX 1067 1360 1265 1016 1058 1123 1204 -0.21 1.00 1.00 ENGRAJS 807 545 776 702 705 705 705 -3.32 0.00 0.00 PLOMB 56 72 85 60 35 35 35 -11.78 0.00 0.00 ACIDE PHOSPHORIQUE 871 1088 027 1068 1409 1409 1983 12.78 0.00 5.00 PDTS ENERG/LUBRIFIANTS 324 396 362 373 402 539 758 5.54 5.00 5.00 S/TOT VRh._ 17101 18412 18205 16915 16669 16871 17745 -0.64 0.20 0.72 AGRUIMESPRIMEURS 662 670 717 757 762 858 986 3.58 2.00 2.00 DIVERS PATE / PAPIER 63 67 61 SI 853 6.48 5.00 5.00 S/TOT NON UNITARISABLE 63 67 61 78 81 109 153 6.48 5.00 5.00 DEI PDTS DIVERS 46 41 43 47 67 g0 126 9.86 5.00 5.00 LEGUMES SECS 10 12 17 32 14 17 21 8.78 3.00 3.00 PDTS ALIMENTAIRES 539 403 411 396 379 379 379 -8.43 0.00 0.00 PROD BRUST AN/VEGE 63 44 52 52 52 52 52 -4.68 0.00 0.00 PRDTS FINIS EQUIR4 35 5 7 40 25 25 25 -8.07 0.00 0.00 POTS FINIS CONS 37 38 43 47 74 140 18.92 5.00 5.00 S/TOT UtITARISABLE i3i 633 573 614 611 662 743 -4.35 1.34 1.66 S/TOT DIVERS 793 700 634 692 692 771 896 -3.35 1.80 2.17 TOTAL GENERAL 18556 19782 19556 18364 18123 18500 19627 -0.59 0.34 0.85 Source: Office des Changes and mission estimates KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT CEREALS TRAFFIC BY PORT: 1978-88 L/ (tons) Y13ARS CASAB CNA muF JOBP T.SF TAGEG NADR AGADIR 1978 1,686,728 222,820 - 91,324 - 90,652 2,091,524 1979 1,606,440 234,741 - 118,565 - 90,456 2,050,202 1980 1,733,896 240,570 - 118,787 - 96,573 2,189,826 1981 2,727,489 352,574 - 215,771 52,845 136,657 3,485,336 1982 1,599,501 291,724 92,212 157,772 113,777 90,607 2,345,593 1983 1,021,124 205,326 299,083 204,650 125,280 103,549 1,959,012 1984 1,439,256 316,704 450,417 197,060 255,256 201,788 2,860,481 H 1985 1,279,650 214,561 93,373 215,339 189,768 178,424 2,171,115 ' 1986 984,889 137,955 116,982 141,297 172,183 186,465 1,739,771 1987 1,199,567 265,479 190,457 206,989 226,659 215,263 2,304,414 1988 997,939 193,432 127,441 176,061 283,867 220,987 1,999,727 Average 2982-88 1,217,000 232,000 196,000 186,000 195,000 171,000 2,197,000 / Figures are slightly higher than Foreign Trade Statistics due to inclusion of coastal traffic. Source: ODEP - 114 - Annex 12 Table 3 KINGDOM OF MOROCCO STAFT APPRAISAL REPORT PORT SECTOR PROJECT Forecast of Unitized Traffic: Casablanca ('000 tons) 1987 1994 2000 Annual Rate A. Without Proiect Total Unitized Traffic 1,007 1,230 1,400 2.6X of which Container Ships 695 849 966 2.6X Ro-Ro Containers 141 172 196 2.6X Ro-Ro Trailers 171 209 238 2.61 Conventional Traffic Differential - 213 524 Number of Containers Full 64,293 78,531 89,385 2.6X Empty 29,930 36,392 41,662 2.6X Number of Trailers Full 9,511 11,617 13,222 2.6X Empty 601 728 14,058 2.6X Total Number of Containers 94,223 114,923 132,047 2.61 Total Number of Trailers 10,111 12,343 14,058 2.61 B. With Proiect Total Unitized Traffic 1,007 1,443 1,924 5.1% of which Container Ships 695 1,039 1,443 5.81 Ro-Ro Containers 141 202 250 4.51 Ro-Ro Trailers 171 202 231 2.31 Number of Containers Full 64,293 95,460 130,240 5.61 Empty 29,930 44,230 60,705 5.61 Number of Trailers Full 9,511 11,223 12,827 2.3X Empty 601 701 811 2.31 Total Number of Containers 94,223 139,698 190,945 5.61 Total Number of Trailers 10,111 11,925 13,638 2.31 - 115 A Table 4 KINGDON OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Casablanca Container Terminal: Civil Works Costs - Phase 1 Infrastructure Units Unit Cost(DH) Quantities Total costs (DH '000) Mobilization 10,000,000 1 10,000 Removal of wreck - 20,000,000 1 20,000 Dredging - normal m3 30 875,000 26,250 - rock m3 600 55,000 33,000 Earthworks m3 30 4,800,000 144,000 Quaywall-12 m. linear meter 140,000 350 49,000 Ro-Ro Ramp - 12,000,000 1 12,000 Access roads - 13,350,000 1 13,350 Rail Access - 22,000,000 1 22,000 Protection - 30,000,000 1 30.000 Sub-Total Infrastructure 359,600 SuDerstructure Paving m2 300 220,000 66,000 Drainage linear meter 1,200 2,000 2,400 Water linear meter 900 4,000 3,600 Electricity linear meter 2,250 1,600 3,600 Buildings m2 1,500 600 900 C.F.S Station m2 1,100 16,000 17,600 Container shed m2 1,000 10,000 10,000 Enclosure linear meter 1,000 2,000 2.000 Sub-total Superstructure 106,000 Total Civil Works 465.60 Source: CATRAM Consultants KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Casablanca Container Terminal: Estimates of Ship Costs and Cargo Handling Costs: 1994 and 2000 (US$ '000) With Project Without Project 1994 2122o4 20 Total Unitized Traffic (O0Otons) 1,443 1,924 1,230 1,400 - Containers 1,039 1,443 849 966 - Containers on Ro-Ro 202 250 172 196 I.A - Ro-Ro Trailers 202 231 209 238 Conventional General Cargo (000tons) 1,710 1,961 1,923 2,485 Ship Service Time 15,988 16,840 17,518 19,557 Ship Waiting Time (general cargo) - - 2,885 7,990 Additional Cargo Handling Foreign Ports 1/ * 1,331 3,275 Cargo Handling Casablanca: - Containers 5,325 7,395 5,304 6,038 - Container on Ro-Ro 152 188 161 184 - Ro-Ro Trailers 152 173 196 223 - General Cargo - - 3,195 7,860 tn Calculated on incremental unitized cargo otherwise handled as conventional general cargo in without project scenario, namely 213,000 tons in 1984 and 524,000 tons in 1994. KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Casablanca Container Terminal: Cost-Benefit Analysis (US$ '000) 1994 2000 1991 1992 1993 1994 1905 1096 1997 1998 1909 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Ship Service 1530 2717 752 1148 1296 1444 1593 1741 1889 2038 2038 2038 2038 2038 2038 2038 2038 2038 2038 2038 2038 2038 2038 Ship Wa.t1*s 2885 7990 752 2164 2564 3039 3601 4267 5057 5993 93 5993 5993 5993 5993 53 5993 5993 5993 5993 5993 5993 5993 Cargo Toreipn 1331 3275 502 866 777 899 1044 1213 1410 1638 1638 1638 1638 1638 1638 1838 1638 1638 1638 1638 1638 1638 1638 CaZro Camabluaoa 3227 6549 1002 3227 3782 4336 4889 5442 5995 6549 6549 6549 6549 6549 6549 654 9 6549 8549 6549 6549 6549 6549 6549 7205 8419 9718 11127 12663 14351 16216 16218 16218 16218 16218 16218 16218 16218 16218 16218 16218 16218 16218 16218 gum:~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~f- Infrastructure with project 1698S 14307 11177 - - - 3000 - - - - - - - - - - -17041 witbout pSojeot - - 178 - - - - - - - - - - - - - - - - - - - - 2qupenmt: with project 6647 - 12200 - - - 3177 - 4785 - 2788 - - 3177 - - 4765 - 2788 witbout project 6647 - 3177 - - - 317 - - 4765 - 3177 - - 3277 - - - 4765 - 3177 Not Costs 16986 14307 18412 - - 3000 - - - - -389 - - - - - - - - - -17430 vat Denefits -16988 -14307 -18412 7205 8419 9718 8127 12663 14351 16218 16218 16218 16607 16218 16218 16218 16218 16218 16218 26216 16218 16218 33648 Rot Present Value at 15S - USS13 Million UR - 192 - 118 - AnneU 13 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT ORT NECTOR PROJECT Past Financial Statements 1. This Annex gives ODEP's detailed financial statements for the period 1985-1989. The financial projections for the period 1990-1995 are given in Annex 14 together with the assumptions made for presenting the tables and establishing the financial projections. Income Statements 2. Despite ODEP's inheritance of a quite difficult financial situation from the former RAPC, it has performed satisfactorily during the period 1985- 1989. 3. Total operating revenues net of taxes increased from DH 530 million in 1985 to DH 807 million in 1989, reflecting an increase of about 7% in traffic and an increase of about 5% in tariffs in 1987. About 92% of the revenues consist of cargo h.ndling, port dues and wharfage, the remaining 8% consist of minor services. 4. Total operating expenses including maintenance salaries and ,depreciation increased from DH 504 million in 1985 to DH 717 million in 1989, a 42X increase over the period 1985-1989. Staff efficiency improved during the same period. While salaries represent the major operating expense along with maintenance and depreciation, they have declined from about 34% to 30% of revenues. Depreciation is in line with the current assets structure. 5. Reflecting the overall operation performance the working ratio went down from 69% to 67% and the net operating income over revenues had been kept at about 7%. Balance Sheets and Sources and ApDlication of Funds 6. The financial structure of ODEP has been sound during the period. ODEP has generated sufficient cash to cover its debt service and its increase in working capital. The net cash generation covered about 36% of the total capital expenditure over the period 1985-1989. The Balance Sheets analysis shows that ODEP has fulfilled its financial covenants in terms of rate of return on net fixed assets and debt service coverage which were 8.8% and 4.0 respectively in 1989 compared to targetsi of 7.5% and 1.4 respectively. In aedition, ODEP has improved its account receivable which decreased from 112 to 54 days of billing in 1989, and had kept its debt ratio at about 32%. - 119 - Anne:x 13 Table 1 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Income Statements (Millions DH) 198! 1°,86 1987 1988 1989 . --...........actual… ............................ ) REVENUES Handlirng - NT - 373.55 384.86 425.36 487.23 508.9? Services to Ships - NT 35.24 22.37 22.55 25.08 26.68 Fish Market - HT - 12.59 14.50 17.92 21.51 23.23 Ship-Yard - HT - 4.38 4.63 4.34 5.49 5.76 Wharfage (use of infrastructure) - HT - 100.99 151.99 167.71 217.17 222.59 Water & Electricity - HT - 3.044 7.02 13.86 17.95 17.54 Taxes 60.24 99.22 120.52 141.23 150.27 -- - -- -- .. .. ..... . ._ . _._ TOTAL REVENUES 590.03 684.59 772.26 915.66 957.13 WORKING EXPENSES Inventory Increases (decreases) -1.48 -3.10 -6.40 -9.,9 -6.10 Naterials & Maintenance 40.88 54.31 37.04 46.25 45.99 External Work, Supply, Services 114.12 105.70 106.17 105.94 129.32 Transport & Traveling 1.20 2.04 2.34 1.76 3.24 Administrative Expenses 4.70 4.96 9.29 16.21 16.56 Interests & Commissions Current Acc. 1.25 2.41 2.12 2.68 0.64 Property Fees (royalty) 40.48 40.23 44.60 42.42 42.42 sotal Working Expenses 201.15 206.55 195.16 205.47 232.07 Added Value 388.88 478.04 577.10 710.19 725.06 wages 180.86 207.52 210.41 233.27 245.79 Taxes 25.19 109.73 131.98 153.37 16.44 . ._ -- -- -- -- .. .. ...... Operat. inc. before Dep. 182.83 160.79 234.71 323.55 314.83 Depreciation 100.08 113.26 154.25 185.68 182.91 Provisions 22.09 13.19 16.72 57.82 56.58 ~~~~_. _..... ...... ------ ...... . .. ... ..... Operating Income 60.66 34.34 63.74 80.05 75.34 Interest 11.21 20.35 33.84 26.65 35.68 Interest Income 15.00 13.00 14.33 13.88 21.46 ......... ------ . ........ ...... ...... ....... Net Operating Income 64.45 26.99 U.23 67.28 61.12 Non Operating Profits 14.00 55.68 37.62 50.79 17.22 Non Operating Losses 72.24 72.86 75.24 88.65 93.92 _ _ _ _ ...... ...... ---- ...... Net Income before Taxes 6.21 9.81 6.61 29.42 -15.58 Income Taxes 2.97 7.76 5.55 10.27 15.80 -- -_ .. .. _._._._ ... . Net Income after Taxes 3.24 2.05 1.06 19.15 -31.38 Retained Earnings 3.24 5.29 6.35 25.50 -5.88 RATIOS Working Ratio (X) 69.01 76.51 69.61 64.66 67.11 Operating Ratio (X) 89.72 94.98 91.75 91.26 92.13 Net Income/Revenues (Z) 0.55 0.30 0.14 2.09 -3.28 Operating Income/Revenues (X) 10.28 5.02 8.25 8.74 7.87 Average Depreciation (X) 15.68 16.62 12.80 13.77 11.41 - 120 - Annex 13 Table 2 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Balance Sheet (Millions DH) im 1986 198 1988 989 (…------actual- ...................- ) ASSETS Fixed Assets rganrization Expenses 8.54 16.48 0.00 0.00 Gross Fixed Assets 638.14 681.66 1204.84 1348.32 1603.07 Less: Accumlated Depreciation 99.82 208.64 320.29 489.55 663.55 Net Fixed Assets In Operation 546.86 489.50 884.55 858.77 939.52 Assets under Construction 90.01 220.95 91.88 138.32 171.37 Other Assets 30.11 39.50 228.25 333.04 449.75 ...... ...... ---- .. ... .. .. Total Met Fixed Assets 666.98 749.95 1204.68 1330.13 1560.64 Current Assets Inventories 14.35 17.46 19.45 32.25 39.29 Receivables 180.46 207.39 213.81 134.65 141.73 Other Receivables 285.11 254.42 127.32 281.62 266.23 Cash 128.73 112.45 51.17 37.76 80.00 ~~~~....... ....... ---- .... ... Total Current Assets Less Cash 479.92 479.27 360.58 448.52 47.25 Totat Current Assets 608.65 591.72 411.75 486.28 527.25 ...... . ....... ....... ..------.. ....... . .......... .. TOTAL ASSETS 1275.63 1341.67 1616.43 1816.41 2087.89 fl... ur.. u..= su.. ..m EQUITY & LIABILITIES Capital (transfer/RAPC) U7.06 451.4 451.15 451.15 522.21 doverrment Contribution 150.82 150.82 149.93 149.58 149.58 Retained Earning 3.25 5.29 6.35 25.51 -5.88 -- -- --- -- -.. ..... -- - - . - - - Total Equity 601.13 607.57 607.43 626.24 665.91 RESERVES 129.33 179.25 225.18 252.25 291.87 Long Teom Debt Previous Loans 109.56 88.07 239.85 376.19 413.35 New Loans 27.95 47.34 Other Loans 5.79 5.79 5.79 5.87 Total Lon Term Debt 143.30 93.86 292.98 382.06 413.35 Current Liabilities Suppliers 43.70 89.54 95.36 67.07 109.98 Payable 0.75 0.91 1.06 3.13 Other Payable 88.47 109.30 112.75 111.68 241.54 Other Liabilities 172.05 172.40 122.32 175.66 133.95 Property Fees 0.00 60.4 105.06 147.48 187.90 Long Term Naturities 96.90 28.38 29.65 35.12 41.47 Overdraft 0.00 0.00 24.64 15.72 1.92 Total Current Liabilities 401.87 460.99 49Q.e4 555.86 716.76 . . . . ............ _.... . - - - - .... . TOTAL EWUITY & LIABILITIES 1275.63 1341.67 If i6.43 1816.41 2087.89 RATIOS Current Ratio 1.51 1.28 0.84 0.87 0.75 Accotmt Receivable (on day of billing) 111.63 110.57 101.05 53.67 54.05 Debt/Debt & Equity (X) 24.75 13.45 27.93 32.20 32.20 Total Fixed Aets/Total Debt (2) 133.56 162.68 165.44 158.50 157.01 Rate of Returm (M) 13.30 12.10 11.30 10.60 8.84 Debt/Equity (2) 32.88 15.54 38.75 47.49 47.49 - 121 - Annex13 Table 3 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Sources & Apolications of Funds - (Millions DH) 198 12ffi 1987 1988 1989 ( ................-actual---------------. -----) SOURCES Income before Interest 17.42 30.16 40.45 56.07 20.10 Plus Depreciation 100.08 113.26 154.25 185.68 182.91 Ninus Incore Taxes -2.97 -7.76 -5.55 -10.27 -15.80 Ninus Dividends 0.00 0.00 0.00 0.00 0.00 Internat Cash Generation 114.53 135.66 189.15 231.48 187.21 Less Debt Service Amortization 11.30 36.60 20.09 29.65 33.95 Interest 11.21 20.35 33.84 26.65 35.68 increase (decrease) in Working Capital 174.95 -128.29 -147.27 28.39 -15S.82 Net Internal Cash Generation -82.93 207.00 282.49 146.79 273.40 Equity Variation 72.21 54.32 44.73 26.72 110.68 Borrowings 240.20 0.00 161.15 118.73 71.52 other Sources 11.30 -86.20 58.06 5.47 TOTAL SOURCES 895.78 175.12 546.43 297.71 455.60 APPLICATIONS Investments 766.80 191.79 423.80 308.58 287.81 Others Assets Variation 0.26 183.92 2.83 125.55 ------ ~~.. ... ..... .... .. .... TOTAL APPLICATIONS 767.06 191.79 607.72 311.41 413.35 Cash Increas Decrease 128.7Z -16.67 -61.29 -13.70 42.24 Cash Beginning of Year 0.00 128.73 112.45 51.17 37.76 Cash End of Year 128.73 112.45 51.17 37.76 80.00 RATIOS Debt Service Coverag -1.06 4.89 S.98 2.64 4.14 Capital Expenditure X Net Internal Sources Annual -10.81 107.93 66.66 47.57 66.14 Three-year average -25.95 39.64 76.29 37.38 90.60 - 122 - Annex 14 Page 1 of 3 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT AssuMDtions and Financial Projections Inflation 1. It is assumed that the annual local inflation related to the increase in consumer prices will be 6.2X in 1990, 5.61 in 1991, 5.4X in 1992, 4.4X in 1993, 4.91 in 1994 and 5.51 in 1995. Annual foreign price increases are estimated at 4.11 in 1990, 5.31 in 1991, 5.4X in 1992, 5.41 in 1993, 5.21 in 1994 and 5.31 in 1995. The exchange rate in December 1989 was about DH 8.25 per US Dollar, It is expected that the exchange rate will remain constant thereafter. Financial Forecasts 2. ODEP's main financial statements, Income Statements, Balance Sheets, Sources and Application of Funds, global sector accounts are summarized in Tables 5.1 to 5.6 and Table 5.9 in Chapter 5. Detailed statements are included in this Annex (Tables 1 to 3). Additional tables regarding tariffs, traffic forecasts, investment plan, financing plan, depreciation, fixed assets valuation and calculation of port fee are available in the Project File. Summary financial projections on the proposed new facilities (Casablanca container terminal and Jorf Lasfar coal handling facility) are presented in Tables 5.7 and 5.8 in Chapter 5. Details are given in the present Annex (Tables 4 and 5). Traffic Progections 3. Traffic data used in financial analysis are derived from the CATRAM feasibility study (Project File Document No. B.1). General cargo traffic is estimated to inc.rease by about 31 per year through the year 2000. Unitized goods are forecast to increase by about 5X per year for the same period. Phosphate traffic is kept at its 1987 level from 1989 to 1991 and would increase by 11 thereafter. Revenues 4. ODEP's revenues are forecast on the basis of the proposed new tariff structure to be implemented from beginning of 1991 for port dues on ships and from March 1991 for containers handling charges. Revenues related to fishing activities in ports transferred recently to ODEP, lease of coal handling facilities at Jorf Lasfar and those related to the lease of facilities for pleasure craft are not included in the financial forecasts. The related revenues would be minor part of ODEP's activity and the related cost recovery policy has - 123 - Annex 14 Page 2 of 3 not yet been defined. ODEP will carry out a cost recovery study for these activities as part of its Development Program. Operational ExRenses 5. Materials and external services represent respectively about 3X and 61 of gross fixed assets in operation. Maintenance cost of the existing facilities is estimated at 11 of their current value. Transport expenses are projected to increase at 31 per year and administrative expenses at 21 per year. Wages increase is estimated at annual inflation rate. It is assumed that the number of employees will decrease by about 910 staff over five years, new recruitment being limited to management staff. Fee to be Paid by ODEP to the Government 6. ODEP will pay the Government a fee based on its use of infrastructure which will remain in the public domain. Government assets were revalued for fee calculation in 1985. Investments carried out by ODEP to rehabilitate and/or extend public property have been deducted from total public property. The net value of these assets at end-1991 are assumed to be transferred to ODEP and will be maintained and depreciated accordingly. The part of the infrastructure costs apportioned to ODEP is assumed to be equivalent to 151 of the Government gross fixed assets. The aggregate amount of port fees payable to the Government will be: 5% of the net revalued Government assets apportioned to ODEP, 1.25X of the total government gross fixed assets apportioned to ODEP and annual depreciation of the said assets. The level of the fee enables the cost of dredging and maintenance work on breakwaters undertaken by the Government to be adequately covered. Bad Debt 7. A provision for doubtful debts of 51 of total revenues has been used over the 1990-1995 period. DeRreciation 8. ODEP's average depreciation rate is high. It reflects fixed assets historically composed mainly of equipment. This average is expected to decrease from 12% to 71 with the investments entering in operation and the transfer of public property to ODEP. Interest 9. New investments are assumed to be financed by loans at an interest rate of about 7.51 per year with a repayment period of 20 years including a grace period of five years. Financing will cover about 451 of the total investment program. - 124 - &Aex 14 Page 3 of 3 Balance Sheets 10. Inventories are assumed to be equal to 501 or six months of materials expenses and supplies from lQ90 to 1992 and will decrease to three months thereafter. Account receivables are assumed reduced from 4.5 months of billing in 1988 to 2.5 months in 1990 and forty five days by the end of the period. This assumes improvements in the billing and collection system. Other receivables are forecast to amount to approximately 10X of operational expenses and investments from 1990 to 1992 and 5 thereafter. Suppliers are assumed at two months of investment and operating expenses in 1990 decreasing to one month in 1993. Other payables are assumed to be one month of operating expenses and 51 of the total investment and operating expenses after adjustment of previous RAPC accounts and unpaid taxes and penalties due to Government. A&ssets and Debt Revaluation 11. Revaluation methods based on local inflation rate and or variation in exchange rates to update the value of fixed assets has been done annually to calculate the rate of return on net fixed assets in operation. ODEP has agreed to carry out a formal inventory and an informal revaluation every year in order to determine tariff adjustments to meet the rate of return and debt service requirements. Foreign debt will be revalued in line with the expected changes in the US Dollar-Dirham exchange rate. Sensitivity Analysis 12. A sensitivity analysis to test the financial objectives indicates that rates of return and debt service coverage ratios are sensitive to changes in revenues as shown Table 6 of this Annex. Traffic developments and their impact on revenues will therefore be closely monitored during project implementatior. with a view to maintaining an appropriate financial rate of return and debt service coverage ratio. - 125 - AnnexA14 Table 1 KINGDOM OF MOROCCO STA=F APPRAISAL REPORT PORT SECTOR PROJECT Income Statements (Millions DHI MD 19I 1299 1993 1°4 1995 estim. (.................forecast-------------------) REVENUES HNtdling - NT - 520.14 576.04 628.32 703.72 727.24 753.38 Services to Ships - NT - 26.09 26.62 28.61 29.19 29.77 30.36 Fish Narket - HT - 22.82 23.62 25.76 26.67 27.60 28.57 Ship-Yard - HT - 5.63 6.75 7.12 7.12 7.12 7.12 Wharfage & Port Dues - Kr - 224.54 254.51 282.67 293.27 305.16 317.94 Water & Electricity - NT - 18.42 19.34 20.30 21.32 22.39 23.51 Taxes 151.26 167.77 183.66 200.04 207.07 214.76 TOTAL REVENUES 968.90 1074.64 1176.45 1281.32 1326.34 1375.64 WORKING EXPENSES Inventory Increases (decreases) -9.66 1.37 4.26 -18.11 0.71 0.46 Materials & Maintenance 59.2S 61.99 70.50 68.57 71.39 73.25 Extermal Work, Supply, Services 118.50 123.98 141.01 137.14 142.79 146.49 Transport & Traveling 3.34 3.44 3.54 3.65 3.76 3.87 Administrative Expenses 19.38 21.49 23.53 25.63 26.53 27.51 Interests & Comissions Current Acc. 0.67 0.71 0.74 0.78 0.82 0.86 Property Fees (royalty) 42.40 71.14 76.12 81.35 85.09 89.27 Total Working Expeses 233.88 284.11 319.70 299.00 331.07 341.71 Added Value 735.02 790.53 856.75 982.32 995.26 1033.93 Wages 250.85 254.16 2S6.56 256.02 256.16 257.17 Taxes 1Z6 185.91 203.5 2216 229.45 237.98 Operating Income before Deprec. 316.55 350.46 396.67 504.63 509.65 S38.78 Depreciation 136.34 153.65 178.67 204.64 234.52 263.89 Provisions 48.A 53.3 58.8Z 640 66.32 68.78 Operating Income 131.?7 143.08 159.18 235.92 208.81 206.11 Interest 22.30 22.34 22.95 29.60 46.58 69.86 Interest Inco1 e 7.18 2.74 0.85 1.53 4.59 4.13 Net operating Income 116.66 123.48 137.08 207.86 166.83 140.37 mon Operating Profits 4.19 6.41 6.92 6.68 6.43 6.19 Non Operating Losses 23.48 00.00 00.00 00.00 00.00 43.00 Net Incare before Taxes 97.36 129.89 14.00 214.53 173.26 103.56 Income Taxes 3894 51.96 57.60 85.81 69.31 41.42 NMt Inceme after Taxes 58.42 77.93 86.40 128.72 103.96 62.14 Dividends 31.17 34.56 51.49 41.58 24.85 Retained Earnings 52.54 99.30 151.14 228.37 290.75 328.03 RATIOS Working Ratio (X) 67.33 67.39 66.28 60.62 61.57 60.83 Operating Ratio (X) 86.40 86.69 86.47 81.59 84.26 85.02 Net Income/Revenaes (X) 6.03 7.25 7.34 10.05 7.84 4.52 Operating Income/Revenues (X) 13.60 13.31 13.53 18.41 15.74 14.98 Average Depreciation (X) 7.98 8.07 7.49 7.31 7.09 6.80 - 126 Annex 14 Table 2 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Balance Sheet (Millions DH) 19° 1991 1992 1993 1994 1995 estim. t.---------------forecast---------- ) ASSETS Fixed Assets Gross Fixed Assets 1707.88 1903.93 2383.85 2799.23 3308.76 3880.05 Less: Accumulated Depreciation 79.8_9 953.5 t11L21 1336.85 1571.37 1835.26 Net Fixed Assets in Operation 908.00 950.39 1251.64 1462.38 1737.39 2044.79 Assets under Construction 266.46 409.46 633.00 748.41 787.20 475.56 Other Assets 287.36 248.14 204.16 173.53 169.45 163.09 Total Net Fixed Assets 1461.82 1607.99 2088.80 2384.32 2694.04 2683.44 Current Assets inventories 29.63 30.99 35.25 17.14 17.85 18.31 Receivables 201.85 223.88 196.07 213.55 165.99 171.95 Other Receivables 163.44 194.80 222.82 121.56 126.56 142.45 Cash 54.76 16.94 30.59 91.88 82.59 62.73 Total Current Assets Less Cash 394.92 449.67 454.15 352.26 310.20 332.71 Total Current Assets 449.68 466.61 .4 414 392.79 395.45 TOTAL ASSETS 1911.50 2074.61 7 2828.4 3 3078 88 EQUITY & LIASILITIES Capital (transfer/RAPC) 522.21 522.21 522.21 522.21 522.21 522.21 Gover nmt Contribution 149.58 149.58 391.99 391.99 391.99 391.99 Retainmd Earning 2.L4 . 151.14 28.37 290.75 328.03 Total Equity 724.33 771.09 1065.34 1142.58 1204.95 1242.23 RESERVES 257.25 253.38 258.53 263.91 268.67 276.98 Lon Term Debt Previous loans 374.45 342.63 314.97 288.74 266.82 248.19 New loans 113.03 283.75 449.63 651.48 805.57 869.92 Other Loans Total Long Term Debt 487.48 626.38 764.60 940.22 1072.39 1118.11 Current Liabilities Suppiers 81.06 117.11 152.35 109.60 114.56 64.96 Payable Other payable 96.02 112.03 125.19 128.19 134.66 123.68 Other liabilities 59.34 79.49 91.59 124.20 109.29 69.73 Property fees 161.04 71.14 76.12 81.35 85.09 89.27 Long term maturities 44.99 43.99 39.83 38.40 97.22 93.93 overdraft 0.00 0.00 0.00 °-°° - 0° 0.00 Total Current Liabilities 442.45 423.76 485.07 481.74 540.81 441.56 TOTAL EQUITY & LIABILITIES 1LS.5 2074.61 2s7.55 8 3 3078.88 RATIOS Current Ratio 1.02 1.10 1.00 0.92 0.73 0.90 Account Receivable (on day of billing) 76.04 76.04 60.83 60.83 45.63 45.63 Debt/Debt & Equity (X) 35.17 39.55 37.80 41.03 44.25 44.38 Total Fixed Assets/Totat Debt (M) 212.31 220.29 241.41 249.49 253.90 279.26 Rate of Return CX) 9.55 10.37 10.04 11.64 9.43 8.15 Debt/Equity (t) 54.25 65.44 60.76 69.58 79.37 79.78 - 127 - Annex 14 Table 3 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Sources & Applications of Funds - (Millions DHM 1 IM 0 M 1293 199 199 estim. ( -*---------forecast--------------------) SOURCES Income before Interest 119.66 152123 166.95 244.13 219.84 173.43 Plus Depreciation 136.34 153.65 178.67 204.64 234.52 263.89 Hinus Income Taxes -38.94 -51.96 -57.60 -85.81 -69.31 -41.42 Minus Dividends 0.00 -31.17 -34.56 -51.49 -41.58 -24.85 Internal Cash Generation 217.05 222.75 253.46 311.47 343.47 371.04 Less Debt Service Amortization 41.47 44.99 43.9 39.83 38.40 97.22 Interest 41.43 51.89 59.60 67.70 79.46 87.55 Increase (decrease) in Working Capital 2.50 T2.45 -61.00 -100.00 -42.30 118.47 Net Internal Cash Generation -91.34 53.43 210.87 303.94 267.91 67.79 Equity Variation -34.62 -3.86 247.56 5.37 4.77 8.30 Borrowings 119.11 182.89 178.05 214.03 229.39 139.65 TOTAL SWRCES -6.86 232.46 636.49 523.34 502.07 215.74 APPLICATIONS Assets Takeover 242.41 Investments 180.77 309.49 424.40 492.68 515.43 241.96 Other Assets Variations -162.39 -39.22 -43.98 -30.63 -4.08 -6.36 TOTAL APPLICATIONS 18.38 270.28 622.83 462.05 511.36 235.60 Cash Increase Decrease -25.24 -37.82 13.65 61.29 -9.29 -19.86 Cash Beinning of Year 80.00 54.76 16.94 30.59 91.88 82.59 Cash End of Year 54.76 16.94 30.59 91.88 82.59 62.73 RATIOS Debt Service Coverage 0.00 1.45 2.92 3.49 2.09 1.38 Capital Expenditure 2 Net Internal Sources Annual -50.53 17.26 49.69 61.69 51.98 28.02 Three-year average -39.03 17.58 46.68 57.12 66.48 27.23 - 128 - A lmbx 1.4 Table 4 KINGDOM OF MOROCCO STAFF APPRAISAL REOR PORT SECTOR PROJECT Container Terminal: Income Statements - (Million DH) INCOME STATEMENT 1990 1991 199 19 94 1915 1921 1222 REVERUE Maintenance 31.82 99.34 133.99 140.15 146.61 162.92 180.61 199.77 220.52 242.98 Port Dues 1.97 2.83 3.22 3.34 3.47 3.83 4.23 4.66 5.14 5.68 Services 0.72 0.75 0.82 0.85 0.88 0.97 1.07 1.18 1.30 1.44 Infrastructure Fees 2.99 4.15 6.19 10.69 18.43 23.92 27.20 26.60 Q 30.10 .85 TOTAL REVENUES 37.50 107.07 144.21 155.03 169.39 191.64 213.11 232.21 257.07 280.f5 OPERATING EXPENSES Materials 2.67 3.57 4.79 6.89 11.29 13.17 14.38 13.07 14.94 15.18 Services 2.67 3.57 4.79 6.89 11.29 13.1? 14.38 13.07 14.94 15.18 Personnel 8.01 8.46 8.91 _.30M 9.76 10L. 10L. 11.46 12L.0 12I. TOTAL OPERATING 13.34 15.59 18.50 23.08 32.34 36.64 39.62 37.60 41.97 43.11 EXPENSES Depreciation 2.83 4.54 7.17 12.35 22.58 29.19 32.42 32.42 36.85 37.46 Interest Expense 9.05 12.60 18.77 27.68 . MA .35. 33.32 29.98 40.39 TOTAL 25.22 32.74 44.U 63.11 91.57 104.70 107.91 103.35 108.81 120.96 Corporate Taxes 4.91 29.73 39.91 36.77 31.13 34.78 42.08 51.55 59.30 64.00 Net Income 7.37 44.60 59.86 55.15 46.69 52.17 63.12 77.32 88.96 95.99 Net Income after RevaLuation 4.76 41.96 56.81 51.50 42.06 47.36 56.93 71.94 82.03 8?.46 Net Income before Interest 13.81 54.56 75.58 79.18 78.71 86.24 92.79 105.25 112.01 127.85 Accumilated Depreciation 30.20 40.79 55.25 76.40 110.56 134.94 184.96 199.83 259.00 324.66 Net Fixed Assets 95.60 119.57 202.54 390.15 713.68 970.11 1124.53 1143.82 1309.67 1362.15 Average Net Fixed assets 62.43 107.58 161.06 296.35 551.92 841.90 1047.32 1134.17 1226.74 1335.91 Rate of Return 22.13 50.71 46.93 26.71 14.26 10.24 8.86 9.28 9.13 9.57 Operating Ratio 43.12 18.81 17.80 22.86 32.42 34.35 33.81 30.16 30.66 28.68 - 129 1 4 Table 5 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Coal Handling Facility - (Millgon DR) 1992 a2Em am Um am I"? in 9 m ma TOTAL REVENUES 1.23 2.95 12.82 36.29 42.54 43.81 43.74 43.67 43.61 iooorts Quantity (000 tons) 0.75 0.75 1.50 1.50 1.50 1.50 1.50 Revenue per Ton (0N) 17.09 48.38 29.21 29.21 29.16 29.12 29.07 S Equivalent 2.01 5.69 3.34 3.44 3.43 3.43 3.42 OPERATING EXPENSES Materials 0.10 0.11 1.09 5.00 5.73 5.89 5.89 5.89 5.89 Services 0.10 0.11 1.70 8.04 9.05 9.20 9.20 9.20 9.20 Personnel 0.41 0.43 0.45 0.47 0.50 0.53 0.56 0.59 0.62 Depreciation 0.41 0.43 2.24 9.33 11.34 11.96 11.96 11.96 11.96 Interest Expense 0.21 1.88 7.34 13.45 15.92 16.23 16.13 16.03 15.93 TOTAL 1.23 2.9f 12.82 36.29 42.54 43.81 43.74 43.67 43.61 - 130 - Annex -14 Table 6 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Sensitivity Analysis 1990 1991 i 199 1993 22 1995 Base Case Rate of Return 7.8 8.5 7.0 9.4 7.5 6.4 Debt Service Coverage 0.0 1.5 2.9 3.5 2.1 1.4 75% of Base Case Tariff Base Case Traffic Rate of Return 7.8 7.7 5.6 6.1 3.9 2.6 Debt Service Coverage 0.0 1.4 2.8 3.2 1.8 1.3 75X of Base Case Tariff Constant Traffic Rate of Return 7.8 8.3 6.7 7.6 5.6 4.5 Debt Service Coverage 0.0 1.4 2.9 3.3 2.0 1.2 Base Case Tariff Constant Traffic Rate of Return 7.8 7.7 5.5 7.2 4.8 3.4 Debt Service Coverage 0.0 1.4 2.8 3.3 1.9 1.2 - 131 - Anneg 1S Page 1 of 2 KINGDOM OF MOR0CCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT List of Prodect File Documents A. Selected ReDorts and Studies Related to the Sector A.1. SAR Highway Sector Project, January 8, 1990 A.2. Transport Sector Public Investment Review, World Bank, December 1987 A.3. Etude du schema directeur National des transports, Dar El Handasah, January 1990 A.4. Morocco Trade Expansion Program, Draft Report, World Bank, November 1989 A.S. Administration et organisation portuaire: une experience interessante au Maroc, Jean Chapon, UNCTAD, June 1989 B. Selected Peports and Studies Related to the Project B.l. Etudes de factibilite li6es a la pr4paration d'un eventuel projet portuaire, CATRAM, January 1990 B.2. Contrat Programme Etat-ODEP 1991-1993 (second draft), ODEP, November 1990 B.3. Expertise des impacts sur l'environnement marin, Mission Reports, Christian Brossard, November 1989 and February 1990 B.4. ODEP's investment Plan 1990-1994, January, 1990 B.5. Amelioration de la qualite de service, Plan d'Actions 1990-1994, ODEP, December 1989 B.6. Bidding documents for the construction of the new container terminal in the port of Casablanca, CID-BCEOM, August 1990 B.7. Technical Studies related to the Casablanca Container Terminal (a) Etude d'agitation sur modele math6matique, LPEE, March 1990 (b) Etude de stabilit6 en canal a houle du cavalier, LPEE, February 1990 (c) Recherche de materiaux, LPEE, January 1990 (d) Etude G6otechnique, LPEE, August 1990 (e) Analyse de vase au nouveau terminal a conteneurs, LPEE, August 1990 B.8. TOR Etude des actions de modernisation, (dredging study), Soci6t6 de dragage des ports, DRAPOR, July 1990 B.9. TOR for updating the National master plan, Direction des Ports, Septe.mber 1990 B.10.TOR Rehabilitation des dragages d'entretien des ports, 6tude d'environnement (environmental assessment of maintenance dredging), Christian Brossard, February 1990 - 132 - Annex 15 Page 2 of 2 B.ll.Draft TOR Logistic Studies and Facilitation, July 1990 B.12.Etude de tarification, Rapport de synthese, ODEP, October 1988 B.13.Etude d'organisation de l'ODEP, Rapport de synth&se, Arthur D. Little- IMEG-Audit Maroc, October 1988 B.14.Rapport sur la gestion financiere, le contr6le budgetaire et l'audit interne, Transtec, April 1989 B.15.Etude de conception d'un systeme de surveillance et d'aide a la navigation maritime dans le detroit de Gibraltar a partir de la rive Marocaine (radar control tower and vessel traffic services), OPEFORM and als, July 1990 B.16.Mission de l'expert en op6ration portuaires pour le Projet Portuaire Casablanca et Mohammedia, Jean Platteau, August 1988 B.17.Etude du Plan National Directeur Portuaire et de l'organisation du secteur portuaire, Sogreah-BCEOM, September 1983 and May 1985 (supplement) C. Selected Working Papers C.1. Economic evaluation of the proposed container terminal in the port of Casablanca C.2. Statistiques portuaires 1988-1989, ODEP C.3. ODEP's Appraisal Report, January 1990 C.4. Evaluation of ODEP's Fixed Assets, ODEP C.5. ODEP's Financial Forecast C.6. Financial Data - ODEP's consolidated financial statements for 1985-19R9 C.7. Evolution et comparaison des tarifs avec les ports 6trangers, ODEP C.8. Trade Facilitation and Logistics: various working papers by Bank staff and consultants John Raven, JosQ Dubois and Bernard Stoven C.9. Bilan des actions de formation pour l'ann6e 1989, ODEP C.l0.Tableau de bord des ressources humaines, ODEP, September 1989 C.11.Draft TOk Etudes prospective pour le developpement des ressources humaines (human resources development study), ODEP, September 1989 C.12.Rendement de la manutention dans les ports marocains, ODEP, October 1989 C.13.Indicateurs d'exploitation, ODEP, Kay 1989 C.14.Inventory of Equipment, ODEP, January 1990 - 133 - TableI KINGDOM OF MOROCCO STAFF APPRAISAL UPORT PORT SECTOR PROJECT Port Facilities ----Number of Berths ------- Total General Bulk Length Water Dgpth (m) Carg- Liwdn solid Total (m? HLni Max. Casablanca 36 12 48 5.800 6 12 Nohammedia 3 2 5 600 6 22 Kenitra 11 2 13 1,230 3.5 4 Jorf Lasfar 3 9 12 1,330 5.3 15.6 Safi 5 4 9 1,460 8.5 12 Agadir 12 1 13 3,380 9 Tan Tan 4 -- 4 600 4 6 LaAyoune 1 4 5 800 7 25 Dakhla 7 -- 7 480 4.2 6.7 Tangier 14 2 16 1,750 5 12 Nador 6 9 la 2J500 5 13 Total 102 45 147 19,930 Source: MW - Ports Directorate - 134 - Table 2 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT pORT SECTOR PROJECT Distribution of Ttaffic by Port: 1988 V (Thousand Tons) Port Liuid Bulk Minerals Cereals Dy BuAlk General Cargo Total Casablanca 1,558 10,305 998 361 3,502 16,724 :.ohammedia 4,865 - - 17 10 4,892 Safi 1,656 3,147 193 638 196 5,830 Jorf Lasfar 1,834 3,747 127 1,184 41 6,933 Tangiers 90 - 176 - 499 765 Nador 56 426 204 - 491 1,177 Agadir 312 225 221 26 510 1,294 Kenitra 82 47 - 7 276 412 Saharan Ports 184 144 -i 34 380 Total L4919 =559 V Includes coastal traffic Source: ODEP - 135 - Iabl 3 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Division of Responsibility between DP and ODEP PORTS -- --> C M S A T N J TT K PORT INFRASTRUCTURE Construction 3 3 3 3 3 3 3 3 3 Breakwater Maintenance 3 3 3 3 3 3 3 3 3 Maintenance of other * * * * I * 0 * * structures Channel Maintenance* 3 3 3 3 3 3 3 3 3 WAREHOUSES AND BUILDINGS Construction * 3 I I I I I I Maintenance EOUIPMENT Investment E I U U I I U I U Major Repairs 3 * 3 | 3 * 3 3 * Routine Maintenance * * * * * 3 3 * 3 SERVICES TO SHIPS Signalling (new works) 3 3 * 3 3 3 3 3 3 Signalling (operation) * I I I I I I I U Harbor Master 3 * 3 3 3 3 3 3 3 Pilotage .11. Towage 4L11 3 3 3 1 t I Water Supply 3 * 0 3 * * * * * Dry Docks 3 - O - - Slipways 3 3 3 * 3 3 - 3 Line Handling I 4L * * * * * E SERVICES TO CARGO Stevedoring Lr I JL 4 1 I I Cargo Handling Ashore 3 * * * * 3 3 3 41* Warehousing * * f 3 3 * * * * MISCELLANEOUS Water Supply and * * * 3 * * * * 3 Electricity Networks Fish Market I I I I + + + 4 $ Ferries Facilities - - * * Public Domain Management 3 I I 3 3 I U U U 3 Ports Directorate (DP) * Dredging performed by DRAPOR g ODEP subsidiary of ODEP Jr Private ** Equipment rented from ODEP + National Fisheries Board *** Warehouses rented from ODEP C-Casablanca M-Kohammedia S-Safi A-Agadir T-Tangier N-Nador J-Jorf-Lasfar K-Kenitra TT-Tan-Tan, Dakhla, Laayoune - 136 - Table 4 Page 1 of 2 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PQO SECTOR PROJECT Productivity Data 1. Productivity ger gang on selected items (tons per shift of 8 h) Pot Cargo item 1984 Variation (in X) Casablanca Citrus fruits (pallets) 99 152 53.5X Packaged woods 125 154 23.21 Steel products 185 572 209.21 Sugar in bulk 234 306 30.81 Grain in bulk 203 222 9.41 Bales 33 56 69.71 Paper products 119 215 80.71 Fertilizers in bags 55 61 10.9X Safi Sulfur 1,808 1,976 9.31 TSP in bags 219 295 34.7X Potasch 298 311 4.41 Manganese 491 464 -5.51 Iander Grain in bulk 182 211 15.91 Timber 86 111 29.11 Steel products 228 327 43.41 Paper products 137 206 50.4Z Agadir Grain in bulk 489 386 -21.11 Citrus fruits 118 150 27.11 Logs 110 155 40.91 Packaged wood 74 109 47.31 Nador Grain 271 299 10.31 Lead 191 280 46.61 Coal 231 301 30.31 Steel products 347 397 14.41 Baryte 1,044 1,453 39.21 Source: ODEP - 137 - aLble 4 Page 2 of 2 2. Ship Movements by Port: 1988 Gross Registered Port Number of Shins Tonnage (GRT) Nador 292 1,239,590 Tangier 4,885 14,086,175 Kenitra 608 949,370 Nohammedia 654 7,204,451 Casablanca 6,220 40,129,215 Jorf Lasfar 850 10,583,984 Safi 1,069 9,296,324 Agadir 1,470 5,684,033 Saharian Ports 504 2.545.964 Total 16,552 91,719,106 3. Berth Utilization ard Occumancy: 1988 Average Ship Averag2 Ship Port Waiting Time Service Time Berth Occupancy (hours) (hours) (X) Nador 11 67 23 Tangier -- -- 36 Kenitra 14 87 35 Mohammedia 40 -- 24 Casablanca 12 -- 40-58 Jorf Lasfar 13 39 28 Safi 20 53 25-44 4. Container Traffic: 1988 Output per gang: 651 tons per shift, 72 TEUs per shift Output per ship: 130 TEUs per shift Berth occupancy: 38X (1987) Dwell time: 22 days (import), 4 days (export) 5. Average General Cargo Dwell Time: 1988 Nador 18.9 days Tangier 42.5 days Casablanca 15.3 days Jorf Lasfar 16.3 days Safi 11.1 days Agadir 18.3 days - 138 - Table 5 KINGDOM OF MOROCCO STAFF APP-RAISAL REPORT PORT SECTOR PROJECT Key Elements for the Contract Plan - Government port policy (strategy, objectives) - Respective functions and responsibilities of public agencies on the public domain - Role of the private sector and conditions of entry in port sector activities - Investment program - Port planning with criteria relating to economic and financial 'iability of investments - Principles of tariff setting and procedures for adjustment - Indicators and targets for financial and personnel management - Technical indicators and targets for operations and equipment management - Transfer of fixed assets to ODEP - Fee to be paid by ODEP on Government-owned infrastructure - Financial control and audit procedures - Arrears ODEP-RAPC - 139 - Table 6 Page 1 of 2 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Technical Assistance and Consulting Services ODEP (a) Studies Man-months Civil works supervision 100 Subprojects preparation 80 Dredging study 20 Data processing/software 30 Telecommunications master plan 20 Financial studies 20 Miscellaneous 30 Total 300 Man-months (b) Training Courses and technical visits (abroad) Man-months Technical visits 120 - Containers 10 - Ro-Ro 6 - Conventional general cargo 12 - Bulk terminals 6 - Equipment 24 - Other 62 Manpower resources management 12 Port planning 3 Project management 9 Environment 6 Marketing 10 Finances 10 Port operations 20 Total 190 Man-months - 140 - Table 6 Page 2 of 2 Seminars (Morocco) Nb of staff Port planning 25 Project management 25 Environmental protection 25 Marketing 25 Total 100 staff Ports Directorate (DP) (a) Studies National Port Master Plan: 30 man-months Environmental studies, subproject preparatica: 20 man-months (b) Training 8 man-months of courses and technical visits abroad (a) Studies Technical studies, detailed design, environment: 60 man-months (b) Training 8 man-months of courses and technical visits abroad - 141 - Table 7 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT PORT SECTOR PROJECT Initial Allocation of the Two Bank Loans Loan to the Kingdomt of Morocco Categorv Amount (US$ million) Breakwater Rehabilitation 9.9 Dredging 6.3 Marine Security 6.6 Miscellaneous Equipment 0.6 Consulting services 2.2 Overseas training 0.2 Unallocated 7.2 Total 33.0 Loan to ODEP Cateaory Amount (US$ million) Civil works for Casablanca container terminal 36.1 Tangier civil works 3.9 Jorf Lasfar civil works 8.5 Container Handling Equipment 12.7 Coal Handling Equipment. 9.5 Other Equipment 1.1 Consulting services 3.9 Overseas training 2.0 Unallocated 21.3 Total 99.0 KINGDOM OF MOROCCO PORT SECTOR PROJECT Central Ports Directorate (DP) Organization Chart DIRECTOR OF PORTS PERSONNEL ACCOUNTING AND PROCUREMENT REGIONAL SERVICES OPERATIONS TECHNICAL PLANDNDING ADLIGHTHOUSES DEPARTMENT DEPARTMENT AND STUDIES AND BEACON DEPARTMENT DEPARTMENT COORDINATION_________ fSTATISTICSLIHOUE |COORDINATON| | CIVI WORKS | |AND E.D.P. ||AND BEACON| PROPT ISUPERVISION ECOOIC DREDGING [PIC ONMIC TARIFFS ~ ~EQUIPMENT PLANNING KINGDOM OF MOROCCO PORT SECTOR PROJECT Port Directorate of Casablanca and Mohammedia (DPCM) Organization Chart GENERAL DIRECTOR DEPARTMENT OF DEPARTMENT OF DEPARTMENT OF CASABLANCA MOHAMMEDIA CENTRAL EQUIPMENT PORT PORT SERVICES OPERATIONS OPERATIONS STUDIES HARBOR HARBOR DIVISION MASTER MASTER j CIVIL PLANNING WORKS AND STUDIES OPERATIONS DIVISION DIVISION DIVISION J MECHANICAL OPERATIONS & ELECTRICAL DIVISION jDIVISION DVSO KINGDOM OF MOROCCO PORT SECTOR PROJECT Office for Port Operations (ODEP) 1. Organization at Headquarters IMINISTRY OFI BPUBC WORKSI TECHNICAL BOARD MANAGEMENT COMMITTEES COMMITTEE HUMA ORANIZAIONFOM SOCIAL SECONDARY DEVELOPMENT FINANCIAL EHUMANS & INFORMI ENGINEERING LEGAL AFFAIRS PORTS DEPARTMENT DEPARTMENT RESOURCES SYSTEMS DEPARTMENT DEPARTMENT DEPARTMENT DEPARTMENT DEPARTMENT DEPARTMENT PORT OPERATIONS UNITS NADOR TANGER IENITRA MOHAMMEDIA CASABLANCA JORPLASFAR SAFI AGADIR KINGDOM OF MOROCCO PORT SECTOR PROJECT Office for Port Operations (ODEP) II. Organization of Casablanca Port Operation Unit (DEPC) rENE O.D.E.P. | GENERAL MANAGER] D.E.P.C. PORT DIRECTOR LEGAL DIVISION UI MARKETING & DVI FORECASTS DEPARTMENT FINANCIAL & i ACCOUNTING HUMAN DIVISION RESOURCES I_ DIVISION E.D.P. & MANAGEMENT INFORMATION DIVISION [ HANDLING § gEQUIPMENT ENGINEERING FISH MARKET SHIP REPAIR DEPARTMENT DEPARTMENT DEPARTMENT DIVISION YARD 12 8 4 1j% etf,a>n .I} 0 MIDiqC ('~ t '" 1" ri Al MHx Pima +tNdo N M O R O C C O i0 .hbb+ M O R O C C O (lun~~~~~~~~~~~~~~~~~~~:auen lebha t9 NdR. LaracheO 0 K1Ixdl4a0 PORKT SECTORKPROJ ECT SoKearl, A11.ln ud MOROCCO PORT SYSTEM Mechr..Brt.K l r 'yj Taounate \,Stv~~~dl 1 K.enitra * em la.' ranurirtt Mohamrwdl I S iekne1 t ( T CT n 3 r Khemls.wt 4,6<| 0r1 ItEN .1 Joe Hrsetb )nmouzer Kandar /it -32- A 71AJVI|f iii g n i f r a g ' Bo-i& >~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~fr slimano 7' % ( kouIernane C) C' E A N El de. . Moalla , J M R--_ch jof Ida , ,' 6 zfa 5 CENTRAL MSOUtH TA SDennate I , oumima Errat* id(a ~~~~TE _iDente . Gul - rrTinhird, .a , Imin Tano,uta ,˘ 1 s 5{;Kelaa ,˘' s 43 PORT SU8PROJECT LOCATIONS | gvv ><,@~~~~~~~~~~~~~~~~~~~~~~~en h/ r ___ plox O TOWNS AND CJTIES wch beweaurtff ECONOMIC REGION BOUNDARIES - ) t . INTERNATIONAL BOUNDARIES 400, - INTERNATIONAL BOUNDARY ,,. Guetmim / ,° 50 tOo IsO (approximate) 1oS / / ~~~~~~~~~~~~~~~~~~~~KILOMETERtS -NOTIE Son ot existing fall -28s outsi tbe map image area. ,, 'Tan-Tan _2 _ i o :%'t -4-2- t2- 8 4 TSgr 4 \ h .bA :1. ; U7 a I T MUiq i M O R O C C O E Ii Al, Hoxeima Larache 0 Chaouen0 IeblIa 0~ K%ar el YebirS PORT SECTOR PROJECT 0uAnt Souk el Arba 0 u MOROCCO PORT SYSTEM Mechra-ts raounate Sidi Kenitra * m -0 ema MohabSae > -%J '1 RABATa, MohammK edla 6 * k ( ; IRJ3 JorfLasbri@adida~~~~~~~~~~~~E )NE 74[i 2 I \ Ben Afl~~~~~~~'motuzer Kanadar OIAI bga - e ~Buterane A TI A N TI S 1 -Khenlfra -32- - flour ; CEN/TRALj y Mide b 0 c EA Iv dE Ke sUHiTat 3 / J- TENS/F-T; 0,D Ws)Demnate ., r Goulmima Erraidla _ E s T Ingi$ W Imin TarkoutO / s -Kelaa / J s ; RPORT SUBPROIFCT LOCATIONS k~~~~~~~~~~~~~~~~~~~~n desMp I tFRS - - 4 § 3. 5 t _ / A IR PO R TS =MAJORE ROADS 71,. Wor;ld 5,tnk^. .JMIexclw(.'. -8t4 9- - _>Tam/A= SECONDARY ROADS readers *nd Is ak,a- * (r tY uhe LOCaima S O U T H °Zagora LOCAL ROADS a,c ih.n rnrr Uonaj p,tnaoc. /--- I *) *@ AJIROAD5 C.,~eorron. Th. ronernknttono uwad a,dlh.hos'ndarjea I _ / 0 PROVINCE CAPiTALS Dan a~~~~~~~~~~~~~~pdi @ ~~~~~~~~~~~~-NATIONAL CAPITAL :7yajs'df;0OOlh CR / alsnzais '3Tat / 0 _ # SpfO 0 TOWNS AND CITIES futhwdogrsn. /d -'O _ ECONOMIC REGION BOUNDARIES / - ~~~~~~~~~~~~~~~~~~~~~~~~~~~INTERNATIONAL 8OUNDARIES - - / _INTERNATIONAL BOUNDARY .00 Guelmim ° 50 ttt0 tS0(approximate) 28' KILOMETERS NoaTE!: Soe mporItsse *Irea. - T;- iTan I 4 2- I ~~~~~~~~~~~~~~~~~~~~~~~ a,~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~2 MOROCCO PORT SECTOR PROJECT CASABLANCA PORT LAYOUT Project Extension I --Propose Road Access 'u-,- Future Bridge at Gabt No. 4 Built-up Areas - Customs Fence 4-4- Railroads F-,L7 Port Buildirngs O' 0 ~~~~~~ ~~0.5 0 KILOMETERS 0stt1 Royt l Navy Harbor < i < 0 < 'aSF "t'ff ic 0~~~~~~~~~~~~~~~~~~~~~~ 3hip .iji, ,, : < Customs _ Yards t _ . . No I . St, t-o~~~~~~~~~~~~Itt N MOROCCO PORT SECTOR PROJECT AIlantic Ocean JORF LASFAR PORT LAYOUT NORTH ENTRANCE Proposed Coal Berth O O Port Buildings sszt%9 Roads s00 O.C.P, WATER INTAKCE 0 ty REPAIR / O4Etf~~~~~~~~~~~~*:5, ~~~~~~~~ ~AREA WAREHOUSES COIO STORAGE O os0 / / P. KItOMOTRS v/ t 40 X~~~~~~~~~~~~~~~t v hw bru WOM-6d e , % s , u s e d ~~~~~~~~~~~ n d m e tf m o n a F dc o~~~~~~~~~~~~~~~o VU aw do not wnprV on " SOUJTH k**OrW2Wc omsat ENTRANCE 0# ajudwnenon h* kWe -tsA /; ~ ~~~~~~~~~~~xeese of ac:ephnce of E / ~~~ at~ _ich _o axnt co~ MOROCCO . . , . PORT SECTOR PROJECT TANGIER PORT LAYOUT Project Extension BREAKWATER (RO-RO Facilities) PETROLEUM BERTH Roads Railroads / [a Port Buildings -------- Port Boundary ---- - /5 5 ~~~TERtMINI / ~ t' 'Ot .A2j STA KI r/LOMETERS This omop hs nbe p-epo,ed bz Th Worl BoA's doff eodoooely 6or the x co.nec iereadmr ead is eoJuorel for the internol ow of The Wordd Bonk ad i. Inrnaiofl Ihrodo Co,porabo.- Tho demo. mion red and the boundoris rhown -n this .op do nctmply. on the pa1of The Wortd Bak any terr or any hor&torrponreof s ch iond 5i s t