Document of v ' 0 The World Bank FOR OFFICIAL USE ONLY Report No. P-2519-MOR REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE KINGDOM OF MOROCCO FOR A VILLAGE ELECTRIFICATION PROJECT April 26, 1979 This document has a restricted distribution and may be _ed by recipients only in the performance of their official duties. Its contents may aot otherwise disclesed without World Dank autheriztion. Currency Equivalents US$1.00 = DH 4.00 (Average 1978) DH 1.00 - .25 US$ Fiscal Year : January 1 - December 31 GLOSSARY OF ABBREVIATIONS BNDE Banque Nationale I-our le Developpement Economique CIk Credit Immobilier et Ho^telier kV Kilovolt Kgce Kilogram coal equ: valent Mtce Million tons coal equivalent MW Megawatts ONE Office National de l'Electricitg V volt FOR OFFICIAL USE ONL , KINGDOM OF MOROCCO VILLAGE ELECTRIFICATION PROJECT LOAN AND PROJECT SUIMARY Borrower: Kingdom of Morocco. Beneficiaries: 220 villages and Office National de l'Electricite (ONE). Amount: US$42 million. Terms: Amortization 26 years, including a 6-year grace period at the standard Bank interest rate. Project Description: The Project, which is the first stage of a 15-year village electrification program aimed at providing electricity service from the national grid to 1,800 villages, would provide electricity to about 60,000 dwellings in 220 vil- lages located in 17 out of 34 provinces. The Project would include: (i) construction of about 1,250 km of 22-kV and 995 km of 380/220-volt distribution lines and installa- tion of related equipment; (ii) provision of about 45 MVA of 22/0.4-kV distribution transformer capacity and street lighting equipment; and (iii) provision of consultant services to assist in detailed engineering and project management. The project would be implemented by the Office National de l'Electricite (ONE). The project would be an essential part of the Government's newly emphasized policy aimed at slowing down rural outmigration by concentrating activities and amenities in well selected rural centers. The project would contribute to increasing productivity in the agriculture sector, creating employment and improving living conditions in rural areas. No special risks are foreseen in the implementation of the project. Project Cost US$ Million Estimates: Local Foreign Total (i) Overhead 22-kV distribution lines 5.1 9.0 14.1 (ii) Distribution transformers 0.2 1.0 1.2 (iii) 380/220-V Distribution systems and related equipment 8.1 15.7 23.8 (iv) Public lighting 0.6 2.3 2.9 (v) Engineering and administration 2.7 1.5 4.2 (vi) Import duties and taxes 11.6 11.6 (vii) Price and physical contingencies 14.7 12.5 27.2 Total Project Cost 43.0 42.0 85.0 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. - ii - Financing Plan: US$ Million Local Foreign Total IBRD Loan - 42.0 42.0 Government 40.8 - 40.8 Customers 2.2 - 2.2 Total 43.0 42.0 85.0 Estimated Disbursements: FY 80 81 82 83 84 Annual 3.5 9.5 11.0 12.0 6.0 Cumulative 3.5 13.0 24.0 36.0 42.0 Procurement Arrangements: Contracts for goods and works to be financed from the pro- posed Bank loan would be awarded under international com- petitive bidding in accordance with the Bank's guidelines for procurement; in the evaluation of bids for these con- tracts, Moroccan equipment suppliers would be given a preference margin of 15 percent, or the prevailing customs duty, whichever is lower. Retroactive financing up to $250,000 for expenditures incurred prior to loan signature but after January 1, 1979, for preparation of detailed engineering and bidding documents, is proposed. This is in addition to the $90,000 advance granted under the Project Preparation Facility. Rate of Return: 6 percent. Staff Appraisal Report: No.2385a-MOR of April 20, 1979 Regional Projects Department EMENA REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO TIE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE KINGDOM OF MOROCCO FOR A VILLAGE ELECTRIFICATION PROJECT ]. I submit the following report and recommendation on a proposed loan to the Kingdom of Morocco for the equivalent of US$42 million, to finance a proposed Village Electrification project. The loan would have a term of 26 years including 6 years of grace with interest at 7.9 percent per annum. PART I - THE ECONOMY I/ 2. A report entitled "Country Economic Memorandum on Morocco" (1473-MOR) was distributed to the Executive Directors in June 1977. An economic mission which visited Morocco in February/March 1978 was followed by a basic economic mission in November 1978. A basic economic report is under preparation; preliminary findings and conclusions of these missions are reflected in the following paragraphs. Country Data Sheets are attached as Annex I. Recent Developments 3. In 1977, Morocco completed the return towards a constitutional mon- archy. Having marshalled a strong national consensus over the Western Sahara issue, King Hassan II called municipal, provincial and national elections between November 1976 and April 1977. Opposition parties with platforms stressing social reform scored strongly in municipal elections in the larger cities, while at the provincial level, rural constituents supported Government candidates, wio eventually obtained a majority of 141 seats out of 264 in the National Assembly. With the new Government formed in October 1977, both the Istiqlal party which had been in the opposition since 1963, and the Mouvement Populaire whose main support is in the Berber population returned to political responsibility. The new Cabinet was appointed with the mandate to prepare and implement economic austerity measures, the first of which were introduced in the 1978 Budget Law, and to pursue the social development objectives set out in the 1973-77 Development Plan. 4. Morocco's economic and financial situation became increasingly unbalanced towards the end of the 1973-77 Plan. Rapid growth of investments and imports, carried over from 1974-75 when phosphate export revenues reached an all-time high, did not slow down despite some Government restrictions, while the world demand for Morocco's main exports, especially phosphate, recovered only moderately. At the same time, efforts to increase budgetary savings were insufficient to meet the continued increase in investment and military expenditures. As a result, in 1977 Morocco faced again a large 1/ This part is identical to paragraphs 2 to 16 of the President's Report No. P-2499-MOR dated March 28, 1979 on a Loan for an Integrated Project for Small Scale Industry Development. - 2 - resource gap (21 percent of GDP) and overall budget deficit (19 percent of GDP). To cover these, it sharply increased external borrowing to $1.9 billion (commitments), from $909 million in 1976 and $780 million in 1975; most were from commercial sources. Despite these borrowings, the country's net foreign assets stayed at a low level (1.2 months of 1977 imports by year's end). On the domestic side, external borrowings fueled monetary expansion which remained rapid in 1977; consumer prices rose 12.5 percent over 1976 compared to about 8 percent in the previous two years. 5. By and large, the new Government has succeeded in regaining control over the excessive increases in investment and external borrowing experienced towards the end of the 1973-77 Plan. Investment has since been r.educed by an estimated 25 percent in real terms, and so has external borrowing which at $1.3 billion of new commitments was, however, still large and mostly on commercial terms. The Government has achieved these improvements through budgetary austerity, including severe cuts in public investment, :-estraint in current spending and some tax increases; it applied selective import restrictions and controls on private credit preserving as much as possible tihe growth momentum of private sector outptut and exports. A good agricultural crop in 1978 helped sustain growth, despite a sharp decline in construction activity largely resulting from cuts in public investment plans; overall, GDP grew by an estimated 4 percent in real terms in 1978. 6. The Government will have to pursue austerity policies for a while, considering the continued excessive resource gaps and low exports and savings which cannot be increased quickly for reasons largely beyond the Government's control. Instead of the 1978-82 Plan, the Government has introduced a three- year interim plan (1978-80) which was approved by Parliament in December 1978, together with the 1979 Budget Law. Its main objectives are to further reduce the budget and current balance of payments deficits, and to concentrate avail- able resources (after meeting defense requirements) on productive projects and the neediest population groups. implementation of major publiLc projects not meeting these criteria has been postponed, while the measures designed to preserve growth in the private sector have been strengthened. Recently, the Government agreed with the IMF on a short-term financial rehabilitation program for 1979. This program calls for continued limitation of budgetary expenditures, domestic credit expansion and new external borrowing, while maintaining selective import restrictions and credit controls favoring productive private activities. It is aimed at reducing the overall budget deficit by 15 percent, and narrowing the current balance of payments deficit by more than 30 percent. Assuming harvests are equal to those of 1978 and phosphate exports increase by 6 percent in quantity and 7 percent in value, real GDP growth in 1979 again may still not exceed 4 percent. Gross official reserves would stay around 1.5 months of imports. 7. While the interim measures may be effective in re-balancing the economy, because of the short-term constraints on exports and savings, they might cause a rise in social pressures. The Government is therefore anxious to resume the more dynamic social policy stance which characterized Moroccan development during the 1973-77 Plan. Preparation of the 1981-85 Plan has begun and attention is being given to long-term reforms which are needed if an early resumption of more rapid economic and social progress is to be achieved. - 3 - Economic Development Issues and Prospects 8. Bank projections summarized in Annex I reflect the Government's keen concern to avoid a liquidity crisis in the next two to three years. They assume sharp policy adjustments to keep the economy on a financially viable growtlh path over the long run, but also reflect the desire to maintaie adequate GDP and employment growth during the interim period, and to achieve further progress towards the country's social objectives. The projections show that investment and GDP growth will have to be curtailed for the next two to three years, given the constraints on savings and exports. In this period, Morocco will need substantial capital transfers from abroad on terms as favorable as possible to sustain the project investment and GDP growth. Beyond 1982, export prospects should enable Morocco to resume more rapid growth of investments, output and employment while progressively reducing the relative burden of debt and debt service. 9. Following the large windfalls in foreign exchange and domestic sav- ings caused by high phosphate prices in 1974-75, the investment target was raised to meet cost increases, permit some real expansion of original invest- ment programs, and undertake large capital-intensive projects geared to import substitution (in particular sugar, chemicals, shipping and steel). Thus the GDP growth target for 1973-77 was nearly met, and investment rose to nearly 32 percent of GDP in 1977 from less than 14 percent in 1972. In the process, Morocco built up its capacity to prepare and implement projects not only in traditional sectors such as irrigation, import-substitution industries and physical infrastructure, but also in new and more difficult sectors such as rainfed and small-scale agriculture, export industries, and socially-oriented programs. There is little doubt that Morocco can achieve the investment levels assumed in the Bank projections, the main constraints being domestic savings and foreign exchange availability. 10. Domestic savings have been falling in relation to GDP after the brief increase during the phosphate windfall years, mainly due to low public savings of only 4.7 percent of GDP in 1977. Successful efforts to raise public revenues to 28 percent of GDP in 1977 were offset by increases in current spending, partly for education and health, but particularly for price subsidies and military expenses. Tax reform measures (which are being prepared with IMF assistance) and unpopular price policy decisions, such as reduction of subsidies to urban consumers, farmers and industrial investors, will be required to increase public savings. Interest rate adjustments to reflect changes in the rate of domestic price inflation would also be called for. 11. During the 1973-77 Plan period, exports rose by less than 2 percent p.a. in real terms (the Plan target was 10 percent). This lackluster per- formance was largely due to weak external demand for Morocco's main export products since 1974, especially phosphate, other minerals and agricultural products. Moreover, with some exceptions, such as textiles, export produc- tion and marketing efforts were not sufficient, and new markets were not aggressively sought; Morocco continued to depend on demand from the EEC, especially France. Yet, it has considerable export potential if only products - 4 - and markets were diversified. Export programs are now under preparation particularly for phosphate and its derivatives, fresh and processed food- stuffs, and tourism. With regard to phosphate, for example, Morocco and the USSR signed agreements in March 1978 under which Morocco will export phosphate rock and phosphoric acid for the next 30 years for possibly up to 10 million tons per year by 1985-86; in return, the USSR will lend Morocco up to $2 billion on favorable terms to develop its phosphate export capacity and will export various commodities and goods to Morocco, including crude oil. These agreements substantially improve Morocco's long-term prospects for phosphate exports. 12. While the emphasis on completion of high-return projects will have to continue, Morocco should shift away from highly capital-intensive, import substitution investments, as well as from some ambitious programs for phys- ical infrastructure. This would call for improvements in policy planning and investment programming. Consultants are currently completing a major study on industrial investment strategy, which should facilitate better investment selection. A changed investment pattern should reduce the external resource gap, and also contribute to higher growth and employment at lower investment and import costs than in recent years. Social Development Strategy 13. Comparatively slow economic growth and employment creation up to the early 1970's were accompanied by widening income disparities and a decline in real consumption for the weaker sections of Morocco's population. As a major objective, the 1973-77 Plan set out to reverse these trends. The Government's strategy since 1973 has emphasized: (i) acceleration of employment creation; (ii) measures aimed at reducing income disparities; and (iii) specific investment programs to benefit the least favored population groups. 14. Progress has been made towards these objectives, as witnessed by the increased expenditures for social sectors (from DH 1.3 billion in 1972 to DH 3.7 billion in 1977). However, the institutions created to meet social sector objectives are in many cases still fragile. Understaffing, weak policy analysis and inadequate program formulation are common. As a result, public programs to improve productivity, collective amenities and social services are reaching relatively small proportions of the population, especially in rural areas. In addition, during the period of financial stringency ahead, Morocco will not be able to sustain the current level of expenditures in socially-oriented sectors, and cuts have been made as part of the measures to re-balance the economy. 15. With the population growth rate now at about 3 percent, pressure to provide adequate social services will rise. Despite short-term financial constraints, efforts will be needed to limit such growth. Consequently, strengthening health and family planning services is now an integral part of the Government's social objectives. -5- External Debt and Debt Service 16. Morocco sharply increased external borrowings after 1973 (para. 4). Nearly all of the increase came from Arab and commercial sources. With a hardening of terms on new commitments, average maturity dropped from 19 to 10 years and average interest rose from 5 to 7.5 percent between 1974 and 1977. Morocco also drew on the IMF automatic credit facilities in early 1976, and obtained about $70 million in IMF compensatory financing in August 1978. From the low levels in 1974-75, Morocco's external debt has risen rapidly to an estimated $4.0 billion (disbursed only) at the end of 1978, and in that year debt service amounted to $481 million (18 percent of exports and workers' remittances). As a result of recent and projected borrowings, debt and debt service may be expected to increase further, and debt service may exceed 25 percent of exports and workers' remittances by 1980-82, and decline progres- sively thereafter. The country's net foreign assets would remain at a rela- tively low level. Because of the expected upswing in debt service, external debt management has become more restrictive and selective since 1978. If debt service is to stay manageable, Morocco will have to continue this policy over the next few years. Additional commercial borrowing should be limited, and efforts should be increased to seek loans on softer terms. Yet, external borrowing needs would be sizeable. Beyond 1980-82, however, the situation should progressively improve with the Government firmly controlling domestic demand and with good long-term prospects for exports and, in particular, with assured sales of phosphate rock and derivatives. Morocco should therefore be considered creditworthy for further Bank lending. PART II - BANK GROUP OPERATIONS IN MOROCCO 17. Bank and IDA lending to Morocco has supported 40 projects, financing a total net of cancellations of $1,106.9 million 1/, of which $886 million has been lent since the beginning of FY73. IDA credits, totalling $50 million, have been made available for five projects. A Third Window loan for $25 mil- lion for the third education project was approved in March 1976. IFC invest- ments have amounted to $12.6 million ($10.5 million after cancellations, terminations, repayments and sales). Annex II contains a summary statement of Bank loans, IDA credits and IFC investments as of March 31, 1979, and notes on the execution of ongoing IBRD/IDA projects. In some cases, delays in project implementation have been caused by management or procurement diffi- culties, and in 1974 cost overruns increased due to the upsurge in investment activity in Morocco and the acceleration of inflation. Overall performance in project execution, however, has considerably improved in recent years. Total disbursements as of December 31, 1978, amounted to 72 percent of original appraisal forecasts and to 75 percent of revised forecasts. 1/ Including two loans approved in April 1979, the first of $113 million for the Fourth Education Project and the second of $25 million for an Integrated Project for Small Industry Development. - 6 - 18. Past Bank Group lending has been concentrated in the agricultural and industrial sectors, which have accounted for 27 and 32 percent, respec- tively, of total net commitments; the balance is represented by utilities (14 percent), education (14 percent), tourism (7 percent), roads (4 percent), and urban development (2 percent). Apart from the transfer of resources to Morocco (Bank Group gross disbursements amounted to 5.5 percent of total fixed investment in 1970-74), the main objectives of lending were to foster and strengthen development institutions, provide technical assistance especially for project preparation, and increase productive capacity, in order to improve the balance of payments. 19. While these objectives remain, greater emphasis is being given to prepare projects that support the Government's policy of fostering social development and improving income distribution. An increasing share of Bank Group lending will be devoted to projects directly or indirectly developing the productive capacity of the lowest urban and rural income groups and meeting their basic needs, including, possibly, Bank participation in the Government's program for promoting integrated regional development, which is under discussion. 20. Past lending for agriculture has supported irrigation development, credit and, through a first operation in FY75, improvement in the produc- tivity of rainfed farming. Continued selective lending for irrigation is envisaged but emphasis will be increasingly given to support small farmers and the development of rainfed areas. The Fez-Karia-Tissa Agriculture Proj- ect, approved in June 1978 was the second, after the Meknes Project (Credit 555-MOR) to directly address these objectives with the added advantage of being located in the favorable cereal producing zone. An integrated rural development project, including livestock/forestry development, is under preparation in a rainfed zone in northern Morocco, as are projects aimed at extending agricultural credit to farmers and at developing production, mar- keting and processing of vegetables on small holdings. A Government program for promoting integrated regional development is also under discussion. 21. Projects in industry and tourism have had as key objectives increased foreign exchange earnings or savings and the improvement of sectoral policies, which have taken on increased importance in view of the country's short-term resource constraints. The eighth loan to Banque Nationale pour le Developpe- ment Economique (BNDE) which was approved in 1977, included a pilot small- scale industry component to promote labor intensive investments. The recently approved loan for small scale industry development follows up on this pilot effort. The loan to Maroc Phosphore made in 1978 will help increase Morocco's foreign exchange earnings. Continued lending for industry through the BNDE is contemplated as well as further lending to Credit Immobilier et Hotelier (CIH) for tourism development. 22. Previous lending for utilities has consisted of a loan for potable water supply, two loans for power and one engineering loan for the preparation of a sewerage project for Casablanca. A follow up project for water supply and distribution in urban centers, including distribution to low income urban consumers, is under preparation, as is a sewerage project in Agadir. - 7 - 23. Education continues to need attention to ensure Morocco's manpower development. Two credits and a loan have been made to develop secondary education and teacher training, to improve technical and vocational training, and to expand facilities in rural areas. A loan for a fourth project entir-ely devoted to technical education has been recently approved. 24. The recently approved Rabat project was the first Bank-financed project in the urban sector. Follow Up projects are under consideration to suipport the Government's program for slum upgrading and urban development through the provision of basic infrastructure, housing and social services and the creation of employment opportunities. 25. Loan commitments from multilateral and bilateral official sources to Morocco rose from $221 million in 1975 to $296 million in 1976 and dropped $831 million in 1977 but dropped sharply to $370 million in 1978. Major sources of aid were France, Saudi Arabia, the UAE, the U.S., Germany and the Bank Group. At the end of 1978, the Bank Group's share in Morocco's outstand- ing and disbursed external public debt was 11.2 percent. The share of the Bank Group in debt service was 24 percent in 1976 and declined to 18 percent in 1977, and 9.5 percent in 1978. By 1983 the Bank Group's shares in debt outstanding and in debt service are expected to be about 25 percent and 12 percent respectively. III - THE ENERGY SECTOR 26. Morocco's main indigenous energy resources are coal and hydropower. Known oil and gas deposits are nearly exhausted but exploration efforts have been intensified. Large deposits of bituminous schists exist but their devel- opment is not economically justified with present technologies. Uranium, directly mined or extracted from phosphoric acid, could become a source for power generation in the future. 27. Energy demand has grown at the average of 7 percent per year over the last decade; in 1976, total consumption reached 4.9 million tons coal equivalent (mtce) or 273 kgce per capita which is low compared to countries with similar per capita income. Morocco is highly dependent on imported oil, the share of which in total energy consumption rose from 64 percent in 1961 to 80 percent in 1977. That year, oil imports amounted to DII 1.7 billion, representing about 12 percent of total imports and 70 percent of phosphate exports, Morocco's main source of foreign exchange. Oil is mainly imported as crude, for refining in two refineries with a combined capacity of 3 million tons per year in 1977. This capacity is at present being increased. Morocco's energy demand is expected to grow at about 10 percent per year over the next decade, despite the present slow down in economic growth and conservation measures in energy use. 28. All energy prices are fixed by the Government. Except for petrol, the price of petroleum products remained unchanged from 1962 until the end of 1975. Through a compensation account, the Government has subsidized the prices of fuel oil, gas oil and kerosene, which are typically used for indus- trial and low income domestic purposes, and levied special taxes on petrol. - 8 - Until the end of 1973, the cost of subsidies was more than offset by revenue from the special taxes. The sharp increase in oil prices in 1973-74 resulted in large deficits for the compensation account in 1974 and 1975. At the end of 1975, prices of petroleum products were sharply increased and the deficit declined from $115 million in 1975 to $23 million in 1976. Further price increases, including the last one in January 1979, have resulted in the elinmination of price subsidies for petroleum products. 29. During the Third Plan period (1973-77) investment in the sector amounted to DH 3.2 billion (more than three times thie figulre for the previous Five-Year Plan), of which 40 percent was spent for development of the power subsector and 36 percent for increasing petroleum refining and distribution capacity. The rest was spent for oil and gas exploration and for increasing domestic coal production from 550,000 tons in 1972 to 700,000 tons in 1977 with the intention to bring it to I million tons in 1981. 30. The Ministry of Energy and Mining is responsible for overall plan- nirig and policy making in the sector; it also supervises several public corporations in charge of oil and gas exploration, distribution of petroleum products, oil refining and coal mining. Office National de l'Electricite (ONE) is responsible for power generation and distribution. The Electric Power Subsector 31. ONE generates about 91 percent of the electric power in the country, transmits it to the load centers and distributes about 40 percent of its pro- duction outside the large cities. Distribution of power in large urban areas is thie responsibility of 13 Regies which are autonomous public enterprises under the supervision of the Ministry of the Interior. Captive plants, most of them linked to industrial enterprises, account for 8 percent of power generation and consumption. The remaining 1 percent is generated by small systems operated by local authorities in about 187 isolated localities. 32. Electricity demand has grown at about 9 percent per year over the past decade. By end 1978, total installed capacity in Morocco was 1,063 Megawatts (MW). The share of hydropower in total generation lhas steadily declined from 93 percent in 1963 to 37 percent in 1978, because of the rapid growth of irrigation which is given precedence over lhydropower in water use. The transmission system operates at 225, 150 and 60-kV, and distribution at 22-kV. 33. Through a loan of $25 million in FY74 (936-MOR), the Bank helped finance part of ONE's capital expenditure program for generation and trans- mission. The physical works were completed on schedule. Cost savings of $4 million have been applied to the financing of feasibility and engineering studies for future hydroplant development; these studies are expected to be completed shortly. ONE's present generation program includes completion of two thermal plants and of the Sidi Cheho Al Massira dam which the Bank helped finance through a $49 million loan in FY76 (1299-MOR). Works on this dam project are progressing satisfactorily and the 120 MW plant is expected to be commissioned in early 1980. 34. ONE has traditionally earned a low rate of return on assets and has financed about 20 percent of its capital expenditures through internal cash generation; the Government has provided about one third of financing while the balance has been financed by supplier's credits, local bond issues and foreign borrowings. Financing of future programs is expected to follow the same pattern. By contrast, the Regies have financed the largest part of their net- work expansion through connection charges prepaid by customers. This will prove more difficult for the future because large investments are required by Lhe Regies to increase access to electricity of a fast growing urban popu- lation. 35. The division of responsibilities between the Ministries of Energy and Mining and of the Interior which supervise the power sub-sector does not facilitate planning for its development. The Bank had earlier suggested that a single authority be made responsible for regulating the sub-sector. This suggestion was not followed by the Government on the grounds that distribution of electricity should remain under the responsibility of local governments which are traditionally tinder the supervision of the Ministry of the Interior. Under Loan 1299-MOR, the Government agreed to submit to the Bank by end of July 1977 proposals for improving the power sector organization. The Govern- ment did not comply with this requirement, but established an ad hoc committee to develop proposals for reforming the power sector organization and drafting an electricity code. This committee's terms of reference included establish- ing an appropriate tariff structure and improving coordination between ONE and local authorities in carrying out their respective tasks both in urban and rural areas. The committee is expected to recommend to the Government by end of 1979, tariffs reflecting full cost of providing electricity to all customer classes and allowing ONE to finance at least 20 percent of its capital expendi- ture internaLly. To facilitate overall planning of the power sector, the committee is expected to issue guidelines making it for the first time an obligation for the Regies to prepare multi-annual development programs which would be part of the 1981-85 Development Plan. 36. The technicaL quality of ONE's planning is satisfactory. However, ONE's investment decisions have traditionally been based more on financial than on economic considerations. ONE's efforts at introducing least cost methodology for planning purposes have been recently frustrated by increased uncertainties in estimating costs and benefits for alternative power genera- tion systems. As risks and potential cost of errors made in planning for the future become larger, it is important for ONE to master more complex tech- niques than it has so far applied. Technical assistance would be provided to ONE under the proposed loan for this purpose. Rural Electrification 37. About 60 percent of Morocco's urban population, but only 6 percent of its rural population, have access to electricity. Rural electrification has progressed at a slow pace over the last two decades because of ONE's traditional reluctance to move into rural areas due to the lack of proper organization to prepare and finance programs and to the difficulty of provid- ing electricity to a highly dispersed population living in 33,000 douars or - 10 - hamlets made up on average of 40 dwellings. Until recently, annual programs for rura] electrificationi were prepared through a lengthy process involving several ministries concerned with rural development and represented in an interministerial commission. By the end( of the 1973-77 Plan period, the Government decided to accelerate the pace of rural electrification as a means, among others, of reducing the rate of rural outmigration. As part of the preparation of the now abandoned 1978-82 National Development Plan (see para. 6 above), the Government had prepared a five year investment program for communal deveLopment. The rural electrification portion of this program had been prepared on the basis of requests from local authorities; villages had beeni selected according to their size and administrative status, rather than after analysis of economic returns of alternatives. For the preparation of the proposed project, the Government agreed to reformulate this program and to base it upon a least cost path for rural electrification over a longer period of time than the one initially considered. Extending the planninig period was seen as a nmeans to better analyze interactions of rural electrification witl other long term objectives. In March 1978, the Government requested, and subsequently obtained a $90,000 advance tinder the Project Preparation Facility to prepare a rural electrification project for Bank financing which would be the first tranche of a 15-year program. PART IV - THE PROJECT 38. The Project was prepared by the Government with assistance of con- sultants financed under the Project Preparation Facility. The Project was appraised in September/October 1978. Negotiations took place in Washington from March 28 to 30, 1979. The Moroccan delegation was led by Mr. Belkoura of the Prime Minister's Office. A Staff Appraisal Report entitled "Morocco- Village Electrification Project" (No. 2385a-MOR dated April 20, 1979) is being circulated separately to the Executive Directors. The main features of the loan and project are listed in the Loan and Project Summary and in Annex III. Project Objectives and Description 39. The Project is the first stage of a fifteen-year village electrifica- tion program aimed at providing electricity service from the national grid to 1,800 villages. By comparison, during the past fifteen years only 300 villages had been connected to the grid. The total population to be supplied by the end of the program in 1995 would amount to 2.5 million inhabitants or 17 percent of the rural population. This would imply an accelerated rate over the past, but would remain within the Government's physical and financial capabilities. The project, covering a four-year slice of the program, would provide elec- tricity to a population of some 360,000 potential beneficiaries in 220 villages located in 17 out of 34 provinces. It would form an essential part of the Government's newly emphasized policy to spur economic activities and implement basic and social investments in rural areas. This policy should slow down rural out-migration and, by concentrating activities and amenities in rural centers, should result in a more integrated and economically viable pattern of settlements in rural Morocco than now. The Project would be a deliberate attempt to favor the development of some existing or potential centers which would become small towns. The Project would include: (i) construction of - 11 - about 1,250 km of 22-kV and 995 km of 380/220-volt distribution lines and installation of related equipment; (ii) provision of about 45 MVA of 22/0.4-kV distribution transformer capacity and street lighting equipment; and (iii) provision of consultant services to assist in detailed engineering and project management. Project Costs and Financing Plan 40. The cost of the project including contingencies is estimated at $85.0 million, of which $42 million would be in foreign exchange. Total cost of enginearing services and administration excluding contingencies but includ- ing the $90,000 advance provided under the Project Preparation Facility is estimated at $4.2 million of which $1.5 million in foreign exchange. Physical contingencies ($4.7 million) were assumed at 10 percent for both local and foreign components. Price contingencies ($22.5 million) were estimated at 7.5 percent in 1979 and 7 percent thereafter for foreign exchange costs, in line with expected international price increases and at 10 percent for local costs, in line with recent civil work prices in Morocco. 41. The proposed Bank loan of $42 million to the Government of Morocco, would finance the full foreign exchange cost of the Project. Project benefi- ciaries would contribute an estimated $2.2 million through payment of connec- tion fees. The Government would finance the remaining project cost out of budgetary allocations. Breaking with its present practice of allocating funds for rural electrification through the budgets of several ministries, the Government agreed to channel the project funds through the budgets of the Ministries of Energy and Mining and of the Interior (Section 3.01(b) draft Loan Agreement). Project Execution 42. The Project would be implemented by ONE under conditions and accord- ing to procedures to be detailed in an agreement between the Government and ONE. The draft agreement was reviewed during loan negotiations; its signature would be a condition of loan effectiveness (Section 6.01 draft Loan Agreement). Ownership of project facilities would be divided between ONE and the communes benefitting from the project. The 22-kV transmission lines would belong to ONE, and the distribution network including the medium-low voltage trans- formers, to the communes. After project completion, ONE would operate and maintain the latter facilities on behalf of the communes under conditions set forth in the above agreement. 43. To implement the project, ONE has created a village electrification unit within its distribution department. Staffing arrangements for this unit were reviewed during loan negotiations and found satisfactory. With the help of consultants, this unit is preparing detailed engineering and bidding documents. It is also preparing a critical path for project implementation which would be reviewed at regular intervals. To avoid disruptions in project implementation due to late payments to contractors, the Government agreed to provide ONE annually with sufficient funds to cover expenditures expected to -12 - be incurred during the following year (Section 3.01(a) draft Loan Agreement). Physical implementation of the Project would start by end-1979 and last for about four years. 44. The Ministry of the Interior, which supervises local governments, would monitor project implementation through a newly created unit. This unit would annually review budget allocations required for project financing, keep an inventory of project facilities, supervise the orderly transfer of facility ownership to the communes and the proper implementation by ONE of operation and maintenance contracts for facilities owned by the communes, compile and update statistical data for preparing new phases of village electrification and undertake at periodical intervals an evaluation of socio-economic effects of thke project and future phases. For adequate implementation of these tasks, the unit has already recruited four professionals and would recruit additional staff as and when needed (Section 3.03 draft Loan Agreement). A working level committee with representatives of the Ministries of Interior, Finance and Energy and Mining and ONE would meet monthly to monitor progress in project implementation. 45. The unit in the Ministry of the Interior will serve as secretariat for the interministerial commission for village electrification which would continue to review and approve annual village electrification programs (Section 3.02 draft Loan Agreement). Procedures for preparing further phases of the 15-year Village Electrification Program would be reviewed by the Bank at regular intervals. Cost Recovery 46. Power tariffs, which have been increased most recently in January 1979 by 22 percent (of which 12 percent was to take account of fuel cost increases), would allow for recovering from project beneficiaries the full cost, except for interest, of power generation and transmission, and the operation and maintenance cost of the low voltage distribution facilities to be owned by the communes. Part of the capital cost of the latter facilities would be recovered through connection fees to be paid by customers. Net cash surplus should fully cover depreciation of the low voltage facilities in 1988 and thereafter. Surplus over project operation and maintenance cost would be used thereafter by ONE exclusively for the financing of network expansion as well as future tranches of the village electrification program (Section 3.04 draft Loan Agreement). ONE's overall tariff would be increased as neces- sary to comply with the cash generation covenant under Loan 1299-MOR, whereby ONE's average net internal cash generation, in any year and the preceeding year, should amount to at least 18 percent of average capital expenditures over the same two years and the next following years, until 1979, and to at least 20 percent thereafter. Procurement 47. Contracts for supplying equipment and materials to be financed from the proposed Bank loan would be awarded under international competitive bid- ding in accordance with the Bank's guidelines for procurement; in the evalua- tion of bids for these contracts, Moroccan equipment suppliers would be given - 13 - a preference margin of 15 percent, or the prevailing customs duty, whichever is lower. Minor quantities of standard distribution equipment and materials would be procured under "international shopping" after inviting quotations from at least three manufacturers, provided the aggregate amount of such con- tracts does not exceed $700,000 equivalent. Contracts for civil works and installation of project facilities would be grouped by region and let after international competitive bidding. However, it is unlikely that foreign contractors would be interested in bidding for these contracts because of the geographical dispersion and the high labor content of works to be carried out under the Project. Disbursement 48. Disbursements, estimated to be completed by end June 1984, would be made against: 100 percent of the cif cost of imported equipment and materials, 100 percent of the ex-factory cost of locally produced equipment and materials procured after international competitive bidding, 35 percent of the total cost of installation works representing the estimated foreign exchange content and 100 percent of the foreign exchange cost of consultant services. Retroactive Financing 49. Retroactive financing up to $250,000 for expenditures incurred prior to loan signature but after January 1, 1979, for preparation of detailed engineering and bidding documents is proposed (Schedule 1, draft Loan Agree- ment). This would be in addition to the $90,000 advance granted under the Project Preparation Facility. Project Risks and Environmental Impact 50. The project would be a continuation of past efforts albeit on a much larger scale and in a more systematic fashion. The work would consist of extending distribution lines in rural areas without detrimental effect on the environment. ONE with the help of consultants would be capable of handling the quantity of work to be done. Because of possible conflicts between ONE and the Ministry of the Interior, which might respond unduly to pressures from local governments for provision of additional infrastructures, a list of villages which would benefit from the project has been agreed upon and would be attached to the agreement between the Government and ONE. Project Justification 51. The project would be a first phase of the national rural electrifi- cation program which has two principal objectives: (a) to increase access to electricity of Morocco's rural population; and (b) to contribute to the improvement of the agriculture sector's productivity. The project would extend electric service from the national grid to 220 villages in seventeen provinces, thus providing electricity to approximately 360,000 rural inhab- itants. The project would be an essential part of the Government's newly emphasized policy aimed at slowing down rural out-migration by concentrating activities and amenities in well selected rural centers. The project's / - 14 - economic rate of return would be 6 percent, applying the traditional method- ology, i.e. using present tariffs as proxy for project's benefits. This computation does not capture secondary benefits such as employment creation and improved living conditions. This low rate of return is not specific to this project. Village electrification is a lengthy and costly process in all developing countries. In the case of Morocco the rugged nature of the terrain and dispersed pattern of the rural population render the process even more costly. Past efforts in providing electricity to rural areas were clearly insufficient. As a consequence, the percentage of population currently ser- viced is particularly low in comparison with other countries with similar per capita income. The proposed project would accelerate the pace of village electrification and strengthen the institutions responsible for it. The project would also establish a financial mechanism conducive to reducing requirements for Government outlays for the financing of future phases of village electrification. However this would be obtained only in the long term and the mechanism should therefore be put to work without delay. PART V - LEGAL INSTRUMENTS AND AUTHORITY 52. The draft Loan Agreement between the Kingdom of Morocco and the Bank, the draft Project Agreement between the Bank and ONE and the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement are being distributed to the Executive Directors separately. 53. Special conditions of the Project are listed in Section III of Ahnex III. 54. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 55. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments April 26, 1979 Washington, D.C. - 15 - ANNEX I Page 1 of 5 tABLE 3a MOROCCO - SOCIAL INOICAIORS DAIA SHEET LAND AREA (THOU %M2) ------------------------------------------------ --------------- MKOROCCO REtERINCE COUNiTRtfS (1t70) IOTAL 659.9A IAOST aLCENT AGRIC. S7060 I970 ESTIMATE E* PH ILIPPINtS TURtRy OaIIgCI t'*4 GNP PER CAPITA (USS¶ 190l 0 300.0 540.0 230.0 0OO0O 1360.0 POPULAtION AXn VrITAL STAIISTiCS POPUI0lIGI. ItMO-YR. WMILION) 11.6 14.8 17.2 3tt9 3s.6 tt.a PO"I¼AT IN DIENSI1T PAil SDuAIl AM. 26.0 33.0 123.0 4t.0 67.0 Pta Sf. KM( AGRICLlkLUFtAL LAND 61b0 74,0 3tU.t 275.0 65 0 e6.o VITAL STAtiStICS CRUDE BIATH RATE (/TIOuU AV) 50.4 49.2 46.2 44.2 40.6 10.1 CRuoE OWNTH RAIE (/Ikl0J,AV) 24.2 16.5 15.7 13.2 14 4 3.0 INFk4l hORIALII. RAIt I/tHOU) 149.0/a * 130.0 01.0 tS30/" 29.6 LIfE EXrICTAICY AT SRlTH (YRS) 45 4 50.4 53.0 5.0 64 4 TO.9 MOSS0 RE1,OIIUCtION RATE 3.4 4 3. 3.3 2.6/. C .e POPULAIJOTI GROL7'H QATE (I) IDIAL 3t.b 2. 4 /a 2. 4 t8 3.0 25 a O b/It LkBAN 6.4 4.C 5.6 4.0 4.1b/d 1.0 URBAN POPULATION (% OF TOTAL) 29.3 32.2 40.1 27.6 36.7 62.( UGE STRUCTURE ¶PERCENT) 0 10 14 VEARS 44.3 46.4 45.8 45.E 41.7 24.9 t5 TO 64 YEARS 61.7 61.1 51.6 1 .6 54 0 64.8 65 TEARS AN0 OVER 4.0 2.5 2.6 2.6 4.3 11.1 AGE DEPENDENCY RATIO 0.0 1.0 0.9 0.9 0M9 0.6 ECONLIIAIC DEPENDfkCY RATIO 2.0 1.9/b 1.8 ' .1. I /e FAMIILT PLANNINO ACCEPiORS (CIMULATIVE. THO) .. .1 352.3 320.0 USERS ( Of MAARRIED WOMEN) 2.0 534 2.0 f.2 IMPtOYMENT = ...___., lOfAL LAbOR FORCE (THO)SAND) t300.0 /b 4000.0tb4900.01b 12400.0 1L400C.0/f LABOR FDRCE IN AGRICULIlRE 41% 5Bo Ib 5-/b 4' 4 4$ $5. 0/ 63.4 UtNiMPLOYED (S Of LAbO FORCE) 9-0,t5' 9.ON 13.25 7.6 - I.9/^ INCoNE DISTRIBUT ION S Of PRIVATE INCOACE REC'D BY- HIGHEST 5 OF HOUSEHOLDS Ib.C /e 20.0 tc .3 hIGHEST 208 OF HOUSLE4oLOS A3.0 o .c o( f, * * OomrF LfZlSt 3tA W2 HOfOJSFHOLDS 7.0 re 4.0fc *. .. 2.9/W :, tD4ESt 4tF OF HQVSEHULDS 16.6 /C 12.0 /i .. .. S.d .. tIMONteUOItm Di' LANO OWNERSHIP _-- ---- - ---- ----- --- ------ --_ _ _ _ r OWNtD Sy tOP I0. of ORNLRS .. . 51.0/c . 39.0 /1 % OWNED AY SMALLtST IIOX ONERS . . * * .°/c 0.7 /- ItALIH AIIID NUTRITION POLPULAIIOli PER PHYTICIAs. 9700.01& 12650.0 IN4Orn.0 . 2250.0 620.6 POPULATION PER NURSING PfESCN I . 1500.0 . 1770. f 11.0 POPULATION PER HOSPITAL SED 620. /a,d660. 0/d 780.0/d 650.0 60D.0' 160. PEll LAIA SUPpLA OF - ClL(lxIL tX Of REOUIREMENTS) 70.0 102.0 I06,.Qe 06.0 112.0 ¶46.0 PROTElN IGIAMS PER DAY) 43.0 64 D u/i 45.0 76.0 99. -Of WHICH ANIMAL AND PULSE I. 0/c 13.2J 22.0 22.01k "2.0/b DEATH RATE f/IHOUI AGES 1-4 .. .. 6.6 14.*/1 EDUCAI IO0 AD.IUSTE EfkR3LLMt$NT RAtlIO PRIMARY SCHOOL 4f.0 52.0 64.9 1t3.0 I09.0 110.0 S[CONIJARY SCHOOL 5.0 13.0 17.2 49.0 28.0 70.0 rEAf.. rf SC.IOOL1FLG PtOVIDED (FIRSTA ND0 SkCoNO LEVEL) 12.0 12.0 13.0 10.0 11.0 12.0 VOCAl JffAL ENROLLMENT .I OCF SECOfOFARL ,, 2.0 3.0 6.o/b 14.0 20.0 ACULI EiTfRACY RATE tI( 17.0/e 1. 0 28.0 * *S.O/ 62.0 PfER5O .-. .j 1A (iOC IUfRR NI 2.1 Z 1 . . I . DCcUPIL D WEf LLINGS WI mUUT PIPEIL rWAlER 81 .. 3s.5 . 76.0 6e.0 AiCCES TO ELECTRICwITY- IS Of ALL OwELLITNS) 76.0 f2.0/1 . . 23.0 40 0 AURAL DWLLLINCS CONN4ECIED 10 ELECTRICITY (81 31.0 . 7.0 1..0 CONSUMPI ION RAD:o RECEIVfRS (t-R liTOU POP) 4ff 0 6U.0 77 72.0 69.0 11 .0 PASsN "E CLARS tI fFRI dlt, POP) 11.0 15.0 19 3 8.0 4.0 26.0 FLtCTlICITV (KWi4/VR PILA CAP) 87.0 138.0 171.0 445.0 247.0 5072.0 NEWSrRINT (AG/YR PEtA CATr) 0.2 9.2 0.3 2.0 0.7 %.6 Sit MOTES 40NU OEfINITI 1N 014 REVERSE -16- ANNEX I Page 2 of 5 0,1n... oh oi.. .t0.4. 0.a for 19k0 l.far -n naY T..n ha..., 0959 sad 1961. I., 1900 kn.a.... 1969 *and 1971. and for We. teant latl6t 6*9,0 /d tao.,-t konPitalaiblaa.S n1 4 Para...MLY 1 Osaw a, ft"n Pa.-ar nt . aa h. tn Food aad wit.. )970 /. l. tn au.iatia Pnrtalatiaa *raatb late im looar tIns o o ri ed alral lucre..; lb tndnda auorporced fownls belpata in ai,Iooltara; I. Canatiptide, aspandItaro at hassaa.ds; /4 Csawaausn hanpital esaaiabonsits earl1 /9t i9O66; If ol. bea.a.hde asli. 100 1TRzqk l1IKA?t: D.. to `Giaranttn pap.latina *r.th Gets Is looeant ba rate of nataral iarta".. ,j 1977 dat ltat. ___________________ _ I. laoldaa collecti.* ..t "latch' laud: I e.C.aobauat hospital .atakIJoahaants .6171 Ij 1951-7 tOIrla'lstl 17 1. aP....rontgo of asplaynant; lb P.1,lit aoctatat ably. 7060.! 1970 I. 1967; lb laniod.0 17 acatarS pranl-an; /c 1965-67; /t 1965-70. /6 1L.Cia at Ppultation d.tt IS add ii ad1 Ioot jb, I...a 1) ..... ant ana; if CinLia1 1.6., fnrcai /JI Thtadi.a Pank a...-.. agLi.Wto,41 an."lopub"91 Ilt l.pnaab'l . inc...; /1t A.rI.nItaral land. IsnarlaS laNtI.a h o...hA..a I1 1-.4It.# a.ai.ta.t oursas anf nd. nba.; Itk 1964-66.. ij 1967-681; /j i.r.da... Win eanra and anal nba tellCh tan.. takne, that they? fan rdW &an CUd E 1970 I D.a Ia nastatan ppot ianBreth lots in I-a thas ri veto. nat-alicroana; 1k 1967. R14, May7 1. 1970 ~~n4Ol0a ftbooka.eJ Ponnlattan anI ataralaa aat.na - Pofpalaioa dtnidat by atinr of protiialap taal .,.1 .fo raenrt ta eemd n,ra ad inland narona. IMNat.a fnnal ardt oa."t-aisad" n"rttd .roaa,and trt 9- nna ..lti- t ofniltC..It-a O'a. W.da tooprarttly or perain exaLt.rip p-nana ,ntt -Ltaial at apnllaaa. n Ic b I.ot, raoo. k ntht 6 kitct.. an.a.- or tn it. fa1l... EMnI;tooan Dog htospital bad - noaiadi,td.4 ky -6., t ah pauta1 beft aaib1. In b.aki! n niaannr Id 11nt aPa.laIatd hapitt1 and C",P alt O.tt I:")71 C",? PG. .ap..a ..atinatt a. ..a.....at dut pt.., rnlabililattean tonar; anolatn . i1f. h-# -od atabihwla.at. cmt oala,,Iated b7 a... eanornion niod a. ValId lan Onlaa (19740-ll baaia); ntta p,-natl,. Corn. 1960; lEO and 1976 dAt.---ent nni tonnin1 of Lrn ,-.t.)a - Cnpotad ft.. nearly pov~~~~l.ti- ..d Vil.1 Ucl.tt.a.lolna af t lad.aPpl. 11.1.1i. po-in , Iaa .tay parant "Part Red poaalaton~ai~.atn ll-o,, -" An at ll ti,La: At nat Motain rrsaaaaa in nInth; nat aa .laanolda anInal Inat, seeds qo-tttitta "W a of .ni- td a I-a..; 1960, 19,70 and 1976 data. In Iaat pG-a...Ia and lanana in ditatrisema; maqora-a.iat. aa-cetl.iad 67PAO ha.d a.4G ~b,lnlaioa aseds fan --I artinit and hnait landid. ~alotloodnat~j an anodla ha- kid-y.ar papi.taato par nynar. bilserm asn nr*aaaut.l tespern,ar., bady auith. nn ast an. dAtrilbtotand Of (ItO hact-to c oaa..papalatiea. -ad a -lant 10t fa Goadts at knanahald looai. L..aintlod.ati..alaaoara h of arlig, ia.d - teapated a. ebroo for ft. Coatea ajainat~ 110.1 ltem et da,- 96.161. lnteat of per copied anltiotl ad onl. ant ..,Pp, af fond par day; an aapiy at fond in afL.Ad Go .bat. raqatra- --.l tar all aOrtCSa sanlt.aat d by aUBA B.-L. lsnanara S.ar.at Via tatit.ti- pranida For a .inha ailodar at hO A.- at total P.otlan par "Y.a m -t! bl).rI ana Iltann-d.oo.- ona lo biraha Gar Ihad. at 10 B'ar o a .t lnl ant paa drl.. aftt. or e6b 10 gra abotaId Wa Mimiu Ii-at oo.tt Onoyt...... ati a...na nl.4 In 1966 and 1970. pratata; than. atandA,da . al -leat le Chn- at is71 oo of at min pmttala Gn I nyaIatra r:l"f'it~ 1971fT noa5laoocntlntadrt. and 23 rn tala pa.-ola Ga a.a-rana tor tha _ld* GGGG.aa ky #A0 Clod4a S.t a.trilond vrn - toA-I doatMt par tbanaand ar nld-ynar 1. tha ThIrd WIdAnI pant Narvny. paanta. a-no-n lathantin oln. .1i 11140 an 1970 nAt tin- ft. adnitaarpFa.C. n 1m. frau nalnal and at41a - NaVal. a.WPI nf t"d ya,atoaodO L1975 fa noaet dora - atlnt dartond frt u anal taaaI ta.ptdy W-n ant-nor tali aI 1/that) Ann.al Ch.la vif itat 4na n ar taaaa 6 a.a atha Par tweanan In see S"" lad Pa, ah....n linbrt. arnt1:drnai amtop tg-aa .a ldn ta bIrh d bnally htO-na anordia1 -,ndl70 i. IWO. d10 ant 1Get tnt danlof Ua5 batatnina 11-atA-ln..t lana 0of .0 -taaaofnlitat nil aan - pat fartl.... raIn, .aalyfaaya lan ni6 . 1960, 170 19 1915r hatiev ead5aotadfrdffmaiath tpiartdrt". n nntl wt iaa,nltlo: t.otbrata l) -ttal -Cpeat aaatal grtoth lin atntd-par atabanatie4IIiota.nahal ago pon.a b.tol nl(I-oGn-CpttIh s .... m at t-tarle ...natian tap rn a an a.yar rapaa niaylnyain popoit lo; dilarni datnitoan t ia aP., a lat ~rblt t rndngnra,nntae attaol raai lana,tt. .n far ppi data aaooar canorina. atAn'1.tpo'19? .d 97 W 12 -ta yforot dial rarlapt* I"hofpitnaan alatim (.arll a.lladnd. farba !oo.~ tlmI tttl anonobnt aa ooana;dfanm O at anaal. nLidad "I.bat any aactd lan i.) - at, yaaI, aret t PMI...lp ry9mtt6 - lbltltr - 10o-04 m Ilk. S thdaa-an .1-4 yanra1 la taian aar.la. ft a-t fnona I.--)- -V ppaotsd dnt.ary, 1-tatl 010 naa. ftata-lti tpplta bna 1.. nd 65fand oaprabitr ofa taaid..aa anndm -.inai latiana.reti. fr or a~t a. .- tbS BiU orta12 Itaao rat.years of raa d.It -.61. ran S -- atlly an poar- -i9bm lt/vEtaoLr. -.) anl.ofpoolltnanarIIaa at f ...a . Tan anta .t totaladl g-Aa.A i.t-a et 1 ar au ann.- - as-j-t inohootrlodatona aetna. ataploa of-natianal t d..111 p 6t raGlanI ftjn n ostraL 6nna noe a- ptaana tesat- r in anniad taniloalaonnn - nal. i,ofp .cs atnartj .ygPnratoaa4a6 ofd -ari. to n at- dala ..t.roa Gat ananoaln parta. a.inaaath..B 4Arp. idet orha t.an (mIn -ra Laterat Ina1ttaa (abtaita - Glas -it.) f"lpei- of IJbtr fhto.. I (t-aaaad -. ofnulal ala. patatod,1 planIndl annads alattlso, - Ia -11.6 moatesna a- -roan at natal polln6 foo ala, and f~n7tt~d t.aolty.dbat aololn~ oo..attoa. atadaa.I l..; tatlailiaar.. tmIni arana.e LI ef.1. -i I. tala obnont.::.s.54 Yeaa ars)epr.la arl lllnpor.ao. I aataal,CI -Cdandaaa. atGoa 1.46 -lo.a am ..1talta0 IC] - lolaltaal ahartott (. fPIP"e tntaar, tallilna nlp hnnti~g and Ilailta) ad parloao oa ofltotalilain. tart. Teflit I at -abo Oht-.4) l vsi-nt lydar oata.ll P aa. .d 1a.4tnaii um"dl efinsacmU :14111 .P,bto a4 Aln ou sS a_ .1.adailgaLia o,ala at- py4b. .Ia. Go a ntta ty 4.Itan ndat- India -2116ar tarta a l le.a aanm ttrtahnd 1. -n .. c-t nt ho t rnaaGo, C ....a loalnt&.a n ndlaatdtataaI oatantra and tI 'atr alan tail.taata -t Clapca nad naa for affal b-Li., ..d b:~~~~~~~~~~~.no at an ht nn paaar a auaa at,nr.a.l se.ra nd lInhaa E. rInen 2 t1 panran )6.b God pan' at". 4 a. d hae..-e taut In..l tr - olVr fra(*b et Ghaldab. I rhr t . ..- otd- Wed. eL.oag..... flai/a' parnal t-e- aoaf ppna,Wti . at n4d ttes rarat"ra -'LY .: I.,~~~~~~~~~~~~puo n anaaaataat . lant ar artpt, aaal Y nono ..af land donr . as Iaa tIstt*be.Got .. fan Inpata and sapyt at a-prlblty.el.se -r,eogk Wanntnt ha~.7.va, - araattaaor .- .a-upI.. in- -la artm al~~~jyd pr1..tlofil-i mba n.Latont lnbldta.. frat prtnaeto pCladata sela.nat c ptt M.ateo naapltt.r -fjoa b ar j~~IONIa $. rPae.altl2on dioldad b . -at awt preat el ne -.h " ~paiolana qanalif lad frau n nadloal nakeal an A-iaaGao-posae, l. - 17 - page 3 of 5 } ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~wo* _c~0 .z9au _& _ _ _ 1,3.,.3 ?tr.9e013.f _ A,,,.. Cro..,I, 1.0 P,14.,rL 7 SO- 3911 m12 1910 S 9I7 Ila 1On2 1687 107-2 1972.32 L 7 12 1 02-37 3921 , lL~ IT%J.iO-4* 1. 0o.* 9o.130 9..0.ot 13,323 30.411 32,332 23120,t ?.010 4 6.32 s4.sos ,u o,1 4.3 9.3 130.3 t. t7r 48 3.1. *40.....z 5300 t 1 ? 307 1t3 133 1.104 - - - - O.4 . -,..*3 171 Itrt 13,273 2C S 17.3l 2.S33 30.662 37.441 55.947 .2 7.4 3.0 6.3 220.1 S. !'r l. 3am8 3,994 4,200 1.169 7.170 ,21. 33.9321 S. 3I.1 0.1 10.9 27.2 t. 't>rl -l*97 .3.i9SI .3.331 -4.77 -1. 02 -3.i432 n .12t4 3.3 i.s 9A. 9.1 I;.. . 14r3 3S * 3.41.t.-t -2, s74 . -3.01.2 *1,34 -4.211 -9,1.1 -lI 2. 3,4 1. 0.6 14.7 2 it tff- |. 1S6~13 9. t 49111 3324 134 3.796 1 .81 7,?37 393 0.530 - - 130 . t.I6 .U*optl.. 14.16) 13,23 03.61.1 24.S13 250.41 3I .12 12.347 5.. 4.1 S.2 1.0 6I.3 9. ?olUt. o..o.oo 1.239 13.1.10 19.421 19.349 20 0.1 25.103 3U2" s 1.0 i.9 1.9 SS 17.4 l0o C.o.0.*t r 1,t11 2.410 L*1US 4.704 4.*4 4. Ait, 9.3 o .3 123. 4.* S .0 110 Lt. Cr..A f(0.4 2..0r*l 1 40 2 .1 *.8l1 6.453 4,130 t.400 1I.SCO 5 . 24 '.85 . 194 2.. _1. .9l II *1 61.2 345 -1.2 372 600 49S 1 53 - - - 2 33 r_el13 .4i,.n 1.110 2.*3S 3.3" 3.000 49W 1 * .S052 13.390 12.0 3. 4.0 32.3 ItS 34. 04t33r.I G-lp 960 Z,744 10321 * 09 5.849 2 .972 U4,1ss 23.1 37.21 2.3 3.1 30.3 IS. cr.. D-'tt, l".11 3.003 5.012 9.914 113224 12.102 19,437 341.21 10.4 14.3 5 0.4 13.0 - (S 1 .1111.4 04*t prIeol) 13. C.. S- .0 ll 444S1 3.044 0.09 1 0 0.316 11.354 12.580 10.i2S 35.103 10. 13.1 10.0 121. is itilll