Document of The World Bank Public Disclosure Authorized

Report No: 31962-MA

IMPLEMENTATION COMPLETION REPORT (SCL-41280 SCL-41281)

ON A

LOAN

Public Disclosure Authorized IN THE AMOUNT OF US$85.0 MILLION

TO THE

KINGDOM OF MOROCCO

FOR A

RAILWAY RESTRUCTURING & PRIVATIZATION PROJECT Public Disclosure Authorized May 30, 2005

Finance, Private Sector and Infrastructure Middle East and North Africa Region Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective May 7, 2005) Currency Unit = Moroccan Dirham (DH) DH1 = US$ 0.12 US$ 1 = DH 8.57

FISCAL YEAR January 1 December 30

ABBREVIATIONS AND ACRONYMS

ADB African Development Bank CAS Country Assistance Strategy CIPEP Comité interministériel permanent des entreprises publiques (Interministerial Committee of Public Enterprises) DH Dirham EIB European Investment Bank GOM Government of Morocco IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding ICR Implementation Completion Report IDA International Development Association MED Ministry of Economic Development MT Ministry of Transport NCB National Competitive Bidding OCP Office chérifien des phosphates (National Company of Phosphates) ONCF Office national des chemins de fer (National Railway Company) ONT Office national des transports (National Transport Office) PSO Public Service Obligation PSR Project Status Report SAR Staff Appraisal Report SOE Statement of Expenditure

Vice President: Christiaan J. Poortman Country Director: Theodore O. Ahlers Sector Manager: Hedi Larbi Task Team Leader/Task Manager: Michel Bellier

MOROCCO RAILWAY RESTRUCTURING & PRIVATIZATION

CONTENTS

Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 4 5. Major Factors Affecting Implementation and Outcome 9 6. Sustainability 10 7. Bank and Borrower Performance 11 8. Lessons Learned 12 9. Partner Comments 13 10. Additional Information 14 Annex 1. Key Performance Indicators/Log Frame Matrix 15 Annex 2. Project Costs and Financing 16 Annex 3. Economic Costs and Benefits 19 Annex 4. Bank Inputs 26 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 28 Annex 6. Ratings of Bank and Borrower Performance 29 Annex 7. List of Supporting Documents 30 Annex 8. Partner Comments (Borrower/Implementation Agency) 31

Project ID: P043725 Project Name: MA-RAILWAY RESTR & PRIV Team Leader: Michel Bellier TL Unit: MNSIF ICR Type: Core ICR Report Date: May 26, 2005

1. Project Data Name: MA-RAILWAY RESTR & PRIV L/C/TF Number: SCL-41280; SCL-41281 Country/Department: MOROCCO Region: Middle East and North Africa Region Sector/subsector: Railways (100%) Theme: State enterprise/bank restructuring and privatization (P)

KEY DATES Original Revised/Actual PCD: 11/27/1995 Effective: 07/22/1997 Appraisal: 08/01/1996 MTR: 02/15/1999 06/22/1999 Approval: 12/19/1996 Closing: 12/31/2002 11/30/2004

Borrower/Implementing Agency: Office National des Chemins de Fer (ONCF)/Office National des Chemins de Fer (ONCF) Other Partners: African Development Bank/European Investment Bank

STAFF Current At Appraisal Vice President: Christiaan J. Poortman Kemal Dervis Country Director: Theodore O. Ahlers Daniel Ritchie Sector Manager: Hedi Larbi A. Amir Al-Khafaji Team Leader at ICR: Michel Bellier Henri Beenhakher ICR Primary Author: Jacques Yenny

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: HL Institutional Development Impact: H Bank Performance: HS Borrower Performance: HS

QAG (if available) ICR Quality at Entry: HS Project at Risk at Any Time: No 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The objective of the project was to support the preparation and implementation of a restructuring program of the Moroccan railways that would lead to an efficient, commercially-oriented operation.

The principal items of the restructuring program were:

a) Transform the Moroccan National Railway Company (ONCF) into a joint stock company; b) Attract private capital; c) Adopt a new set of regulations for the joint stock company; d) Reduce Government financial support for public service operations; and e) Reform the railway pension system.

The project was also intended to contribute to financing the railway's rehabilitation and modernization program necessary to support the restructuring program.

The objective was clear and consistent with the Bank’s strategy in Morocco to assist with the reform of public enterprises. The objective also responded to a specific Government request for assistance with its program to restructure the railway sector, achieve financial viability in railway operations and reduce the railways’ drain on fiscal resources.

3.2 Revised Objective: The project objective was not revised.

3.3 Original Components: The project included the following components:

(a) Investment for the rehabilitation and modernization of rail infrastructure and equipment, including: l Renewal or rehabilitation of track and electric traction facilities (catenary, substations) on selected sections of the network; l Improvement of signaling and telecommunication systems; l Investment in rolling stock (acquisition of nine electric locomotives, and 100 specialized wagons).

(b) Studies and consulting services to prepare and implement the restructuring program, to prepare and implement the reform of the railway pension system, and to support the improvement of railway management systems; and

(c) Acquisition of computer equipment needed for the implementation of new management systems.

A number of the components of the project were to be financed, in parallel with the Bank loan, by the African Development Bank (ADB), the European Investment Bank (EIB), bilateral assistance, commercial banks and ONCF’s own resources.

The Bank-financed components were as follows:

· Acquisition of rail and turnouts for the track renewal program for about US$21 million;

- 2 - · Infrastructure works for track renewal, US$70 million; · Acquisition of computer equipment, US$1 million; and · Studies and consultant services, US$2 million.

The fourth Bank-financed component was the most directly related to the restructuring of the railways, since many of the studies and consultant services were directly focused on this goal. The others were also important. The improvements in railway infrastructure and computer equipment under these components were intended to enable ONCF to fulfill its future role as an independent entity more effectively.

3.4 Revised Components: The components were not revised.

3.5 Quality at Entry: There was no Quality Assurance Assessment at Entry. Quality at entry is rated as highly satisfactory for the following reasons:

i) Consistency with CAS/Government Strategy. The design of the project was consistent with Government priorities and the Bank’s country strategy in Morocco to reform public enterprises; ii) Government Commitment, Ownership and Participation in Preparation. The project resulted from a long working relationship between the Bank and the Moroccan railways and agreement on a policy package to which the Government was fully committed. The first attempt to finance a railway project in Morocco was made during the preparation of a second Public Enterprise Restructuring Loan (PERL) in 1991, but the Government felt it did not have enough political support to proceed. In 1993 Government requested a stand alone railway project. The Bank conditioned its intervention on an increase in phosphate transport tariffs and on a financial agreement between ONCF and the Government. Subsequently, in 1994 phosphate tariffs were increased by 26% and an automatic adjustment formula for inflation was agreed upon. The Government and ONCF also signed an agreement for annual support to the railway of DH700 million until 2000. ONCF adopted cost control measures that reduced operating costs by about 20% in 1995 compared to the previous year. ONCF also improved the cost effectiveness of passenger service by eliminating under-used service (a 25% reduction in service resulted in a loss of only 1% in revenues). ONCF also eliminated 30% of passenger train stops and closed several little used stations. Base freight and passenger tariffs were also increased in 1994. Finally, the medium-term investment program was reviewed and reduced by 40%, and the transfer of non-core activities to the private sector was initiated. All these measures demonstrated the commitment of the ONCF and the Government to the reform of the railways.

iii) Readiness for Implementation. Before Board presentation in December 1996, the Government submitted a policy letter confirming its intention to continue restructuring the railway. Also, a Performance Contract for 1996-2000 between the ONCF and the Government was signed. Preparation for implementation was well advanced; the publication of bid invitations for goods and a pre-qualification notice for works were issued before Board presentation.

iv) Suitability of Project components. The investments for the rehabilitation and modernization of rail infrastructure on the core network were selected to reduce operating costs and improve service to customers. They were designed to assist the restructuring program and in particular to facilitate improved commercial operations of the railways. The acquisition of computer equipment and software was also essential for achieving this goal. The organization and human resources management studies assisted the ONCF in designing and implementing its staffing strategy and improving the management of its personnel.

- 3 - v) Risk Management. The project risks were correctly assessed. The risks involved Government willingness to enforce the stipulations of its railway sub-sector policy letter. The settlement of a long-overdue tariff dispute with the National Phosphate Office and changes in the management of ONCF prior to the loan indicated Government commitment. To further mitigate risks, technical assistance was included in the project to identify and recommend actions that would reinforce the Government’s and ONCF’s commitment to reform.

vi) Safeguard Policies. Because the physical component financed by the Bank was limited to track renewal on existing lines, there were no major environment issues (the project was classified as category B), and no resettlement was needed. The civil works contract for track works included mitigating measures to minimize pollution during the transport of construction material.

4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: The development objective of the project was successfully met and hence the satisfactory rating of the project outcome. The restructuring program of the Moroccan railways has been implemented leading to an efficient, commercially-oriented operation as illustrated by the key performance indicators of the company (table 2). The project has achieved a remarkable set of major reforms and institution building in a sector that had previously experienced difficult problems.

The Moroccan National Railway Company is being transformed into a joint stock company. A new railway law creating a joint stock company was adopted late in 2004. The ONCF should become the Société Marocaine des Chemins de Fer, a joint-stock company (Société Anonyme) on January 1, 2006, and new regulations have been adopted for the new company. ONCF also has been reorganized (mid-2002) on the basis of commercial operations by main business lines (phosphate, freight, passengers). The freedom to set its tariffs also has enabled ONCF to develop a new commercial policy and to continue increasing its efficiency. Improved passenger services have attracted more customers, with passenger traffic increasing by over 20% between 2001 and 2003.

Government has reduced financial support for public service operations of the railway. The reduction of financial support has been as follows (million DH):

Table 1: Financial support to ONCF 1996 1997 1998 1999 2000 2001 2002 2003 2004 Revenue 700 700 700 700 700 0 0 0 0 support Capital 0 0 0 0 0 0 329 434 530 grants The capital grants are equivalent to the debt service of the bonds issued by ONCF for the transfer of its pensions. There have been no operating subsidies since 2000.

The railway pension system has been reformed. The pension transfer was completed on January 1, 2002 under a refinancing scheme providing for (i) the issuance of bonds by the ONCF in three annual tranches (2002-2004) to cover most of the agreed capital cost of the transfer of DH 5.9 billion, and (ii) the Government entering into the 2002-2005 performance contract, including capital grants to cover the debt service of the bonds. The three bond issues were highly successful with the last one completed on schedule early in 2004.

- 4 - All actions included in the policy letter (presented before Board presentation) to restructure the railways have been taken to bring about more efficient and commercially oriented railway operations. These actions have been very effective, as illustrated by the Key Performance Indicators, including traffic growth, staff reduction, and increased efficiency, measured by unit revenues and the labor cost ratio to revenue, which exceeded the targets set in the SAR (see further details in Annex 1).

- 5 - Table 2. Performance indicators

1997 1998 1999 2000 2001 2002 2003 2004 - Personnel Cost / Operating Revenues * IBRD Objective <41% <39% <37% <36% <31% <31% <31% <31% * Actual ONCF 37,2% 35,0% 34,9% 33,4% 32,5% 30,7% 29,7% 26,9% - Passenger Revenue / Seat-Kms (cents) * IBRD Objective 9,0 9,4 9,8 10,2 10,4 10,6 10,8 10,8 * Actual ONCF 9,6 9,8 10,3 10,2 10,7 10,9 12,0 12,9 - Receipts / Trains-kms (Dirhams) * IBRD Objective (*) 170 175 167 169 170 172 172 172 * Actual ONCF 164,3 165,6 165,0 166,2 156,3 167,0 191,0 185,5

(*) 1999-2002 targets modified following ONCF visit to the Bank from July 5 to 8 1999.

The financial viability of ONCF has greatly improved and it has become a profitable operation. The achievement of the objective is therefore rated satisfactory.

4.2 Outputs by components: Overall, the output of the project components financed by the three development banks (IBRD, ADB and EIB) was satisfactory. The rehabilitation and improvement of track, electric traction facilities, signaling and telecommunications on the core network have reduced operating costs, increased commercial speeds and safety, all contributing to the successful outcome of the project. For example, the improvements allowed ONCF to run half hourly trains between Casablanca and Rabat, thus greatly improving the quality of passenger services. Travel time was also reduced from Casablanca to Marrakesh and Fès. The Bank financed components in particular were satisfactorily completed. The Bank had placed a large emphasis on institutional change and privatization,which involved a large amount of consultant services and the development of software applications in support of the railway restructuring. The Bank only financed limited infrastructure improvement, because most infrastructure improvements were financed by the borrower (ONCF) and the other donors.Details on the outputs of the Bank-financed components are as follows.

A - Acquisition of rail and turnouts for the track renewal program

Output of this component is rated highly satisfactory. All the rails and turnouts specified in the project were purchased in a timely and cost-effective manner and have been properly used in the rehabilitation and renewal of priority tracks of the core network.

B - Infrastructure works for track renewal

Output under this component is rated satisfactory. The Bank loan financed track renewal on sections of three main lines: Casablanca-Marrakesh, Casablanca-Sidi Kassem, and Fès-Oujda. ONCF entered into a single contract for the three lines in 1998. After initial delays by the contractor, works proceeded for some time and were expected to be completed by November 2001, against a contract date of February 2001. The

- 6 - quality of works was good as well as their supervision by ONCF. Works on the Casablanca-Marrakesh and Casablanca-Sidi Kassem lines were completed satisfactorily. However, due to problems with a contractor, in March 2002, ONCF terminated the contract, with only 70% of the works executed on the section Casablanca-Sidi Kassem. This led to an extension of the Loan Agreement in December 2002 up to November 30, 2004. However, in early 2003, ONCF informed the Bank that it did not intend to carry out the works because Algeria had closed its border with Morocco and the traffic anticipated on the Fès-Oujda line was no longer expected to materialize. Other proposals were submitted to the Bank for the use of the remaining funds, but they would have required a further extension of the closing date that could not be considered.

A positive result of the extension of the closing date was that the Bank could continue to advise ONCF on the reform program and to the Government on the new railway law. This continued working relationship lasted for almost two years after the original closing date and helped to frame and solidify the important policy improvements.

C - Acquisition of computer equipment

Output of this component is rated satisfactory. Computers were acquired up to the amount allocated in the loan. ONCF acquired over 200 micro-computers and related equipment such as servers and printers, to support the modernization of its management system. It also acquired ticket-printing machines for the modernization of its passenger stations. All these investments contributed to enhancing the financial and information management systems of the company and thus directly assisted in achieving the outcome of the project.

D - Studies and consultant services

The output of this important component is also rated satisfactory. The first three items were especially useful in supporting the reorganization and strategic restructuring of the railway. The last three proved less useful due to delays in their implementation and because the increase in axle load for phosphate cars did not prove to be feasible.

Procurement and installation of financial software. The contract proceeded normally, with some delays due to changes in consultant personnel. By 2001, some modules were already in place, such as for the management of suppliers, clients and contracts. Applications for the accounting of stations were completed in 2004 and applications for assets management continue to be implemented. Further updating of the system is being financed directly by ONCF with the same contractor.

Study of the future railway organization.The study was completed satisfactorily in 2001, and its recommendations were used by ONCF in its 2002 reorganization along commercial lines of operations. This study proved extremely useful in guiding the management of the railway making major strategic decisions.

Study to reorganize human resource management. This study, including suggestions for changes in the incentive and salary system, was completed satisfactorily in 2001. The 2002 reorganization was based on recommendations from this and the organization study. It was particularly well conceived and implemented, following a careful preparation to get the approval of the staff. A new statute of personnel effective April 1, 2004, brought major modifications in staff classification and pay system. The new statute is based on the management by objectives method, a new salary system related to performance and annual evaluations, and a career development policy combined with advertisement of vacant positions, open to all staff with the

- 7 - required profiles for the positions. ONCF now has a much improved human resources management system.

Development of a computerized central command of freight traffic. In early 2002, the Bank agreed to exclude this study from the project as it could only start in 2003 following the 2002 reorganization of the company. There were already many software systems under implementation in the company and this would have stretched the capacity of the staff to deal efficiently with additional software.

Development of a computer system to monitor the functioning of all information systems. This was not completed successfully. There were delays in the consultant contract, which was supposed to be completed by the end of 1999. The completion date was initially moved to April 2001. After several work stoppages, the consultant abandoned work in March 2001. In 2002, the ONCF proposed to restart the project taking into account the evolution of its information system since the contract signature three years earlier. The consultant proposed a pilot project, excluding several of the activities included in the original contract. No agreement was reached and, in 2004, the Directorate of Information Systems passed the matter to the juridical department for resolution, which has not yet been achieved. It is worth noting that the non completion of this integrated information system did not affect the outcome of the project nor the performance of the company.

Feasibility study of increasing the axle load of phosphate cars.The study was completed and conducted to the non justification of an increase in axle load. The increases would have implied major modifications in the installations for loading and unloading of phosphate trains, which would have negated the benefits of increased axle loads.

4.3 Net Present Value/Economic rate of return: The bulk of Bank loan financed track renewal on three sections of the major north-south line connecting Morocco’s main cities from Fès to Marrakesh, through Kenitra, Rabat and Casablanca. The length renewed was 150 km. This axis is predominantly used for long distance passenger traffic. On the three sections partially renewed under the project passenger traffic has increased very rapidly since appraisal in 1996 exceeding the forecast of 3 to 5 percent per annum.

Table 3. Passenger Traffic 1996-2004 in thousand passengers per year

1996 2004 Annual growth in % Marrakesh-Casablanca 1,664 4,523 13.3 Casablanca-Sidi Kassem 4,614 8,969 8.7 Fès-Oujda 1,742 2,557 4.9

The main benefits from track renewal are: reduced track maintenance cost, reduced accident risk, and time savings to passengers due to increased operating speed. The re-estimated economic rates of return range from 18 to 29% (Annex 3) and are comparable to those estimated at appraisal (22 to 33%).

The benefits of the project go far beyond the quantifiable economic returns. The project supported important institution building and railway restructuring. Operations have become profitable and much less of a burden to the State.

4.4 Financial rate of return: The financial situation of ONCF improved rapidly after 1995, following the 1994 tariff increases for

- 8 - phosphate, general freight and passengers and the strict cost control measures introduced by management. In 1998, ONCF made a profit for the first time and has continued to do so every year since. This was due primarily to sharp staff downsizing and better control of the use of goods and services in rail operations. Solving the pension problem, a major policy reform supported by the project, also has contributed to the improved financial situation. Because of the agreed annual Government contribution up to the end of 2000, ONCF was able to finance a major share of its renewal program. All financial ratios agreed to in the Loan Agreement have been met or exceeded each year.

Table 4. Financial ratios

Actual at end 2004 Bank loan Covenants Actual/Covenant for 2003 Labor cost/op. Rev. 26.9% <31% +4.14 points Working Ratio 50.2% <75% +24.84 points Debt Ratio 17.2% <35% +17.8 points Current Ratio 1.5 >1.5 +0.0 points Pass. Rev./seat-km in DH 12.9 10.6 +21.8% cents Freight Rev./train-km in DH 186 172 +7.9%

ONCF’s net profit increased rapidly after 2000 to over 400 million DH in 2004, a 37% increase over 2003, with only a 12.5% increase in traffic. This reflects ONCF’s continuing tight cost control. A detailed financial statement is in Annex 3

4.5 Institutional development impact: Institutional development is rated highly satisfactory, which is somewhat unusual for a railway project. ONCF management strongly supported the project objectives. The government was also supportive, although pension reforms and new railway law took longer than expected. ONCF was first reorganized in 1995 to achieve greater efficiency and reduce operating costs. Non-core activities such as hotels, food and beverage services in stations, railroad ties manufacturing, and quarries were transferred to the private sector. Properties were either sold or placed under management contracts. Another reorganization took place in 2002, creating separate directorates along business lines (phosphate, general freight and passenger services), with responsibility for the technical and commercial aspects of these services. The directorates are responsible for the financial performance of their respective activities. The management of infrastructure and train circulation is under a central directorate with regional branches. This reorganization was well conceived and implemented. A new statute of personnel was introduced on April 1, 2004. The operation improved the railway’s ability to manage its financial and human resources, as reflected by the efficiency indicators. The railway will become a joint stock company early in 2006 which will further solidify the legal basis of its autonomous management which is already in practice.

5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: There were no major external factors affecting the implementation of the project. Phosphate transport accounts for 50% of total revenues, and volumes transported are influenced by the world market for phosphate. During the 1990s, tonnage transported was fairly stable. Demand increased after 2002 to 25 million tons in 2004. Drought affected cereal transport for a few years, reducing other freight traffic. Other freight decreased from about 8 million tons in 1995 to 6.9 million tons in 2002, but grew again to 7.5 million tons in 2004. However, deterioration of the political relationships with Algeria slightly affected the

- 9 - renewal program but it did not impact the overall project outcome (see 5.4).

5.2 Factors generally subject to government control: The restructuring of the railway required solving ONCF’s pension problem with Government support and passing a new railway law creating a joint-stock company. These were difficult issues, requiring political will and broad consensus among all stakeholders, in particular the staff unions. Both were eventually achieved, although four and five years behind the original schedule.

5.3 Factors generally subject to implementing agency control: The successful implementation of reforms by ONCF and its results have already been described in the various sections above. The implementing agency played a key role in the project successful achievements.

5.4 Costs and financing: The appraisal estimate of the program cost was US$614 million. This included the components of the project financed by the three development Banks (IBRD, ADB and EIB) estimated at US$350 million and other investments estimated at US$264 million. The final program cost was US$376 million. Detailed costs are in Annex 2. The reasons for the lower program cost than estimated in the SAR are as follows:

The cost of the components financed by the three development Banks was US$304 million, 87% of the appraisal estimate. The low cost of the Bank financed components, was the result of a reduction in amount of the track renewal on the Fès-Oujda line. ONCF decided not to proceed with a non profitable investment due to the closing of the border with Algeria (see section 4.2).

For the “Other and Miscellaneous” components, the actual cost was US$73 million or 28% of the appraisal estimate. With the restructuring of the railway and its more commercial operation since 2000/01, some of the other investments were cancelled. For instance, instead of purchasing 100 freight cars, as indicated in the SAR, ONCF scrapped 400 cars and this program continues. ONCF is now much more able to assess investment proposals and make sound decisions than before.

The remaining funds in Euro (about 11.9 million) were cancelled in 2004, out of the Euro part of the Loan (equivalent to US$42.5), and the outstanding amount of US$31.2 million was cancelled in March 2005, out of the Dollar part of the Loan (US$42.5 million). The ONCF did not request earlier cancellation because it wanted to keep the option of requesting reimbursement for expenditures paid for with its own funds. At closing, ONCF no longer needed additional financing.

6. Sustainability 6.1 Rationale for sustainability rating: The very positive impact of the reforms undertaken under the project led to improved management, commercial operations and autonomous operations. This augurs well for the future of the railways. Efficiency has improved. The railway now can concentrate on activities for which it has a competitive advantage vis-à-vis other transport modes, particularly road transport. The commercial orientation of management and the motivation of the staff are likely to continue when the railway becomes a joint-stock company in 2006. Road transport offers intense competition, except for the transport of phosphate, so the railway will need to continue improving its operations and to continue assessing the transport market in order to identify profitable niches. Moroccan phosphate is of very good quality and is in high demand. ONCF has a distinct advantage in the transport of phosphate, which should ensure it of significant and continuing revenue in the future.

- 10 - 6.2 Transition arrangement to regular operations: No transition arrangements were necessary as the railway was always in regular operations.

7. Bank and Borrower Performance Bank 7.1 Lending: Bank assistance in project preparation was highly satisfactory. The skill mix of the team was well suited to assist with railway reform. The Bank rightly insisted that a sound policy framework be adopted and acted upon before Board presentation. The fairly lengthy preparation period enabled consensus building within both the ONCF and the Government.

7.2 Supervision: There was almost complete continuity in the Bank team dealing with the project throughout preparation and implementation. When the first task manager retired, his successor, who had already been associated with the project from its inception, remained with the project until the end of 2003 when the reform process and the investments were completed. The same railway specialist dealt with the project from appraisal to closing. The Bank staff were closely involved in advising ONCF and the Government on pension plan reform and on drafting the new railway law.

The Bank’s influence was most significant in defining the new institutional framework: (i) transforming the railway into a commercially oriented joint stock company; (ii) operating the railway under the legal framework of a concession, and (iii) including the possibility to introduce concessionaires other than the railway company. The Bank influenced the drafting of legal and contractual texts. ONCF, which originally asked a consultant to do this, was not satisfied with the output. The Director General, set up a small working group of Moroccan experts and included Bank staff. The final texts were the result of a fruitful dialogue between the staff and the management of the company and the Bank. The Bank also helped to define the framework for the transfer of pension liabilities and assisted in its implementation by the Ministry of Finance. This freed the railway a large financial burden.

The Bank team showed flexibility in accommodating changes in the investment components. However, it was not possible to entertain new bids and get work completed before the extended closing date.

7.3 Overall Bank performance: Overall the Bank’s performance was highly satisfactory.

Borrower 7.4 Preparation: The Government performance was highly satisfactory. Government stopped an earlier attempt to prepare the project because the political situation was not yet favorable for implementing the necessary reforms. In 1993, the Government approached the Bank to resume preparation. The decision to proceed after a period of deliberation indicated real interest by the borrower. The consideration of the issues at that time by the government contributed to the eventual success of the project. Indeed, the Government was able to meet the conditions set by the Bank for the loan: setting a strong reform agenda, increasing the phosphate tariffs and agreeing to an annual support of the railways until 2000 (see details in section 3.5).

7.5 Government implementation performance: Government performance was satisfactory. It provided assistance to the railway as agreed in the

- 11 - performance contracts signed with ONCF. Contributions were made of DN 700 million per year from 1995 to 2000, as were the annual capital grants to cover the bond issues for the cost of the pension plan transfer. It took longer than anticipated to finalize the pension transfer and to pass the railway law, but both were eventually achieved. Processing this difficult reform agenda through the political system was difficult, and it is a credit to the government that this was achieved.

7.6 Implementing Agency: The performance of the executing agency was highly satisfactory as already detailed in the sections above. ONCF performed well from the beginning. ONCF successfully reduced costs during the project implementation period and, although traffic increased only very little (+2% between 1994 and 2000), its financial situation improved significantly. Staff was reduced from 14,400 in 1994 to 10,400 in 2000, and had further reduced to 9200 by the end of 2004, reflecting productivity gains.

7.7 Overall Borrower performance: The overall performance of the borrower is rated highly satisfactory. Although there were delays in passing the new railway law, this was understandable given the need to achieve a political consensus for these major reforms in two chambers of Parliament. The delay is a relatively minor factor in the context of the ambitious reform program supported by the project, which eventually was fully completed.

8. Lessons Learned l Strong political will is necessary to accomplish the degree of reform and improved efficiency brought about in this project. ONCF and the Government were clearly not ready for the project in 1991, even though the Bank was planning to appraise the project. When the Government felt more confident of its ability to pursue reforms in 1993, it requested Bank’s assistance for a stand-alone railway project. This commitment was tested when major reforms were made conditions for presenting the project to the Bank’s Board. l Progress in projects with major reform agendas can be expected to encounter roadblocks, which require continuous follow-up and support from donors and the government agencies involved. Fortunately, the ONCF General Manager was very interested in reform, and he had the full support of the Government at the highest levels. His two successors were also committed to the project objective. On the Government side, support for railway reform remained a priority, although it took more time to carry out reforms that required Government decisions. l A strong business base and demand for services is important. Road transport was not competitive in the transport of phosphate between the mines and the ports, and phosphate traffic accounts for 50% of the total revenues. The adjustment of phosphate tariffs, including an escalation clause, which had been a condition of the Bank’s loan, eased the railway’s financial situation early in the project period and enabled management to focus on restructuring. l Continuity of staff can contribute to project success, especially when major reforms are involved. There was an almost complete continuity of Bank staff over a ten-year span (1994-2004), which was exceptional. The original manager of ONCF remained in his position long enough to give a strong impetus to organizational reform and financial improvement. His successor stayed only two years (2001-02), but then continued to support reforms as Minister of Transport. There was also a reserve of young managers, well trained and fairly paid (with salaries comparable to the private sector), who were able to participate in the restructuring.

- 12 - l Disbursements are not always the best measure of project achievement. In this project the Bank has rightly focused on adequately implementing the institutional reforms; investments were a somewhat secondary measure of success. Because the reforms were achieved early during implementation, loan disbursement was less critical to the success of the project. ONCF was able to finance the bulk of its investments with its own funds, and large amounts of the loan were cancelled. Bank staff focused most of their effort on the policy aspects of the project. l In this type of project, major IT spending should be postponed until after much of the restructuring and reform has been achieved, particularly for large management information and control systems, in order to ensure that it is appropriate for the new management setting and that the equipment will be properly utilized.

9. Partner Comments (a) Borrower/implementing agency: Important factors led to success in restructuring the Moroccan railways in contrast to similar efforts in other countries.This success, which is rather exceptional in the railway sector, was the result of several factors:

l Before restructuring, the railway was in good technical condition (infrastructure, rolling stock, management systems). This was due to the quality of technical staff and to the fact that despite the poor financial situation of the railway, spare parts had remained available in sufficient number.

l The general manager, who had been in his position for 27 years, had retired. His Government appointed successor was very dynamic and had private sector management experience. He also had the full support of the highest authorities in the country. His actions were not blocked by the administration as is often the case in Morocco and elsewhere. On the contrary, the administration, particularly the Ministry of Finance, was very supportive of the major restructuring reforms.

l There was a reserve of young managers, well trained and fairly paid (with salaries comparable to the private sector), and who were ready to participate in the restructuring.

l The railway had generally operated without major interference in management from the administration, except for tariff setting. Although the administration was represented on the board, there was no major intervention in operations, as is often the case in other railways.

The increase in phosphate tariffs, which had been a condition of the Bank’s loan, eased the railway’s financial situation and enabled management to focus on restructuring.

The report submitted by ONCF in French is attached in Annex 8. It follows the outline of the ICR, starting with the listing of project objectives the components. With regard to project implementation, the report states that the project was well conceived and responded to the economic priorities of the Government in the transport sector. It concludes that the objective of the project has been reached satisfactorily with the improvement and development of the railway sector in Morocco. This includes especially the transfer of ONCF’s pension fund and the reorganization of its activities along business lines. The latter has enabled ONCF to be closer to its clients, to be more responsive to their needs and to have a structure that is more efficient and adapted to its mission, and requires simpler procedures.

The report also describes the output by components and gives details of each contract for goods, works and

- 13 - services financed by the project. It gives the performance indicators annually between 1997 and 2004, showing that they exceeded the targets agreed with the Bank every year. It also gives the financial ratios stipulated in the Loan Agreement, showing that they were all exceeded. The evolution of freight and passenger traffic on the three lines which were the object of Bank financed track renewal is also shown in the report.

Finally, the report comments favorably on the performance of the ONCF and of the Bank. Regarding the lessons learned, the ONCF mentions that time was saved in the procurement process since they were able to deal directly with the Bank for the approval of contract awards, without the involvement of the Ministry of Finance. ONCF commends the Bank for giving advice on reforms and for assistance in contracting, helping to manage various contracts during their execution and the ease of disbursement. (b) Cofinanciers: NA (c) Other partners (NGOs/private sector): NA

10. Additional Information NA

- 14 - Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate A restructured, modernized, self-financed railway meeting the challenge of road competition Indicators:

1.Million traffic units carried 7,569 (year 2003) 8180 2.Staffing level 10,000 9207 3.Transfers from the GOM budget (million) DH325 DH 570 4.Availability rate of diesel locomotive >85% 85

Output Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate Enhanced productivity and financial viability

1.Revenue/seat-km (cents of DH) 10,8 12,9 2.Revenue/general cargo train-km (DH) 172 186 3.Labor costs to traffic revenue (%) 30% 26,9% 4.Average load per freight car (tons) 41 43

1 End of project

- 15 - Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Component US$ million US$ million World Bank (IBRD) Acquisition of rails and turnouts 21.00 22.00 105 Track renewal Fès/Oujda 45.00 Track renewal Rabat/Sidi Kassem 10.00 0 Track renewal Casablanca/Marrakesh 15.00 0 Sub-total track renewal 70.00 57.00 81 Computer Equipment 2.00 1.00 50 Studies and Consulting services 1.00 2.00 200 Physical contingencies 9.00 0 Price contingencies 11.00 African Development Bank (ADB) 103.00 104.00 88 European Investment Bank (EIB) 134.00 118.00 44 Others 167.00 73.00 44 Miscellaneous 97.00 0 Total Baseline Cost 685.00 377.00 Total Project Costs 685.00 377.00 Total Financing Required 685.00 377.00

- 16 - Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB 2 N.B.F. Total Cost NCB Other 1. Works 86.00 0.00 0.00 0.00 86.00 (59.00) (0.00) (0.00) (0.00) (59.00) 2. Goods 25.00 0.00 0.00 0.00 25.00 (24.00) (0.00) (0.00) (0.00) (24.00) 3. Services 0.00 0.00 2.00 0.00 2.00 (0.00) (0.00) (2.00) (0.00) (2.00) 4. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 5. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 111.00 0.00 2.00 0.00 113.00 (83.00) (0.00) (2.00) (0.00) (85.00)

Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB 2 N.B.F. Total Cost NCB Other 1. Works 57.00 0.00 0.00 0.00 57.00 (43.00) (0.00) (0.00) (0.00) (43.00) 2. Goods 23.00 0.00 0.00 0.00 23.00 (23.00) (0.00) (0.00) (0.00) (23.00) 3. Services 0.00 0.00 2.00 0.00 2.00 (0.00) (0.00) (2.00) (0.00) (2.00) 4. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 5. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 80.00 0.00 2.00 0.00 82.00 (66.00) (0.00) (2.00) (0.00) (68.00)

1/ Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. 2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units.

- 17 - Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate Bank Govt. CoF. Bank Govt. CoF. Bank Govt. CoF. Total Project 85.00 336.00 193.00 68.00 134.00 174.00 80.0 39.9 90.2

- 18 - Annex 3. Economic Costs and Benefits

- 19 - Project Cost Recapitulation

Section Planned Actual A/P in % Fes/Oudja (2) 331430 400087 120.7 % Casa/Marrakech 117124 159718 136.4 % Kenitra/S. Kacem 222253 205060 92.3 % TOTAL (1) 670807 764865 114.0 %

(1): including works on the PAI FES/OUDJA track (2): excluding works on the PAI track.

- 20 - Financial Situation 2004

(Unités=Milliers)

- 21 - - 22 - - 23 - Principaux indicateurs financiers à fin décembre 2004

1- Compte de produits et charges

(en millions de DH) Réalisa- Réalisa- Budget Ecart en valeur tions à fin tions à fin à fin Réalisations 2004/ Réalisations 03 Déc. 03 Déc. 04 Déc. 04

I - PRODUITS D'EXPLOITATION 2,262.6 2,511.8 2,279.7 249.2

II - CHARGES D'EXPLOITATION 1,846.4 1,961.7 1,878.2 115.2

III - RESULTAT D'EXPLOITATION (I - II) 416.2 550.1 401.5 133.9

IV - PRODUITS FINANCIERS 70.7 70.3 51.5 -0.4

V - CHARGES FINANCIERES 169.2 151.6 178.0 -17.6

VI - RESULTAT FINANCIER (IV - V) -98.5 -81.3 -126.5 17.2

VII - RESULTAT COURANT (III + VI) 317.7 468.9 275.1 151.2

VIII- PRODUITS NON-COURANTS 56.2 14.2 46.4 -42.0

IX - CHARGES NON-COURANTES 62.3 59.9 58.0 -2.3

X - RESULTAT NON-COURANT (VIII + IX) -6.1 -45.7 -11.6 -39.7

XI - RESULTAT NET 301.0 411.2 252.3 110.2

2 - Evolution du compte produits et charges de 1998 à 2004

1998 1999 2000 2001 2002 2003 Déc. 04

RESULTAT D'EXPLOITATION 237 246 250 298 361 416 550.1

RESULTAT COURANT 172 282 273 286 370 318 468.9

RESULTAT NET 10 62 76 284 387 301 411.2 3 - Objectifs du contrat-programme Réalisations Objectifs Ecarts par rapport à fin Contrat-Plan aux objectifs Contrat - Plan Déc. 04 2004

- Valeur Ajoutée 1,869.8 1,555.5 20.2%

- Excédent Brut d'Exploitation (EBE) 1,162.4 908.5 27.9%

- Autofinancement 1,043.3 685.9 52.1%

- Charges de personnel / Recettes d'Exploitation (1) 26.9% 29.1% 2.2 points

- Dépenses d'exploitation / Recettes du trafic (2) 51.8% 59.2% +7.4 points

- Charges de personnel / valeur ajoutée (3) 36.9% 40.5% +3.6 points

- Ratio d'endettement (Hors caisse de retraite ) (4) 17.2% 32.4% +15.2 points

- EBE / Service de la dette (5) 522.2% 191.5% +330.7 points NB : Le signe "+" indique que l'écart est favorable.

1 = charge Personnel hors P° immob./recettes exp. hors P° immob. et vart.stock 2 = charges exploitation hors dotations et P°/recettes de trafic 3 = charges totales de personnel/valeur ajoutée 4 = dettes de financement/financement permanent 5 = EBE (remboursement en principal + intérêts + pertes de change)

- 24 - 4 - Objectifs fixés dans les Accords de Prêt avec la Banque mondiale

Réalisations à fin Objectifs Banque Ecarts par rapport aux décembre 2004 mondiale pour l'année objectifs Banque 2003 mondiale 2003 - Charges de 26.9% < 31 % + 4.14 personnel/Recettes d'exploitation 50.2 % < 75 % +24.84 - Dépenses d'exploitation/Recettes 17.2 % < 35 % + 17.8 d'exploitation 1.5 > 1.5 +0.0 - Ratio d'endettement 12.9 10.6 21.8 % - Actif circulant/Passif circulant 186 172 7.9 % - Recettes Voyageurs/ Places-offertes-kms (centimes) * - Recettes Marchandises/ Trains-kms (en Dirhams) *

NB : Le signe + indique que l'écart est favorable (* ) Ratios provisoires à fin décembre 2004

- 25 - Annex 4. Bank Inputs (a) Missions: Stage of Project Cycle No. of Persons and Specialty Performance Rating (e.g. 2 Economists, 1 FMS, etc.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 11/18/1990 1 ECONOMIST (1) 03/11/1991 3 ECONOMIST (1); FINANCIAL ANALYST (1); RAILWAY SPECIALIST (1)

Appraisal/Negotiation 08/11/1996 3 ECONOMIST/TTL (1); FINANCIAL ANALYST (1); RAILWAY SPECIALIST (1) 10/31/1996 7 ECONOMIST/TTL (1); FINANCIAL ANALYST (1); RAILWAY SPECIALIST (1); LEGAL (1); PROC. SPECIALIST (1); DISBURSEMENT OFFICER (1); OPERATIONS ANALYST (1) Supervision 10/04/1997 2 ECONOMIST/TTL (1); HS S RAILWAY SPECIALIST (1) 03/07/1998 2 ECONOMIST/TTL (1); HS S RAILWAY SPECIALIST (1) 11/21/1998 3 TRANSPORT ECONOMIST (1); HS S TRANSPORT ECONOMIST (1); RAILWAY ENGINEER (1) 12/02/1999 2 TRANSPORT ECONOMIST (1); S S RAILWAY SPECIALIST (1) 06/09/2000 3 ECONOMIST/FINANC. ANAL. S S (1); RAILWAY SPECIALIST (1) 03/09/2001 2 ECONOMIST (1); RAILWAY S S SPECIALIST (1) 11/09/2001 2 TRANSPORT ECONOMIST (1); S S RAILWAY SPECIALIST (1) 05/03/2002 2 TRANSPORT ECONOMIST (1); S S RAILWAY SPECIALIST (1) 02/18/2003 2 TRANSPORT ECONOMIST S HS (1); RAILWAY SPECIALIST (1) 12/04/2003 1 RAILWAY SPECIALIST (1) S S 07/29/2004 2 TRANSPORT SPECIALIST (1); S S RAILWAY SPECIALIST (1)

ICR 03/16/2005 1 TRANSPORT SPEC. HS HS

- 26 - (b) Staff:

Stage of Project Cycle Actual/Latest Estimate No. Staff weeks US$ ('000) Identification/Preparation 153.0 Appraisal/Negotiation 216.0 Supervision 447.0 ICR 20.0 Total 836.0

- 27 - Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA

Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA

- 28 - Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU

6.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU

- 29 - Annex 7. List of Supporting Documents

- Project Appraisal Document - Credit Agreement - Project Supervision Reports - Guidelines for Preparing ICRs issued December 24, 2003

- 30 - Additional Annex 8. Partner Comments (Borrower/Implementation Agency) ACCORD DE PRET

PROJET DE RESTRUCTURATION DU SECTEUR FERROVIAIRE AU MAROC

ENTRE

LA BANQUE INTERNATIONALE POUR LA RECONSTRUCTION ET LE DEVELOPPEMENT

ET

L’OFFICE NATIONAL DES CHEMINS DE FER

- 31 -

1. GENESE, DESCRIPTION ET EVOLUTION DU PROJET

1.1 GENESE DU PROJET

1.2. LES REALISATIONS

1.2.1 COMPOSANTE ACQUISITION DE MATERIEL INFORMATIQUE 1.2.2 COMPOSANTE ACQUISITION DE RAILS ET APPAREILS DE VOIE 1.2.3 COMPOSANTE TRAVAUX ET SUPERVISION 1.2.4 COMPOSANTE SERVICE DE CONSULTANTS

1.3 INDICATEURS DE PERFORMANCE

2. EVALUATION DES PERFORMANCES DU PROJET

2.1. EVALUATION DES PEROFORMANCES DE L’ORGANE D’EXECUTION ET DE LA BANQUE

2.1.1 L’ORGANE D’EXECUTION 2.1.2. LA BANQUE

2.2. IMPACT SOCIO-ECONOMIQUE

2.2.1 CONTEXTE 2.2.2 EVALUATION ECONOMIQUE ET ANALYSE DE SENSIBILITE

2.3. IMPACT SUR L’ENVIRONNEMENT

3. RECOMMANDATIONS POUR LES FUTURS PROJETS

3.1. CRITERES D’ELIGIBILITE

3.2. PROCEDURES DE PASSATION DES MARCHES

3.3. MAITRISE DE LA GESTION DE L’EXECUTION

3.4. PROCEDURES DE DECAISSEMENT

- 32 - 1. GENESE, DESCRIPTION ET EVOLUTION DU PROJET :

1.1 GENESE DU PROJET

Le gouvernement du Royaume du Maroc et l’ONCF reconnaissent la nécessité pour le chemin de fer de s’adapter à un environnement plus concurrentiel sur le marché des transports, d’améliorer sa performance financière, et de réduire le volume et de rationaliser les mécanismes de transfert des ressources financières entre l’Etat et le secteur ferroviaire. Plusieurs mesures ont déjà été prises depuis 1994, et notamment :

1. la signature d’un protocole d’accord entre l’Etat et l’ONCF définissant les modalités de restructuration de la dette de l’ONCF et des contributions financières de l’Etat à l’ONCF pour la période 1994-1998 ; 2. la simplification de l’organigramme de l’ONCF pour l’entreprise orientée vers la satisfaction des besoins de sa clientèle et accroître la responsabilité des gestionnaires ; 3. la suppression de plusieurs services de transport voyageurs déficitaires, 4. le redéploiement d’une partie du personnel des services centraux vers les unités de production.

Afin de transformer l’ONCF en entreprise à caractère résolument commercial, orientée vers le marché et à la gestion financière durablement équilibrée, il a été convenu:

1. de doter l’entreprise ferroviaire de statut de Société anonyme , 2. d’attirer l’investissement privé, 3. d’adopter un nouveau Cahier des charges de l’activité ferroviaire qui distinguera clairement d’une part les services de transport à caractère commercial, qui seront exploités dans un environnement déréglementé, et d’autre part, les services exploités à titre d’obligation de service public, à la demande expresse de l’Etat et qui feraient l’objet d’une compensation financière en raison des déficits encourus, d’ici la clôture du projet, limiter à terme les transferts financiers de l’Etat vers le secteur ferroviaire à la compensation des obligations de service public, 4. réformer le système des retraites des cheminots de manière à libérer l’ONCF d’un poids financier qui deviendrait rapidement insupportable.

Les objectifs du Projet sont : la préparation et la mise en œuvre d’un programme de restructuration du sous-secteur ferroviaire visant à améliorer l’efficacité dudit sous-secteur et à transformer l’ONCF en une entreprise commerciale financièrement viable.

Le projet comprend les deux parties suivantes :

Réhabilitation et modernisation du réseau ferroviaire

1. amélioration des systèmes de signalisation et de télécommunications, le renouvellement des voies sur les axes Fès/Oujda, Rabat/Sidi Kacem et Casablanca/Marrakech, et le renforcement du parc matériel roulant par l’acquisition d’une centaine de wagons spécialisés et d’environ sept locomotive électriques, et la réhabilitation des voitures voyageurs, 2. le renouvellement et le renforcement des installations de traction électrique (caténaires, sous-stations) et le doublement des voies sur l’axe Kénitra/Sidi-slimane, 3. la rectification du tracé, le renouvellement de voie et le doublement de la plate-forme Sidi Kacem/Meknès.

- 33 - Programme de Restructuration ferroviaire

Préparation et exécution d’un programme complet de restructuration visant à améliorer l’efficacité des opérations ferroviaires, y compris et principalement la transformation de l’ONCF en une société anonyme financièrement viable qui réalisera ses opérations de manière résolument commerciale, l’amélioration des systèmes de gestion ferroviaire, et la réforme adéquate du système de retraites de l’ONCF.

1.2. LES REALISATIONS

Les principales composantes du projet sont :

1. un programme d’investissements pour la réhabilitation et la modernisation de l’infrastructure et de l’équipement ferroviaires. Ce programme se concentre sur la réhabilitation et le renouvellement de la voie ferrée, des installations de traction électrique et de signalisation et de télécommunications. L’acquisition de 100 wagons spécialisés et la réhabilitation du parc de voitures à voyageurs ; 2. un programme d’études et de services de consultants pour l’appui à la préparation du programme de restructuration (élaboration de textes législatifs et réglementaires) du secteur, l’appui à la définition et à la mise en place de la réforme du système de retraites des cheminots, l’appui à l’amélioration des systèmes de gestion ferroviaire ; 3. un programme d’acquisition de matériels informatiques nécessaires à la mise en œuvre de l’amélioration des systèmes de gestion ferroviaire.

1.2.1 COMPOSANTE ACQUISITION DE MATERIEL INFORMATIQUE

221 micro-ordinateurs, 5 traceurs et 4 scanners : Marché conclu avec BULL le 24 avril 1998 pour un montant de DH 4 118 635,31 HT, son avancement physique indique que le matériel a été livré,

9 serveurs HP, 7 stations HP Kayak, 144 imprimantes à jet d'encre HP, 7 imprimantes Laser et 48 imprimantes : Marché conclu avec MUNISYS le 24 avril 1998 pour un montant de DH 2 061 101,00 HT, son avancement physique indique que le matériel a été livré,

50 imprimantes à ticket TMT 88 : Marché conclu avec APR le 24 avril 1998 pour un montant de DH 240 000,00 HT, son avancement physique indique que le matériel a été livré,

20 imprimantes LEXMARK LASER : Marché conclu avec DCI le 24 avril 1998 pour un montant de DH 93 500,00 HT, son avancement physique indique que le matériel a été livré,

1.2.2 COMPOSANTE ACQUISITION DE RAILS ET APPAREILS DE VOIE

Acquisition de 23 300 rails : Marché conclu avec CSI PRODUCTOS LARGOS (Espagne) le 26 septembre 1997 pour un montant de EUR 10 114 855,09, son avancement physique indique que les 23 300 rails ont été livrés ;

Acquisition de 24 appareils de voie :Marché conclu avec COGIFER (France) le 28 août 1997 pour un montant de EUR 1 065 988,32, son avancement physique indique que les appareils de voie ont été livrés.

- 34 - Acquisition de 8000 rails :Marché conclu avec ACERALIA (Espagne) le 15 juillet 1999 pour un montant de EUR 3 575 844,15, son avancement physique indique que les 8000 rails ont été livré,

Acquisition de 60 appareils de voie : marché conclu avec COGIFER (France) le 19 mai 1999 pour un montant de EUR 2 919 983,32, son avancement physique indique que les 60 appareils de voie ont été livrés.

1.2.3 COMPOSANTE TRAVAUX ET SUPERVISION

Renouvellement de voie sur les axes Casablanca-Marrakech, Casabalanca-Sidi-Kacem et Fès-Oujda: Marché conclu avec AGRUPACION GUINOVART OBRAS Y SERVICIOS HISPANIA (Espagne) le 6 mars 1998pour un montant de 532 013 000,62 DH HT et EUR 11 594 374,73,son avancement physique indique un taux de réalisation de 70%. L’exécution du marché a connu de graves difficultés rencontrées par l’entreprise AGRUPACION GUINOVART en matière d’approvisionnement en ballast et éventuellement en raison de ses difficultés financières générales.L'entreprise a prévu de reprendre courant novembre 2001 les travaux de renouvellement sur un premier tronçon de 13 Km et a présenté un programme d'achèvement total des travaux à fin 2002 que l’ONCF a jugé aléatoire (notamment pour ce qui concerne l’approvisionnement des chantiers de renouvellement en ballast). Ce marché a été résilié le 1 mars 2002.

Contrôle des études et travaux de grands ouvrages d'art : Contrat conclu avec SOCOTEC le 16 novembre 1998 pour DH 550 000,00 HT, son avancement physique indique un taux de réalisation de 31%, la supervision était bonne.

1.2.4 COMPOSANTE SERVICE DE CONSULTANTS

Acquisition d'un système d'hypervision et d'administration du système d'information de l'ONCF : Contrat conclu avec COMPUTER ASSOCIATES (France) le 02/04/1999 pour un montant de EUR 1 367 230,93, son avancement physique indique un taux de réalisation de 37%. Après pluieurs phases de déroulement du projet et suite à des divergences techniques et financières par la suite, entre l’ONCF et le fournisseur, dues essentiellement au non respect des termes du marché, ce dernier a décidé de façon unilatérale de geler le projet en juillet 2003. Malgré plusieurs tentatives de relances de l’ONCF, la société COMPUTER ASSOCIATES a refusé toute reprise du projet ne répondant pas à ces conditions préjudiciables à l’ONCF. Devant cette situation de gel, l'ONCF a confié le dossier à sa Division juridique le 26 mai 2004 demandant une assistance dans la démarche de clôture définitive de cette affaire conformément à la réglementation en vigueur. On se dirige vers l’arbitrage selon les termes du contrat.

Acquisition de logiciels financiers : Contrat conclu avec OMNIDATA (Maroc) le 12/02/1999 pour un montant de DH 10 165 533,00, son avancement physique indique un taux de réalisation de 90%, le dernier module est en voie d’achèvement.

Etude des perspectives d'évolution de l'organisation de l'ONCF : Contrat conclu avec SYSTRA (France) le 11/02/2000 pour un montant de EUR 275 236,03, son avancement physique indique que l’étude est terminée.

- 35 - Etude de diagnostic et de refonte de la gestion des ressources humaines de l'ONCF: Contrat conclu avec WS ATKINS International (Royaume-Uni)/ LMS le 31/03/2000 pour un montant de DH 805 195,00 HT et £ 82 796, l’étude est terminée et à servi de base au nouveau statut de gestion des ressources humaines et la mise en place du système MPO.

Etude d'augmentation de la charge à l'essieu sur les itinéraires phosphatiers : Contrat conclu avec CANARAIL (Canada) le 16/04/2001 pour un montant de $US 214 779,00 et DH 202 690,00 HT, l’étude a montré que l’augmentation de la charge à l’essieu n’était pas économiquement justifiée.

1.3 INDICATEURS DE PERFORMANCE

Conformément au rapport d’évaluation du projet, les indicateurs de performance qui ont été retenus pour le suivi de l’exécution des opérations du projet sont les suivants :

1997 1998 1999 2000 2001 2002 2003 2004 - Charges de personnel / Recettes d'Exploitation * Objectif BIRD <41% <39% <37% <36% <31% <31% <31% <31% * Réalisations ONCF 37,2% 35,0% 34,9% 33,4% 32,5% 30,7% 29,7% 26,9% - Recettes Voyageurs / Places-Offertes-Kms (centimes) * Objectif BIRD 9,0 9,4 9,8 10,2 10,4 10,6 10,8 10,8 * Réalisations ONCF 9,6 9,8 10,3 10,2 10,7 10,9 12,0 12,9 - Recettes Marchandises / Trains-kms (en Dirhams) * Objectif BIRD (*) 170 175 167 169 170 172 172 172 * Réalisations ONCF 164,3 165,6 165,0 166,2 156,3 167,0 191,0 185,5

(*) Objectifs 1999-2002 modifié suite à Mission de l'ONCF à la la BIRD du 5 au 8 Juillet 1999.

- 36 - OBJECTIFS FIXES DANS L’ACCORD DE PRET AVEC LA BANQUE MONDIALE POUR L’EXERCICE 2004

Réalisations à fin Objectifs BIRD pour Ecart par rapport aux Décembre 2004 l’année 2003 objectifs de la BIRD 2003 Charges personnel/recettes 26,9% <31% +4,14 points d’exploitation Dép. d'exploitation/ 50,2% <75% +24,84% points recettes d’exploitation Ratio d’endettement 17,2% <35% +17,8 points Actif circulant/Passif 1,5 >1,5 +0,0 Points circulant Recettes voyeurs/ 12,9 10,6 21,8% Places-offertes-Kms (centimes)* Recettes Marchandises/ 186 172 7,9% trains-Kms (en Dirhams) *

NB : Le signe « + » indique que l’écart est favorable * : Ratios provisoires à fin décembre 2004

2. EVALUATION DES PERFORMANCES DU PROJET

Bien que le projet a connu une prorogation de deux ans de sa date limite d’utilisation de crédit suite à la résiliation du marché relatif aux travaux de renouvellement de la voie sur les axes Fès-Oujda, Casablanca-Sidi Kacem et Casablanca-Marrakech et de la programmation des travaux restant à réaliser, la banque et l’organe d’exécution ont donné satisfaction dans la réalisation du projet.

2.1. EVALUATION DES PERFORMANCE DE L’ORGANE D’EXECUTION ET DE LA BANQUE

2.1.1 L’ORGANE D’EXECUTION

Les performances de l’ONCF sont satisfaisantes pour ce qui concerne l’accomplissement des formalités de mise en vigueur du prêt et l’acheminement des demandes de décaissements.

Les principaux objectifs constituant chaque composante du projet ont été réalisées avec succès. Les seules opérations financés au titre du Prêt et restant en cours d’exécution sont relatives à des opérations d’appui à la Direction des Systèmes d’Information (Acquisition d’un système d’hypervision du réseau informatique et Acquisition de logiciels financiers). Les décomptes et les demandes de décaissement ont été établis régulièrement. La Banque a pu recevoir régulièrement les rapports d’avancement du programme sur les plans physique et financier .

- 37 - 2.1.2. LA BANQUE

La Banque a été performante durant toute la durée du projet. Les missions de supervision ont permis à la Banque de suivre de très près l’exécution des différentes composantes du projet.

Les responsables de la supervision du projet du côté de la Banque ont également contribué à améliorer cette qualité ce qui a permet à l’ONCF de tirer profit des recommandations émises par les experts lors de ces visites.

Les résultats obtenus montrent que le projet a été bien préparé et évalué et que les objectifs fixés sont atteints.

En conclusion le projet de restructuration du secteur ferroviaire, financé par la BIRD, a été bien conçu. Il correspond à des priorités économiques dans le secteur des transports et a été réalisé avec succès. Il a contribué à l’amélioration et au développement du secteur ferroviaire au Maroc.

Par ailleurs, en parallèle du progrès qu’a connu le projet, l’ONCF a pu réaliser :

Le transfert de la caisse de retraite au RCAR : Dans le cadre du programme de restructuration de l’ONCF, et sous l’égide du ministère des finances, une étude actuarielle a été effectuée par un organisme spécialisé externe pour concrétiser la refonte de la caisse interne de retraite. La solution jugée la plus adéquate retenue par l’office a été l’absorption de ladite caisse par le Régime Collectif d’Allocation de Retraites RCAR. Ce transfert a été effectué le 1er janvier 2002 et le coût de l’opération a été arrêté à 5.868 millions de DH financé par un crédit bancaire de 945 millions de DH et un programme d’emprunts obligataires d’un montant de 4.923 milliards de DH étalé sur 3 ans de 2002 à 2004 avec 3 opérations d’émission remboursables sur 15 ans. L’opération de transfert a été ainsi clôturée avec succès et le montant global du transfert soit 5.868 millions de DH a été réglé au RCAR.

La réorganisation de l’Office : l’ONCF a mis en place en juillet 2002 une réorganisation qui a pour objectif de rapprocher l’office de ses clients et de créer les conditions favorables à mise en œuvre et à la réussite d’une politique commerciale efficace. Elle a en effet permis de doter l’ONCF de structures plus adaptées aux nouveaux enjeux, d’un cadre global de réalisation de ses missions-clés et d’outils susceptibles de favoriser des potentialités et la simplification des procédures.

2.2. IMPACT SOCIO-ECONOMIQUE

2.2.1 CONTEXTE

Cette section décrit l’évaluation économique des composantes du programme d’investissement de 1996-2000 de l’ONCF. Ces composantes sont les suivantes:

- opérations de renouvellement et de rectification de tracés, - doublement des voies sur les axes de Kénitra et Sidi Kacem, - remplacement de sept locomotives, - acquisition de 100 wagons

- 38 - 2.2.2 EVALUATION ECONOMIQUE ET ANALYSE DE SENSIBILITE

Les principaux avantages résultant du renouvellement des rails dans le programme d’investissement de l’ONCF, se mesurent en termes de réduction des déraillements, des coûts d’entretien des voies et des dépenses de fonctionnement des trains substantiellement réduite.

Le flux du trafic aller-retour du fret (Unité : tonnes) et des voyageurs (unité : nombre de voyageurs) par axe se présente comme suit :

* Axe Casa/Marrakech (Chiffres en Milliers)

1996 1997 1998 1999 2000 2001 2002 2003 2004 Frêt 1235 1225 1460 1604 1556 1525 1354 1510 1594 Voyageu 1429 1739 1762 1931 2332 2516 2941 3656 4523 rs

5 000

4 000

3 000 Fret 2 000 Voyageurs

1 000

0 1996 1997 1998 1999 2000 2001 2002 2003 2004

* Axe Casa/S Kacem (Chiffres en Milliers)

1996 1997 1998 1999 2000 2001 2002 2003 2004 Frêt 2601 2178 2780 2546 2624 2230 2339 2559 2568 Voyageur 4614 5052 5134 5908 7036 7302 7532 8228 8968 s

- 39 -

10 000

8 000

6 000 Fret 4 000 Voyageurs

2 000

0 1 996 1 997 1 998 1 999 2 000 2 001 2 002 2 003 2 004

* Axe Fès/Oujda (Chiffres en Milliers)

1996 1997 1998 1999 2000 2001 2002 2003 2004 Frêt 437 420 561 618 800 740 642 633 526 Voyageur 1741 1937 1789 1762 1955 1998 2112 2297 2557 s

3000 2500 2000 Fret 1500 Voyageurs 1000 500 0 1 996 1 997 1 998 1 999 2 000 2 001 2 002 2 003 2 004

Le taux de disponibilité du matériel moteur diesel de type DH ( le plus utilisé) pour la période de 2002 à 2004 est donné comme suit :

2002 2003 2004 Voyageurs 89 % 84 % 84 % Frêt 88 % 80 % 82 %

2.3. IMPACT SUR L’ENVIRONNEMENT

Vu la nature inoffensive sur les aspects environnementaux des opérations effectuées au titre de ce projet touchant essentiellement des aspects informatique et études de consultant, le marché des travaux passé avec AGRUPACION GUINOVART OBRAS Y SERVICIOS HISPANIA concernant le renouvellement de la

- 40 - voie sur les axes Casablanca-Marrakech, Casabalanca-Sidi-Kacem et Fès-Oujda n’ a pas eu d’impacts négatifs sur l’environnement et ce en harmonie avec les principes toujours adoptés par l’ONCF vis à vis du respect de cet aspect dans la réalisation de tous ses projets.

3. RECOMMANDATIONS POUR LES FUTURS PROJETS

3.1. CRITERES D’ELIGIBILITE

Pour les marchés financés par la Banque, l’ONCF traite les dossiers d’éligibilité directement avec la Banque Mondiale sans l’intermédiation du Ministère des Finances, cette pratique a beaucoup allégé la procédure et à contribuer au bon déroulement des opérations.

3.2. PROCEDURES DE PASSATION DES MARCHES

La passation des marchés des opérations financées par la Banque n’a pas connu de problèmes majeurs, à ce titre l’ONCF félicite la qualité et la célérité avec lesquelles la Banque a bien voulu traité les dossiers.

3.3. MAITRISE DE LA GESTION DE L’EXECUTION

Concernant la maîtrise de la gestion de l’exécution, l’ONCF n’a pas rencontré de difficultés majeures à ce niveau. La bonne coopération de la banque et de l’organe d’exécution a attribué à une meilleure gestion.

3.4. PROCEDURES DE DECAISSEMENT

L’ONCF n’a pas rencontré de problèmes à ce sujet. Les demandes de décaissement ont été passées dans de bonnes conditions du côté de la Banque.

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