PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No: 38451 Project Name Multimodal Transport Project Region AFRICA Sector Transport Project ID P092537 Borrower(s) Democratic Republic of the Congo Implementing Agency Comité de Pilotage de la Réforme des Entreprises Publiques (COPIREP) and Office des Routes (ODR) Environment Category [X] A [] B [ ] C [ ] FI [ ] TBD (to be determined)
Safeguard Classification [] S1 [X] S2 [ ] S3 [ ] Sf [ ] TBD (to be determined) Date PID Prepared May 23, 2005 Estimated Date of Appraisal 09/10/2007 Authorization Estimated Date of Board 12/04/2007 Approval
1. Key development issues
The proposed multimodal transport project (MTP) is a central element of a vast and coherent national program for economic and social revival (PMPTR: Programme Minimum de Partenariat pour la Transition et la Relance) launched in November 2004 by the Government of the Democratic Republic of Congo (DRC). The program document, prepared with the assistance of the Bank, specifies the objectives for each economic sector, articulates implementation strategies, recommends the necessary institutional reforms and identifies priority investments. In the transport sector, the primary objective of the Government is to consolidate the country reunification through the revival of DRC’s three backbone multimodal trade and transport corridors. To reach this objective, the Government recognizes the need to deeply restructure the state-owned enterprises (SOEs) that operate along these corridors and, when feasible, to bring in private operators and investors through public/private partnerships (PPPs). This approach is deemed essential to ensure the long term sustainability of expensive transport infrastructure, and to reduce DRC transport costs which are more than twice the African average.
Consistent with one of the Bank’s Africa strategy main pillar, the MTP seeks to generate private sector-led growth1 with the expected outcome of lowering transport costs for rail, port and airport networks by 50% through 2014 as well as improving the DRC investment climate. The reduction in costs would cumulatively represent US$ 750 million in savings for transport users by 2013 with indirect and induced benefits pushing this figure well beyond the US$ 1 billion threshold. Furthermore, the subordination of the majority of the MTP investment to the establishment of PPPs will set the stage for enabling transport regulations and institutional reforms throughout the sector. In this regard, although a 1978 law already permits limited PPPs in the form of management
1 The proposed project’s private sector led-growth will build upon the Bank’s extensive experience in promoting viable PPPs throughout Sub-Saharan Africa. contracts, current institutional reform supported by a Bank-funded Private Sector Development and Competitiveness Project (PSDC) should translate into a new legislation that would enable more radical types of PPPs (e.g., such as concessions). Initially foreseen to be effective before the end of 2005, the law is to be adopted by the Parliament before mid-2007, due to the electoral context of 2006.
2. Proposed project development objective(s)
The MTP development objectives are: 1) the physical reunification of the eastern and western parts of the country and, 2) the drastic reduction, by at least 1/2 or the equivalent of 2% of the GDP, of annual transport costs.
3. Preliminary project description
The MTP will constitute the first transport project in DRC since the end of the civil war. Its aggregate estimated cost during its first phase covering is US$ 180 million (excluding labor retrenchment cost of about US$ 73 million2) spread across all transport sub-sectors. The MTP main components are:
a) West/North-East Corridor
The West/North-East Corridor is the most important of all three multimodal corridors as it links the DRC’s western maritime façade to its eastern lakes region via the Congo River. Major cities including Matadi, Kinshasa, Mbandaka, Kisangani and Bukavu are served by this corridor. Enhancing its performance will strengthen the still fragile DRC unification process as well as lower significantly overall transport costs throughout the country. The main sub-components to be funded along this corridor will be implemented in support of public/private partnerships at Matadi port, along the Matadi/Kinshasa transport corridor link as well as Kinshasa N’djili international airport.
At the port of Matadi, since the rehabilitation of the quay of Matadi will be financed by the PMURR ahead of the MTP implementation, the project will finance through a US$ 5 million technical assistance package the necessary institutional reform of the port management system. This will be done with: a) the licensing and or concessioning to private operators of the port’s stevedoring activities and, b) the establishment of an independent port authority using the landlord model. Ahead of the creation of the port authority, operations at the port of Matadi will benefit from ongoing technical assistance provided by the Belgian Cooperation and the Port of Antwerp. The legal framework to be adopted in Matadi consists of a port company rather than a state- owned enterprise, whose capital would be gradually open to private firms up to 49% of share. Furthermore, the MTP will also provide assistance to the Régie des Voies Maritimes (RVM) in the form of equipment acquisition (i.e., US$ 5 million) as part of plan to integrate it within Matadi port authority.
2 This figure amounts to US$ 155.5 million if eligible salary arrears for the SNCC are taken into consideration. The upgrading of the rail operations between Matadi and Kinshasa, i.e., Chemins de Fer Matadi Kinshasa (CFMK), will be sought through the implementation, minimally, of a performance management contract with a private operator. This contract estimated three-year cost of US$ 5 million will be paid for by the MTP. Additionally, US$ 15 million will be made available to finance track rehabilitation works, and US$ 5 million will be allocated to the leasing of the rolling stock. In the latter case, the use of a Partial Risk Guarantee (PRG) is envisaged to secure up to US$ 20 million in leasing costs commitments3.
Finally, at Kinshasa N’djili International Airport, the MTP will provide up to US$ 50 million to finance the rehabilitation of the airport passenger and cargo terminals. This financing will complement planned AFD funding of the airport runway, taxiways and apron rehabilitation works. It will be contingent, however, on the transfer to a private operator of the management of the airport facilities.
b) West/South-East Corridor
The West/South Corridor is also of a considerable importance to DRC. It links the country’s western maritime façade to its south-eastern mining centers located in the Katanga province and serves as a trade corridor to Angola, Zambia and South Africa. The main MTP activity on this corridor will consist in supporting the transfer to a private operator of Société Nationale des Chemins de fer du Congo (SNCC) management (See Annex 6) with: a) US$ 60 million going toward the financing of track rehabilitation, b) US$ 15 million dedicated to pay for the estimated first three-year cost of a management contract and, c) US$ 15 million to cover rolling stock leasing cost.
The design of the MTP rests on three guiding principles:
No or limited money will be lent to SOEs. Current financial and management crises in the transport sector SOEs precludes the Bank from making funds available to these enterprises when a clear and viable private sector alternative exists. Investments in infrastructure will support and be tied to implementation of PPPs, whenever feasible. The transport sector in DRC generates in excess of US$ 200 million in revenues per year, most of which is in hard currency. A number of transport activities, therefore, lend themselves for various PPPs schemes. Lending will be preferably be used to fund infrastructure rather than equipment. Acquisition of rail and port equipment will be limited to a minimum since: a) the uncertainties regarding the level of future demand for certain transport activities, e.g., railways, do not support the risk of vast outlays of money within an environment of heavily constrained resources, and b) transport
3 PRG instrument can be used to provide Government backed World Bank guarantees to payments to be made to an equipment leasing company. In all cases, the guarantee amount only accounts for 25% of its equivalent IDA allocation; thus a US$20 million guarantee would translate into a US$ 5 million IDA credit. infrastructure targeted for rehabilitation should be able to sustain commercially viable operations; thus allowing private operators to lease and/or acquire necessary transport equipment.
4. Safeguard policies that might apply
Safeguard Policies Triggered Yes No TBD Environmental Assessment (OP/BP 4.01) X Because of the geographic and sectoral scope of the project, a Sectoral EA will be prepared. Uncertainties will exist until project implementation on the exact location of the rehabilitation and maintenance works that will take place for airports, railways and roads, and an Environmental Social Management Framework (ESMF) will therefore be developed in conjunction with the Sectoral EA. This ESMF will include a screening mechanism that will make identification of specific safeguards issues possible and will guide the preparation of appropriate impact management instruments for the specific subprojects, including Environmental Assessments (EAs), Environmental Management Plans (EMPs), and Environmental Audits. Natural Habitats (OP/BP 4.04) X The Sectoral EA will include an overview of habitats that could be affected by the project and will identify potential “hot spots” that would require special consideration in subproject planning, design and implementation. Forests (OP/BP 4.36) X While the project does not support forest clearing activities, improvements in the Congo transport network could facilitate timber trade along some corridors, including illegal logging trade. Accordingly, the Sectoral EA will include an assessment of this potential problem in order to assess what preventive measures, if any, would need to be adopted. Pest Management (OP 4.09) X Cultural Property (OPN 11.03) X Indigenous Peoples (OD 4.20) X Involuntary Resettlement (OP/BP 4.12) X Railway track as well as airport terminal rehabilitation and road maintenance will likely involve resettlement of local population which has, over the years, infringed upon track and runway safety perimeters and along roads and corridors. Evaluation of the extent and location of possible resettlement issues and needs will be accurately identified during project implementation when the location and scope of sub-projects become known. During implementation, for each sub-project entailing land acquisition or/and involuntary resettlement, a Resettlement Action Plan will be prepared, published and implemented in accordance with the requirements and procedures of OP/BP 4.12. A Resettlement Policy Framework incorporating the principles and procedures for RAP preparation will be prepared, cleared by the Bank and disclosed before appraisal. Safety of Dams (OP/BP 4.37) X Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X
5. Proposed preparation schedule The MTP project will extend over five years from Fiscal Year 2008 through FY 2013.
Milestones Date PCN Review 4/21/2005 Pre appraisal mission 01/2006 PAD Review/ Decision Meeting 06/2007 Appraisal Mission 09/2007 Negotiations 11/2007 Board Presentation 12/2007 Credit Effectiveness 04/2008