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Document of The World Bank FILE COPY FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 2109 PROJECT PERFORMANCE AUDIT REPORT Public Disclosure Authorized TUNISIA FIRST RAILWAY PROJECT (LOAN 606/CREDIT 150-TUN) June 23, 1978 Public Disclosure Authorized Public Disclosure Authorized Operations Evaluation Department Tis 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. FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT TUNISIA FIRST RAILWAY PROJECT (LOAN 606/CREDIT 150-TUN) Table of Contents Page No. PREFACE PROJECT PERFORMANCE AUDIT BASIC DATA SHEET HIGHLIGHTS PROJECT PERFORMANCE AUDIT MEMORANDUM I. Introduction 1 II. Main Issues 2 III. Conclusions 5 ATTACHMENT: PROJECT COMPLETION REPORT I. Summary and Conclusions A.1 II. Project Preparation and Appraisal A.2 III. Project Implementation and Cost A.4 IV. Traffic and Operations A.7 V. Financial Performance of the Borrower A.9 VI. Institutional Development A.11 VII. Economic Reevaluation A.12 VIII. Role of the IB'RD/IDA A.13 Tables 1. Actual and Expected Physical Completion 2. Actual Costs Compared with Appraisal Estimates 3. Appraisal Forecasts Compared with Actual Traffic 1968-1975 4. Selected Operating Statistics 1968-75 5. Adjusted Income Account - Appraisal Forecasts and Actual Results 6. Balance Sheets at December 31 - Appraisal Forecasts Compared with Actual Results 7. Appraisal Expectation Compared with Actual Financing of Project 8. Economic Reevaluation Map 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. PROJECT PERFORMANCE AUDIT REPORT TUNISIA FIRST RAILWAY PROJECT (LOAN 606/CREDIT 150-TUN) Preface This report presents a performance audit of the Tunisia Railway Project for which Loan 606-TUN and Credit 150-TUN, each in the amount of US$8.5 million, were closed fully disbursed in 1976 and 1973, respectively. The report consists of a Project Perfor- mance Audit Memorandum prepared by the Operations Evaluation Depart- ment (OED) and a Pioject Completion Report (PCR) prepared by the EMENA Region. The memorcandum is based on the PCR and on discussions with Bank staff members; the transcript of the Executive Directors' meeting of April 29, 1969 has been read, and the project files have been reviewed. An OED mission to Tunisia was undertaken in January 1978 and its findings are reflected in the Audit Memorandum. The assistance ren- dered to the mission by Tunisian authorities is gratefully acknowledged. The Government and the Borrower have not commented on the draft report. The audit agrees with the principal conclusions of the PCR but amplifies on certain aspects of the project which appear to be of particular significance. PROJECTPERFORMANCE AUDIT BASIC DATASHEET TUNCSIA: RAILWAYSPROJECT (LOAN 606/CREDIT 150-TUN) SOCIRTE NATIONALEDES CHEMINSDE PER TUNISIENS(SNCFT) KEY PROJECT DATA Original Actual or Item Plan Current Estimate Total Project Cost (US$ million) 29.2 35.45/2 Overrun (%) 52 1 Loan/Credit Amount (US$ million) (606-8.5, 150-8.5) 17.0 17.6 Disbursed Cancelled Repaid to ) . I Outstanding to ) April 30, 1978 Date Physical Componenta Completed 12/31/72 6/30/76,1 Proportion Completed by Original Date () 6 - Proportion of Time Overrun ()100 Economic Rate of Return (7.) 2 and 25 10 Financial Performance 4 7.(1971). 7 7.(1973), Negative 7 %. (after 1973) OTHER PROJECT DATA 17. Original Ites, Plan Revisions Actual First Mention in Files or Timetable InformalApproach Q/ -/66 6/29/66 Govermentes' Application -- 8/17/67 Negotiations 12/ -168 2/ -/69 3/ -/69 Board Approval 2/ -169 3/22/69 4/29/69 Loan/Credit Agreement 3/ -/69 -- /-6/ 4/69 Effectiveness 6/ -/69 -1 9/16/697 Closing Date 12/31/73 12/31/75 9/ 1/76 Borrower Loan 606 - SNCFT Cr. 150 Republic of Tunisia Executing Agency SNCPT Pistol Year of Borrower January I - December 31 Follow-on Project Name No request likely to be made for a second project to he financed by the Bank OTHRPION DATA lent Month No. of 8 No. of Date of Item PlYear eevssone ManweeAs c ual Identification - - /-1 /7 Preparation 11/67 0.5 4 2 12/21/61 Preappraisal 6/68 3 3 9-9 /9 Appraisal 10/68 2 3 6 Yellnw 1/22/69 Sub-total 9 5-.65 - Gray 4/11/69 Supervision I 6/69 1 2 2 7/2/69 Supervision 11 3/70 2 1 2 5/14/7 Bupervesion IL 9/70 1 6 2 2 10/20/70 Supervision IV 12/70 0.5 2 1 1/27/71 Supervision V 6/71 2 2 4 8/17/71 Supervision VI 4/72 2 3 6 5/10/72 Supervision VII 3/73 2 2 4 5/15/7.3 Fupervisione Vic 12/73 1 1 1 1/18/74 Supervision IX 12/74 1 2 2 3/10/75 Supfrvision X 2/76 s d 1 1 3/11/76 Sub-total 13.5 25 Completion 4/76 -/ 2 3 6 8/- 7 Total 21 48 COUNTRYEXCHANGE RATES Name of Crency (Abbreviation) (TO) Tunisian Dinar Appraisal Sear Average US$ 1 TO 0.525 6 Intervening Year Average7$ 1 T2 0.450 1970S- US1 - TO 0.525 1973- US$1. TO 0.420 1971 - 0$ 1 - T 0.521 1974 - TO 0.437 2$7 1972u-US$1. T 0.477 1975- US$ I TO 0.402 Completio Year, 1976 2 S$ 3T 0.429 6 /1 The estimate, excluding duties and tomes (which were waived) sad project item cancelled, was 01$23.3 million. 52 Overrun on project itsN actually carried out, including interest during construction. /3 including US$1.6 million for exchange adjustments. /Z Repayments refer to Loan 606-TUB; repayment of Credit 150-TUN coemences in 1979. /3 Based on principal components of project. /A Northern and Southern region, respectively. If Final disbursement date. /8 Number of 5-day weeks shown in the mission report plus travel time. /9 Numiber of weeks times number of persons. Excluding time spent in report-writinR. PROJECT PERFORMANCE AUDIT REPORT TUNISIA FIRST RAILWAY PROJECT (LOAN 606/CREDIT 150-TUN) Highlights This project contributed as intended to the first stage of a renewal and modernization program for the Tunisian Railways (SNCFT), through the financing of track renewal, procurement of motive power and rolling stock, renewal of workshops, consulting services and interest during construction. However, the agreed financial performance objec- tives for the Borrower were not realized. The project had a 100% time overrun and a 52% cost overrun. The former was primarily due to serious floods which diverted SNCFT's resources at the start of the project, while the delays during a period of inflation and some underestimates of unit costs were responsible for the cost overrun. The re-estimated economic return on the project is 10% against 12% and 25% (for the northern and southern regions, respectively) at the time of appraisal. Points of particular interest are: - the serious financial difficulties of SNCFT and reasons for the Government's reluctance to increase rates (paras 7-9, 16; PCR, paras 3.03, 5.04-5.05); - SNCFT's reasons for using other than World Bank financing for further investments (paras 12-13); and - delaying procurement to effect progress towards meeting the financial covenants (para. 8). PROJECT PERFORMANCE AUDIT MEMORANDUM TUNISIA FIRST RAILWAY PROJECT (LOAN 606/CREDIT 150-TUN) I. Introduction 1. Tunisia is about one-quarter of the size of France and has a population of some six million. Its principal exports (by value) are crude oil, rock phosphate and phosphate products, olive oil and tex- tiles. The Tunisian transport system consists of well developed road and railway systems and six ports, one of which only serves for oil ex- ports. By the end ok 1977, the Bank Group had financed 41 projects in Tunisia for a total of over US$500 million. Six projects, for an amount of US$92 million, were in the transport sector (two ports, two highways, one pipeline and one railway project). 2. The Societe Nationale des Chemins de Fer Tunisiens (SNCFT) is responsible for virtually all rail transport in the country. It has about 500 route km of standard gauge and about 1,500 route km of meter gauge track. Some one-third of the traffic units of SNCFT consists of passenger traffic, with suburban traffic playing an important role. Freight transport consists predominantly of bulk commodities such as phosphate, cereals, iron ore and cement, while only about 15% is gen- eral merchandise (see PCR, Table 3). At the time when discussions on a Bank loan started in the mid-sixties, it was clear that for many years investments for renewals had been insufficient. This was specially evi- dent where diesel railcars had an average age of almost 20 years, pas- senger cars were all over 40 years old, and 57% of the freight cars were over 50 years old. Track renewal was also urgently required. 3. Lending for railways was informally discussed between the Government and the Bank in 1966, and an official request was received from the Government in August 1967. The Bank felt, however, that a transport study of the country was required to establish investment priorities, and the project was not financed until almost two years later. The project was to cover urgent replacements, to be followed soon by further loans for continuation of the renewal program as well as expansion to meet anticipated traffic growth. A loan and credit for US$8.5 million each were signed on April 29, 1969.