.oAA)J 673- rrAI RESTRICTED FILE COPY Report No. TO-648b Public Disclosure Authorized This report was prepared for use within the Bank and its afflliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized APPRAISAL OF THE SECOND TUNISIAN PORT PROJECT REPUBLIC OF TUNISIA Public Disclosure Authorized October 15, 1968 Public Disclosure Authorized Projects Department CURRENCY EQUIVALENTS US$1. 0 D 0.525 US$1. 905 D 1.0 UNITS Tons are metric tons of 2., 205 lbs .1 Kilometer = 0. 6Z miles 1 Meter = 3. 28 feet 1 Cubic Meter = 1. 31 cubic yards All depths of water are in meters below low water level. FISCAL YEAR January 1 - December 31 A C R 0 N Y 1il S GNP - Gross National Product BC'EOH - Bureau Central d' Etudes pour les Equipements d'Outre Ner SvbT_C - Societe d'Etudes Techniques et Economiques STI4 - Societe Tunisienne d ,Acconage et de Ilanutzntion OPiOT - Office des Ports Nationauc, Tunisiens UNDP - United Nations Deve:Lopient Prograrxne REPUBTLIC OF TINTSIA SECOND TUNISIAN PORT PROJECT APPRAISAL REPORT TABLE OF CONTENTS SUMMARY i-il 1. INTRODUTCTION 1 2. BACKGROUND 1 A. General 1 B. Transport System 2 C. Existing Loan 380-TUN Port of La Goulette Project 3 3. EXISTING FACILITIES AND ORGANIZATION 4 A. Office des Ports Nationaux Tunisiens h B. Operations (i) General 5 (ii) Cargo-Handling 5 4. TRAFFIC AND PORT DEVELOPMENT 7 A. Shipping 7 B. Present and Future Traffic (i) General 7 (ii) Bulk Traffic 8 (iii) General Cargo 9 C. Port Development 9 5. THE PROJECT 10 6. ECONOMIC JUSTIFICATION 15 A. Capital Dredging 15 B. Dredger and Tug 17 C. Cargo-Handling Equipment 18 D. Breakwater at Bizerte 19 E. Bulk-grain berth and Storage Facility at La Goulette 19 7. TARIFFS AND FINANCES 20 A. Ta-rif-fs-s 20 B. Present Finar es 21 C. Future Finances 24 8. CONCLUSIONS AND RECOMMENDATIONS 29 This report has been prepared by Messrs. Aijt3r (Economist), Clark (Financial Analyst) and Hi'ginbottom (Engineer). TABLE OF CONTENTS (cont'd.) TABLES 1. Port Data 2. Cargo-Handling Equipment owned by STAM and OPNT 3. Cargo-Handling Equipment to be provided to STAM and OPNT under the Project 4. Ship Calls. 1963 - 1967 5. Total Cargo Traffic all Ports by Major Category; Actual and Forecast 60 Cargo Traffic Tunis-La Goulette; Actual and Forecast 7. Cargo Traffic Bizerte/Menzel Bourguiba; Actual and Forecast 8. Cargo Traffic Sfax; Actual and Forecast 9. Cargo Traffic Sousse; Actual and Forecast 10. Alternative Costs of Purchasing Dredging Equipment versus Maintenance Dredging by Contract 11. Revenue for Years 1964-66, estimated for 1967 and forecast for 1968-1973 12. Estimate of Cash Flow 1967-1973 13. Balance Sheet for 1966 and Forecast Proforma Balance Sheets for 1967-73 14. Forecast of Debt Service 1967-1973 APPENDICES 1. Debt at December 31, 1966 2. Bases and Assumptions used in Financial Projections MAP 1. Tunisia, Commercial Ports (No. 2264R) REPUBLIC OF TUNISIA SECOND TUNISIAN PORT PROJECT SUMMARY i. The Bank has been asked by the Government of Tunisia to help finance improvements to the ports under the control of the Office des Ports Nationaux Tunisiens (OPNT). ii. The project consists of a number of elements designed to ensure more efficient operation in OPNT's ports including: dredging at the ports of La Goulette, Bizerte-Menzel Bourguiba and Sfax; provision of a new dredger and tug; provision of tractors, forklift trucks, and mobile cranes at La Goulette and Sfax and the rehabilitation of the existing portal cranes at La Goulette; reconstruction of the island breakwater at Bizerte; con- struction of a new bulk-grain berth and storage facility at La Goulette; assistance in training OPNT staff in accounting and financial management; and necessary consulting services. The total cost is estimated to be US$10.73 million (D 5.63 million) of which the proposed credit of US$865 million (D 4.46 million) would finance the estimated foreign exchange cost. iii. An earlier Loan (No. 380-TUN of US$7.0 million) was made to the Government of Tunisia in June 1964, for extension of the port of La Goulette. The construction works have been satisfactorily completed and the loan was fully disbursed by the Closing Date of March 31, 1968. The law creating OPNT was passed as one of the conditions of the loan, and the new organization is functioning satisfactorily except for the Accounts Department which needs strengthening. One requirement under the loan has not been complied with: the construction of bulk-grain handling facilities. This is due to lack of finance, and the Bank is now including it in the new project. iv. OPNT controls all shipping entering its ports, but cargo-handling is carried out by concessionaires, the most important of which is the Societe Tunisienne d'Acconage et de Kanutention (STIUi). OPMT provides portal cranes on the quays, floating cranes, and some equipment for use by consignees or their agents on taking delivery of cargo. STAM generally provides the tractors, forklift trucks and mobile cranes for cargo-handling on the quays. v. Total traffic through OPNT ports has grown irregularly from 5.6 million tons in 1963 to 8.2 million tons in 1966 and was 7.5 million tons in 1967 due to the situation in the Middle East. Most of the increase has been in bulk traffic. Future traffic is expected to grow at a modest rate of about four per cent per annum, taking into account the expected increase in economic activity and changes in demand. Future exports of phosphates from southern Tunisian mines cannot be clearly determined at this time. They will depend upon further investment in the mines and Tunisia's share of the world market. vi. The present project covers the immediate development requirements of O?NT. Certain capital expenditure will be incurred by OPTT in the normal - ii - course of operations and a further extension of Tunis/La Goulette is expected to be required about 1972. The Government intends to develop a newJ port at Gabes. Before this port is completed it will be neces- sary to consider incorporation of the new port in OPNT, to review the distribution of traffic between Sfax and Gabes, and to consider the effects on OPNT's finances. vii. All the proposed items in the project are operationally and technically justified. The economic rates of return on the different items range between 10% and 25' and these are considered satisfactory. viii. The cash position of OPNT is satisfactory and is expected to continue to be so. Consultants are reviewJing OPNT's tariff structure and rates and their recommendations, due in 1968, are expected to include changes that will result in increased revenues. The specific changes and expected results are not known but the Bank will require that tariffs be applied to produce revenues sufficient to assure a rate of at least six per cent in 1971 on the average value of net fixed assets and seven per cent in 1973, and increasing thereafter. ix. The project provides a suitable basis for a Bank Loan to OPNT of US$8.5 million, for a period of 30 years, including 10 years' grace at D6, per annum interest. The Government of Tunisia would be the Guarantor. FEPUBMIC OF TUHISIA SECOND TUIESIAN FORT PROJECT 1. INTRODUCTION 1.01 The Government of Tunisia in August 1966 requested the Bank to assist in financing improvements to the ports operated by the Office des Ports Nationaux Tunisiens (OPNT). The proposed loan of US$8.5 million covers the estimated foreign exchange costs out of a total estimated cost of US$10.7 million equivalent, and will be made to OPNT at 6-Va interest rate for a 30-year repayment period including 10 years' grace with the Government as Guarantor. The project consists of dredging at the ports of La Goulette (Tunis), Bizerte-Menzel Bourguiba and Sfax; provision of a dredger and attendant tug for maintenance dredging; replacement of cargo-handling equipment, provision of additional equipment, and re- habilitation of quay cranes; reconstruction of the island breakwater at Bizerte; construction of a bulk-grain berth and storage facility at La Goulette; training of accounting staff; and the provision of accounting and engineering consultants. Details are given in Chapter 5. 1.02 Tunisia has previously received a Bank loan of US$7.0 million for port improvements at Tunis-La Goulette. Construction of the project was satisfactorily completed in November 1967. Further details are given in paras. 2.09 - 2.12. 1.03 The following appraisal report is based on the findings of a preliminary Bank mission to Tunisia in May/June 1967, an appraisal mis- sion in November 1967, and a follow-up mission in March 1968, to settle the details of the project and to update the information. The missions have included at various times, Messrs. Clark, Dobie, Higginbottom, Muth and Pusar., Tlis report has been prepared by Messrs. Awar, Clark and Higginbottom. 2. BACKGROUND A. General (see Map 1) 2.01 Tunisia, with an area of 164,000 sq km or about one-quarter of the area of France, has a population of about 4.5 million, estimated to be increasing at an annual rate of 2.3%. It is bordered by the Mediter- ranean to the north and east, Algeria to the mest, and Libya to the south and southeast. The coastline is some 1200 km, and there are four major ports: Bizerte-Menzel Bourguiba, Sfax, Sousse and Tunis-La Goulette all under OPNT control.