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4: ~~~~~~~~~~~~~~~~~~RES TR IC'TE D ILIP_ DReport vein No. PTR-6a r _. I Thl;re;porlwas pi;epared formuse w-ithin hieiOunk unO ;S urriiiurea organizations. Public Disclosure Authorized They do not accept responsibility for its accuracy or completeness. The report may Ino be pubishied- nor m iT bybe quoteci as represenTing rneir views. INTERNATIONAL BANK FOR REC'ONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized REPUBLIC OF TUNISIA APPRAISAL OF A RAILWAY PROTJ.ET Public Disclosure Authorized April il, 1969 Public Disclosure Authorized Transportation Projects Department Currency Equivalents Nationa1 rurren-ry is the Dinar (D) divided in 1, 000 Millimes (M) US$ 1. 00 = DO. 525 US$ 1.905 D 1.0 US¢ 0. 19 M 1.0 Wei cits and Measuvres i Metric ton = 2, 205 lbS 1 Kilogram (kg) = 2. 2 lbs 1 Kilometer (kin) = 0. 62 miles 1 Meter (m) = 3. 28 feet Fis c 1 v ar January 1 December 31 Acronyms OPNT - Office des Ports Nationaux Tunisiens *p1r- I. T ' *.'D 'JOV1:Aos'-Aes L, 0, Telgapz4 v^S%1L 4 s ATAe_nh A. w s4IJ A1V SNCFT - Societe Nationale des Chemins de Fer Tunisiens Sofomeca - Societe de Fonderie et de Mecanique REPUBLIC OF TUNISIA APPRAISAL OF A RAILWAY PROJECT TA'RTF OF rnvT1TNTrT; Page S_MAARY 1. INTRODUCTION 1 2. BAC1KGROULT 1 A e ,- -1 B. Transport System 2 CJ. rTrars p±i±II -4.j ti Pno'licy andA Cood.,3Coo-IU~.JUUJ4LIM 43U.L'.LUo 3. r.TT-r- ¶n? ^sLAYflMSIu 4TTA~7' ifn~ £Uul d., L~.LAV II&Lt vJt.L0J L4 A. Organization, Management and Staff 4 D. rroper 6Y C. Operations 9 v. frali lC 5 E. Present Finances 11 U. THE PROJECT 16 A. The Second Four-Year Plan i6 B. Description of the Project 16 C. Execution of the Project and Procurement 18 5. F4U1L-UE TRAFFIC, EARNINGS AND FINANCES 20 A. Future Traffic 20 B. Future Operating Results 20 C. Project Financing and Proposed Bank Loan 22 D. Forecast Cash Flow 23 E. Forecast Balance Sheets 24 6. ECONCMIC EVALUATION 24 7. C' iI-;PD, T IO;NS 26 This report has been prepared by Messrs. Awar (Economist), Brechot (Engineer) and De Gryse (Financial Analyst). TABLE OF CONTENTS (eontinued) CHART 1 Organization of SNCFT TABLES 1. Track Characteristics 2. omnposition of MVotive Poe R i as at 31, 1'J67 3. Summary of Operating Statistics (Northern-Center Network)- l. Freight Traffic Statistics 5. Passenger Traffic Statistics 6 . Resp,ect+i;,M Cont-ribu,tion flrom Users andu Stuate 7. Summary Income Accounts 1962-67 (as shown in SNCFT's Books) 8.Ar,ed. -111 e k~ULIUhIC±Q--c y ±±''UITno-,;e- ~A__-._4t 1 UL4IIUk ±L7U-1962-67Z -Uf 9. Tentat;ive Evaluation of Gross and Net Fixed Assets as of 10. Summary Balance Sheet as of December 31, 1967 ii.L w . LII Tmiopoeru-uputuu A Projectr Jc 12. Track Renewal and Improvement Works included in the Proposed Project 13. Traufic Forecasts for Passengers 1968-1y75 14. Traffic Forecasts for Freight, per Main Commodities, 1968-1975 15. Summary of Traffic Trends 16. Forecast Income Accounts 1968-1975 (2 sheets) 17. Forecast Cash Flow Statement 1968-1975 18. Pro-Forma Balance Sheet as of December 31, 1967-1975 19. Forecast Long-Term Debt 20. Costs/Benefits Analysis for Line 6 ANNEXES 1. Amendments made to SNCFT's Income Accounts 1962-67 2. Tentative Evaluation of SNCFT's Fixed Assets as of December 31, 1967 3. Description of Measures taken or to be taken by the Government to improve SNCIT's Financial Position 4. Reasons for Elimination of Four-Year Plan Items from the Propbsed Project 5. Analysis of Traffic Forecasts 6. Notes on Forecast Operating Income and Expenditure 7. Methodology for Estimating Economic Benefits for the Northern- Center Network MAP Tunisi.an Railways (IBRD-2496) REPUBLIC OF TUNISIA APPRAISAL OF A RAILTAY PROJECT i. lThe Government of Tunisia and the Tunisian Railways have asked the Bank and the Association for a loan and a credit of US$ 8.5 miilion equir-- alent each to help finance a railway rehabilitation and modernization pro- ject which will be part of the Government's Second Four-Year Plan, 1969-J197 . The propose(d loan/credit would cover the project foreign exchange elemen't, estimated at 58% of the project total cost. ii. A UNDP-financed Transport Survey, covering all modes of trans- portation in Tunisia, was recently completed by the consulting firm Ital-- consult, wi-th the Bank acting as Executing Agent. The transport sector of the Government Four-Year Plan 1969-1972 will take into account the consul- tant's recoirmendations on transport policies and investment. The Plan i'3 being reviewed by the Bank. iii. Rail transport - performed on two networks, recently amalgamated - is the responsibility of the State-owned Societe Nationale des Chemins de Fer Tunisiens (SNCFT). SNCFT's management is reasonably competent and opera- tions are generally efficient. The financial relationship between the Gov- ernment and the Railways - as set forth in SNCFT's present Statutes - is in- adequate, and SNCFT's present financial position is unsatisfactory. MeaSures to correct the situation have been agreed upon. Submission of SNCFT's amended Statutes to the Tunisian National Assembly and implementation of tha agreed financial measures should be conditions for sizning of the proposed loan/credit. iv. Passenger and freight rail traffic has been growing steadily over the last 10 Years and is exDected to continue to increase at an overall annnu- al average of 8%. SNCFT's freight traffic is largely of a bulk nature, sai2> able for rail transport. vI The pronit consists of track re'npwal. thA purchase of motive nower and rolling stock, provisions for track equipment, workshops and consulting services, and interest drlring c-onstruction. It generally crovers the immediatp requirements of SNCFT to cope with present traffic demands. The consultant studies inclulded in the pronec-t will lard to the identification of a npcond railway project, the timing of which will depend. upon the satisfactory execu- +Jion ofr then nrreseQnt rjet vi. The~pro ti. +is 4nicV11u asioun lnnrl is jifiedNrl onr, anomi,r grounds. In addition to the project investments, measures will be taken 'o ntcrease reven.ue prasets bvely wich will enable SNCFT +^ ezr a 71 return on the net fixed assets by 1973. -ii- vii. The project provides a suitable basis for a Bank loan and an IDA credit of US$ 8.5 million each. The proposed loan would be made to SNCFT with a term of 25 years, including 4 years of grace. The term is related to the economic life of the project items. The proposed credit would be made to the Government of Tunisia and relent to SNCFT on the terms and con- ditions of the proposed Bank loan. RP.PTMT.Tr OR 'TITTTTA APPVATCZAT_ OF A pATTIJAV TmVThr'PP 1. INTRODUCTION 1.01~.JJ T,e nover-r.-,e.-1t ofL T- ar.d ',1U.teState-owned ±W-LL.n R1..Ll in August 1967 requested the Bank and the Association to assist in financing a railway, rehabil tation and modernization project which is part of th e Government's Second Four-Year Plan, 1969-1972. The proposed loan and c:red t. amounting to US$8.5 million each, cover the estimated foreign exchange cost of the project, or 58% of the total project cost (US$29.2 million equivaler-t). The project comprises track renewal, the purchase of motive power and rollIng stock, provisions for track equipment, workshops and consulting service3, and interest during construction due on the proposed Bank loan. 1.02 The proposed loan and credit would be the third Bank Group operatf,on in Tunisia for transportation. In 1964 and 1968 two loans totalling USS1T.$ million were made for ports development to the Office des Ports Nationaux Tunisiens '(OPNT). Construction of the project financed by the 1964 loan was satisfactorily completed in November 1967. 1.03 This appraisal report is based on (i) information supplied by the Government of Tunisia and the Tunisian Railways; (ii) the findings and recoYQ- mendations of the UNDP-financed Tunisian Transport Survey carried out by Italconsult in 1967/68; and (iii) the findings of a Bank appraisal missi.oll in June 1968 and a follow-up Bank mission in October 1968, when full project 1b.z became available. The latter mission reviewed Italconsult's recommendatioivs with respect to railway investment. Both Bank missions comprised Messrs. Awar, Brechot andi De Grvse, and this renort has been nrenared by them. 2. BACKGROUND A. General 2=01 Tunisia, with an areanof 16hOA) kn 2, or about on2e-.qurt,er that o France, is bordered by the Mediterranean to the north and east, Algeria to the west, a1ndl T;bya t, -soh an-he southeAs IT4 o is_-4- 1a r .. .w~_V ovuJ"A , co< v, -v v us<O'AA | WO LvucW^C~ ,LU%J""Xo million and is increasing at 2.3% p.a. The average population density of 27 inhitant per k 2 is low- because of the 'arge areas of inhospitable mount- ains and deserts. Because of the concentration of economic activity in the -'-111 .; 4the -'Aorw1,LMJ~., part-icj.~L '"L4.LO.LJJ A.AA the-LdLJ.t- .T-isLL.L.L CdL_t,&area, Ul4I- JJVJJLLLaLU.LV11po3uiafiio- Ut.llii.L,.Y.des .1n_ nws the nortlLLhi is~ considerab-Ly above the overall average. 2.02 Eleal output in the Tunisian economy grew by about 4% annually betweee. 19'U aud 1',67 so that, i.n tne iatter year the gross national product (GNPi amounted to US$963 million, or US$215 per capita.l/ 2 03 hgriculture contributed some 18% to GNP, but provided abcut one.-haif of total etaployment.