Document of The World Bank FOR OFFICIAL USE ONLY G6Z 12 C O-oZ Report No. 77094MOZ Public Disclosure Authorized STAFF APPRAISALREPORT MOZAMBIQUE Public Disclosure Authorized BEIRA TRANSPORTCORRIDOR PROJECT JULY 18, 1989 Public Disclosure Authorized SouthernAfrica Department Public Disclosure Authorized InfrastructureOperations Division Thisdocument has a restricted disribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCYEQUIVALENTS Currency Unit - Metical (plural Meticais) USS1 * 715 Meticais (Mts) 05/01189 Mt 100 - US$0.14 MEASURES AND EQUIVALENTS 1 Meter (m) - 3.28 Feet 1 Square Meter (m.sq) 10.76 Square Feet 1 Hectare 2.47 Acres 1 Kilometer - 0.62 Miles ABBREVIATIONSAND ACRONYMS AfDB = African DevelopmentBank BCA - Beira Corridor Authority BTC - Beira Transport Corridor CFM(C) - Caminhos de Ferro de Mocambique (Centro) CFM(N) ' Caminhos de Ferro de Mozambique (Norte) CFM(S) ' Caminhos de Ferro de Mocambique (Sul) CFM,EE Caminhos de Ferro de Mocambique, Empresa Estatal CPMZ - CompanhiaPipeline Mozambique-Zimbabwe DANIDA = Danish InternationalDevelopment Authority DNPCF 8 Direccao Nacional de Portos e Caminhos de Ferro EDF - European DevelopmentFund EEC European Economic Community GDR 3 German DemocraticRepublic MBA - MachipandaBeira Authority (Zimbabwe) MIS = ManagementInformation System MT ' Metric Ton (1,000kg) MTC = Ministry of Transport and Communications NORAD 3 NorwegianDirectorate for DevelopmentAid NRZ = National Railways of Zimbabwe RENFE = Red Nacional de los FerrocarrilesEspanoles RITES 2 Rail India Technical and Economic Services RSA Republic of South Africa SADCC = SouthernAfrica DevelopmentCoordination Conferenc; SATCC = SouthernAfrica Transport and Communications Commission SETEP 3 Secretariateof State for Technical and Vocational Training UEM = University EduardoMondlane U.K.ODA = United Kingdom Overseas DevelopmentAdministration USAID = United States Agency for InternationalDevelopment WFP World Food Program uaR rriLiAL USE ONLY MOZAMBIQUE BEIRA TRANSPORTCORRIDOR PROJECT TABLEOF CONTENTS Page No. CREDIT AND PROJECT SUMMARY................. ... ............. i - ii I. SECTORAL AND SOUTHERN AFRICA REGIONAL CONTEXT.......... 1 A. Introduction......................... .. ....... 1 B. GeographicSetting ............... ............ 1 C. Role of Transport Corridorsin Mozambique'sEconomy 2 D. Southern Africa Regional Coe t e xt 3 E. GovernmentStrategyr........... *.......... 6... 5 F. IDA's Role...... 8 II. THE BEIRA TRANSPORTCORRIDOR............... 9 A. Physical and InstitutionalFramework . .. 9 B. Beira Portort.... ..... ..... .... ... 10 C. Beira-MachipandaRailwaya....... ..... 13 D. Beira Machipanda R oad . ................ 15 E. Pipeline Beira-Mutare ..... .......... 15 F. Tranna....................... 15 III. THE PROJECT R.. ... ........... .... 16 A. Project Objectives ......... .16 B. The Beira CorridorAuthority... 17 C. The Beira Corridor Program... 17 D. Overall Program Cost and Financing. 19 E. IDA Assisted Project Components.......... 21 F. Rationale for IDA Components... 27 G. Project Cost Estimates ..... 27 H. Financing ............. 28 I. Implementationn... .... .... 29 J. Procurement .... 29 K. Disbursements .... 30 L. Project Monitoring ... 31 M. Budget, Accounts,Audit and Evaluation .... 31 N. Enviroment .... 32 This report is based on the findings of an appraisalmission to Mozambique in October November, 1988 consistingof World Bank staff Messrs D. Graham (MissionLeader), J. Rebelo, K. Kohriko and S. Nayak and consultants Messrs. Bonnin, Le Bussy, Gusmao, de Langen, Morra and Spit. Mrs. L. Iacono was responsiblefor report processing. This document has a restricteddistribution and may be used by recipients only in the perfomrance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Table of Contents (Cont'd) IV. ECONOMIC EVALUATION ...................... .. 32 As Introduction*... ........................*s..*.........32 B. Traffic Forecast................................. 32 C. Economic Evaluation..... ....... .. ....... .* 38 V. FINANCIALEVALUATION ......................... so...... 41 A. CFMC F....................... 41 B. DNPCF....... #o , ....,.. o ..... o 44 VI. AGREEMENTS,CONDITIONS AND RECOMMENDATIONS............ 44 ANNEXES 1 Status of Overall Project Components 2 Training 3 TechnicalAssistance 4 LocomotiveRequirements 5 PerformanceTargets 6 Economic Analysis 7 Financial Analysis 8 Organization Charts 9 Criteria for Investment in the Beira Corridor 10 Terms of Reference for the Project Coordinator and Procurement/DisbursementOfficer MAPS IBRD No. 20101 Beira Corridor IBRD No. 20102 Beira Corridor IBRD No. 21356 Beira Port MOZAMBIQUE BEIRA TRANSPORTCORRIDOR PROJECT CREDIT AND PROJECT SUMMARY Borrowers People's Republic of Mozambique Beneficiaries: Ministry of Transportand Communications(MTC), National Directorateof Ports and Railways (DNPCF),Beira Corridor Authority (BCA), Central Railway System (CFM(C)),Southern Railway System (CFM(S)),Northern Railway System (CFM(N)and Secretariateof State for Technical and Vocational Training (SETEP). Amounts SDR 31 million (US$ 40.0 million equivalent). Termst Standard IDA Terms with 40 years maturity. Onlendini Terms: The credit will be on-lent to the Mozambique Ports and Railways Administration(DNPCF) for a period of 30 years includingfive years of grace, at an interest rate of 7.65%. DNPCF will bear the foreign exchange risk. Project's Descriptions The main objectiveof the Beira Transport Corridor Program is the rehabilitationand upgrading of the Beira Corridor to restore its cost efficienttransit functions. The IDA assisted projectwould contributeto this objective through the provisionof technical assistance,manpower developmentand training and motive power. IDA componentswill provide for (i) technical assistanceto run port and railway operationsduring the 1989-1995period; (ii) manpower developmentand training for all levels of staff in the port and railways; (iii) rehabilitationand acquisitionof motive power for main line and shunting operations;and (iv) implementationof a railway/portcost accountingsystem and a management informationsystem. Benefits and Risks: The main benefits are the reductionof transportcosts and increasedefficiency which will allow Beira to competewith Durban (RSA), providingZimbabwe and Malawi with cheaper alternativesto the sea and Mozambiquewith foreign exchange earnings. The main risks are (i) delays in project implementationand consequent inabilityto provide acceptablelevels of service may affect financial and economicviability; and (ii) the security issue: in spite of the presence of armed forces guarding the corridor,possible disruptionsmay occur. EstimatedCosts: Local Foreign Total -US$ Million------------- General Projects 3.7 22.1 25.8 Port Projects 6.4 187.4 193.8 Rail Projects 3.4 94.6 98.0 Road Projects 5.0 22.3 27.3 Total 18.5 326.4 344.9 FinancingPlan: Local Foreign Total ---------- US$ Million------------ Mozambique Government 4.3 - 4.3 Proposed IDA Credit 40.0 40.0 Parallel financing _ 29.5 29.5 Sub-totalProject 4.3 69.5 73.8 Other Parallel financing of the Program 14.2 256.9 271.1 Total 18.5 326.4 344.9 EstimatedDisbursements FY90 FY91 FY92 FY93 FY94 FY95 FY96 Annual 4.0 12.0 10.0 6.0 5.0 2.0 1.0 Cumulative 4.0 16.0 26.0 32.0 37.0 39.0 40.0 Economic Rate of Return: 14% for the whole Beira Corridor Program. 34% for the IDA assisted Project AF6IN July 1989 MOZAMBIQUE BEIRA TRANSPORTCORRIDOR PROJECT DocumentsAvailable on the Proiect File Report and Documentson Beira TransportCorridor 1. Beira Port Transport System, 10-YearDevelopment Plan, SATCC (SouthernAfrica Transportand CommunicationCommission, Maputo, January 1986). 2. Comments and suggestionson: Beira Port Transport System, 10-Year DevelopmentPlan, World Bank, March 7, 1986. 3. Port of Beira, Pre-FeasibilityStudy of Channel Improvements, Volumes 1, 2 and 3, Bertlin and Partners,June 1978. 4. Beira Port Study, Phase 3, Master Plan Study, Volumes 2, 3, and 4, NEDECO, 1982. 5. Beira Port Project, Tender Documents,Reconstruction of Quays 2-5, Volume 1-6, NEDECO, March 1985. 6. Zimbabwe National Transport Study, SWECO, 1985. 7. Beira-MachipandaRoad, FeasibilityStudy Report, Gavan McDonel and Company with Snowy Mountains EngineeringCorporation and COTOP, Mozambique,April 1985. 8. RehabilitationStudy Beira-MachipandaLine and Maputo- ChicualalcualaLine, Mott, Hay & Anderson InternationalLtd., June 1982/April1983. 9. Study of Railway Rolling Stock in the SADCC countries,Kampsax, Swedrail, June 1984. 10. Mozambique,An IntroductoryEconomic Survey, Annex II, Transport Sector, World Bank, June 6, 1985. 11. SouthernAfrica Regional TransportationStrategy Paper, Louis Berger InternationalInc., for USAID, March 15, 1985. 12. SouthernAfrica Regional TransportationStrategy Evaluation,Data Base Update, Louis Berger International,Inc., for USAID, May 1986. MOZAMBIQUE BEIRA TRANSPORTCORRIDOR PROJECT 13. Port Staff Training Program Study, SATCC, Norconsult,September 1986. 14. Reconstruction Quays 2-5, Beira, Economic and Financial Feasibility,Netherlands Economic Institute,October 1986. 15. SATCC Project #R-OP-1, Motive Power, Rolling Stock an; Operations Plan for CFM Center, Draft Final Report, 2 volumes, SLI Consultants,October 1986. 16. Study on Railway Training Programs,DE Consult, October 1986. 17. Study of Locomotivesfor DNPCF, Mozambique. Rites, September 1988. 18. Organizationand Manpower DevelopmentPlan,