Docmmt of

The World Bak

FooR OFFICALl USE ONLY

MICROFICHE COPY C4 1c96 ' -4XReport No. P- 529B-SE RpwtNe. P-5298-SEMITCHELL, f X3483'1 / J9 117/ AF51N

REPORT AND RECOMMENDATION

05 THE

PRESIDENT OF TRE

INTEERATIONAL DEVELOPMT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A PROPOSED DEVELOPMENT CREDIT

OF SDR 49.9 MILLION

TO THE REPUBLIC OF SENEGAL

FOR THE TRANSPORT SE-TOR ADJUSTMENT/INVESTMENT PROGRAM

MAY 16, 1991

N

Thi doctomat has a remticted distrbution and may be aned by recPient OulY hi the performne Ofhilr bffkial dpties its cqttcnt -may not otherwise be discosed wifthotWorld Bank autborlsatlo.

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REPUBLIC OF SENEGAL

TRANSPORT SECTOR ADJUSTMENT/INVESTMENT PROGRAM

CURRENCY EQUIVALENTS(January 1990)

Currency Unit - CFAFUS$1 = CFAF 300CFAF 1 million - US$3,333CFAF 1 billion - US$3.33 million

FISCAL YEAR

For FY91 - 92: July 1, 1991 - December 31, 1992starting FY93: January 1 - December 31

SYSTEM OF WEIGHTS AND MEASURES: METRIC

1 meter (m) - 3.28 feet (ft)1 kilometer (km) = 0.62 mile (mi)1 square kilometer (km?) 0 0.39 square mile (sq mi)1 metric ton (t) - 2,205 pounds (lbs)

This report Is based on the findings of a World Bank mission consisting ofMrs. Brigitta Mitchell (Senior Transport Economist, Mission Leader), Mr.Amadou Cissa (Senior Civil Engineer), Mr. Michel Loir (Transport Economist/Financial Analyst), Ms. Yvonne Powers (Financial Analyst), Mr. Roger Lebussy(Railway Engineer), and Mr. Karim-Jacques Budin (Railway Engineer), whovisited Senegal in December 1989 to appraise the project. A post-negotiationmission by Mrs. Mitchell and Mr. Cissa was undertaken in December 1990 toassess the draft environmental impact study. Mr. Peter Watson and Ms.Katherine Marshall are the managing Division Chief and Department Directorfor the operation; the lead advisor has been Dieter Havlicek. Mrs. FannyBarrett and Ms. Amy Gallagher provided secretarial support in the preparationof the report.

FOR OFFICILU USE ONLY

RP LIC OF SENGLTRANSPORT SECTOR ADJUSTKEM INVESTMENT MRo

Table of ContentsPa*e nos.

Credit and Project Summsry .. .. ................ . i-v

1. TH ECOof .vnu . .. * * * 1A. Recent Economic Deve opment .. . . . . . . . . . . . . . I B. DevelotpmentPt Prescts ..... :.:.: .. :..... * 2C. _overtment 1 -Medium-Ter ir;vr*s 3

II. MACROECONOMIC AND SECTORAL ADJUSTMENT-PROGRAMS . . . . . . . ... . . . . 3

III. MAIN ISSUES IN THE TRANSPORT SECTOR AND STRATEGY FOR ADDRESSING THEM . . . . 5A. * ackaround . . . . . . . . * . * . . . . * * * * . * . . . . .* . . 5B. InvestmentP lannint andS tratea. ....... a .o . ...... 7C. TheInstitutional Framework . . . . . . . . . . . . .. . .*. .. . 8D. Financial Viabilit and Ooerational Efficiency . . . . . . . . . . . 13

IV THE PROJECT . * . . . . . . . * * * * . . . . . . * . . . . . . 19A. Proaram Ob1ectives and Kev Actiors . ... ... ... .. .. . . . 193. reit SizeandProaramCoumonegts . . . . * 999 19C. Program and ProJect Cost Estmagtes and Financini t . . . . . . . 22D. Im1em ntation .. e o 24E. Procurement. . . . . . . . . . . . . . . . . * . . . . . . . . . . 25F. bt8ursements * .......................*29G. Accountinand Auditina .. ....... . ....... 31H. Reort . .i . . . . . . . . . . . . . . . . . . . . . . 31I. Imact -on Environment and Emlognyent . . . . . . . . . . . . . . . . 31J. Proiect ustif ication ....................... 32

V. BANK GROUP STRATEGY AND OPERATIONS . ........ ....... ...... 35A. Country AssistanceeStrateao ............................... 353. Bank GroupOperations2 Past and Future ... *.......... ..... 36

VI. COORDINATION WITH THE IMF . . . . . . . . . . .. . . . . . . . . . . . 39

VII. AGREEMENTS REACHED AIID RECOHMENDATION ......... ........ ....... 39

ANNEXES

I Economic Indieat4reIIs Lettre de Politique SectorielleIIb Action ProgramIII SNCS (Railway) Financial DetaIV PAD (Port) Financial DataV AIR SENEGAL - Comptes FinanciersVI ASECMA-SENEGAL - Financial DataVII Description of TSAIP Investment ComponentVIIl Cost Estimates and Financing Plan by Subsector

DOCUMENTS IN THE PROJE^T FILE

This document has a rstricted distribution and may be used by recipients only in the perfor nanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorizatinj

ABBREVIATIONS AND ACRONYMS

ACDI Canadian International Agence Canadienne pour lIDevelopment Agency D;veloppement Internetional

ASECNA Agency for Air Navigation Safety Agence pour la Securito de leNavigation Aorionne

BAD African Development Bank Banque Africaine de DeveloppementBGR Road Management Unit Bureau de G&.tion Routi'reBID Islamic Dovelopment Bank Banque Islamique de DoveloppementBOAD West African Development Bank Banque Ouest Africaine de

DeveloppomentCCCE French Development Fund Caisse Centrale de Cooperation

EconomiqueCPTP Public Works Training Center Centre de Perfectionnement des

Travaws PublicsBERM Office of Road Maintenance Bureau de l'Entretien Routier

and Equipment et du MaterielDTP Directorate of Public Works Direction des Travaux Publics, MINEQDRSP Public Sector Reform Agency Delegation a la R"forme du Secteur

ParapublicDTT Directorate of Land Transport Direction des Transports TerrestresERR Economic Rate of Return Taux de Rentabilite EconomiqueFAC French Development Aid Agency Ponds d'Aide et de CooperationFED European Development Fund Ponds Europeen de Diveloppemeu>*FondsCEDEAO Development Fund of the Economic Ponds de la Communaut; Economique

Community of West African States des Etats de l'Afrique de l'OuestKFW German Bilateral Aid Agency Agence Al.emande d'Aide Bilatirale

(Kreditanstalt Fur Wiederaufbau)m Million MillionMINEQ Ministry of Equipment, Transport Ministere de l'Equipement, des

and Housing Transports et du LogementMF Ministry of Finance Ministere des FinancesMPC Ministry of Plan and Cooperation Ministere du Plan et de la

CooperationPAD Dakar Port Authority Soci&te Nationale du Port Autonome de

Dakarp-m person-months personne-moisRCFS Senegalese Railways (before 1989) Regie des Chemins de Per

du SenegalRCFM Mali Railways Regie des Chemins de fer du MaliRF Road Fund Ponds RoutierSNCS Senegalese Railways Societe Nationale de Chemins de

(since Nov. 1989) Per du SenegalSONATRA AIR SENEGAL - National Airline Societe Nationale de Transport

Aerien, AIR SENEGALtpy tons per year Tonnes par anniePNUD United Nations Development Programme des Nations Unies pour

Program le Developpementvoc vehicle operating cost Coat d'exploitation des vihiculesvpd vehicles per day Vehicules par jourv/km vehicle-kilometers Vehicules-kilom1 tres

REPUBLIC OF 8ENGL

TRANSPORT SECTOR ADJUST IINVESMtENT PROGRAM

DOCUMENTS IN THE PROJECT FILE

Rnt. NO. Document Title

Road Cogeonent

1-1 Uinletbro de L'Equipm_nt - Pr parstion au Premier ProjetSectorial de Transport - Compoeante Routl6re - Rapport: Synth&e

1-2 Mlnet*r. de I'Equipesmnt - Pr4poration au Prml-r ProjetSectoriel de Transport - Composante routitre - Rapport:Rentorcement des Chouss 4e

1-8 Ministbre de I'Equlpment - Pr6porstlon au Premler ProjetSoctorill de Transport - Composanto routl4re - Rapport: Teroesde R4fMrnco

1-4 inis4tbro d I'Equip nt - Pr6parstion au Premier ProjotSwctoritl de Transport - Composanto Routl&ro - Rapport:Assstwanc Technique et Fomatieon

1-C Minltbre de I'Equlpement - Rapport: Etude compldmsntaire our leCentre de Formation et de Perfectionn_ment - Projet d'AjuetOomntSectorlol dbe Transport - Volume I: Le Rapport

1-- Minsetbre do I'Equipm.nt - Rapport: Etud. cpldm.nt.lr. our I-Centre de Formation et de Porfectonnoment -ProJet d'Ajustemnt Sectoriel d Tr,nsports - Volume Is LesAnnexes.

1-7 1nst&re, deo I 'qulpment - Premier Projet Sectorlel doTranoport - Composant RoutilAro - Document de Support a laRdunlon des Beaileure do Fends.

14- MinistAre de I'Equtlpemnt - Ageone Canadlenne do Dveloppoment -Prora do Coop6ration Industr il Is Volet 1 - Plan d'Actlondu 1 DTP - Rapport olnIrel, Dec. loU

1-9 MinlstIre do l'Equtpem.nt - Agence Canadtenne de D4vloppement -Programe do Coop6ration Industrioelle: Volt 1 - Annex 1 -Orgaatnstion d'un o"Inalr. our I volot routlor du PAST, Doe.S9W

1-10 Minlotbr. do IEqulp_ment - Agenc Conadtenne do D6veloppwment -Programme do Coop6ration Industrillto - Volot 1 - Annex 2 -Etude sommalre do Is cnpacIt6 des P.M.E. s6nfgalalse & rIollnsrlag travaux d'entretnen routlor du PAST, Dec. 19O

1-11 Minitlre do l'Equlpemnt - Aence Canadlenne do Dvelopp N nt -Programme do Coopiratlon Inddstietole, - Volot 1 - Annexe 8 -R6organlsation do Is D.T.P. et do Is D.T.T. pour Is bonne*xIcution du PAST, Dec. 1990

1-12 Minintre do l'Equtpmesnt - Agnce Conedienne do Dveloppoment -Programe do Coop6rotion IndustrellI - Vol t 1 - Annexe 4 -PrAparation db dossiers d'aoslstance technique & I* D.T.P. et AIs D0T.T. pour Is bonne r6allesteon des setions du PAST,De. 1990

Rot. Me. Document Titlo

1-18 Ministr do I'Eqopernt - Agence Comdlenne de D.wloppesn"t -Progra_m de CoopOration lndugtriel b - Volot 1 - Annoxo £ -pr Oloction doe entrepr lr s ot P.M.E. a6nagat.lai pour lostravaux d'ontrStlon routISr do Is caMpagno 1990 - 1991,0.e. 1990.

1-14 1 alotbte do I *Equip_ent - Ages. Can1dionne do DSO loppeonnt -Progm_ do Coop6ratlon Enduetriol to - Volot I - Annex" -Programation des trovaux d'Ontr.tl.n routor pour to c_ga-199 - 1001, Dec. l0ow

1-15 Mia bltre do I 'Equlpeent - Agenc. Canadion do -* loppeount -Program, de Cooprutton Indostrtiolt - Vol.1 1 - Ansxo 7 -ModAlon do Cahtors do Charge ot do Maroh trp ds travauxd'ontrntitn courant A I'ontr.prls pour la capagn 1008 - 1991Dec. 1990

1-10 MInlstro do I 'Equipemnt - Agec. Canadlonne d DJhvloppement -Programme do Coop6ratlon Industriol l -Volot 2 - Etude our tor habilitatlon .b la r1nforement docatre do formation .t do perfectionnement 4. travaux publice.Volume 1 - L. Rapport, Doe. 1090

1-17 MillloUAr d I 'Equipemt - Ages. Canadl_am do D6lelopp_met -Programs do Coop6rAton IndustrIoll1 -vol t 2 - Etude our I r6habilItation at I reotoro_met docentre do formtlon st do porf.ctionreemt des travaux public*.Volme 2 - Les annexes, DOe. 1090

1-1* Minler. de l'Equipe_t - Mlodernistlon do la Directlon deTransport T*rrootre - Aide Mbolr .

2-1 Premi*r Projot Sectorial des Trnsport - Etude Forrowvlir. -Mare 188

2-2 Premier Projeb Soctoriol des Transport - Etude Fbrrovliro -Annto s - Tome I - More 180

2-8 Presier Projot Sectorl-l dee Transports - Etude Forrovtiir. -Annexe - Tom _I - Mre 1088.

2-4 ProJot Se¢torill do Tran.port4Soction InfownstIqoe - Mol 1o8.

2-5 Premier Projet Sectorial des Transport. - Etude Controt Pln -Projot do Rapport Final.

2 s MinistAr d I 'Equto_e nt - Soc1bt National. do Chasnm doFor - Contrat Plan - Mare 190.

2-7 IinlbtAr. do IEquipement - ROgio dbo Chbsln do For doS6n val - 8lln au 8W Juln 1086.

2-8 Minltre do I Equlpsnt - R6g1o do. Chbmln do For doSOrOgal - SilaS *u s Juln 1907.

2-0 MInitUr. do I Equipme_nt - Rdgie doo Ch elne do F*r duS3nOgal - lnS SOu 89 Juin 1908.

2-10 MInIeUtr do IEGqupmonnt - R6gie do Chasms do For duSOagal - Bilas au 80 Juln 100.

2-11 Mlnlstre do lVEqulp e.nt - Rgie dbe Chemins do For duSs6ga6l - Stlsn so 81 octobro 108.

2-12 MinitAr. do I EquIpoment - ROgl. deo Chemine do For d'JSOnOgal - Rapprochebmot fichior - Imobillationo - octobre1098.

Rtf. No. *Oocuw t Ttl4h

*-1 PerC Autonoso de D 4ke - Etude do Plan Op6rationnel Tec_lquepour t'A AIlerOton du Fonctlonasmont do Port de Oskar - Phsw

Rapport ntoru6ditare Dlcneostle

84l Port Autonooe . Poknr - Etude du Plan 0p6.rtlonnol Tentoiquepour I'A Atoration do Fonctienosmnt do Port do Poker - Phasett - Tom It Plan DoAction

84$ Port Auteno do hh*r - Etude de Plan Op6rtIonnI Tlechniqewpour I '*AI beotlon do fonctionnent do Pert do Oskar - Phastt. Toe tt MAttvit6s ds Export. as Coors de Is Se1.ig. Etap .

S-4 soessed Conultaen - Prolet Controle, do Getle. pour 1e Pert doOakar.

4Sesrd Consultnt - Projet do Coeptabit it6 Ann lytqeo peor iePert Auto... do Dakar.

4@ SBossard Consltant. - Port Autonose s Osakr - Doosser D'Etudest Projet r eletifs & lacisition des 4bdoo.o pour to

coptabl lt6 flnoncl4r et & Is transition coeptabil ItEPZC/Carptabi IIt S*04t6 Nationale.

'-7 WInietSr do I'Equt _pent - Port Autenos do Dokar - Rbcoull doTexte lighlatitf et r6glo_ eelres.

Civil Aviation Component

4-1 ASECNA - Convention - Status - Cabler dma Charges.

4-2 Orgnleation do l'Avietion Clvil* SOternationale - Etue sur leeA6redroee du S6n6sol - Financ et Ade tstrotion ROapportPr611sinsmre.

4-4 Zstmttat do Transport * rlon - Le Tre _ort £6ie. a*u S6audgl -Rapport S6tinitlf.

4-4 SOMATRA - SoclWt Nationale do Transports W6r1e. - Ml pique otAnalyse de Coptpe VAir SP 16a.

4-5 Air IdnAgal - L'lVeiUIQon per lor chlflr .

4W0 SOMATRA - Alr SA&dgal - Plan d'Entrpprol.

4-7 Atr ft$o6pl - Manuol do ProeAdr. Administrative et Fl a_ ire.

4- Air SAnAgal - ReWon. do 1 Politi,u Con_erciale - Avar,Rapport.

4-9 Air S&ndgal - anueul do Procedures dlExploltatlon (Smooire)

4-1 Air SAniGpl - Spkcflicoatons DOEntretlen

REPUBLIC OF SERECAL

TRANSPORT SECTOR ADJUS TNTIIMVLSTMEN PROGRAM

CREDIT AND PROJECT SUMMARY

Borrower: Government of Senegal

Credit Amounts SDR 49.9 m (US$65 m equivalent)

Terms: Standard, with 40-year maturity

Co-Lenders: European Development Fund (FED, US$54.1 mequivalent); African Development Bank (BAD,US$23.8 m equivalent); West African DevelopmentBank (BOAD, US$18.0 m equivalent); IslamicDevelopment Bank (BID, US$11.5 a equivalent);West African Development Fund (Fonds CEDEAO,US$5.4 m equivalent); Unitad Nations DevelopmentProgram (PRUD, US$0.8 m equivalent); ASECMAART.2: US$2.1 a equivalent; CanadianInternational Development &-nociation (ACDI,US$3.2 u equivalent); Caisse Centrale deCoop$ration Economique (CCCE, US$25.1 mequivalent); Fonds d 'Aide et de Cooperation(FAC, US$3.3 m oquivalent); Government of Italyt(US$32.6 a equivalent); and Government ofFinland: US$5 m equivalent (Special Fund forAfrica).

Priect Description: The project will assist the Government inrehabilitating and maintaining essentialtranspott infrastructure and in biprovingsectoral efficiency, including the strengthoningof existing institutions as well as the adoptionof sound policy and regulatory measures. Theproject covers the priority areas of theGovernment's FY91-FY95 total sectoralexpenditure program, The program placesparticular emphasie on road maintonance,including reliable counterpart funding andlnstitutional improvenrtts, and selective roadrehabilitation of national, regional, anddepartmental roads. The project also Includesroad safety lprovements. Tho railway componentcovers essential track maiLtonance and aContract Plan (CP) to Improve manage-untautonomy and efficiency. The port componentfocusses on laplieintation of the remaining

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tasks under the operational and financial ActionPlan and on improved roadlrail access to th newcontainer terminal and rehobilitt ion ofdilapidated utility networks. The civilaviation component iL%cludes rehabilitation toessential safety standards of the Cap Skirtingand Ziguinchor runways, and assistance tofinancial and operational action plans for AIRSENEGAL and ASECNA-Senegal. Additionally, theproject will finance technical assistance formanagement support and training, and for theimplementation of agreed policy actions in thesector.

Proiect Benefits and Riskss The project is designed to restore transportsector efficiency by modetrnizing the sector'sadministration, restructuring sectorparastatals, and halting the decay of transportinfrastructure for road, rail, maritime, and airservices which, if unattended, womldincressingly deter economic activity, partic-ularly in the Dakar arcua and hamper theimportant transit trade. It will, thus, benefitboth the urban and rural populattons of Senegal,as well as the economy of neighboring land-locked Mali. Rehabilitation and msintenance ofroads and other infrastructure have very higheconomic returns leading to substantial savingsof fureign exchange, as do improvements In roadsafety. The main project riskr are that theGovernment may not be able to fully carrythrough the institutional and policy aspects ofthe projct, and resolve the constraints inmobilizing adequate funding for roadmaintenace. The possibility that low priorityinvestments will be carried oui with tbe supportof some donors is a much reduced risk at thispoint.

These risks are considered acceptable in thecontext of the technical assistance andimplamentation arrangements designed for theproject; thoy will be further reduced throughadditional financial support and close projectmonitoring under the adjustment component of theproject, through continued close coordinationwith co-donors, and through reinforcing measuresunder the ongoing structural adjustment program.

- III -

Suan Panre Cost Natimate

fga1tocg daa Taxe Di-------- 1----18$ mllion-------------

I. Xl I S S3Il

load CoMponent 197.2 79.7 68.6 345.5Railway Component 36.3 16.8 14.4 67.5Port Component 15.1 7.6 10.3 33.0Aviation Component 11.3 3.1 3.6 18.0

T=otal Base C0st 259.9 10 6.9 464.0

Fhysical Contingcies 31.7 13.3 11.9 54.9Price Contingencies 34.9 14.2 13.0 62.1

T1r ITVESNt COmENS 326.5 114.7 121.8 flL.0

II DJUS Cm 20.0 - - I0

UII. ROJPCT PAPAMTION FACILITY 14 - _

?O¶'AL P121OUA?4 COST ML.B JIM.i. 1aA 2 hMiA

- v -

Pinancina Pla

Foretan Loeal Taxes sTota--------------- US$ million------------

:. Inveotment Component

IDA 44.5 4.0 4BPS

FED 38.0 16.1 54.1

BAD 23.8 23.8

BOAD 18.*0 18.0

BID 11.*5 11.5Fonds CEDEA0 5.4 5.4

PNUD 0.8 0.8ASECNA ART.2 1.8 - 0.3 2.1

ACDI 3.2 3.2CCCE 20.0 5.1 25.1

FAC 3.3 3.3Italy 27.4 5.2 32.6

Subtotal 197.7 30.4 0.3 228.4

Other Donors (Gapj (71.5) (75.5)

8NCS (Senegal Railways) 4.4 10.4 16.6 31.4PAD (Dakar Port) 4.6 8.8 12.0 25.4

ASERCNA ART.10112 - 2.2 4.0 6.02

Government:(Road Fund) 44.2 50.2 94.4

(Investment Budget) 32.7 32.7

Taxs on Road Component: 88.0

TOTAL INVESTMENT COMPONN 326.4 134.7 121.9 583.0

.I. Adjustment Component

IDA 15. 0 155 0

Finland 5.0 5.0

TOTAL ADJUSTMENT COMPONENT 20.0 20.0

III. IDA (PPF) 1.5 1.5

Zh 0 3A7 Mad -- 2ii

- V ft

Lot imated IDA Disbursemants

Bank Fiscal Yeas 1992 Ifl j§j4 1995 1996 tgp_

I. Investments a/

Annual 5.6 15.3 14.4 13.7 1.0 50.UCumulative 5.6 20.9 35.3 49.0 50.0

II. Adiustment

Tranche Releases 2.0 k/ 6.5 6.5 15.0Cumulative 2.0 8.5 15.0

III. TOTAL CREDI'2

Annual 7.6 21.8 20.9 13.7 1.0 65.0Cumuiative 7.6 29.4 50.3 M4.0 65.0 -

a/ Based on West Africa Region transport investment and maintenanco.bl In addition to US$5.0 million equivalent from Finland SPA Funds.

Rates of Return (S)

Rangings

Paved Road Strengthening Program 14S - 872Periodic Maintenance of Paved Roads 131 - 26ZPeriodic Maintenance of Gravel Roads 122 - 361Routine Maintenance Programs paved roads 201 - 30SRoutine Maintenance Progr-p.: gravel roads 202 - 301Railway Track Rehabilitation 121 - 161

Maw: IBRD 20880

INTERNATIONAL DEmVLOPMENT ASSOCIATION

REPORT AND RECOMMENDATION OF THE PRESIDENTTO T5E EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT

TO THE REPUBLIC OF SENEGAL FOR ATRANSPCRT SECTOR ADJUsmENTINVTs PROGRAM

1. I submit the following report and recommendation on a proposeddevelopment credit to the Republic of Senegal in the amount of SDR 49.9million (US$65.0 million equivalent) for approval. The proposed Credit wouldbe on standard IDA terms with 40-year maturity and would help finance aTransport Sector Adjustment/Investment Program (TSAIP). It is proposed tosupplement this Credit with a grant ^%f Firmark 20 million (US$5.0 millionequivalent) under the Special Program of Assistance for Debt-Distressed, Low-Income Countries in Sub-Saharan Africa. Cofinancing for the project wouldinclude BAD, FED, BID, BOAD, CEDEAO FUN?, UNDP, French CCCE and FV., ACDI(Canadi, Italy, and Belgium.

I. THE ECONOMY

2. The following assessment of the Senegalese economy is based on thePresident's Report for a Structural Adjustment Program (SAL IVs Report P-5185-SE) distributed to the Executive Directors in January 1990, and on thefindings of missions that visited Senegal in 1989-91 to help the Governmentimplement its macroeconomic and sectoral adjustment programs and prepare itsvarious Policy Framework Papers, the latest of which was considered by theCommittee of the whole in late May 1991. Annex I contains economicIndicators.

A. Recent Economic Development

3. Since the adoption of a Medium-Term Economic Recovery Program(1985-92), Senegal has undertaken a series of measures to stabilize itsfinancial situation, improve resource mobilization and allocation, liberalizetrade and pricing, and alleviate poverty. These measures, combined withfavorable weather conditions, which led to increases in agriculturalproduction, have contributed to noticeable economic improvementst between1984 and 1988, real GDP grew at an average rate of 4.3 porcent p.a., comparedto the long-term trend of 2.5 percent and a population growth rate of 2.9percent over the same period. The resource gap has been shrinking, though Itstill remained at 5.0 percent of GDP in 1988. Prudent demand managementpolicies helped retduce inflation to less than 3 percent gad arrested thetrend towards real exchange rate appreciation.

4. In spite of these improvementa, the Government's fiscal situationresaains fragile, as evidenced by the significant shortfall in fiscal revenuein 1989 and 1990. The combination of a weak oconomy and social disturbancesrelated to the border conflict with Mauritania caused tax revenue shortfallsof 13 percent compared to the financial program target In 1989 and of 7.6percent in 1990. The shortfall in tax revenue has necessitated an Increasein certain tax rates. The Government budget also relies heavily on the taxon petroleum products whose domestic prices have been kept unchanged sinceworld oil prices reached a peak in the mid-19809. Petroleum tax revenues

accounted for about one fourth of total Government revenue in recent years.Excessive reliance on petroleum taxes introduces a high degree of uncertaintyin the budgetary situation and also imposes a heavy burden on the economy bymaintaining high petroleum product prices averaging 2.2 times world prices.Since total expenditure and net lending also exceeded the financial programtargets in 1990, the fiscal deficit, on a comuitment basis and excludinggrants, reached 4.5 percent of GDP, compared with a program target of 2.6percent. Thus, Senegal is still highly dependent on direct budgetaryassistance from abroad to cover current expenses, including the servicing offoreign debt and the repayment of arrears. This situation complicates themanagement of the Government's financial operations, increases itsvulnerability vis-a-vis external developments, and has led to recurringrcoblems in the country's servicing of its debt, which reached US$4.1billion, or about 90 percent of GDP In 1989.

5. Real GDP in fact declined in 1989 by 0.5 percent, due primarily toa drop in agricultural production caused by an uneven distribution ofrainfall; it grew 3.6 percent in 1990 and is expected to grow by only 1.3percent in 1991. The important shortfall of fiscal revenues during 1989 and1990 has added much strain to an already tight budgetary situation. Spendingfor materials and maintenance has been lowered while wage expenditurescontinued to rise.

B. Development Prosaects

6. In the medium-term, even assuming reasonably favorable developmentsin climate and terms-of-trade, the Senegal economy can be expected to growonly marginally faster than the population. The physical constraints todevelopment are not amenable to change in a medium-term perspective: Improvedsoil and water resources management can affect agricultural production onlygradually; mineral and fish resources are currently exploited at near-optimumrates; and, in spite of a recently articulated population policy, thedemographic pressure on resources in both urban and rural areas willcontinue.

7. Economic projections of the most likely development scenario-involving normal weather, more efficient investment and faster-than-usualgrowth of non-traditional exports as a result of policy reforms underimplementation, and further debt relief--show modest GDP growth of about 3.81p.a. in the 1990s. If, contrary to the assumptions underlying theseprojections, the implementation of the reform agenda slows down or stagnatesand if, as a consequence, external financing from donors were to drop belowtheir current levels, GDP growth would be no higher than about 2.32 p.s.(Implying falliol income per capita) even with favorable rainfall andcommodity prices.

8. In the longer term, Senegal's development potential will depend onfour factorst (a) an improved climate for international trade and continuingprosperity in OECD countries; (b) a much improved domestic businessenvironment conducive to private investment, including foreign investment;(c) a productive, skilled labor force; and (d) more rapid depreciation of the

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real effective exchang rate. If these conditions can be met, Senegal couldtake advantag, of its location and climate to develop exports of lightmanufactures and service industry for the region.

C. Government's Medium-Term Proarem

9. Government elaborated its medium-term objectives in its (fifth)Policy Framework Paper for the FY91-93 period, during which it Intends toprovide a more' faverable and balanced macroeconomic environment to sustaineconomic growth. This will be achieved through controlling growth in publicspendingt, limiting inflationary pressures and removing structural bottlenecksto economic growth and to increased private sector activity. In line withthis objective, the Government intends to: (a) achieve a turnaround in thebudget position (from a deficit to a surplus), so as to gradually reduce theneed for external budgetary assistanceo (b) strengthen further publiciavestment programming with an emphasis on efficiency and the directlyproductive sectors; (c) enhance Industrial development through appropriateincentive measures, including reductions in production costs; (d) promoto anddiversify agricultural production; (e) accelerate the reform of the publicenterprise sector through rehabilitation, privatization, and liquidation; (f)implement the reform program of the banking sector; (g) implement policyreforms and major infrastructure rehabilitation measures In the transportsector; and (h) laimch sector adjustment operations in the human resourcesand agriculture sectors. These planned measures are expected to have agradual impact on economic performance over the medium term.

X1. MACROECONOMIC AND SECTORAL ADJUSTM$NT PROGRAMS

10. Senegal's medium- and long-term (1985-92) adjustment program hasbeen supported by two IDA policy-based lending operations (SAL II andSAL III) with participation of the Special Facility for Sub-Saharan Africaand Swiss grants under this facility, and by financing from France, theUnited States, the Netherlands, Saudi Arabia, and the African DevelopmentBank. The adjustment program in Senegal is also being assisted by a three-year Enhanced Structural Adjustment Facility of the IMF. After SALs II andIII, Senegal's economy has been substantially liberalized, with free movementof goods within the country largely unencumbered by price controls, andimports unhindered by quantitative restrictions. The private sector nowplays a more important role, especially in trade and the procossing ofagricultural products. Progress has been made in fiscal and debt management.Investment programming has been strengthened considerably and the system ofeconomic planning is being reformed. A population policy was adopted and anaction programme is being implemented. In contrast, progress was less thananticipated in three other principal areas. Whilst most planned financialsector actions were implemented, the dimension of the banking system crisiswas underestimated by both the Bank and the Government. Labor hiringpractices were reformed though Government was unable to pass legislation thatwould have increased lebor market flexibility in a meaningful way. Thepublic enterprise sector continued to be a major financial burden on theeconomy despite the implementation of a program of reforms. In particular,though progress was made in identifying public enterprises for privatization,

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it Is only recently that the program of public enterprise privatization beganto have some response. As a result, Senegal's Oconomy is now more open andxposed to competition from abroad, but significant constraints remain to beaddressed for a supply side response to be forthcoming. A major reason forthe lagging investment and supply responsoe i the persistence, despite themeasures taken under SALs II and III, of certain rigidities In the economy,nd In particular the weigh. of public consumption (the high wage bill of the

civil service and the deficits of the public enterprises), the over-regulation of the labor market, the crisis In the banking sector and the lackof competitiveness of Sonegal's economy in terms of the relative prices oftradeable and non-tradeable goods.

11. In spite of the many achievements, the adjustment process is, thus,far from complete and a number of severe financial and economic constraintshave yet to be effectively tackled. The supply response from the privatesector, especially in terms of new industrial investment and exports, hasbeen weak because of high production costs, labor market rigidities, anddeficiencies in the regulatory environment. Much deeper reforms are stillneeded to address these problems and to provide the correct incentives toprivate sector development. These reforms should contribute to further realexchange rate depreciition, which is needed to render Senegalese enterprisesmore competitive in international markets, where many of Senegal'scompetitors have been undergoing external adjustments. Furthermore, seriousweaknesses persist in the management of public resources, especially theallocation between wage and non-wage expenditures and the financialperformance of the parapublic sector. Unless these weaknesses are remedied,tho probability of reaching the goals of eliminating the budget deficit andrestoring public savings is not very high. It should be politically feasibleto adopt the necessary reforms, though on the basis of past experience InSenegal, particular care has to be taken to line up support againstopposition from powerful vested interested groups (such as civil servants andlabor unions) and to avoid overestimating the Government's capacity toimplement reforms and underestimating the time needed to prepare andimplement the necessary actions.

12. In order to do this, the ongoing SAL IV focusses on relativelyfewer areas than previous SALs and supports a limited number of criticalmacro-level actions, while a number of complementary SECALs and hybridoperations tackle issues at the sectoral level, mobilizing both the sectoralministries and other cofinanciers in support of needed reforms. Thetransport sector, along with those of agriculture, banking, and humanresources, is among the most Important sectors where major reforms in supportof macro-economic objectives are being pursued through sectoral adjustmentoperations. Major improvements are being sought in transport sector planning,operations, and management. The transport of Senegal's agricultural productsfrom farm gate to markets, and the movement of its mining and industrialproducts (such as phosphates, phosphoric acid, and fertilizers) to the portfor export are critically dependent on the efficiency of the sector and itsservices. The cost of transport is a key factor in the marketability ofthese commodities, particularly their competitiveness in the export market.Although entry to the road transport industry--which handles over 90 percent

of passenger ad freight traffic (excluding phosphbtes)--ls completelyliboralized, and although competition works despite Indicative officialtariffs, the cost of transport is high, reflecting both the very high levolsof taxation on equipment and fuel, and the lncreasingly damaging impact ofinfrastructure deterioration. The TSAIP has been designed to hblt thedecline in the transport sector's performance, counter the effects ofremalnlng lnefficeLncies In the port and railway companies, and reverse thetrend of lncreasing costs due to deteriorating infrastructure which, ifunattended, would deter economlc activity especially in the Dakar area, andseriously Impede transit trade to Mali.

13. Under the stimulus of the SALs and the rolling three-year publicinvestment programs (PTIPs), the Governvant has developed two transportsector objectives in its dialogue with the Associations (a) Lmprovedoyerational officiency of the transport system; and (b) lower overalltr6nsport costs. The Government has also developod a strategy to attainthese objectives through reforms in three principal and interdependent policyareas: (i) investment planning and strategy; (li) improved institutionalframework of trasport parastatals; and (iii) measures to improve financialviability and operstlonal efficiency, mainly through staff and tariffadjustments. The following section provides an overview of the policymeasures and lastitutional reforms which would be supported by the proposedcredlt.

1II. MAIN ISSUES IN THE TRANSPORT SECTORAND STRATEGY FOR ADDRESSING THEM

A. Backsround

14. The policy dialogue in the context of the recently completed FifthHlghway (Cr. 1448-SE) and Thlrd Railway (LN. 1518-SE) Projects and of theongoing Third Dakar Port (Cr. 1459-SE) Project has served to sensitize theGovernment to the more serious deficiencies ln the Transport Sector, whichares persistent lack of funding for maintenance; poor investment planning;expensive implementation methods; and inefficient Institutional performance.In addition, the role of the private sector, potentially more efficient, hasremained embryonic and restricted ln practice to road transport. Transportcoordination has been virtually absent, as resource allocation was based onnarrow subsectoral plans and priorities and not on overall demand-drivencriteria. The dialogue, pursued with Government since a policy reviewmeeting with the Bank in late 1986, has resulted in agreement on the need forreforms in three main areass (a) improved lnvestment planning in the sectorwith a target of at least 80 percent of sector expenditures earmarked forinfrastructure maintenance and rehabilitation, and a major emphasis, through1994, on repairing the dilapidated highway network; (b) increasedmobilization of resources from the sector through Improved efficiency, costcontrol and revised tariff policies in the railways and ports subsectors; and(c) strengthened sector management through a series of lnstltutional reforms,including revising the legal status and increasing the autonomy of the port,railway, and civil aviation parastatals.

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15. Since reforms In these areas had been attempted under earlierprojects with disappointing results, considerable emphasis during projectpreparation was put on significant un-front action on a number of the agreedpolicy changes. First, detailed action plans have been established fortrasslating agreed policy changes for the road, railways, port, and aviationsubsectors into reality. A number of Important reform measures have alreadybeen introduced to comply with conditions of appraisal of the proposed TSAIP,and the hybrid format chosen for the project will allow continued monitoring,and recognition of the Implementation of critical policy measures duringproject lmplementation--particularly those that concern the policy agend"s ofthe Ministries of Plan and Finance rather than those of the technicalministry and agencies directly concerned by the project--through trancherelease conditions under the adjustment component. Reform measures alreadyimplemented are detailed in Annex 1I and includes (a) sector wides agreementon a 12 percent rate of return criterion for all investments overUS$1 million in tue sector; (b) for the road subsector: Government's formalengagement - included in its 1989 Letter of Transport Policy - to devote 80percent of all subsector expenditures to rehabilitation and maintenance (asopposed to the construction of new roads), and to increase budgetaryallocations for maintenance (Road Fund) from CFA 2 billion to CFA 6.5 billionp.a. This will be required for the execution of an agreed emergency salvageprogram for some 900 km of the paveA road network, and periodic and routinemaintenance actions on the rest of the defined priority network. Governmntfurther agreed to the continued freeze in hiring of force accountconstruction personnel whose number will decline by two thirds over theproject period through natural attrition, and to an increase in road workscarried out by private contractors from 35 percent to 75 percent of all roadworks--including routine maintenance--over the period of project executiong(c) for the railway subsector: transformation of the ORigie' into a *SocietiNationale" with increased management autonomy (Nov. 1989); introduction of aunified personnel statute to end long-festering conflicts due to differingcompensation and promotion criteria applied to staff under the two existingstatutes of the "Regie"; agreement on a five-year financial plan withmonitorable operational and financial targets, detailed in a Contract Planand designed to reduce Government operating subsidies to the railwayssubstantially and to eliminate them entirely by the end of the projectperiod; (d) for the port subsector: transformation of the port from an'Etablissement Public a Caractere Industriel et Commercial' (EPIC) into a'Socite Nationale" with increased management autonomy (July 1987); andimplementation of an agreed technical, operational and financial plan aimedat improving port efficiency, financial performance, and pricing and qualityof service to shippers; and (e) for the civil aviation subsectors agreementto establish financial and operational plans for both AIR SENEGAL and ASECNA-Senegal under the proposed project.

16. Implementation of the reform measures agreed to will result insharply increased budgetary needs during the project period, and the hybridcredit was chosen, because: (a) the prospect of quick disbursementfacilitated agreement on some of the upfront actions described above and,through tranching, will focus attention on monitorable future actions; (b) itsignificantly strengthens Government's ability to implement productivity

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enhancing reforms, including increased expenditures for road maintenance, inan environment of great fiscal constraint; while at the same time (c)avoiding the drawback of direct IDA contributions to routine road maintenancebudgets as under previous Highway Projects which, although designed to belncremental, de facto simply substituted f&r Government's own budgetaryallocations, thus perpetuating persistent underfunding of maintenance andpremature degradation of an expanding road network. The policy reformsfacilitated by the adjustment component will, in combination with carefullyevaluated essential rehabilitation investments, maintenance actions, andinstitutional capacity building supported by the investment element of theproject, durably improve transport efficiency, which is a key factor in theprocess of increasing market responsiveness in the economy and reducing costsof production for agriculture and industry. The policy changes andinstitutional improvements to be supported under the proposed project aresummarized in Annexes Ila and IIb and presented in more detail below.

B. Investment PlanninR and Strateav

17. The well-developed, but under-maintained road network, and theaccumulation of arrears by the railways, are both indicativo of pastdistortions in investment strategies. Up to the early eighties, trassporttraditionally received up to 19 percent of the total investment budget andmost of the resources were allocated to new construction. During the 1981-85period, when structural adjustments were being Introduced at themecroeconomic level, the share of transport dropped to about 13 percent ofinvestments. But these were still directed largely to new construction, anddespite substantial contributions by IDA to maintenance (especially in theroad subsector) the overall condition of Senegal's aging transportinfrastructure deteriorated severely. In an effort to stem this acceleratingtrend, studies to evaluate the essential maintenance needs of the sector werecarried out. They showed that to cover the most urgent rehabilitation needs,allocations to transport in the 1990-92 Three-Year Plan would have to riseagain to about 20 percent of the national investment budget.

18. The increase in the overall percentage allocation to transport isprincipally justified by the urgent need to step up periodic highwaymaintenance in order to stem the rapidly accelerating deterioration of 30percent of the paved network. As noted above (para 12), Government, in amajor change from earlier practice, has agreed that at least 80 percent ofroad expenditures would be for rehabilitation and maintenanco, that no newprojects would be Included in the PTIP unless they yield an ERR of 12 percentor more, and that all projects would be ranked for financing andimplementation strictly according to economic priorities.

19. In the railway subsector, a major misinveotment on high-costrenewal of the international railway line to Mali has been averted bylimiting the scope of works to rehabilitation and intensive maintenance, thusreducing initially planned investments of US$86 million to about US$50million. Even this reduced investment was accepted by IDA only after twostudies established a satisfactory long-term role for the line and anadequate techno-economic justification.

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20. In the port subsector, the only proposed investment la forimproving road access connecting the urban network to the new ContainerTerminal financed under the ongoing Third Dakar Port Project, while the mainemphasis will be on periodic maintenance of the aging utility systems (water,electricity) serving port needs. In the civil aviation subsector, longoverdue rehabilitation of the runways of the Cap Skirring and Ziguinchorairfields, and renewal of navigational aids indispensable for safe operationof the Dakar airport and several regional airfields are the only Investmentsforeseen under the project.

21. The recent PTIP reviews have highlighted some Issues and weaknessesIn the sectoral investment planning process itself. While the current programrightly focuses on high priority maintenance in all the subsectors and publicinvestment planning in the transport sector is less overprogrammed than itused to be five years ago: (a) the planning process requires structurallysounder subsectoral plans, more rigorous economic justification, and a betterintegration into a coordinated transport sector strategy; and (b) manpowerdevelopment and training need to be strengthened in almost all subsectors.These issues require continued corrective action and monitoring linked totranching through the proposed credit and future lending to the sector. A-sse in point is urban transport in the Dakar rep1on, which is not includedin the proposed project, having been traditionally assisted via bilateralarrangements, especially with France. SOTRAC, the joint venturo Dskar urbantransport company owned 60 percent by Government and 40 percent by RVI(Renault) has recently acquired 120 new buses (25 percent of its floet)despite consistently deficitary operational results. The next majorinvestment proposed in the urban transport subsector concerns tho Train deBanlieue, a suburban rail service in the Dakar area, expected to replace busservice on loss-making suburban routes of SOTRAC. While IDA, afterexamination of the feasibility studies, has concluded that the project may beeconomically viable, It is judged prudent to introduce the proposed full-service system in two or three stages, phased In response to proven customerdemand for increased service frequency. Agreement on these phasing. will besought in the context of an overall Urban Transport Master Plan for whichfinancing Is being sought.

C. The Institutional Framework

Roads

22. The Government has traditionally relied upon force-accountImplementation of road maintenance, which was slow and often inefficient. Inaccordance with its policy to divest itself progressively from the executionof works or provision of services, the Administration has agreed to grant toSenegal's developing private construction industry a more signiflcant role inperiodic and routine road maintenance works by increasing its share from some35 percent under the Fifth Highway Project to 75 percent of the annual worksbudget over the next four years. The Public Works departments will retainonly a small routine maintenance capability, and will concentrate mainly ontheir role of planning, programing, contracting, and supervising works.This will result In a significant reduction of personnel which wI I I be

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largely acheved through normal attrition. It will also Improve thetimeliness and efficiency of works execution. The use of consultants fordesign and supervision will act as a stimulus to the development of the localconsulting industry. However, a problem which the contracting industry Islikely to face will be payment delays by the Administration for worksexecuted. Government's disbursement practices are so cumbersome thatcontractors' bills have in the past often been paid up to twelve months late.Unlike large contractors, the small- and medium-scale firms who are oxpectedto be interested in the routine maintenance works are unable to functionunder such conditions. The Government is convinced of the need to reducethese delays, if the privatization of road maintenance Is to succeed; and itis now committed to ensure payment of contractors' and suppliers' billswithin no more than three months. Compliance with this payment delay will bea condition of tranche release for the adjustment portion of the proposedcredit. Successful transfer of maintenance works execution to contraetorsalso needs to be supported with appropriate training programs, and the PublicWorks Training Center (CPTP) should be able to accept both administrationpersonnel and that of small- and medium-size contractors for training. Thisnow role will have to be reflected in its statutes, and adoption of statutesCPTP satisfactory to the Association will be a condition of disbursement forthe road gomponent.

RailwYas

23. In the early 1980s, the railway subsector was plagued by shrinklngtraffic, falling revenues, rising costs, poor cost recovery, low laborproductivlty, and overall managerial failure. The future of RCFS was indoubt. Studies carried out during preparation of the project establishedthat the RCFS could have a definite role to play, but only if operationalefficiency were Improved. This iole covers the haulage of internationaltransit traffic to Mali, both frelght and passengers, and the nationalphosphate traffic. At the time, lt appeared that national freight traffic(other than phosphate) and national passenger traffic (especlally on the low-density line of Tivavouane-St. Louis) were deficltary. Siace then, therailway has taken stringent measures to cut costs by reduclng staff, reduclngthe number of intermediate stations, etc. As a result, recently concludedtrials have shown that national freight and passenger services will be ableto cover avoidable costs as long as no new investments are made and servicesare operated at current levels. Accordlngly, agreement has been reachedwlth the Government that no expansion of these servlces will be undertakenunless trials demonstrate the fessibility of recovering thelr avoidablecosts.

24. The efflciency of the railway and lts competltlveness with roadtranspart had been serlously eroded through lack of management autonomy,partlcularly ln tariff setting and personnel administration. As a result ofthe ongoing dialogue with the Assoclation, both in the context of the SAL andthe proposed TSAIP, Government has converted RCFS lito a Soclet'e Nationalewith much increased managerial autonomy. Based on the results of studiescarried out during project preparation, a matrix of verifiable operationaland financial targets to be achieved annually has been drawn up. Further, as

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suggested by the diagnostic studies, the two existing personnel statuteswhich, although conflicting, had been maintained through union pressure, areto be changed to a unified personnel statute for the Sociite Nationale. Theentire framework of reform actions is reflected in the statutes of the newwSocitt Nationale de Chemins de Fer du Senegal (SNCS)' and will beImplemented and monitored through the Contract Plan. The final outcome oithese far-reaching institutional reforms will be to eliminate operationalsubsidies during the project period (see par"s 28 ff). Detailed financialprojections have shown that the railway's working ratio, currently at 0.75,could be Improved to 0.70 or less during the FY91-95 period.

25. Important institutional concerns will need to be addressed in thearticulation of the proposed suburban passenger rail service with both therailway company and the urban bus company. While involvement of SNCS in theservice is desirable to facilitate operational coordination of suburban andnationallinternational traffic, the institutional arrangements need to ensurethat this involvement will not jeopardize SNCS financial and operationalrehabilitation plans. Concomitant, suburban rail and urban bus services(both of SOTRAC and the 'Cars Rapidesl, small private sector bus operatorsproviding about a third of urban transport) need to be integrated in waysthat improve service and maintain reasonable competition. Aareement will bereached with IDA on any arranRements for an urban transport authority thatGovernment may wish to establish.

Ports and Shipping

26. In the recent past, institutional weaknesses of the Autonomous Portof Dakar (PAD) have been the subject of intensive reviews under the ongoingDakar Container Port Project. A large measure of the requisite reforms havebeen undertaken over the past two years. In July 1987, PAD was convertedinto a Societe Nationale (PAD) with substantially enhanced managementautonomy. The new management structure with a new management team are inplace. An Action Plan, established under the ongoing Dakar Container PortProject, defines detailed measures to Improve organization and management,and is being implemented. A five-year financial plan, detailing financialand operating targets to be attained every year, has been drawn up (see par"s39 ff below). These have been reflected in a Contract Plan between PAD andGovernment, agreed with IDA. In addition, certain essential follow-upreforms have been agreed upon; these are:

(a) increasing the port capacity by clearing up the working zones ofthe port throught

(i) strict and timely Implementation of bond and auctionprocedures for goods in abeyance; and

(1i) an agreed timetable for the termination of long-term storagefacilities in the port working areas for CPSP;

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(b) setting up a Management Information System, a manpower plan, andan Action Plan for each department of the port, the details ofwhich were agreed at negotiations; and

(c) facilitating transshipment, International trsasit, and door-to-doorcontainer traffic by simplification of Customs' procedures forthese operationa, follcwing the results of a study currently beingcarried out.

Measures under (c) would reinforce action pursued already under SAL IVgcompliance with Contract Plan .objectives including the implementation ofmeasures under (a) and (b) would be conditions of tranche release for theadJustment component of the proposed project. In addition, as rail 4nd roadaccess to the port are being improved and grain handling arrangementschanged, Government will institute annual reviews of the agreements with theGovernment of Mali on the Free Zone (EMASE) with the aim of providingalternative facilities and procedures for the Mali trafflc that would improvetransport efficiency and reduce transport cost in the Dakar-Bamako corridor,as well as enhance overall port efficiency. Undeo the investment componentof the project, a satisfactory techiAcal assistance team will be financed tosupport PAD management and sustain the momentum of the reform process. Theproject would also support the production of a master plan defining thelonger-term development objectives and prospects of Dakar Port.

27. While past development plans have concentrated on Dakar port, thetraffic and revenues of the secondary ports like St. Louis, Kaolack, andZiguinchor are dwindling. It is not clear whether this is the cause or theeffect of lack of attention to these ports. The role of these ports In thenational context has to be reassessed in the light of the competitiveness ofcoastal navigation with road transport. Studies will be conducted under theproposed project to enable Govermnent to formulate a coherent strategy forthese secondary ports.

28. National Shipping was reorganized in 1987 through the establisbmentof a joint-venture company, COSENAM, regrouping all private and publicSenegalese shipping Interests. At present, COSENAH is chartering space andselling its traffic rights to foreign shipping lines and its financialsituation is healthy. However, Government and COSENAN are considering waysto develop COSENAM's involvement in actual shipping operations. Unlesspooling agreements can be secured, this Is a very risky operation givenSenegal's unbalanced trade. In any case, chartering vesrels or space ispreferable to buying vessels in the present volatile environment of marit imetransport. Therefore, Government and COSENAM should seek regional poolingagreements and accumulate experience with chartering before committingthemselves to potentially hazardous investments in vessels. Any investmentIn shipping would, however, be included In the PTIP for prior review withIDA. It would be preferable for Government to ultimately divest itself ofits remaining 26 percent share In the company and have it fully privatized.

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Civil Aviation

29. The national carrier AIR SENEGAL/SONAT a, after operating at a lossfcr the first twelve years of its existence, has been able to cover operatingcosts since 198314 thanks to improved management, diversification ofactivities (charter, handling, etc.) and Government compensation payments ofCFA 100 million annually for public service provision to Eastern Senegal andthe Fleuve region at tariffs vwll below costs (60 percent). A recentcritical examination of the company's route structure; traffic potential andfleet utilisation concluded that AIR SENEGAL's current fleet is poorly suitedto serve Its present and potential traffic efficiently, and identifiedseveral equipment replacement scenarios that could Improve service andfinancial results. The project would support a detailed study of threeproposed fleet renewal alternatives, including a five-year financial planreflecting realistic financing assumptions for new equipment (purchaselleaseoptions) and acceptable arrangements concerning AIR SENEGAL's debts on theexisting fleet. It would also support establishment of a Contract Plan as acondition of effectiveness and first tranche releases this would defineoperational and financial objectives ior AIR SENEGAL's commercial as well aspublic service routes, with a view to fully recover costa on the latter bythe end of 199112 as agreed under SAL IV.

30. Management of airiorts and air navigation facilitles, entrusted toASECNA has deteriorated in recent years, and a consultant's report preparedduring project preparation recommended a separation of managementresponsibilities for air navigazion (ASECNA) and commercial activities(ground facilities, real estate, airport commercial activities, etc). TheAdministration rejected the proposal to establish an independent airportauthority, preferring to restrzucture ASECNAts activity and put It on acommercial basis. The project will support this by financin& a diagnosticstudy and an operational and financial-Action Plan for putting air navigationand airport management in Senegal on a sound financial footing. The ActionPlan is expected to address: (a) present organizational arrangemuents andproposed improvements; (b) an examination of staffing levels, staffqualifications, and training needs, with a view to containing and reducingrecent steep increases in salary expenditures for administrative personnel;(c) introduction of detailed annual budgeting, including revenuelexpenditureestimates for each center of activity, estimates of routine and periodicmaintenance needs for infrastructure and equipment, and cost of non-civilaviation related services to be compensated; (d) a plan for recovery ofpayment arrears (more then 50 percent of current annual billing) on bothaeronautical fees and airport rentals and commercial activities; and (e)establishment of a 3-5 year rolling investment plan for renewal andimprovement of essential infrastructure and equipment. It will also benecessary to evaluate carefully the impact of the recently launchedrestructuring of AIR AFRIQUE on both recovery of past debts (the company isASECNA's largest debtor) and on estimated future airport revenues followingthe domanded cutbacks In service frequency of competing airlines, in linewith the 1973 Yaounde treaty arrangements.

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D. Financial Viability and OoeratIonal Efficiency

Railways MS-CS)

(a) Recent Financial Performance and Current Financial Position

31. As noted earlier (para 24), the main objective of the proposedproject is to make the railway financially self-sufficient s@ that operatingsubsidies are completely phased out, and the railway is able to meet itsrenewal requirements through adequate provision for depreciation. Theconversion of RCFS into a Sociote Nationale with a new financal structureand personnel statute, and their implementation through a performancecontract should set the pace for Institutional recovery. RCFS financialmanagement into the early 1980s had been characterised by unsatisfactoryaccounting practices and clouded by improprieties. Annual accounts wereprepared poorly and with several years' delay. Only after a severe shake-upof accounting personnel and implementation of annual external audits startingIn 1985 have accounts been produced on time. Earlier qualificationsconcerning Iwportant items have been gradually clarified. By conclusion ofthe audit of the FY88 financial statements, most of an important remainingdifference of CPAF 1.7 billion in balances shown respectively by Tressury andRCFS should be narrowed down to CFAF 336 million based on RCPS evidence, anda clear and unqualified opening balance of SNCS as of January 1990, Includinga detailed evaluation of fixed asets, is expected to be available by June1991.

32. RCFS balance sheets for FY86-1Y89 are shown in Anne" III. In FY88,not fixed assets amounted to CFAF 47.2 billion, with CFAF 9.3 billion ofworks in progress. Equity and long-term foreign debt are CPAF 19 billion andCIA? 20 billion, respectively. The most salient feature is expected negativeworking capital of CFAF 8.2 billion for FY89. SNCS is mostly in arrears toGovernment for servicing of foreign and local loans. Substantial mounts arealso owed to suppliers, due In part to past inefficiencies in financialmanagement that are being improved. Accounts receivable have been increaslngand will need attention (see para 33 below).

33. Sine SNCS cannot pay off these arrears Immediately, given itsestimated earnings capacity, a financial restructuring glan is being put intoplace to give the newly established Socioto Nationale a sound finaneialstart. This plan will take effect in FY91 and foresees the following: (a)the excess of short-term liabilities over short-term assets ofCIAF 8.7 billion in FY90 would be eliminated over four years as follows: (i)CFAF 6O billion of ex-RCFS debt to Government will be converted into equity.This awount corresponds to the sum of Government's contribution of 602 totrack rehabilitation works (CFAF 2.0 billion); debt to the nationalretirement fund linked to excess staffing Imposed on RCFS by Government(CIA? 735 million); doubtful Government claims for foreign debt servicing(CFAF 0.9 billion); and CFAF 2.4 billion of other debt that SNCS Is unable toreimburse; (Ui) the remaining short-tezm debt of CFAF 2.7 billion would berepaid over three years, interest freel and (b) in addition, Government willassume potential litigation damages (rolated to past claims by personnel

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resulting out of conflicting personnel statutes) In the samount ofCPA? 1.676 billion iaa=aum--with no ditrect Impact on SVCS liquidity. Theserestrueturing arrangements were reflected in the Contract Plan betweenGovernment and SNCS, signature of which was a condition of effectiveness as.first tranche roleaset compliance therewith will be monitored as conditionsof second and third-tranche releases.

(b) Tariffs

34. The ex-RCPS did not have the autonomy to set tariffs atremunerative rates and tariffs on national passenger traffic, as well asinternational passenger and freight traffic had not changed since 1982.Consultants' reports showed that for the new SNCS to be financially viable,revenue needed to increase by 102 overall over 1987 levels, and reconmendedthat tariff increases for different services be modulated in term. of therailway's comparative advantaRe for each. Increases of tariffs on theinternational traffic and of freight rates on phosphate traffic have beenintroduced in 1988/89; national passenger traffic fares were increased by 52as of February 1, 1990, and by another 5 as of September 1, 1990.Implementation of these increase3 was a condition of effectiveness and firsttranche release on the adjustment component. SVCS pricing policy as definedin the Contract Plan/Cahier des Charges is for core activities (internationalpsssenger and freight traffic, phosphate traffic and national passengertraffic) to bear fully allocated costs, and for other activities to at leastcover avoidable costs. This Implies periodic tariff adjustments in realterms in the light of changing cost data for the different SNCS services.

(c) Financial Obiectives

35. SNCS objective is to be a fully autonomous, commercially-orientedpublic enterprise, the operation of which will not require any subsidies fromGovernment. Its statutes specify that operating revenues should cover alloperating expenses, including adequate maintersace, provision for losses andrenewals, and interest charges on debts. To do so, SNCS has tariff-settingautonomy, and Government control of operational expenditures and bankaccounts will be on a posteriori basis.

36. SNCS will need to reinforce accounting and financial mnagementthrough technical assistance and training, as well as through introduction ofcomputerized billing and accounting procedures on a service-by-service basis.A major objective is to Improve collection of receivables, the levels ofwhich should decrease from 75 days of operating revenues in FY89 to 40 daysin FY93, and institute corresponding timely payment procedures for suppliers,so that the ratio of payables to working expenses (excluding salaries) woulddecline from 30% to 202 over the project period. In addition to the workingratio covenant already Included in the Contract Plan, asgreement was reachedat neLotiatiOns that the current ratio will be maintained above 0.7 in FY91,0.8 in PY92 and 1 thereafter. The 1990-94 Investment program h& u been agreedwith IDA; it foresees expenditures of close to CIAF 25 billion, two thirds ofwhich for track rehabilitation and maintenance. Any additional investment

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exceeding CPAF 300 million will be subject to Association approval throughthe anual investment review process under SAL IV.

td) Forecast Financial Performance

37. The forecast statement of sources and application of funds and theforecast balance sheet are also shown in Annex II. During the 1990-94period, two major lmbalances need to be correcteds (a) negative workingcapital; and (b) negative contribution by some services to net oporatingrevenue The former will be addressed through partial rescheduling of loansand conversion of others to equity (para 33 above). The latter will besolved through a combination of tariff increases and cost reduotions.

38. Based on modest average traffic growth assumptions of 31 and 2.5Sp. a. for freight and passenger traffic, respectively, operating revenues willnot grow from CFAF 9.4 billlon In FY89 to CFAF 12.7 billion in FY94 necessaryto maintain a working ratio of 0.70, unless the overall up-front 101 increasein revenues mentioned oarlier (pars 34) is Implemented, followed byadditional tariff licreases in subsequent years one point below the yearlyinflation rate. To maintain consistency with financial objectLves throughoutproject execution, agreement was reached at negotiations thats (a) thedebtlequity ratio will be no higher than 451551 and (b) gross cash-flow willbe no less than 1.4 times the debt servLeinog requirement.

Ports (PAD)

(a) Recent Financial Performance and Current FinancLal PositLon

39. PAD was establishad in July 1987 as a Soclete Nationale, i.e., afully autonomous, commercLally-orLented public enterprise. Thistransformation was part of the operational and financial Action Plansupported under the Third Dakar Port Project, designed to Lsprove portmanagement, introduce satisfactory management and control systems andincrease financLal autonomy. Overall, revenue and cash-flow objectlves setfor the FY86-88 period (the last period for whlch audLted accounts areavailable) were exceeded, with PAD net income after taxes averagingCFAF 1.4 billion, on annual revenues averagLng CFAF 8.3 billion.

40. PAD balance sheets for FY86-88 are shown in Annex IV. In FY88, netfixed assets amounted to CFAF 19.7 billion, with only CFAF 215 millLon ofworks in progress. Equity and long-term debt are CFAF 19.0 billion andCFAF 8.6 billion, respectively.

41. Accounts receivable as of June 30, 1987 stood at CFAF 5.5 billLon,of which CFAF 1.4 billlon were provlsioned, representing more than 9 monthsof operating revenue and dlstributed 8721132 between private and publicsector customers. PAD new management reorganized cash collection proceduresln November i987, aIming to reduce accounts receivable to 252 of portturnover within 2 years. Collection staff were asslgned to partlcularcategories of customers; follow-up routines and prompt analysis of customerciaims were introduced. Outstandlng lnvoLees in dispute declined from

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CPA? 513 mllion on June 30, 1987, to CFAF 117 million in April 1989.Progress has been most difficult with public sector debtors, and PAD acceptodto roschedule short-term debt of some CPAF 600 million, mostly owed by localcargo handling compan_es and forwarders severely affectod by the impact ofSenegal's adverse economic conditions on port-related activities. Aereo _ntWas rgached at neot_at Ions on finaucial performance Indicators to betterrolate payments received to corresponding bills, and to stablish unambiguousceilings on debt roscheduling; these indicators are part of tho Contract Planconcluded between PAD and Government.

42. PAD current assets Include substantial cash deposits accumulateddue to the deferral of periodic maintenance for several years, and to riingrevenues with rising traffic. As of June 30, 1987, cash In bank and In handstood at CFAP 6.87 billion; however, part of this excoss liquidity resultedfrom non-payment of Government bills, especially foreign debt servicing. Animuediate step to bring surplus cash to more normal level Is settlement ofcross-debts with Government. Most of these date back to the period beforeDecember 1986, and uncontested amounts eoncerning this period should besettled under SAL IV conditionalities by all public enterprises no later thanMarch 31, 1990. It was estimated that PAD owed about CFAF 5.5 billion toGovernment, which In turn owes PAD some CFAF 3 billion. Agreement wasreached at neaotiations that all cross-debts would be settled no later thanDecember 31, 1990; this has been complied with. The compensation plan wouldInclude non-port services provided to Government and the City of Dakar, aswell as proceeds from divestiture of PAD participation In SODHEME andCOSENAM, the ship-maintenance and shipping companies (para 44 below). Inaddition, the scope for lowering rates to shippers will be examined (pare 43below).

(b) Tariffs

43. Under earlier IDA port-projects, tariffs have been increasedregularly (by about 102 p.a. on average) to comply with financial ratioagreements and to generate the revenue required for meeting additionalobligations. Although some revisions of the tariff structure were introducedunder the Second and Third Port projects, the overall structure of chargeshas remained unchanged, reflecting a long outdated technology when shipsspent days at berth, and capacity availability did not require the port touse tariffs for promoting more optimal utilization of Its quay and storagefacilities. Moreover, given the fact that PAD charges represent only onethird of the combined ClAP 22 billion paid by port users in FY88, it isimportant for PAD to monitor rate setting by private operators of stevedoringand other port related services, to ensure that service rendered isconsistent with rates charged, and that Dakar's rates remain competitive withthose of other regional ports such as Abidjan, who are also trying hard toattract international trans-shipment business.

44. Of PAD overall operating revenues of CPAF 7.7 billion in FY88, only13Z originated from services to ships, while 371 were charged for services togoods, 282 for storage and rentals, 151 for fishing port operations, and theremaining 7% for miscellaneous services. It is evident that faster servicing

- 17 -

of fever ships in a modernised fleet has lowered ship-bosed revenues to anunreasonably small share of total revenues, which would more normally beexpected to be distributed 30/70 between ship-based and goods-based revenues.A consultant's study of alternative tariff structures and levelscorresponding more closely to observed costs of different services waslaunched and recommendations were received in April 1991. Implementation ofthe tariff adjustments recommended by the study and agreed by IDA would be acondition of second tranche release of the adjustment component. The projectwill ensure continued monitoring of PAD tariff levels, as well as those ofother port operators, so as to contribute to an improved supply response ofSenegal's economy due to lower prices of foreign inputs, as well as ofexports.

(c) Financial ObAectives

45. PAD's objective is to be a fully autonomous, commercially-orientedand profitable public enterprise. According to its statutes, operatingrevenues should cover all operating expenses including adequate maintenance,provision for losses and renewals, interest charges on debt, and a minimumreturn on revaluated net fixed assets. The authorities have consistentlyaccepted tariff increases requested by PAD to attain these objectives.Financial management has been improved with the establishment of the newSociete Nationale, but needs to continue and intensify its efforts onreduction of receivables and payment of suppliers (para 41 above).

46. A worrisome development has been the steep increase of labor costsfollowing establishment of the Societe Nationale (+ 261 in FY88), whichrepresent 47X of working expenses net of taxes in FY88 and are expected toexceed 50% in FY90 (see Annex IV). While competitive salary levels were, andare, an important feature of the new Societe Nationale, so were reductions innon-productive labor to be identified through a manpower development plan.So far, permanent staff remains at earlier levels of about 730, but thenumber of fixed-term contracts doubled to 120, for total PAD employment of850. Overstaffing is most evident at lower skill levels, and port forceaccount labor for construction and maintenance is large (165) and not veryproductive. An ongoing study is examining the potential for contracting outservices and reducing permanent staffing levels. Aareement was reached atneaotiations to maintain the labor cost/vorking expenses ratio at no morethan 0.5 and the working ratio at no more than 0.65; reduction of permanentstaff by an agreed number following conclusion of the study, together withthe effective termination of all short-term contracts signed in early 1989and not justified in the manpower plan. This was reflected In the ContractPlan and all short-term contracts were in fact terminated by early 1991.Compliance with agreed ratios will be a condition of second and third tranchereleases for the adjustment component of the Credit.

47. Port users are currently being charged for several services thatPAD has been providing without full remuneration at the Administration'srequest. These include operation and maintenance of lighthouses, buoys andbeacons, and operation of the Dakar-Goree ferry-shuttle which generatesmonthly losses of CFAF 20 million on average. Past debt on these services

- 18 -

should be part of the compensation of cross-debts between Government and PAD#agreement was reached at neaotiations that the Contract Plan specify that PADwill be compensated for future services rendered no later than six monthsafter the end of each fiscal year. PAD's present 702 financial participationin SODHEME, a profitable company operating shiplifting facilitie" that hasserved mainly to shore up the near bankrupt dry-dock company DAKAR MARINE(which owes PAD some CFAF 400 million), should be reduced through theprivatization of both these companies (being pursued under SAL IV). Inaddition, possible divestiture of PAD interest in COSENAM, the joint-ventureSenegalese shipping company, was discussed at negotiations.

48. The PAD capital expenditure program for the 1991-94 period has beenagreed with IDA; it represents some CPAF 13.5 billion, mainly for periodicmaintenance. Any additional investments proposed for inclusion in later yearprograms (grain handling terminal, petroleum jetty rehabilitation) will besubject to IDA approval through the annual investment review process underSAL IV. To ensure sufficient gross cash-flow to cover debt servicorequirements, aareement was reached at nexotiations that provision shall bemade in the Contract Plan for the debt service ratio to be maintained at noless than 1.5.

(d) Forecast Financial Performance

49. The five-year forecast statement of sources and applications offunds and the forecast balance sheets are also in Annex IV. During the 1991-94 period, PAD would cover with its initial cash surplus and cash-flow thelocal cost portion of the proposed capital expenditure program as well asinterest payments and debt service on earlier projects. The healthy cashposition estimated for FY94 and FY95 shows that investments in grain terminalfacilities and petroleum jetty rehabilitation, although not included in theprojection, would be affordable. Cross-debts between PAD and Governmentwould be compensated, and excess PAD debt of CFAF 2.5 billion would be repaidover three years. The projection assumes that Government will not dismisslegitimate claims by PAD that reduce short-term debt repayments by someCFAF 3.0 billion. If PAD had to increase its cash outflows for debtrepayment by such amounts, its ability to finance the agreed program would beimpaired. Alternative solutions would have to be worked out within theframework of the Contract-Plan, based on clarification of the issue whichGovernment is coumitted to provide to IDA not later than June 30, 1991. Onpresent assumptions, the debt service ratio would be above 1.5 throughout theprojection period. These satisfactory results are obtained using veryconservative assumptions on traffic growth, and foreseeing only oneadditional tariff increase of half the average inflation rate for the FY91-FY95 period. This presumes, however, that the cost containment measuresenvisaged under the project are fully realized. Overall, forecastperformance should significantly improve Dakar's competitive position amongWest African ports.

_ 19 -

Civil Aviation

50. The studies and action plans to be prepared under the project aredesigned to reinforce ongoing actions for establishing full finncnialviability of AIR SENEGAL witb the aim of eliminating the need forcompensation payments on the public service lines by the end of 1991.Historic data on AIR SENEGAL financial performance showing steady improvementover recent years are in Annex V. Signature of a Contract Plan betweenGovernment and AIR SENEGAL, a condition of effectiveness and first trencherelease, has been complied with. In navigational and airport management, theproject will support establishment of sound financial management practices byASECNA-Senegal, examine the adequacy of user charges at Dakar-Yoff and othernational airfields, and support tariff adjustments where indicated by theresults of the studies. Available financial data on ASECNA operations inSenegal are in Annex VI. Adoption of agreed financial and operational plansfor ASECNA-Senegal, based on the results of the study financed under theproject, will be a condition of third tranche release.

IV. THE PROJECT

A. Proiram Objectives and Key Actions

51. The measures described above and summarized in Annex II constitutea comprehensive package of policy reforms and adjustments pursued under theproject, and of actions already, or programmed to be, taken by Government andthe major transport parastatals. They have been discussed with theAdministration during project preparation and are reflected in Government'sDeclaration of Transport Policy of May 1989, also in Annex II. TSAIP is anintegrated, mutually supportive package of major policy reforms and physicalinvestments. It is aimed at attaining the objectives of the country'songoing macroeconomic adjustment program in the transport sector byt (a)reducing the cost of transport in Senegal; (b) strengthening sectormanagement including investment and maintenance programming capacity; (c)privatizing the execution of works or provision of services in the sector tothe extent possible; and (d) restructuring remaining transport sectorparastatals as public enterprises to be run on a commercial basis, withsignificantly enhanced financial and managerial autonomy and not requiringany operating subsidies from Government. Both elements are requiredI neitherthe policy changes nor the infrastructure investments would by themselvesgenerate the supply response that is essential to the structural adjustmentprogram and the achievement of sustained growth.

B. Credit Size and Proaram Comgonents

52. The proposed program is estimated to cost US$603 millionequivalent, Including taxes estimated at US$121.9 million. It consists of aquick-disbursing (36 months) adjustment lendina component of US$20 millionfor balance of payments and budget support, and an investment component ofUS$583 million (Table 1 below). IDA and the Special Program for Africa(Finland) will finance US$15 million and US$5 million, respectively, of the

- 20 -

quick-disbursing component. Bsdoes contributing to narrowing the oxtornalfianmcing gap, this will provide gonoral budget support and assist GovernmentIn Implementing tho policy changes required to onsuro thatt (a) future budgetallocations for road maintenance will be sufficient to financo easentialmaintonance operations5 and (b) the new Soc it' Nationale de Chemins do Fordu Snegal will be established on a sound financial basis that wlll besustainable without futuro Governmental subsidies for oporations.

53. The investment component effectively underwrites the five-year(FY91-FY95) transport sector investment and expenditure program and focussespractically exclusively on rehabilitation and maintenance of existingtransport infrastructure. Traditionally, funds for maintenance--whether ofroads, railway track, or airport runways--have fallen short of requirements,and infrastructure has often been left to deteriorate until it requited fullreconstruction. In order to avoid high reconstruction costs, usually doubleor triple those of periodic maintenance, a program of priority works has beenidentified. It has been packaged into subprojects designed to attractmaximum cofinaricing from a wide range of donor agencies for the most urgentinterventions, the fin&ncing needs of which far exceed available IDA creditfunds. The program only includes carefully identified priority investments,all fulfilling the 12 percent rate of return criterion (the averate estimatedERR - 25 percent), or actions required to assure basic safety of operations.Interventions in the road subsector consist of 22 subprojects coveringstrengthening of about 860 km of severely deteriorated paved roadst periodicmaintenance of 2,065 km of paved and 1,300 km of unpaved roads; routine roadmaintenance works by contractors on some 9,000 km of the networks technicalassistance to strengthen sector agencies and training, and consultants'services for works supervision and studies. Operations in the rail subsectorconsist of 25 subprojects and concern intensive maintenance of 180 km ofttack; replacement of rolling stock with secondhand equipment locallyrehabilitated; spare parts and equipment for maintenance; works (sidings,marshalling yard) to improve operating efficiency; training, and technicalassistance to SNCS in the areas of traffic management, marketing, finance,and manpower development. In the port subsector, 17 subprojemts wereIdentified, covering construction of an Improved access road to the recentlyopened container terminal in the northern port zone and rehabilitation ofover-aged utility networks; technical assistance for full Implementation ofan agreed Action Plan; and consultants' services for studies. In theaviation subsector finally, 12 subprojects were established to cover runwayrehabilitation in Cap Skirring and Ziguinchor, essential navigation equipmentat selected airports, and consultants' services to assist in reorganizing AIRSENEGAL, and improving ASECNA-Senegal's airport management. (A detaileddescription of all subprojects under the investment component is inAnnex VII.)

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Tafl Is Sumr Pora and Prolc C Tb

,CFAF ml lI Ion aorolon g I T OxW Forleg MOl Sd l

PROAM

Aeus b,osnt CO e"t f -_ -. m --.

IDA 4,506 4,509 15.0 15.6FINLAN 1,5O 1,'M 5.6 5.6

Road Coeonent 59,19$ 28,897 20,675 18,007 197.2 79.7 60.0 846.5Rall Co moent 1,0912 6,020 4,824 260262 8.8 10.8 14.4 67.5Port Cowonent 4,S48 2,260 8,"69 9,90 15.1 ?.6 1N.8 83.Aviation Componont 8,899 9J0 1,089 6,418 11.8 8.1 8.0 18.0

Total basu coat 78.649 82.141 2WM667 189.247 269.9 107. ft,9 404.0

Phystial contingonelos 9,542 8,967 8,647 17,060 51.7 18.3 11.9 56.9Price contingencioe 10,424 4,310 3,696 18,638 34.9 14.2 18.6 02.1

Investment Comonent 98.015 46.424 P.6 174.989 26.5 184.7 121.0 8J.

IDIALM PR1WRAZ M4M|2£ 9LIMI lALM U"I 1LML ILA SMaProlect Preparation Fcililty 456 1.5

OMTOTAL 9,gm

IDA PROJECT

Adjustment Comoonent 4.506 - - 4.560 lS.O - - 15.0

Road Component 9,660 - - 9,860 32.8 - - 82.Rail Component 796 1,96 - 1,750 2.8 8.5 - 6.9Port Component 16 - - 1SO O.0 - - O.Aviation Component 209 - - 260 0.6 - - 0.8

Total base coat 1s 1.0 , 1 2.66 M - 40.0

Physical contingeniets 1,140 06 1,2065 8. 8.9 0.2 - 4.1Price contingncies 1,220 96 1,816 4.1 4.1 6.8 - 4.4

Investment Compnonent 18.856 121_ 14. 44.5 4-!0 4-0 .48

IDA PJECT as S of P!ogrm 15f

Refinaneing of PPF 1.6

SUWL

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C. Proaram and Prolect Cost Estimates and Financint

54. As Indicated in para 52 above, the estimated total nost of theprogram including both adjustment and investment components, (plus taxes forthe latter, and physical and pric, contingencies) is US$603 millionequivalent. The foreign exchange component is about US$346.0 million or 57percent (ef. Table 1). Costs have been estimated in January 1990 prices,with an exchange rate of US$1 o CFAF 300. Physical contingencies of 15percent on average for the road rehabilitation and maintenance component, andof 10 percent for other components have been added. Annual pricecontingencies for foreign expenditures of 5 percent were applied from 1991through 1996 in accordance with Bank guidelines; for local expenditures, thesame annual price increases of 5 percent p.a. were used to reflect projectedinflation trends. in Senegal. The share of the project covered by IDAfinancing is 75 percent for the adjustment component, and 8 percent for theinvestment component. Annex VIII gives the detailed cost estimates for eachsubsector program and its components, together with the different co-donors'share in their financing. While the rail, port and civil aviation subsectorprograms are fully financed, there remains a financing gap of someUS$75.5 million equivalent for parts of the Year 4. and Year ' roadrehabilitation and maintenance program (see Table 2 belo). Funding of thisis being actively pursued by the Ministry of Plan and Cooperation and willhave a priority claim on future financing available for road infrastructure.

55. The adjustment component of the program will be supported by an IDACredit on standard terms of US$15 million and by a Special Joint Financingnon-reimbursable contribution of US$5 million equivalent from Finland, to beadministered by IDA. The foreign exchange costs of the investment programwill be financed by the twelve co-lenders as detailed in Table 2 belowg localcosts will be covered by SNCS, PAD, ASECNA-Senegal, IDA, FED, Italy, andGovernment. Government will onlend US$4.0 million of the IDA Credit to SNCS(track rehabilitation) for 20 years including four years of grace, at 8.0percent p.a. IDA financing of technical assistance, studies, and trainingfor the rail, port, and civAl aviation components will be treated as grantsto SNCS, PAD, AIR SENEGAL and ASECNA-Senegal. The execution of a subsidiaryloan agreement with SNCS would be a condition of effectiveness and firsttranche release. Since Government attaches a high priority to therehabilitation of Senegal's priority road network, and to provision of safeoperating conditions in air transport (especially in support of the touristindustry), budgetary allocation of sufficient counterpart funds will beassured. Their timely provision is, moreover, a condition of tranche releaseunder the adjustment component of the Credit, as shown below:

Ibs e9 S_Mrv Praar*m Flnantna Plpan Ineludlna ehvaeal aLd apies centlgg=142%

Cff MILLIS MS MILLIOS (EX. RATE CFA OM)

Laml UW etll An nTAL am M&ZL 3E1 ll L

IDA 12, 2,92 192 274 14,S17 40.1 6.7 0.7 1.0 48.6FED 16,286 0 e i0,28 54.1 0 0 0 S4.1fA 6,41 789 9 06 7,144 21.4 2.4 9 9 28.8IID 8,85l4 0 1,99 909 54183 11.2 2 t.0 8.2 18.0BIb 2722~~~~g: 9 786 9 8,458 9.1 9 2.4 9 11.5~gA3£1:681 a 0 a 1, 5.4 0 * o 6.4a. 9 9 0 2.8 9. a gooASEOAART.2 9 0 0g 65 5 ° I.8 1.8A>la 2S O 9 0 954 0.1 3.1 0 0 a.2ccc 9 8179a $ 2,468 7,589 9 1g.96 6.8 6.2 25.1FAC 9 995 9 9 995 0 8.8 9 9 LI8ITALY 8,02 6,994 O O 9,776 12.8 20.8 0 O U2.0UTAUL - DRfi13S jlanEm eii Xo,0 &M 30128 4 ILl ."A 225.1

sIeSC O 4,468 9 0 4,408 * 14.8 O O 14.6PUD- O 9 O 4,042 9 4,942 O O 18.4 0 18.4AEOEAAIT1281U 70 0 a 857 657 9 0 a 2.2 2.2to 847 0 a 0 n $47 ~~94.4 0 9 9 94.4

9S9E4 B8 82.7 O 82.7RTST*L - jflA U fl.~2 SZ 1217.A I 1143 LI 2w1.2 l

TO 8 fINWCED (GAP) (22,679) 0 0 0 (22,678) (75.5) O e 0 (75.5)Tm oTewl - tam). ULM 1 1.8 AI2M 848 9 ULM11.4 14 M4 .TAXES Psyble 11 728 4,974 8,580 582 20,815 89.1 16.7 12.9 1.2 60.6Tvamory Chop*e 148964 0 9 720 15,684 4.90 a 9 2.4 52.8

4,5SW 15.0IL.~~~~~~~~~~~~~~~~~~16 5.9MOAIL Adj ustas. Cequuent* 6,999 29.eIDA (PPF) 459 1.5

tOmLs" Alumt Gono"t 20.0

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(a) Effectiveness and first tranche release conditions would bst (M)tho inclusion, in the Road Fund budget, of the full amount neededto carry out the agreed routine and periodic maintenance programfor the following year (estimated at about CFAF 5 billion),lmplementation of a mechanism assuring timely allocation andeffective use of budgeted maintenance funds for program purposes,and evidence of deposit of en agreed amount for the first quarterof FY91 in a designated account; (1i) implementation of a 10percent overall tariff increase by SNCS; (i1i) conclusion of thefinancial restructuring arrangements of SNCSI and (iv) signatureof Contract Plans between Government and SNCS, PAD, and SOIATRA AIRSENEGAL as agreed under SAL IV.

(b) The second tranche mould be released on evidence that Road Fundallocations for the past year have been fully comuitted on agreedprogram works and that no contractor bills are more than 3 monthsoutstanding; that next year's maintonanoe works are fully budgeted,and that at least 50 percent of maintenance works have beenprogramed for execution by contractors; that agreed financial andoperating targets of SNCS, SONATRA AIR SENEGAL, and PAD have beenmet; and that PAD has introduced an agreed now tariff structure.

(c) The third tranche would be released on the basis of the samecriteria for the road sector as In previous years, except that thopercentage of works to be carried out by contractors would be 60percent; on evidence that SNCS, PAD, and SONATRA AIR SENEGALfinancial and operating targets have been met; and that an ActionPlan for ASECNA-Senegal will have been agreed upon andimplementation started.

Second and third tranche releases would also be conditioned on satisfactoryimplementation of the overall program and of the macro-economic adjustmentprogram.

D. Implementation

56. Implementation of the road works will be the responsibility ofMINEQ through the executing agency of the DTP. Axreement has been reachedwith Government that pavement strengthoning, periodic maintenance and anincreasing share of routine maintenance of the road network will beImplemented by contract. Works execution will be supervised by consultantsand by DTP engineers.

57. SNCS will be responsible for execution of the rail comnonent.Construction of major facilities (service station, marshalling yard), maintrack repair works, as well as major overhauls of rolling stock andsignalling maintenance will be implemented through specialised contractors tobe hired under bilateral financing. Only routine and some periodicmaintenance will continue to be carried out by SNCS personnel, since theseworks are scattered and contractor mobilization would be difficult. Machinesneeded for track repair works which are to be procured under the project willbe suitable for subsequent use In maintenance. Track rehabilitation andother subcontracted works will be supervlsed by experienced technical'Assistants and by SNCS onglneers to ensure that the quality of works issatisfactory.

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S8. PAD will be responsible for execution of tho oort gomoonent.Construction of the northern access road and rehabilitation of port utilitynetworks will be carried out by contractors aad supervised by consultants Inaccordance with cofinancier's procedures.

59. ASECNA will act as the executing agency responsible for theconstruction and subsequent operation of the civil aviation project worksunder terms and conditions which are satisfactory to the cofinanciers and theAssociation. Project management, design, engineering, preparation of tenderand contract documents, contract award, and construction supervision servicswill be provided by ASECRA based on a percentage fee. The estimated totalcost of these services is much lower than would be the case If outsideconsultants were retainod, due in part to the agency's familiarity withconditions and procedures in the region.

60. To ensure overall program coordination and monitoring, a ProjectCoordination Unit will be established to provide regular liaison with all co-donors, support the various project executing agencies in procurement anddisbursement matters, coordinate documentation and reporting, and institutemonitoring procedures for the adjustment measures. The unit would benefitfrom the technical assistance services of an exporienced transport specialistthroughout the project period. A Project Coordinator acceptable to IDA hasbeen appointed. Atreement was reached at negotiations on an overallsupervision plan for the various project components.

E. Procurement

61. Under the quick-disbursing adiustment cogPonent of the Credit, itIs proposed that eligible Imports by public agencies and, by the privatesector exceeding US$2 million would be subject to International CompetitiveBidding (ICB). Procurement by public agencies for items costing below thethreshold will follow standard Government practices acceptable to IDA.Eligible general Imports below the threshold by private entities would beprocured t- accordance with normal commercial practices, and whereverpossiblo, quotations from eligible suppliers from at least two countrieswould be sought. Single source purchasing vould only be used for proprietaryequipment or where compatibility with existing equipment requiresstandardization. Procurement documentation would be maintained for ea-postreview by the Bank. A series of actions under SAL IV will strengthen thecustom servlces' capabilities for price verification of Imports; the impactof these measures are to be reviewed in September 1991. If not foundsatisfactory, appointment of expert certification agencies would beconsidered.

62. Unless otherwise Indicated below, procurement arrangements underthe investment component for the overall project will be as follows* civilworks contracts in excess of US$2.5 million equivalent and contracts forgoods costing more than US$200,000 would be awarded on the basis of ICB.Civil works contracts under US$2.5 million equivalent and not excoedingUS$13 million in aggregate, and contracts for goods costing betweonUSS60,000-200,000 and not exceeding US$500,000 in aggregate, would be

2 26 -

procured through local competitive bidding procedures acceptable to theAssociation. Goods valued at lese than US$60,000 per contract, includingfuel fox road maintenance up to an aggregate amount of US$1 million, vould beprocured by competitive shopping based on at least three quotations. Spareparts and accessories which are of proprietary nature may be purchssed, withIDA agreement, under directly negotiated contracts with sole suppliers oragents, within an aggregate coiling of US$1.5 million. The review andapproval of contract award decisions would distinguish between small- andmedium-size contracts following procedures detailed below (para 63). Studiesand technical assistance for project management support financed by IDA willbe commissioned according to the Association's guidelines for the recruitmentof consultants. Procurement decisions for all transactions under IDAfinancing in excess of US$300,000 equivalent will be subject to prior review.Procurement for subcomponents executed with paral.el financing from differentco-donors will follow the respective rules of the agencies concerned.Overall procurement arrangements are summarised in Table 3 below.

63. For the road component, civil works under US$2.5 million equivalentand not exceeding US$9.5 million in aggregate for routine and some of theperiodic road maintenance operations would be procured under localcompetitive bidding procedures acceptable to IDA. Adequate competition isexpected as there is a sufficient number of qualified local contractors. Thereview and approval of LCB contract award would distinguish between small-and medium-size contracts (below and above US$300,000 respectively). For allcivil work contracts related to the implementation of an elitible subproject,DTP or DTT would:

- prepare tender documents;- issue tender invitations;- open tenders; and- prepare tender evaluation.

In the case of contracts for less than US$300,000 at the date of bid opening,MINEQ without IDA involvement, woulds

- award contracts;- sign contracts; and- issue notice to proceed together with payment of an advance

to contractors.

The tender evaluation with the justification for the award decision would bekept on file in MINEQ offices for review by IDA. In the case of contractsworth US$300,000 equivalent or more (corresponding to upwards of 15 km ofregravelling) at the ttme of bid opening, MINEQ would seek IDA agreementbefore finalizing the contract and would for this purpose transmit to IDAs

- the tender evaluation report indicating the award decision andits justification; and

- the draft contract.

- 27 -

IDA would review this information and, if satisfied, indicate no objection tothe contract award. Contracts worth US$300,000 or more are estimated toaccount for 75 percent of the civil works expendi:ares and 13 percent of thenumber of contracts.

64. If procurement were found unsatisfactory, IDA would requestclarification. If IDA should reasonably determine, after consultation withthe Borrower, that the execution of an eligible subproject was proceeding onthe basis of a contract inconsistent with the procurement procedures agreedunder the Credit, IDA would cancel from the Credit the amount correspondingto its scheduled participation in such contract.

65. For the railway comnonent, construction of efficiency enhancingfacilities will be done by local or foreign contractors after competitivebidding in accordance with co-donors' rules and procedures. The ballastneeded for track rehabilitation will be procured from local contractors afterLCB and financed by IDA for 85 percent of the total cost.

66. For the port component, procurement for civil works by contract andfor equipment purchases will follow procedures of the r spectivecofinanciers.

67. Concerning the civil aviation component, ASECN. will negotiate withoverseas suppliers for the highly specialized equipment required forpurposes of standardization and compatibility with existing equipment usedthroughout the ASECNA system, and to take advantage of ASECNA bulk purchasingprocedures. This procedure is consistent with normal ASECNA equipmentprocurement practice for their member countries, and the arrangement has beenused satisfactorily in past IDA projects in which ASECNA has been theexecuting agency. For civil works, procurement will follow the co-donors'competitive bidding procedures under ASECRA supervision.

68. Studies and technical assistance for management support (exceptbilateral technical assistance) for all components will be commissioned inaccordance with the Association's guidelines for recruitment of consultants.Bilaterally financed technical assistanti will have specific terms ofreference with verifiable goals to be achieved, in the same way as thosefinanced by IDA.

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Table 8: PoormU and IDA PrWO] Ameunien tbd o-f -Prumv~tm 2( at I Iion oqulvalont)

SMemrs Lft LC8 ,L

bigd Comoon" W 22.0 22.0 08.9 (8.81 869.0 (9.6}40n USClvi IWork* SWlN ( a (:t!59A48.0 4.4Equipmnt and material -s- 4.1 (-- 4.1Conr. Services, Tecbn. - - - - 18. () IS- (9.

Assist. & Training

P_;_____ ___on____ n4_ -_.t 4.7) ___4 Q6. M-9 tOG0)

Civil Work* (including ballast 5.2 ;4.4) 4J.8 (-) 40.0 (4.4)for track hablitati on)

Equipmet and Materical 0.8 (0.8) 19.1 (-) 19.4 (0.8)Con. Services, Techn. - - - - 12. (1.0) 12.6 (1.9)Assist. A Training

Port Cooonent ^. (- - . 884 to.Jn 89.4 .Ln

Civil Works - - - - 2892Equipment and Materlils - - - - 6.9 6.9 Cons. Servtces, Techn. 4.6 C .7) 4.6 (0.7)Assist. A Training

Aviation Comoonent -.- t?L8 2J06 (6.61

Civil Works - - - - 14.1 C-) 14.1 (-Equipment and Materials - - - - 5.6 5. (-Cons. Services, Techn. - _ _ - 09 (6.1) 0.0 (6.8Assist. & Training

Total Investment Comoonent _226 (22.6) 69.4 (18.0) 41.0 (U.9.) sSUI

CivIl Works 22.6 (22.6) 65.0 (12t?) 4. 517.6 (8 5.Equtpment and Materials - - 4.4 (6.8) 80.6 -) 8s0 (0. 8Cons. Services, Techn. - -) (-) ao.9 12.9) 81.0 (12.0

Assist. A Training

Adustment Sg 20.0 (15.0)

TOTAL PROJECT 00f8 0 L

Prolect Presration Facility 33 It&J

o/ ksounts In () indicate IDA shoro In totals.p Consultancy contract., though internationally procured, are *hown under 'other' according to teh Sashs

operations manual;'other' also includes procurement methods applying to donors other than IDA.E/ lCB, LCD and 'shoppin my npply, dependin on si of controcts-dietribution not estimable.

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F. Disbursements

69. The proposed IDA Credit of US$65 million equivalent will bomade to the Government of Senegal at the standard terms of the Association.US$1.5 million will be used to refinance funds made avallable to Governmentunder the IDA Project Preparation Facility. The proceeds of the quick-disbursing adiustment component (US$15 million equivalent) of the IDA Creditwould be disbursed in three tranches of US$2 mlllon, US$6.5 million, andUS$6.5 millLon equivalent, with the US$5 milllon equivalent of the FLnnishSPA contrlbution also being disbursed as part of the first tranche. Theywould be used to reimburse 100 percent of the CIF cost of ellgible generalimports. Public and private sector Imports would be elLgible, except for:(a) negative list; (b) imports of goods under contracts costLng lose thanUS$5,000 equivalent; (c) imported goods already financed under bilatoral ormultllateral credits; and (d) imported goods purchased on the local market.Thls procedure is preferable to the flnancing of transport-related importsbecause: (L) the medium-term capital needs of the sector as identLfied in theTransport Sector Investment Program are already fully met by donors, ss are(LL) part of the recurrent needs of the sector. The remaining needs forspare parts and petroleum products are estimated to be below available funds;in any cse, they would be elLgible general Imports.

70. The Government will establlsh a Special Account at the CentralBank (BCEAO) to facilitate disbursements under the adjustment component ofthe Credlt. An initLal deposit of US$2 million would be made on fulfillmentof the conditions for 'irst tranche release; subsequently, the account vouldbe replenished regulacly, up to the lLmat of the first tranche, on the basisof fully documented reimbursement applications in excess of US$500,000 or onthe basis of Statements of Expenditure (SOEs) for expenditures below thatamount. The minimum amount of replenishment appllcatLons would beUS$300,000. The Central Bank would lndicste on the SOZo the nature andorlgin of the goods, as well as the payment date, and would maintain allrelevant supporting documentation (invoices, evidence of shipment, customsdeclarations, evidence of payment) for review by Bsak supervLsion misslons.Expenditures under the IDA Credlt would be ln accordance wlth normal IDArules. Retroactlve dlsbursement would be pormltted for an amount notexceeding 20 percent of the total adjustment component, for eligible Importsprocured no earlier than four months before Credit signing. Expendlturescovered by the Finniah contribution would be subject to rules establishedunder the Umbrella Agreement between the Government of FLnland and IDA.

71. Credit categorles and disbursement percentages for theinvestment gortion of the Credit are sumarized In Table 4 below.DS-buree _nts for clvll works and consulting services would be on the basisof contracts. It is estimated that a maximum of about 25 contracts will besigned. Disbursements for purchase of vehicles, equipment, and furniturewill be made on the basis of approved contracts. Dlsbursement applLceatonsagainst contracts will not be for less than US$10,000. The dlsbursementschedule does not differ from the standard Africa Reglonal Profile fortransport projects (6 years): given the past performance of projects lnSenegal, the application of the profile without any changes appearsjustLfied. A second Special Account will be established by Government In a

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comuercial bank to facilitate disbursements for office rehabilitation,furniture and equipment, and for spare parts procured under the investmentcomponent; an Initial deposit of US$500,000 equivalent would be made onfulfillment of the conditions of effectlveness and first tranche rollose.

Table 4s IDA Credit Disbursement Categories and Percentages

CATEGORY OF EXPENDITURE AMOUNT (USS m) I Expenditure tobe Financed

Investment Component

1. Civil Works by Contracts 24.1

(a) For road rehabilitation 10.5 67S of total cost

(b) For periodic roadmaintenance 12.1 672 of total cost

(c) For office rehabilitation 0.6 402 of total cost

(d) Office and teachingequipment and spare parts 0.9 65Z of total cost

2. Eaui_ment and Materials

(a) Ballast for railway trackrehabilitation 3.5 852 of total cost

(b) Office and teaching 0.5 652 of total costequipment for railwaycomponent

3. Consultancv Services for Studies.and Civil Works Supervislon.Technical Assistance and Trainina 11.9

(a) For road component 8.5 80S of total cost

(b) For railway component 1.5 802 of total cost

(c) For port component 0.6 802 of total cost

(d) For aviation component 0.7 802 of total cost

4. Project Coordination Unit 0.6 802 of total cost

5. Refinancina of PPF SN/A

6. Unallocated

Adiustment ComRonent 150

-

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0. Accounting and Auditina

72. Accounting, costing, and budgeting systems for the road, rail andport components have been established at DTP under tho Fifth Highway Project,at SNCS under the PPF and at PAD under the Dsksr Container Port Project.They will be further Improved under the project through special financialassistance and introduction of computorised management system_. Independentexternal auditors acceptable to the Association havo carried out audits ofearlier Road Projects, of the ex-RCFS, and of PAD, sad will continue to doso. Similar arrangements will be made with DTT and DAC (AIR SENEGAL, ASECNAART. 10), with audit reports to be submitted to IDA within four months of theend of the fiscal year. Special audits of Statements of Expenditure (S0Es)will be carried out twice a year.

H. Reoortint

73. With the help of the concerned project implementation agencies andtheir consultants, the Project Coordinator will prepare quarterly or semi-annual reports on overall program and project implementation and expenditureofor submission to the MINEQ, the Association, and co-donors. These reportswill also include key indicators monitoring progress, and financial andoperational results, of the sectoral parastatals. The precise reportingrequirements including monitoring indicators were astreed upon duringnegotiations.

I * Impact on Environment and Ewloiiment

74. The proposed maintenance and rehabilitation works pose no threatto the environment. The alignments of the roads, as well as the railwaytracks follow existing corridors, hence there is no risk of deforestation orproperty disturbance. The new paved road surfaces will minimise pollution bydust in the dry season and mud in the rainy season for the local residents.

75. The construction of a paved road between Dialokoto and Redougou,financed entirely by other donors outside the proposed program, raisedenvironmental concerns, since the road passes through a national park whichhas been declared a World Heritage Site. The Bank informed UNESCO, theagency responsible for World Heritage sites, of the potential problem and ofour concerns. UNESCO requested that the Government undertake a thoroughinvestigation of the environmental impact of this project before start-up ofconstruction and study an alternative route around the park. Tho study wascompleted and submitted to IDA and UNESCO eleven months after negotiations;its results are satisfactory to IDA with regard to the measures proposed toprotect the environment.

76. The civil works components, both in the highways and the railwayssubsectors, would generate employment opportunities for some 3,200 unskilledlaborers and about 800 skilled operators and drivers for the project periodof five years. The project would also generate some 800 permanent additionaljobs by engaging private small-scale contractors for routine maintenance.

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J. Protect Justification

77. The project is fully justified by the joint benefits that wilresult from the implementation of policy reforms and the execution of theinvestment program. The benefits include both direct economic benefits fromthe investment programs--largely In terms of reduced transportation costs--and from the econo-financial benefits resultilg from the increased officiencygenerated by the policy reforms. Both will facilitate the achievement of thedurable private sector supply rosponse that is the prime objectivo of theadjustment program and an indispensable precursor of sustainable economicgrowth. The proposed project has been structured as a hybrid for a varietyof mutually reinforcing reasons.

First, it forms am integral part of the country assistance strategyfor Senegal, the essence of which Is that SAL operations will focus on a fewcritical macroeconomic Issues while eector policy Issues will be dealt within SECALs or hybrids. This approach permits the diversification ofadjustment type, quick-disbursing vehicles that support the SPA andfacilitate cofinancing. More important, it avoids loading the SAL operationswith a variety of sectoral reforms, risking derailing the macro adjustmentprocess because one sectoral Issue canno%. oe resolved. In addition, itallows a spectrum of policy issues to be dealt with through a more continuousprocess, rather than in large, infrequent lumps.

Socond, it has permitted a more effective sectoral dialogue, sincethe stimulation of a supply response through the reduction of transport costsdepends on both the improvement of transport infrastructure and theintroduction of sectoral policy reforms. Treating these two Integratedelements under separate operations would weaken the policy dialogue andencourage Government, as In the past, to focus on infrastructure constructionat the expense of policy reform. This, at least in part, explains why policymeasures attached to sector investment loans as "complementary easures' oreven through covenants have not been very successful.

Third, it has succeeded in getting attention for the criticalsectoral reforms at the appropriate level. In Senegal as elsewhere,Government is not homogeneous and, typically, technical ministries have beenunsuccessful in promoting policy reforms In the areas of arrears, tariffIncreases and staffing reduction because these issues are the responsibilityof ministries of plan and of finance. Attaching an adjustment component tothe investment credit has ensured that these essential reforms receivedproper attention in the relevant ministries.

Fourth, policy reform is a process not an event. Thus, theavailability of quick-disbursing resources in several tranches facilitatosthe continuing reform process by focusing attention (at the appropriatelevels) on the prograsmnng, monitoring and recognition of the various stepsin the reform process.

Fifth, direct financing of road maintenance expenditure has provednot be an effective approach. Under earlier Hlighway Projects, Government hssnot had to fully budget its own funds and, once the projects had finished,

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expenditure returned to an inadequats level. Using a hybrid approachobliges the Goverrmont to budgeti$e road maintenance funds on a regular basis("sslsted by non-earmarked quick-disbursing funds), thus Increasing theprobability of continued adequate funding at the end of the project.

Sixth, the hybrld structure has proved offiieont. It has permittedthe achiovement of agreements on sector policy issues and substantial up-front action with a very small quick-disbursing component of about 3.52 oftotal program cost.

78. In Senegal, the Government has an adjustment program in place, thatIs both supportive of, and complemented by, the proposed operation. A sectorstrategy has been produced by the Government (as set out In the Declarationof Sectoral Development Policy) and endorsed by the donor community, whichhas pledged the majority of the resources required for the program thatsupports the sector strategy. The investment component is technically sound,but would be much less effective in the absence of both up-front andcontinuing policy reform. Thus, the mutually supportive nature of the reformand investment components fosters and justifies complementaryconditionalities under the two components through compliance with the PolicyLetter. Finally, the achievement of the policy objectives In this project isexpected to pave the way to the resumption of more traditional sectorinvestment lending in the future.

Benefits

79. The main benefits expected from the proposed project will be: (a)improved over-all sectoral investment planning, with priority given toappropriate allocations of funds for maintenancel (b) more efficient andeffective utilization of resources in the trasoport sector; (c) operationaland financial rehabilitation and effective management of transportparastatals; and (d) increased reliance on private contractors in theexecution of maintenance works in the different subsectors, especially roada.The project has already been Instrumental in the actual (upfront)introduction of an Important number of the reform mesaures needed to bringthe transport sector in line with the overall re-orientation of Senegal'seconomy under successive structural adjustment operations. It has alsoserved to attract the very substantial cofirancing required for Implementingthe needed sector rehabilitation measures fully. Most Importantly, thisproject has coalesced the necessary support by the donor commiunty to changesIn sectoral policy and, through its adjustment component, assures thatreforms on the policy agenda, which are socially and politleally difficult toImplement, may be effectively addressed.

Economic Justification

80. The economic benefits of the actions proposed are significant: bytransferring funds from dubious now construction to essential maintenance ofintensely used infrastructure, high ERRs (12-85 percent based on standarduser cost-savings methodology) have been obtained for the majority ofInvestment subprojects. (Details of the economic evaluation are in theProject FileO By preventing the imminent breakdown of part of the existing

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transport network and helping to contain and reduce transport costs throughsubstantial efficiency gains sector-wide, vehicle operating costs, railwayoperating costs, and port and aviation charges will be substantially reduced.The project, thus, will make Senegal's products more affordable to itscitizens, and more competitive in export markets. An additional importantbenefit results form the project's impact on employment: it Is expected togenerate jobs for asme 3200 unskilled construction workers and 800 skilledoperators and drivers for the project period of five years. In addition, 800ancillary Jobs for routine maintenance will be created by engaging privatesmall-scale contractors, some of whom will have been developed under IDA'sPublic Employment Project.

Risks

81. The main risk faced by the project is Governmont's ability to liveup to its financial commitments. In the road subsector, the massiverehabilitation program implies a tripling of annual budget allocations formaintenance over the project Implementation period, after which they could bereduced somewhat but would have to remain at levels substantially above thoseheretofore provided. In railways (SNCS) and airport management (ASECNA-Senegal), successful financial rehabilitation plans are predicated onadequate tariff increases, timely compensation payments by Government forlosses occasioned by the provision of any social services these companies waybe requested to furnish, and on agreement to effective short-term debtrestructuring measures. Experience with previous transport sector ContractPlans--among the earliest concluded between public sector companies andGovernment--has been disappointing because Government proved unable tofulfill its part of the bargain. The main factor mitigating these risks iothe substantial progress--facilitated by the hybrid structure of theproject--that has already been achieved; it will be further strengthened bythe requirement under SAL IV that public enterprise rehabilitation plans andGovernment's commitments under contract plans be explicitly included inbudgets or other appropriate instruments. SAL IV and TSAIP conditionalitiesin this respect would be mutually reinforcing since both seek the reductionof overall Government expenditure, while at the same time increasing specificpriority allocations that would result in significant future savings. Forthe road maintenance sector, the problem is not one of raising additionalfunds: the present level of road user charges is high, their collectionrelatively efficient, and measures are already in place or envisaged toensure strict control of expenditures. The problem is effective change inthe allocation of funds, which Government has endorsed. For rail and civilaviation, productivity improvements and relatively modest tariff increasesshould obviate the need for future operating subsidies. Port operations havealready improved to the point where PAD can cover a significant part of itsrehabilitation needs, and full implementation of the operational andfinancial action plan is expected to result in further productivity gains anda potential reduction in port tariffs in support of improved competitivenessof Senegal's exports.

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V. BANK GSOUP STRATEGY AND MPERATIONS

A. Cou_nty Assistance Strate&Z

82. Bank strategy in Senegal has two broad and interrelated objectives.The first objective ls to assist the Government In the medium-term Inrectifying structural Imbalances in the economy which are the cumulativeresult of internal and external shocks, and of policy distortion. overseveral years, compounded by the fixed exchange rate regime. To improv, theincentives environment and to promote greater efficiency in economicmanagement, the primary instrument has been adjustment lending, buttressed byappropriate technical assistance operations. The second objective is topromote a sustainable level of long-term growth and development. Theinstruments designed to address this objective are sector-basedrehabilitationlinvestment projects, within an appropriate framework ofsectoral policy reforms.

83. The country's development strategy, as spelled out in the mostrecent Policy Framework Paper for 1990/91 to 1992193, lays heavy emphasis inthe short-term on improving incentives for private investment; rehabilitatingthe banking system and deregulating the financial sectorl and Improvingresource utilization and expenditure control In the public sector. Theseobjectives are supported by the SAL IV operation (February 1990) and by aFinancial Sector Adjustment Credit (December 1989). Together, these twooperations are expected to improve the utilization of existing productioncapacity and, thus, to improve the competitiveness of Senegalese industry.Furthermore, they will increase the volume of and improve the quality ofpublic and private investments and thereby enhance growth prospects in themedium-term. Beyond 1992, the Government recognizes the need to rebuildproductive capacity, even as the earlier stabilization and structural reformscontinue. Thus, the public investment program for that future periodincludes major projects in energy distrlbution, in water supply, and highwayrehabilitation and maintenance, for which IDA financial assistance has beenrequested. The proposed lending program in the period beyond 1990/91 is thusbalanced between investment programs in urban infrastructure and services(sanitation, water, energy) and policy-cum-investment operations which focuson further private sector development, on the environment, and on humanresources development.

84. Bank assistance strategy is not predicated on Senegal changing thenominal exchange rate. Such a decision cannot be taken unilaterally givenSenegal's membership in UMOA and in the CFA Franc Zone. To achieve thedepreciation of the real exchange rate which is required to increase theexternal competitiveness of the Senegalese economy, appropriate demand-management policies, together with additional measures to reduce productioncosts and to encourage production of tradables, must continue to beimplemented over an extended period of time. The envisaged adjustment periodmay, therefore, be longer and more difficult and the export response slowerthan would be the case if the nominal exchange rate could be devalued.Nonetheless, Senegal is expected to be able to meet its objectives over themedium-term, provided it consistently applies required policy measures thatare being supported through the adjustment program.

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S. Bank Groul Operations. Past and Future

85. As of April 30, 1991, the Bank Group had approved 92 operations inSenegal for a total of about US$1,020 million, consisting of 60 IDA credits(including three Special Fund credits), 20 Bank loans, two SPA and nine IYCoperations. To date, 45 credits and the 20 loans have been fully disbursed.Of the 18 active projects, 5 are in agriculture or rural development, 4 Inindustry and energy, 4 in infrastructure, 1 in human resources; there arealso 4 TA and adjustment operations. SAL IV (US$80 million) was approved inJanuary 1990. As discussed above, Bank assistance will focus heavily onadjustment for the next few years, particularly at the sectoral level.

86. In the area of Structural Adjustment, the SAL II and SAL II.operations have been for the most part successfully completed. The ongoingSAL IV operation builds on the experience of SALs II and III, but focuses ona relatively limited number of critical actions to support Government'smedium-term objectives summarized in para 9 above. A tec6nical assistanceproject is in place to help with the formulation and implementation of thevarious action programs included in the SAL operations, with messures toimprove the management of p: blic investment, public debt, personnelinformation and career develop- ent, management of economic information, andthe development of a policy f lmulation capacity.

87. While some measures aimed at the reform of the bankinA system ofSenegal were supported under SAL III, the dimensions of the crisis in thefinancial sector were initially underestimated by IDA and the Government. Asubsequent IDA-financed study of the causes of the problem found that 8 of 15banks, either wholly or partly owned by the Government and including thosebanks to be rehabilitated under SAL III, were effectively bankrupt. They hadnonperforming loans of CFAF 233 billion (or 15 percent of GDP) out of a totalloan portfolio of CPAF 323 billion and debt outstanding to the BCEA0 of CFAF167 billion. The sharp deterioration in the financial position of the systemwas attributed to poor management as well as to inappropriate policies, atboth the BCEA0 and Government levels. The study drew particular attention tothe following problems: (a) the negative impact of mandatory credit ceilingsper bank and per sector on good lending practices; (b) interference by theGovernment in lending decisions; (c) lax supervision of banks leading todisregard of prudent financial ratiost and (d) laxity in the application ofrefinancing policies. These problems are being tackled under the FinancialSector Adjustment Credit.

88. The next phase of reforms in the atricultural sector will besupported by the Bank under a separate Agricultural Sector Adjustment Credit(AGSECAL). This phase will be characterized by policy development In areascomplementary to the thrust of the improvements made to date. The overallaim of the Agriculture SECAL is to support more efficiency and priceresponsiveness in agriculture, a decrease in government controls, and theelimination of subsidies. In particular, the reforms to be pursued will bet(a) in the cereals subsector--further review of the system of protection withthe overall goal of encouraging the production and transformation of coarsegrains in which Senegal has a comparative advantage (i.e., millet andsorghum), diversifying production into other crops such as maize, and further

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liberallzing the rice market; (b) in the groundnut subsector--action planningto reduce losseo In processing and privatization of confectionery groundnutoperations, and revised protection against Imported oils as a precursor tothe eventual elimination of all subsidies; (c) a full review of theagricultural credit system; and (d) the development of appropriate lendtenure and land management regimes to encourage resource conservation andlong-term private investment, especially In the Fleuve region. Measures toreduce losses in the cotton subsector and to promote diversification forexports would also be pursued.

89. The two other sectors where Important reforms are to be pursued aretransport and human resources. The Bank Group has been among the principalsources of external financing for transport development in Senegal. Since1966, it has made 15 loans and credits totalling US$167.6 million in currentprices. Six of these wero for roads (US$91.2 million); four for railways(US$48.9 million); three for ports (US$17.5 million); and two for aviation(US$10 million). In addition, the Bank Group has financed feeder roads underagricultural projects, and mobilized considerable cofinancing. In the roadsubsector, the most intractable and long standing issue has been adequatefunding for maintenance. Successive projects have supported improvements inroad maintenance organization and execution, with more success than in mostother countries in the region. But the backlog of deferred maintenancenevertheless has perilously increased as the network continued to expand.Operational and financial performance in the railway subsector which remaineddisappointing partly for reasons of internal efficiency of the ex-RCFS, andpartly because of conflicting interventions by other donors, havesignificantly Improved during project preparation. In the port subsector,substantial progress has been made towards a competently run and financiallyautonomous port authority. In the aviation subsector, projects in the 1970semphasized airport infrastructure improvemeit, mainly in support of thedeveloping tourism industry, but efforts to improve financial managementremained at the level of studies. with little or no follow-up, when londingto the subsector ceased.

90. Under the proposed TSAIP, major improvement is being sought In theplanning, operations, and management of the transport sector in Senegal. Adialogue has been established with the Government since a policy reviewmeeting with the Bank in late 1986. Broad agreement, as included ia theLetter of Transport Policy, has been reached on the need for reform In threemain areass (a) improved investment planning in the transport sector with atarget of at least 80 percent of investment in the sector earmarked forinfrastructure maintenance and rehabilitation, and a stronger emphasisthrough 1991 on repairing the dilapidated highway network; (b) increasedmobilization of sector resources through improved efficiency, cost control,and revised tariff policies which are expected to be especially vital in therail.ways and ports subsectorsl and (c) strengthened sector management througha series of institutional reforms, Including a revitalization of theDirectorate of Land Transport and a change in the legal status of therailways parsstatal. Improved transport efficie'kcy is a key factor in theprocess of improving market responsiveness in the economy and reducing costsof production for agriculture and industry. The envisaged Governmontinvestment program for the period 1991-95 provides for an increasing role for

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the private sector, with three fourths of road maintoenance to be contractedout by the end of the project period.

91. Perhaps the most serious constraint to long-term growth in Senegalis the present low level of human resource develooment. Low literacy levels,inadequate health standards, and the absence of a clearly articulated actionplan for controlling the growth of the population will severely limitprospects for growth in agriculture, Industry and the service sector, and,moreover, without concerted action, will prevent any medium term Improvementin living standards. Previous interventions in education have been directedtoward strengthening primary education, especially in rural areas,restructuring educational expenditures toward the primary level, and attechnical and vocational training to support the requirements of theproductive sectors. In health, the emphasis has been on strongthening thedelivery of primary care in rural regions, and on developing health, familyplanning and nutrition education, within an integrated program of maternaland child health care and family planning. In addition, under SAL III, theGovernment formulated a national population policy statement. To have anyimpact, this indicative statement needs to be trasnlated into a concreteprogram with clearly stated priorities.

92. However, additional efforts are required to develop the socialsectors during this period of economic adjustment and to improve the internaland external efficiency of the resources allocated to this sector. Toaddress these issues, two projects, on population and health, and education,are currently under preparation. These hybrid operations woulds (a) supportsectoral adjustment measures to promote more efficient and equitable resourceallocation In the sector, and (b) finance priority investments designed to(i) implement the population policy, (1i) strengthen basic health caredelivery and sectoral institutions, (iiI) accelerate the development ofprimary education and restructure technical and vocational training, and (iv)strengthen the institutional capacity of the Government to develop andcoordinate a comprehensive human resource development strategy.

93. While the adjustment program concentrates primarily on the directlyproductive sectors, the Government has focused its efforts to improve basicservices to the population with the assistance of multilateral organizationssad non-governmental institutions. As part of the multicountry SocialDimensions of Adlustment project, financed by the United Nations DevelopmentProgram and executed by the World Bank, Government has started work tocompile data on income distribution and welfare indicators, to study thesocioeconomic impact of adjustment programs, and to identify compensatoryprograms of action where needed. In addition socioeconomic studies will beprepared with a view to identifying projects and programs to minimise thecost of adjustment for the most vulnerable groups.

94. The Government also recognizes that the degradation of theenvironment represents a serious constraint on Senegal's development,especially in view of rapid population growth. Its impact is already beingfelt in the reduction of yields caused by the fall in soil fertility, in theloss of forest cover arising from the intensive use of fuelwood, and In the

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deterioration of the urban oenvironment. Bank projects will addressenvironmental issues where applicable.

VI. COORDINATION WITH THE IMF

95. The IMP program has been developed in close collaboration with Bankstaff, and is consistent with and reinforces the current adjustment programin Senegal. The current ESAP program amounts to SDR 145 million and wasapproved on November 21, 1988 for a three-year deriod. The first and secondyear arrangements under the ESAF were concluded satisfactorily, and In? staffis currently discussing the third-year program with the Senegaleseauthorities. Bank staff participate fully in those negotiations. Prior toLSA", the IMF had successfully implemented a SAF and a series of stand-byagreements. The Bank will continue to work closely with t4e IMF inmaintaining macroeconomic stability and to ensure consistency in policyreforms.

VII. AGREEMENTS REACHED AND RECOMMENDATION

96. During negotiations, azreement was reached or confirmed on thefollowing:

General

(a) All sectoral investments over US$1 million to be subject to a 122Economic Rate of Return criterion (para 15);

(b) An overall supervision plan for the various project components(para 60)t

(c) Government has produced a satisfactory environmental impactstatement on construction of the Dialokoto-Kedougou road and hasagreed to implement its findings;

(d) A project coordinator acceptable to IDA has been appointed; and

(e) The Minister of Finance confirmed his agreement to put in place anacceptable mechanism ensuring timely payment of contractors.

With DTP

(a) 80% of road sector investments to be for rehabilitation andmaintenance as opposed to new construction (para 15);

(b) Confirmation of the share of periodic and routine maintenance worksto be successively transferred to private contractors (pare 15 andAnnex IIa, Road Maintenance Action Plan, Section 5);

(c) Submission of first report on personnel management policies byOctober 31, 1991 (Annex Ila, Road Maintenance Action Plan,Section 1)$

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(d) Submlssion of first annual program for scrapping uneconomicequipment by October 31, 1991 (Annex IIb, U(vl));

(e) Confirmation of technical norms to be adopted for roadstrengthening works (Annex VII, pars 4);

(f) Agreement on methodology to be used for periodic maintenanesubproject evaluation (Annex Ila, Road Maintenance Action Plan,Table C);

(g) Confirmation of minimum estimetes for annual routine maintenanceprograms, and confirmation of priorities in routine maintenanceinterventions (Annex II, Road Maintenance Action Plan, Section 4;Annex VII, para 6);

(h) Agreement on the organization of supervision for routinemaintenance works by contract (Annex VII, pare 7); and

(i) Agreement on arrangements for non-prografmmed works (Annex IIs, RoadMaintenance Action Plan, para 7.11).

With DTT

(a) Agreement on DTT positions to be fllled by October 31, 1991 at thelatest (Annex VII, pare 10); and

(b) Agreement on terms of reference for technical assistance(Annex VII, pare 10).

With SNCS

(a) Agr aent to bring the Contract Plan into force as of July 1, 199C(p& 33, complied with), including the institutional and financialreform targets below:

(i) Agreement on working and current ratios to be maintained overproject period and thereafter (pars 36); and

(11) Agreement on debtlequity and gross cash-flow debt/servlceratios (pare 38).

(b) Agreement on financing of technical assistance program In the lightof co-donors' proposals to SNCS.

With PAD

(a) Agreement to bring the Contract Plan into force as of July 1, 1990(pars 26, complied with), including the Instltutional and financialreform targets belows

(1) Agreement on financial performance lndicators on revenuecollection end debt rescheduling (para 41);

- 41 -

(11) Agr.ement on settlem_nt of cross-debts (pars 42);

(iiI) Agreement on labor cost/working expenses and on workingratios (par. 46);

(iv) Agreement on debt service ratio (pare 48); and

(v) Agreement on a Management Information System, and timetablefor manpower and action plans for each department (pare 26).

(b) Agreement on timetable for cleating up port working sones(pra. 26).

With AIR SENEGAL

Agreement to bri-ag the Contract Plan into force as of July 1, 1990(complied with), and on timetable for achieving recovery of long-termmarginal cost on public service routes (pare 29).

97. Adiustment CoSmonent - Tranche Release

Effectiveness and First Tranche Release (pars 55a):

(a) Agreement on adequate budgetary provisions for road maintenance,institution of an acceptable mechanism assuring timely allocationand effective use of funds budgeted for road maintenance (RoadFund), and evidence of deposit of an agreed amount for the flrstquarter of FY91 in a designated account; publication of a decreespecifylng organizational responsibility for contracting andsupervision of periodic and routine maintenance worksl

(b) Full implementation of a 10 percent overall tariff increaae (above1987 levels) by SNCS;

(c) Implementation of the financial restructuring plan for SNCSI

(d) Signature of Contract Plans between Goverrment and SNCS, PAD, andSONATRA-AIR SENEGAL, ws agreed under SAL IVI

(e) Execution of subsidiary loan agreement between SNCS and Government;and

(f) Submission of a series of standard contracts for routine roadmaintenance operations.

Second Tranche (para 55b)t

(a) Evidence of full allocation and effective disbursement of theamounts necessary for road maintenance In the previous year;evidence that the agreed shares of periodic and routine maintenanceworks have been carried out by private contractors, and that no

- 42 -

contractor bills are more than three months outstanding; adequatebudgetary allocation for FY92 and deposit of agreed amount forfirst quarter in a designated accountt

(b) Realization of agreed financial and operating targets by SNCS;

(c) Realization of agreed financial and operating targets by PAD;

(d) Introduction of a revised tariff structure by PAD;

(e) Realization of agreed financial and operating targets by SONATRAAIR SENEGAL; and

(f) Satisfactory progress on the macroeconomic reform program.

Third Tranche: as in (a), ('), (C)t (e) and (f) above, plusagreemnt on an Action Plan for ASECNA-Senegal, with implementation started(para 55c).

98. Investment Component

General

(a) Compliance with Policy Letter (Annex IIb, V B(i); and

(b) Agreement on any Urban Transport Authority that Governmentmay wish to establish (para 25).

Road Component

(a) Budgeting and actual expenditure of adequate resources forroad maintenance for PY94 and FY95 (Annex II, RoadMaintenance Action Plan, pars 6); and

(b) Adoption of statutes for CPTP satisfactory to the Association(Annex IIa, Ro&4 Maintenanne Action Plan, pars 7.5).

99. Subject to the above terms, the proposed project is suitable fora Credit to the Government of the Republic of Senegal in the amount of US$65million equivalent, on standard IDA .ermes.

-43 - A-4

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- 45 -

Mot 4

MEMAIQ AND WmEa ti of INS pBM sonE DI

Sttus of World Senk Oo.ratloe Ia keamI

A. Statmennt 9 Seek Lo-mns en rDA Credits t et Mw 1. 1991

* I ns .s,et..t(low ceaellotion)

Cret No. FLI I Yr Ugerg*, £PUn Rak a

20 Loans end 4C Credits benv 19.U3 472.18been cloned

Of whicb SECAL*, SAL* and Prog. Loans

CUs4-M 1981 SENEGAL SAL U."MCA906- 1986 SENEGAL SAL It 44.10 .0C1656S4S8 1986 SENEMGAL SAL Ut 29.06 9.CNS270TS-S 198? SENEQAL SAL tIt 40.15 9.06C14020-M 10t? SENEGAL SAL Ilt 45.01 9.10ClUl21-SEN 1989 SENEGAL SAL Ul 5.69 i.llC206914EN 19ow SENEGAL SAL tV 4.40 9.06L1 -S 19861 SENEGAL SAL. 1 Subtotal 18.781 159.919 9.06

CKSIW-S9 1s" SENEGAL Rural Halth 15.01 1.69C149SE- 1984 SENEGAL Eastern Sonop Igoes 1O.U6 .42C14S901-SE 1904 SEIEGAL Dakar Pert 121 2.ff 9.C1564-SEN 195 SENEGAL Watet Supply KK 24.11 9.6UCIfTWI- 1986 SENEGAL Energ Sector Rehab. 19.06 t.CSC17149- 198" SENEGAL Telecom It 1T." 1s."C1t-SSl 1067 SENEGAL Pr1.ry Edc. 0e. 12." *.45ClS(-SUI S9 SEIEGAL Priputiont IV 33.65 168.CI88W-SEN 1986 SENEGAL Knd11 Se. 806 .57C18840-SEN 1998 SENEGAL lopel Mousn 0l 46.06 31.12C*10-SE 1961 6m SENGAL 17.06 11.42C199215-1 1199 SENEGA Smll Rural pa. SS 6.1 l1.UC29759-SEI 1990 SENEGAL Public Work end Employment 29.11 S.M2CIIII-SE( 19w SENEGAL BanklasmF"anol 6 4S60 1S.7C20900-Mi(s 1906 SNEUAL SAL NV 4.40 49.09CIISTO-S 1099 SENEAL AG Rseerob SS 16.69 10.49C115-S 1990 SENEGAL AG Service 17.19 14.5?c26- 1991 SEAAL SAL KY 7.1u 0."

Totl numer Credits * 1t 440.54 347.19

29 L_am clee All olosod for SENEGAL

Totea I n er Lan. a 9

TOTAL0. 189.3 12.97Of which repaid EalE 0124

TOTAL held b7 Sank & IDA .49 .Aount sold S.

of whiob repld 6.56

OTAL udibre U

s total ApPr and Outtanding balanc represent both aclve an InactiWe LOa en Crdite.(S) IndlgatL M and Credits.

TU. Iet Approved end Bsnk Repepusnt are blstorisl Value, ell othoer era mpket value.

- 46 -

P*- 4 of 4

. Statm eft ofC INS rOu (a of March 1J. lSfl

Ftieal Veer Ofbihor Tlac ot f 1_ -a

19? S"16t Induutrelelit F rtiillav Plat 2.46 1.01 8.46d*Enmrale du 544oa

m2 so S36981 VYg_tbl- Exrt - 6.64 6.64

174 SO?TSEIT D.ovIeNot rFnan_ Co. - .U 8.4

196g Banq de I ltabi tat YOy a Capital larist - 6.46 4.4

du S arashol

192 Industries Chlaiquea F rtills*r Pllot 26.06 - 26.06do 66a 1

1964 ^African Seaood Fish Proceing Plant 8. 2 O.94 4.28

-WA-s4AFRrC PrInt Manufacturlng 8.26 8.2"6W021

1 'CblIu Fortli Plants 6.15 12.16

16 U:FRICAIR Fishing 8.45 8.43

12T1OtalGe Cinitaante 52.S9 f4m 56.18

Low C.esiteati'm, ter.inatr .EoS re r_syntan oal" 82.97 9 86.16

Total Commitment ld by ZFC 19.42 1.56 f.9l

-Unlthuraad 1.5 06.26 1.910"I

ItRUUV4Ut D_ tStNt' AL *§t0- < .65 7 S *t fIPPl.tofuL D. |skt . thlo IRl

* *. Q.J~ . - 47 - ~':fi 7Anna II7

MINISTERS

DE LtE OUIPEMENT, DES TRANSPORTS I)ak k 2 1 J.CI!'J ;i I it

Er DU LOGEMENT"-

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vevillez. afr6er, Mohoiteu*t le I'reA-. i evit., aitsmurar(e tle n-tha:ett: CNei ii6t*nti oreAC.A

. _

- 48 -

Annex IIaPage 2 of 18

GOUVRNERMENT DE LA RtPURLIQUE DU StNtgAL

LETTRE DE POLITIQUE GENERALE DANS LE SECTEUR DES TRANSPORTS

1. EVOLUTION RECENTE DE L'ECONOMIE SENEGALAISE

Depuis 1'adoption du Programue d'Ajuatement Economique et Financier* Moyen et Long Termes (PAML, 1985-92), le Senegal a introduit une soie demesures visant a stabiliser so situation financire, maoliorer iomobilisation et l'allocation de sea ressources, lib;raliser sa politique decomerce et des prix, et securiser lea groupes de faibles revenus. Cesmesures, en combinaison avec des conditions climatiques favorables, outsugmente le taux de croissance du P1B, historiquement de 2.5, a 4.32 par ansur la periode 1984-88, donc superieure au taux de croissance de lapopulation (2.9S par an).

Cependant, la situation fiscal. de l'Etat reste fragiles lestroubles resultant du conflit avec la Nauritanle en 1989, lis a umesituation economique faible ourent pour r;sultat une diminution des revenuede l'Etat de 52 comparee a l'sanne 1988. 1s ne representent qu'un faibletaux (13.4)2 du P1B, ot lo pays depond toujour. de l'alde otarieure pourcouvrir lea dopenses courantes de l'Etat, y inclus le service de is dette etle psiement des arrires sur une dette cuuuloe de 3.3 maIliards de dollars,equivalent ; deux tiers du PIS. La poursulto du programe de stabilisationet de croisssnce economique donc s'impose.

2. PLAN DE DEVELOPPEMENT

Le Gouvernement *'aot efforco d'aborder simultanw_nt lea probli_ sfondamentaux de dtvelopp_ment du pays sinst que lea problomes structurels del'economle. Lo Gouvern_ment a d&fini les grandes lignes de sa strat6gio dedoveloppement dans le PAHL dont l'objectif essentiol est de conellier ler&tabliasoment des *quulibres financiers *vec la promotion de la crolssance.Ss roalisation s'apputo sur lo mise en place de mesures d'lacitation ; laproduction at ; l'emplol, en particulier dans lea secteuro de l'industrie etde l'agriculture et sur une politique financi&er rigourouse. C'est ainsi quolo Gouvernement a ml en place lea instruments do politlque ;conomiqueproptas a assurer une nouvelle dynamique ; des sectours tole quel'agriculture ou l'industrie.

Lee objectifs visis consistent en une red;finition du role de l'Etatpour favoriser 1 promotLon de l'initiative individuelle et priv&e, ledisengagement de l'Etat des activit;s de production, 1. restructuration dusecteur para-public, l'assainissement de la gestion des ressources publiques,l'abaiseement des barri&res protectionnistes et l'introduction de Isconcurronfo.

- 49 -

Annex iraPaSe 3 of 18

3. STRATEGIE DU SECTEUR DES TRANSPORTS

Los resultats obtenus dans la misa on oeuvre de la politiqued'ajustement ont confort- le Gouvernement dans so volont; de poursuivre larelance de l'aconomie tout on consolidant les acquis au plan financier et enminimisant le cout social des mesures mises en oeuvre.

Dens co cadre, la dafinition d'une strategie adequate en matiarede transports est aujourd'hui une nocossito vitale * cette etape du processusde relance. En effet avec la mise on place d'un systemo economique plusconcurrentiel, i, s'avare desormais imporieux do mieux $;rer l'ensemble desfactours utilises dtns notre systemo do production, et le transport so reveleetre parmi les plus importants pour les entreprises. Par ses multiplesfonctions, il sous-tend toutes les activit;s economiques et sociale.l ilintervient ainsi en amont et en oval des productions agricoles etindustrielles, 11 est le support des projets touristiques et participedirectement a l'amelioration do la balance des paiements. Ss contribution ala Production Interieure Brute (P.1.B.E.) oat estimee 8 82 par an au cours dela periode 1988-1991 avec une croissance annuelle de 3,62 au mem. rythme quele Produit Interieur Brut (P.I.B.). L'importance do co secteur ne pouvaitdone pas echapper aux pouvoirs publics. C'est pourquoi des efforts louablesont d4ja ete raslisas:

- sur le plan des transports de surface, l'organisation des transportsurbains at Interurbains ainsi que la rehabilitation deos transportsterroviaLres ont permis do mettro en place des structures adaptees onvue de le satisfaction des besomns de deplacement des blens at despersonnes, en particulier le transport de phosphates doetLne al'exportation d'une part, et l'acheminement d'uno pertle importante desimportations et exportations du Mall d'autre partg

- le resoau routier quant a lui supports environ 902 des transportsm&rchandises non mmniraliers, et 992 du transport voyagour;

- sur le plan des transports a impact ponctuel, le SiaieSl eat a la folsune lmportant. escalo maritime et un carrefour des routes serlennes,grace precisement a ses excellentes infrastructures portualres etaeroportualrost

- dan. leos transports maritimes clest par la Soclit; N^tLon&Ie du PortAutonome do Dakar quo transitent plus de 902 du cownerce Internationaldu Senegal et une part importanto des importations malLennos;

- pour les transports airiens, l'caroport do Dakar-Yoff sort le traficinternational, et un riseau de seLze aeroports ouverts ; la circulationaerienne publique ont pernmis de desenclaver toutes les rigions du payset de dessorvir les principales zones tourisatiques.

Afin de compliter at d'actuallse les objectLf. du secteur destransports, le Gouvernoment a engag; une raflexlon qui a permis do pr;clser

ia los princLpos qul l'ont gutie pour realisatlon des actions ontreprisesdans co sectour. L'ononce do ces prLnclpos tient compto du degr; de

- 50 -

Anmex rraPage 4 of 18

realisation des objectifs globaux et sectoriels, mais aussi des progrewmes etprojets destines a maintenir et *ccroitre les performances du secteur, etconsolider Los acquis tout en satisfaisant la demand. nouvelle.

Cos principes sont lea suivants:

a) Rnforcement des lnstitutions sectorielles. et promotion du secteurprivi aui reposant concratement surs

- une redefinition des missions de services publics devolues a cesinstitutions, et leur renforcement en matire de planification desinvestissesments et de capacite de gestion;

- une restructuration des entreprises parapubliques du secteur en vuede leur assurer une autonomie de gestion de type prive;

- l'encouragement du secteur prive a intervenir de plus en plusfortement dans des sous-secteurs oa l'intervention du secteurpublic reste encore importante, notammnt leur participationcroissante aux activites d'entretien routier.

b) La reconnaissance du caractere orioritaire de l'entretien ot de lar6habilitation des infrastructures routieres et ferrovlaires, et desinstallations portuaires et asroportuaires afin de preserver le capitaldtja investi, de conserver et renforcer le capacite de l'offre detransport et lui assurer une plus grande productivite.

c) La reconnaissance d'une comi;6entariti entre modes de transports quinecessite une amnelioration de la planification et de la coordination destransports de manire a reduire le desequilibre existant entre lesdivers modes, tout en tenant compte des moyens disponibles et descriteres de rentabilite economique.

d) L'amalioration du niveau de s&curite our les routes, les ports, lesseroports, et la voie ferree.

e) Le parachavement du desenclavement des regions peripheriques.

f) Le developpement du trafic de voisinage.

g) La creation de liaisons routieres permanentes avec les pays limitropheslorsqu'elles sont iconomiquement justifiies.

h) Le soution des productions agricoles Industrielles, mini4ers et desprojets touristiques.

i) Pour les transports urbalits, la reconnaissance de la priorite i accorderaux transports collectifes, notamment en site propre (vole ferree,couloirs reservis).

j) Le dtveloppement de la ftomation et du recyclage professionnels.

- 51 -

Annlex II&Page 5 of 18

k) La contribution du secteur i la politique de relance de lV&conomai etau transfert de technologie.

4. PROGRAMME D'ACTIONS VISANT A CONCRETISER CETTE STRATEGIEK

a) Actions d6ii prisest

Dans le cadre de 18 politique de lib&ralisation, l. Gouvornement a d4j;entrepris les reformes institutionnelles nicessalres au disengagementde l'Etat, i la promotion de 1'initiative priv&e, ot i le red&flnitLondes relations entre l'Etat et lesE1310'Socita6ionales du Secteurt

- le renforcement des institutions et do la capscite de gestion desadministrations et entreprises parapubllques en charge du secteura daj& commence en particuller par la transformation en SociltesNatLonales de la RCFS (Regle des Chemins de Fer Sonegalsis), et duPAD (Port Autonome de Dakar);

- l'elaboration et la signature de Contrats-Plan entre la SZCS, laSONAPAD, la SONATRA (Air Senegal) et l'Etat;

- le Gouvernement a consentL des efforts financiers Importants enconsacrant au financement de I'2ntretien routler des ressourcesadequates provenant ie Budget General de 1'Etat;

- le Gouvernemont a onfin presente une stratsgie globale pour lesectour, et un programme d'investisosment le soutenant ' la reuniondes Baillours de Fonds tenue i Dakar en mal 1989. Le Gouvernementconfirme son lntention de limiter son programme d'investiesementdans le sectour a colul qul a ete approuve au cours do cettereunion. L'eventuelle inclusLon d'investlssements additionnelssera consideree apras concertation avec l'IDA et en accord avec i.estipulatLons roglssant l'Lnclusion de projets aux Plansd'Investissement Publics trionnaux gllssants, etablis annuellement.

b) Actions envisatees

Af in de servir do support ef fLace su programme d'Lnvestissements prevu dansce projet, le Gouvernement envisage de mettre en oeuvre tras rapi.ement lesmesures suivantess

1. Sous-secteur routier (infrastructures et transports routiers)

- etablir annuellement des programmes triennaux glissantsd'investissements et d'entretLen;

- avoir pour tout projet d'lnfrastructure routlere propose pourInclusion aU programme d'LnveetLseement un taux de rentabilltoeconomique (TRE) de 122;

- consacrer 802 des depenses a l'entretlen routler at au renforcementdos chaussies;

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Pags 6 of 18

r;server 202 des depenses totales auz investisoments;

*ugmenter sensiblement lee rossources internes du budgetd'entrotien routier (Fonds Rout4er) en aedquation avec le programed'entretien et do rehabilitation et on fonction does possibilitisfinancilres de l'economie nationale;

- tablir des mecanismes et procedures administratives requises pourun fonctionnement correct du Fonds RoutLer;

oxecuter leas travaux d'assistance *ux collectivit6s publiques parune brigade sp&ciale et limiter lea deponses a CFAF 200 million paran;

proceder progressivement au dtsengagement do l'Etat en matiere deprestationsI9511Abvices et d9exicution de travaux, au profit dusecteur prive;

faire evoluer progressivement l rolo do la Direction des TravauxPublics (DTP) dans un sens normatif, do conception et de controle;

former lo personnel d'encadroment en matiere de prograumation etde contrale at perfectionner colut d'oexcution dens la limit. deI'effectif requis pour les travaux on rigie;

roaliser progressivemant l'ontretion courent l'eantreprise jusqu'aatteindre 752 en valour dos budgets d'entretlen courant de laquatriemo annie du programs. Le Plan 4'Action pour l'EntretionRoutLer qui reoumo toutos los mosures ; prendre on vue d'atteindrelos objectifa du PAST en mati;re d'Intretien routier, eat on AnnexeA.

- restructurer at moderniser la Direction des Transports Terrestrespour luS permettre de faire face a soe multiples fonctionst

- reglementer et coordonner le systeme de tarification;

- elaborer un programs d'ections dans le domains do la sciarit&routSo4reo

- introduiro le code do la route done le program. deos ecoles;

- .ensibiliser les usagers aux problemes do la securLt'i;

- mieux connaltre at suivre les accidents de circulation;

- poursuivre des negociations t'accords rigionaux de coopfration pourfaciliter 1'intigration socio-oconomique sous-r8gionalet

- hahmoniser les legislations routlires on vue de favoriser lesconditions de circulation des vehicules;

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Anmex ItsPage 7 of 18

- riglementer les conditions d'acc;s ; la profession do tranwporteurspar la mise en placo d'un systeme d'aptitutde dont lo. modalitesrestent 8 d4ifinir

- proceder au perfectionnemont et au recyclage des artisantransporteurs et des, m.. iteurs d'Auto-Ecoloe

- faciliter l'acces au crtdit Lux transporteurs pour leur p.rmettrede renouvolor lour mateiril en vue du maintien do l'offre dotransport 8 un niveau acceptable du point do vue quantitatif etqualitatif;

- faciliter les migrations alternatives quotidiennos entre domicileet lieu de travail;

- Organiser et structuror los tiffarents mod4e do transport urbain(bus SOTRAC, Car rapidesO, train de banliueu) en vue d'opttmiserla fluidit& du trafic a Dakar et minimiser lea couts dVoperationet do transports.

2. Sous-Secteur Ferroviairg

- &laborer et inettre en place un statut unique du personnel do laSNCS on vue de la rationalisat n des offectfss

- appliquor le contrat-plan avec l'Etat;

3 ronforcer la fonction comerciale au sein do Is societel

- croer un syst=em de comptabiliti analytique;

- rechercher loe possibilitis d'accroissement du trafic.

3. Sous-Secteur Maritime

- finaliser l'adoption des textes concernant le sous-secteur on ogarda son evolution et simplifier les proc'edures douanlores en vued'encourager le transbordeaent le trassit international et letrafic porte ; porte;

- doter do moyens adequats l'armement national afin do le rondrecr6dible en vue de l'enlevement do la totalit& des drolts de traflcon marchandises gonerales et de son intorvention our 1e transportdes vracs (solides et liquid.s);

- s'assurer que les services aUx navires sont fournis dans lUsconditions do competitivite at d'efficacite comparables aux noxmeslnternationalos.

- mettre on place des structures adapteos pour la consignation desnavires et la ripartition des cargaisone do fa;on a maximiser lerapport cout-officacite pour l'usagerg

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Annex UI.Page 8 of 18

assurer la vocation naturolle du Port AutonOme do Dakar de port dogroupement et d';clatement do is sous-reigon, taut en ce qu$c*ncerno Le trafic L conteneurs' que pour lea autres types de traf$c(ce'rales, etc.), cela par la mis en oeuvre du plan d'sctions duport. L'achavement de as restructuration en le dotant de moyensmateriels et humains adequats pour lui permettre do faire fa ce ala concurrence des autres ports de 1 sous-region;

redifinir is vocation des ports secondaires afin de ditermuine leaservices qu'lils peuvent offrir au transport national dans, desconditions d'efficacite et de couts compititife par rapport auxtrsnsports terrestres;

faire une etude globale permettant de definr lo meilleur choix desinvestissements d'organisation et de gestion de ces portsg

moderni4er et structurer la Direction de la Marine Marchande.

4. Sous-Secteur Aerion

maintenir et atumliorer le nivesu de s&reto convenable pour letrafic reru sur chacun des aeroports du Senegall

- aminliorer 18 capacite de l'offre do transports de passagers et defret pour aider le developpoment des exportat ions de produitsmaraichers et rentabiliser lea riceptifs touristiques;

- respecter lea ongagements internationaux du S0nigsl pour lemaintion et l'amiulioration du niveau de securite du systeime denavigation aerienne;

- renforcer lea mesures de lutte contre le terrorismo et le traflcde droguel

examiner is modernisation de is flotte d'Air Senegal pour lutpermettre de faire face a la concurrence, prendre une part plusimportante du trafic voisinage en respectant des crIt4es derentabilite oconomique, et lul fournir lea moyens adiquats pour luiassurer un participation plus large Bux activit&s d'essistance enescale des vols charters notanment;

- soutenir eff icacement la compagnie lnternatlonal. AIR AFRIQUE dansses actions d'assainissement financi;re et do ge8tlon.

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Annex I1sPag. 9 of 18

PLAN D'ACTION POOR L'ENTRETIE ROUTZIE

Ce plan d'action vise a identifier et prograwer toutes lee mosures a prondreen vue d'attelndre ls objectife que le projet d'ajustement sectoriol destransports s'est assigne dans le cadre spocifiquo de la politique d'entretienroutier adoptee par le Gouvernenent et presentee aux bailleurs do fonds loredo la table ronde tenue 8 Dakar le ;0-12 mai 1989.

Introduction

Le reseau routior du Sonegal comprend onviron 14,000 km de routes cl"esoosdont 4000 km bitumees et 8000 km do routes on terre moderne et de pistesamiliorees. Dans l cadre de la pr&paration du PAST, l9obj.ctif retenu enmatilre d'entrotion ost do procedor au renforcement d'environ 860 km deroutes bitumies, au rosurfarago do 2065 km de routes bitumoes et aurochargement de 1300 km do routes en terre, at ; l'ontrotion courantd'environ 9000 km de routes.

Oblectifs

Les objoctifs du plan d'action par l'entrotien routior sonts

(a) RedefLnir les attributions et reorganiser les institutions chargoesdo ia miss en oeuvro de la politique routeire;

(b) Amilioror ia planification de I'entretlen routier;

(c) Amfiliorer 1l gestion du r;seau coutior;

(d) kmollorer la progreumation does op;rations d'entretlen routier;

(a) Amellorer loe eathodes at conditions d9exicution des progr_msed'ontretien routlerg

(f) Assurer le financamnt adequat do lentretien courant du roseouprioritair. dtfini; at

(8) Dfinitr l'assietanco technique n;cessaire pour menor ; bil. leprograMe.

1. Pour rod_finir lga ttributiggg ds -institution chara&es de1lelab@ration et do la mso en oouvro d1* o_litau rgutiuir*

Msttre on vigueur avant 1. lor octobro 1991 tous les totnereglomentaires nocessaires ; 1 diso an place des services reeponsabloedo ltolaboration et de mAs. en oeuvrG de la politique routi;ro au *lndu Ministre do l'Equipement.

- Creation du Bureau do gestion routlre au sein de la DTP.

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Page 10 of I8

- Difinition des attributions des services relevant de 1 DTP.

- D'ttermination does attcibutions do la Collule do Coordination duPAST au soin de I* DTP.

- Df inition d'une politique de gestion du personnel (Oct. 31, 1991).

2. PoUr ameliorer ia ulanification de l'entretien routter. le Gouvernements ' enzaLe a:

Crier au sein de le Direction dos TP uin Bureau de Gestion Routiare quLpermottra d'atablir en liaison avoc le CSUEQs

- Los progrommes d'entrotlen pirLodLque des rout.s bitumies, desroutes on terro, des ouvrages d'art situas sur le reseau classefalsant l'objet d'un entretlen permanent salon des crlteresd'evaluation oconomique figurant aU Tableau C el-Joint;

- Les programes des rkaabilitatione rcutiares necessaires; at

- Le programs do construction do routes neuvos susceptibles deremplir les conditlons de rentabllte iconc=Lque rouises.

3. Pour amagorer Is &est on dft raseou routler. le Couverne.lnt sisnaao ;s

Craer pour lo 31 octobre 1991 au nlveau le la Dlrectlon des TravauxPublies une Banque de donnees des matrlcules routiers et un LaventaLredes ouwrages d'art qul seront tenus ; jour pour l'exploitatLon desrapports monsuels fournis par les services rigionaux does Travaux Publics(SRTP).

4. Pour amiliorer la irosrganetion des oyiratons d'OntLstlen routler. leGouvernoment a'entate ai

4.1 Etablir das le ler juillet 1991 le projet do budget d'ontretlen routlerpour l'ann&e fiscal. 1992, sous ia forms d'un Contrat Programid'Entretien Routior por lequel l'Et*t Sengsaleis approuve en mime temp.quo le montant des ressources allouies * l'enteotieu routler lea actionsspicsfiques prograrmmes our lea dLff;tents axes routLers en adoquatIonavec la budget *lloui;

4.2. Appliquer les priorit's suLvantes pour lea ctions d'entretLen couranta saner s premiere prioriti--poLnt ; tep. our routes bitusies enexcellent et bon stat, et nottoyage/curage ourages *t foss.., etc. ourla totaltit du rsiau-s Aeuise priorite--point ; temp I la late;rtasur le r'seau bltum& en mauvais at tres wauvais etat; troLsti.priorfti--reprofIlage l&ger et lourd our It ressau des routes on terreamllior;oes quattlrim et cinqui&me prlorit-4-signal1atIon horisontalesur routes bLtumeas et recharg_ment partlel des routes en terro.

4.3 Commencor die l 31 octobre 1991 * recuillifr au niveau du Bureau deGstLon RoutiLr. loe inormatIon. fourneos par les rapportt mensuels

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Annox II-Page 11 of 18

d'activitt des setvices regionaus des Travawux Publics, levolution desprix do revient des travaux d'entret$en en fonction des conditionslocales, do la mithode d'execution (rogie ou entrepriso)l

4.4 Budgetiser chsque annee i partir de 1991 un program. de comptago dotrafic, do pesage et d'enquetes de circulation.

S. Pour amenliorer les methodes et conditions d'execution des oroztramesd'entretien routier. le Gouvernoment 8'enzats as

5.1 Realiser la totalite du prograe d'entretien piriodique ; I'entrepriseprivee des la premiere annio du programs.

Rgaliser ; l'entreprise privie, au moins 202 des depenses d'entrotienroutier au cours de la premilre annie du programme, 50S au cours de ladouxlime annie, 65t au cours do le troisiome anneo et 752 su cours dela quatrilme ann;e. Los resultats do cheque anoio fiscale seront rovusconjointement avec l'IDA comme conditions do libirstion des tranches.

5.2 Cetta privatisation progressive des sctivltes d'entretien routiersuppose l'utilisation croiosante de petites ot moyennes entrepriseslocales pour lesquelles LI est nicessaire d'etsblir des proceduress1mplifioes de passation, d'approbation et de geostion des marchos.

Pour ce faire, l Gouvernement s'ongsge as

(a) Nettre on application avant le ler Julliet 1991 les textesri eImentalre8 portant identification des entreprises susceptiblesde repondre aux crlteros do participation au programe de travatux.

(b) Crier au soin do la Direction does TP (BERM) uan bureau d'assistancesux petiteo et moyennes entreprises de travaut publics en vue dofaclliter lours Interventions dns l'entretion routier.

(c) Adopter avant l 31 dtcembre 1991 des cahiers do charges techniquestypes par ltexe'ution des travaux det

- polit ; temps- dibroussaillage- ourage do foss4e- construction ou r;paratLon do petite ouvregoe d'art *t pose

do buses- construction do radiers.

(d) Adoptor des cahler deo charges administrativoe pr;cisent leafacilitos accordtes ceos entroprises en vue d lour assurer latr;sorerie et l'oquipement nvcessairo ; la bonne execution destraveux soit part

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Annex II&Page 12 of 18

- does modalitis de palements spiecfiques (avances sur materiauxou matiriels), patements accelires des prestations ralisese,ou par:

- le cautionnement et le nantissement des marches aupresd'organismes bancsires.

(e) Etablir des procedures simplif lies relatives aux marchas de travauxd'entretion routier dtun montant inffrieur ou egal a CFAF 100millions visant a proceder a l'ouverture, et a i'avaluation desoffres dans un delai do 15 jours suivant la date d'ouverture desoffres. L'approbation du contrat suivra gasleuent une procedureaccaliree permettant le signature du marcha au plus 15 jours apresI'ecceptation des recomandationo du rapport d'avaluation.

6. Assurer le financement adeauate de 1'entretion courant et goriodioue dureseau

La wise en oeuvre officace d'un prograume d'entretien courant reposeossentiellement sur la disponibilite en temps opportun des ressourcesfinanci;res adequates.

Dana le but d'assurer le financament adequat du progrmume d0entretlencourant prioritaire et d'assurer la disponibilit' des rossources ainsiallouiees le Gouvernement sengage ; affecteor au budget d'entretlenroutier (Fonds Routior) leo montants minimal annuels suivante:

1991192 5 millierds de FCFA1992193 6 milliards de FCFA1993194 6 milliards de FCFA1994195 6 milliards do FCFA1995/96 6 milliards do FCPA

Le Couvernement s'engage par silleurs ; garantir 18 disponibilitaeffective de coo fonds en lnstituant une auteanomie rEello defonctionnement du Fonds Routior. Les sommes aInsi. allouees serontversees par tranches convenues a levance ontre le Ministore desFinances et le Minetatro de l'Equipement done un compte spocial ouvertdzss une Banque Counerclle au nom du Ministar. de l'Equipement qui sererosponsable de Is gestion autonomo do ces credits. La also on place dece mcsnisme par arrete du Ministre do l'Econolue ot des Financescontietuers uno condition prealablo i Is mise en vigueur du Cr;dit, ot; l libiration d. la prmiS;re trenche de la composants ajustement duCredit.

Le maintion do cotte disposition pendant tout. l dur;e du projet sereune condition de iLb;ration do trancho pour lea deux ann;es suivanteset une condition de d'ecassemont do la Composante Routiere du PAST pourles deux dernIoros annees.

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Annex IIePage 13 of 18

7. Definir l'assistance technicue necessaire your 1'execution du Rrostrame

7.1 Deux volets d'assistance technique oat ete incorpores dans le projet.L'un est centre sur la DTP i'eutre sur la DTT. Doaw leo deux cos LIs'agit d'eider i ia modernisation des institutions et d'appuyer dans lsmise en oeuvre de 1 nouvelle strategie.

7.2 L'assistance technique augr;s de la DTP a pour objectif do (i) facillterl'implsntation de ie nouvelle politique d'entretion, (iU) derationaliser les prises do decision et 1I geetion de l'entretien routierpar le creation d'un Bureau de Gestion Routilro (BOR), et (iiL) derevitaliser en le reorientant le Centre de Formation et dePerfectionnement. Cette triple assistance technique aupros du BERM,supres de 1 DPT, aupr;s du CPTP pourrait etre assuroo par un seulprestataire de service.

7.3 Les tschos de i'assistance technicue au 9ERM seoant (i) assister le BERMet lea SRTPs dans la programation et l'exicution de 3.entretienroutier, (ii) ronforcor le BERM en mati;ro de passation do marchis apasser au secteur privo pour l'entretion p&riodique et courant, (ifi)contraler l'execution at is gestion des marches en sidant los SRTPs etle BERM & mettre au point lea proc&dures de controle, evaluer leosresultats des premiers contrats et ; realiser lea bilans anuels, et(iv) ronforcer ia DM i optimiser at g6rer son parc.

7.4 La gestion du raseau routler oxalr une connaissance quantifi&e etactualisee des parametres de traflu et d'infrsstructure. On bureau degestion routilre (BOR) sera mis en place pour (i) faciliter laplanification et l'exploitation du r&sesu routier, (it) fournir uneinformation fliable aux different services, et (111) constituor un outilde mise a jour des statistiques routiros. Le BGR sore plsco sousl'autoriti directe du Directeur des TP. Le BGR ti) rassemblerareguli&rement lea Informations supras des services, (11) assurera lecoheronco ot l'uniti des codes et des prisentations, (iii) veillera iis qualiti des informations, (iv) elaborere un rapport de synthoseannuel, oet (v) diffuser& l'information. Le BGR etablir. lea liaisonsavec les servlees extorieurs et en particulitr avec la DTT en ce quiconcerne lo pare automobile. Le BERM fournira loa lnformations relativesa l'entretien ot *u rvseau routier; le DI fournira les informationsrelatives aux traveux neufs ot do rochergement, le CEREEQ fournira leadonnies de base t g&omtzies, constitution des chauss6s, stat visuel uni,d&flexions, lnventairo des carri&rss. La DEP seta responsable de lacollecte des donnseo de trafic &conomiques et fiocales, et implanteraprogressivement le mod&le MDM.

7.5 Le METL dolt (1) *asurer la miss en place do nouveaux outils do travailet (11) redUfinir les compoteneoe et qualifications du personnel degestion et de supervioion. L'Vssistace tchnioue -Mr;s a CITIconsistera & i) alder l. CPTP i daveloppor un service pidagoglquecapable do ganarer un processus d9analyse des bosoons et (it) d&volopperle contenu doe action formatives an planificatton, gattion, etcontrale. Los nouveaux statute duL CIPI qul devraient trto adopt;s avant

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Page 14 of 18

1. 31 octobre 1991, refleteront la nouvelle orientation du Centre visant; participer activement ; la formation et ; i'encadr_o nt des petiteset moyennes entreprises qui seront retenues pour entreprendre destravaux d'entretien courant.

7.6 L'assistance technigue suDras do la DTT a pour objectif de la moderniseret de ronforcer une action * long terme en matiare do securlt; routlero.Les obje#.tifs seront do (i) mettre en place un nouvel organigrameo auvein de la DTT, (it) micro-tforimatiser la DTT et d'assurer l formationdu personnel, (iiI) elaborer les etudes ot systemes g;nerant lesInformations statistiquos relatives au parc automobilo, aux pormis deconduire, aiu titres do transports, aus accidents, aux Infractions et,a implanter ces syst&mes tout on assurant la formation du personnel,(iv) refondre lea textes concernant le code de Is route ot, ;laborer unnouveau manuel pour les candidats au permis de condtuire, (v) dafinir etolaborer lee programes de formation en securit; routiare dee moniteurs,examinateurs, et do sensibilisation des ocollers ot oloveos

7.7 Le Tabloau A ci-apres ditaille la nature et l volume d l'assistancetechnique aupres do ie DTP et de DTT. I1 s'aglt do 485 porsonne-mols (p-m) sur une poriods do ttois ; qustre ns dont 311 p-m pour la DTP (632) et 174 p-m pour is DTT (372). Cotto assltance techniquea'accompagnera do la fourniture d'aquipoment do bureaux, vihicules,micro-ordinateurs, bumps intigratour, balances mobiles do peseesd'essieux, et des frais de fonctionnnment correspondant.

7.8 Pour faire face * as mission le CPTP a 6labor; un plan trionnal (Tableau8) comportant des investilsomento (39 n do FCFA) doe frals do reperationdo le brigade do formation (59.9 u do FCFA) et des frats defonctionnement suppl_entrairos (116 a do FCFA). Seront ;ligiblos a unfinancemont IDA lea dopo nse d'investiosement relatives a iarehabilitation des locaux, ; is remise on stat du mat;riel de is brigadedo fomation, au service do documentation et d'archivage y comprisd'smenagement Interiour des bureaus exisnte, et lee doponsos defonctionnement techniques, &Inai quo los deponsos de rencontros,seiminaireo, stages o l'tranger t d'lindeintis doe stagisiros otinstructours.

7.9 La modernieation do Is DTT sera accompagnee par des trovauxd'-omnagment de locaux de services contraux et r;gionaux elflibles; un financement IDA. A Dakar, lea locaux de le bTT seront r'am6nag&oot agrandis pour uno d}pesse ostimise ; 15 a de FCPA; an province, ouC iasitustion differ. d'un %;timent ; l9autre, un scmo globalc do 25 a deFCFA set esetims neceosaire pour smonager lee buroaus devant rec*voirle micro-ordinatour.

7.10 Los tomes do rifirenc% ot lea plans d'action d;tailll; pour ie mise enplace de l'assistance technique ont ;t; &labor6s en detail lore de lapreparation du projet par de consultants.

7.11 Le Couvornement prondra pour limei des travaux d'aessttance *uxcollectivitis publiquo son. rapport avcc l'entretien routier un niveau

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Palo 35 of la

znnu*l no depassant pa. 200 millions rd FCF. D'autr. part, l1a travaux4'asslatance aux collectivites publlquos aoront toasl.s .xclusivimentpar une brigade autonome qui sera cr;so au s*in de la OTP.

Tableau A - Ccmiosition d- 19AsBeLtlCe Technigu

No. Egaute DTP ------- (Ann;es) -------LI_R IEM

1 Ingenieur/Economisto Chef Mission 31 InOnieur Routier Programmation 31 Specialiste en uarches 11 SjiclUlste Gestlon du persoari.l 1131 Inginiour ContrUle Travaux 31 K;coanloen Engin 31 Ingenieur G6otechnicten (CEREEQ) 11 Infomnticlen 1I Consieller Planification Pedagogilqu 31 SpocalLste en progrsmes de formction 31 Expert on Ressources/Moyens dldactique. 31 Expercts ponctuwls 15112 2112 2112

E _utont DTP - Rombre

Bump Integrator 6Balance Mobile 3Micro-ordinat-ur 3 1 1V.hiculea Services 3 3 2Comptoure Rout ts

Etule DST nn;e

I ConseIller Organisation at Mithode 3.01 ConseLller on EconomiS et StatiatLques 2.0

dee TransportsI Consoiller Castion du Personnol 101121 Sp;ciallt.e s8curit; Rout leo 22 Consollerse on Micro-infomatique 0.5I Specialist. Etude Informatique 0.5I Spciallst, en Fichiers d, Tittu

d Trcansports 2.01 Expert Ponctucl 40112

Rquilgement OTTNoumbr-

V;hiculs SorvSica 4Micro-Ord4instur i9MinI-Otdinateut 1

62 -

Pag. 16 of 18

Tableau P - Contr do foraIon Pro` onlonn llo Plan Trifnn l-Ire nino C nt..rgThtle-ygr , n

RUIRiUQE TOTAL OEVS TAXES ELISLE___,_,__ S Zontat INo Montant IDA

A) 04 ... d'ln,mtlas.nt

1. Oocumentatlon O OO oe 40 2 400 39 16 JO 6 80 1N seeOO2. S.cr6k rlat/orchlvag. 16 ee 00 49 6O 0650 JO 4 666 6 39 4 so 6 M ra. A6aomen_t des loc"x 12 e6 m 16 1 200 we 76 * 406 6S 2 2 400 O4. Achet dtqquIp _t at

eutillII. (Section *6..nu *666 6a 1Be I 0so 28 696 sOO 21 as we6S. ch t d'6oqulpmnt t out11-

top ( cttion gOnto el] 5665666 60 * 636 m 2J3 660 00 21 6ag9 6

O) .e.tn dB .at6rlI de Is

ormatIon 59 9M NO 45 26 9366 6 22 1t 176566 031977t To o

C) El obIratlon *t lI o*n blace0p0o1ramm do Mosotion

1. lIffulsion de to docvu_ntetlon 6 60 00 0 es 56 0S"6669 26 1 7650 we2. Enteeti; dm moy n

techniques 4 66o6 6 280 G0 e o 2t766oo 20 9666oo s8. Mathlr d'aouve, *oction

e6centoq 2 7e6 oeo 4a 6 o 1 020 s0 2O 64660 S4. atltAr d'aovrw., actton

0"^0 civil It 9 J 66t 2 592 565 6 1 77666 29g 2692 meS. * noontrm s nn e llc I 000 eow 01 eoOO U$00e0S. 1t"Inntre orgnlo Olon,

frW e 1 * Xe_*w) toJ SW 0 9 040 on o to N7. vrmtlor eo"Vo los* an n 2"60 0 of I° @ l° we ° 9°°°we9 6= 6 116tr aft" 27 me15 n 6f P 9m SW 0 0 10 63. Inm lt6s 8atalairs m on 9 0 96 2 7s5 gm 16 we a

Is. Idinnit6 l stnact.uenrAglon JJWA J 3 LZL Lq "go66T O A A L 814 * 000 8U 9647 600 40 01 10jg 21 461564 a6 169.3

0.,1... 7$.6MnI. t loeal- 68.0

tea.. 17.9

- 63 -

Annex IlaPage 17 of 18

Tableau C - Entretien p6riodigue - Critsres d6'valuation 6conomioue/Periodic Maintenance - Economic Evaluation Criteria

La strat6gie globale en ce qui concerne l'entretien piriodique eat d'aesureren moyenne tous les 7 ans:

(a) Pour les routes revOtuess Mi) une couche d'usure en matdrSauzenrobes pour des TMJ supdrieur& 1000; et (11) un enduitsuperficiel pour des TMJ inf6rieurs 1000.

(b) Pour les routes non-revOtues un rechargement si le TMJT eatsupsrieur a 50.

A. ModAle d'Etat RksumO: Entretien P6riodiaue

1. Route numero section

2. DonnOes de Base

Longueur km C ) Largeur chaussee m C ) Largeur accotement m C )RevAtement existantt

- Age- Otat t coef. d'uni DWgradation visuellet

3. Trafic V P T B Bus Camions Total

annee de base tcroissance

4. Cost dtop4rations V P T B Bus Camions

Uni avant travaux C )Uni apres travaux ( )Uni annee C )

5. Rosultats Economipues Cas de base Sensibilit0

CoUt invest. (HT) trRR k

6. Schema dexCcution t Invitation & la concurrence s

demarrage des travaux i delai dtexecution

- 64 -

Amnei ItsPAg. 18 of 18

3. Princiuau B;ne £ices Ecorgomlaues ; ConoSderor

7* Los cholx _cono_aquso *eront datermLnis on comparnt locdliffrentos options d'cntratin pirLodique on utillsant 1. model. HDK(Hlghway Design and Kainten.nce). Soul le trafic normal *ora prls *n compt-.

8. TrafiS. Les donnoeo de volume, compoostion, *volution du traficseront fournls. Le taux de crolssance du traftc normal sera drlva do setrleshictorlques, c dtfaut d'autres parenstros tol quo 1- croisscnce envLse; duPUS *eront utlSisec. Los coats de fonctionnement dos vehlculys sorout bcos*ur l *ous-modolo VOC du HDM et our des meosuros du coefficaent d'ual desroutes existent.s ot cecl i partir de l'annie 2 du progreamo et si possibleavant. La valeur du temes des p-socges des bus ot v&hicules l;gors no setspan prlso en compte. Los couts d'lnvestisgements seront conoSderos horetaxes; loo ;tudoes ot controles soront lnclus dons los coats; aucune valourr&sidu&ll, no sera consider&e a 1is1sue de 1a dur;c de vlo envlag.o. Aucunprix de r;ferenco no sore prlo on compto. Une onlvoe do *onsibilit; sore£enie par vari*tLon des prlnelpaux parwmetres.

- 65 -

ACTION PROGRAM

ANNEX IIB

R~1uC eF £NfL

ZAtR MSM £.IIISrW NT E5 PRO--AU E Jl - SROOOINI! D'AJSTW ffT DES TRAISPOIM

Action Proarm

ACTION PRWAI IlPLEWSTAT!ON DEADL[NES, DATES,ComnTs, ETC.

I. mesuana and aetIS an n Whch ausreimet. ha. ee tama.ahu

A. _Sofe idefI) All inwosnto proPos ls should, hencforth, t a Annal public Invesent

minima criterion of 12t to qualify for inclusion in progrm review with IDA

the Scora lniestmunt Plan.

(;;) Ht investmnt eceddn9 USll.l0 millen and tot already SAL IV, PTII

in the approved Sector Investmnt Plan should betadtahen without a prior review of Its jstificationan agesment with the Assciation.

D. mhaihu Setor

i) Future Investments on now contruction to be li lted to Policy Letter ad trular PT? Is c.. effective as of

203 of the total hgbwa subsctor annual budget. rmiw. MoM and WIll continue tobe tffective for the woleprojet period.

(Ii) Incr es in the share of routine sa;ntenance work Policy Letter an Tranche Tranchixg to offet future

carried out by privte contractor. to t within five R ele condItion, ward of contracte (not

years. on-oing contract.) underInvestment component.

(;ii) Incr in Rod Fun *llocation so that: Annual review at agreeddate.

(a) reutl ; mintenanm wIll receive aboutCFAF 2,C0 million annually (19UW prices) forthe next 5 years, to cower force account costsand local contractor costs not financed f rexternal aid; VW ou

(b) eerigdic m will obtain ab, iCFAF 2,5SO illion per annm (t88 prices) forthe next 3 years, asmirng that the totality of

forign costa Is financed fre extrnl eorces;

ACTN PRORAM IMPLEMENTATIM DEADLINES, DATES,cMM.. I .C.

(iv) Provision of counterpart funds for strelgtheiwg works Creit Covnant Monitored annual y.of about CFAF 2,S0 million per annus (1988 prices) forthe ent S yers.

(v) Contieaed freeo on recrultmnt of personnel during the SAL IVentiro project period. However, key posts i theDiretion des transports Torrestros should be filled(as for as possible by transfer of *taff from theFonction Publiqe, or by other mean agreed with theAssociation).

(vi) Limited purchas of nu oquipment for road maintenance Annual Inventory of Publilcby force ccount (agreed list) and reduction of the works equipment.equipmnt fleet by scrapping or ee I )ng equipment oldrthan 1D yaar., In uneconomic condition.

(vii) Establi lkent of a systes of clasIftication of Draft documnt availablecontractors before Jun 39, 1990 by April 30, 1990(Vii;) Establishaent of stand6rd contracts for routine nd Condition of Efectlvelnes *nd Craft docment ovielableperiodic mainenanncend agree with IDA before Juno 30, First Tranche Releaso by July 31* 1991

1991.

C. Rs ilza

(I) Transformation of the 9R9gte' into a 'Socl6t6 Done as of Nov. 1, 1989Nationale with a unified personl atatue as agred.

(;I) Conclusions of financil restructurig of SUMS. Coniition of Effectiveetss end Septmber 80,1991Flet Trench Release.

;i;) A_dhernc to the anmal financial and operating targets Trano Rele_s Conition. Annual eview at agreedagred won, date.(v) no nw train serics, or expanilon of existing train Contrat Plan To be monitored throuh

serviesw to be undertake unles It can be dmnstrated the verifiable targetIn a 3-month trial for froeght-, and 0-month trial for therein.passe_ger service, that euch Slvices coveor the ful Iavoidablo cost and the dsprsclutlon of the 1ocomotvesNan rollin stock.

(v) Reach the levl of 2,8 staff within a yer of the Contract Plan Tart date: March 191 .dae of si9gtom of the IDA Credit Agre n. To integrated into theContract Plan andwmotored th.eby.

ACTIN PROWA ZWLEVENTATXUN CADM, DATES.cans, ETC.

n. ALtwon h2 tan to L riaL

(1) A ntlonwide traffic cemt to be corried out 18811#. Done

(i1) Peperstion of a draft einlstrativo regultion Do".coaering the implication of the mm to low on thecotratin9 pwroces, paymes to contratrs, temporary-r, ste.

(iiI) Presettion of a short list of cossltanto for the D1oe and agreoe to

rmainin studiesad the suprvision of the pavemntstrengthening works lkely to be financed by IDA.

(1w) Preparation of the f Int year prorm of periodic Done

maIntenance, identifying road ections trafflic leves,and costs.

(,) Presantation of a five yer financial plan for the PAD. Done

UK. rma NW IMMM to be

(i) Agreement on orgalzation of an urban trsns,ort Credit Covenan. Revie as reuired.

authority Govorn_nt my i*s to lesablish and phasingof implemsntation of Train de Sanliue proJetsatisfatry to the Asociation.

(Ii) Final agrement an the wnal financiel an opating lmnorpoated In the contract To e monitored ann*l Ir.

targets to be met by the railway each year of the Plan.

projet.

(mii) Presentation of the audit report of the raltla"s Doss FM and FY6 audit

account of FT 187. eorta have also bee

received.

(iV) lcr_ss in Dakar port capaity by clearing the working Contrat Plan To be nltored annually.

*ras through: (a) rict implementation of bedsto, and aution of I dconolsgment*o (b)fir timetable for eintin of lont storagfacilitie to the working res for Ci de106qwatilo, an (o) periodic rwise of the ae nwith llall on the us of the Free Ros, with vies toreduce cot of Uali traffic and lprove portotff iien.

,v) S|1""tremlin cstome procedures for tress-All.t, StWdy TW and timatabl Review under Contrat Plan

literatoal trailot and oor-to-door contcais. aro tmtoriwg NW SAL IV.

ACTMIII P_7* IWdMTATIC EARUI, DATES,cms, ETC.

(WI) Presentation ofa 'Tableau de Bord', and seting out Contract Plra Review In Jun each year.financial ad oeratlag targets of PAD for the durationof the projec.

(vii) Prepration of: (a) an Action Plan for each doe.atmt Contrat Pln Review in Jn ch year.of the Port, (b) a Dat Procesins Plan, an (c) amnposr plan.

(Will) Agremen oan arrangmestA for non-progri road Cedit Coveant Review In June each yar.sorb.

j*. t*i,dtAon of fl1hncm

A.

(i) RedO mintenanc of locations S eiet to fincelocal pvrtion of agreed prasm he" bea budgeted, and_d'PI esuring their efefetive caitment and se

for mintwae work to I ilo plae; sunt asedud In thefIrst qurtwr of F91 has be deposited ln designatedaccot; publication of decree specifyingorganationl rspon lbility for contracting andsupervision of periodic and routine mintenac works.

(1i) OM bes implemented a 1N tariff increas over 198

(}iii Concelulso of financil restructuwr of SCS.

(IV) Signature of Contrat Plan beten -Govemat andSUS, PAD, and SONATRA-AIR #OAL.

(v) Executien of subsidiary los agreseent beteenC Wa

Submission of a swri" of standrd contraCts forrotin mwinteano operatios.

F0 04

ACTIO PROAM IMPLEiMENATION DADNES, DATES,COMM, ETC.

§Mnd JrUDSm(V) Evidec o to) Il ollocrtion SW effetive disbursement Review ln June 1992of thie amount nwcery for road maintenance in the

previous year; evidnce that the reed shares ofperiodic nnd routine minteace works have beecarried out by private contractors, an that nocontrector bi ls are sore than three monthsoutstanding; adequate bodgtry allocations for FM9an deposit of amount rnded In first quarter Indesignated sccount.

(II) Realilation of agreed f;inanciol an operating targets RvIew 1 i June 1992by SMC.

(iii) Reolization of agree f inancsil end operating torgets Review In June 1992by PAD.

(IV) Introduction of a reised tariff structure by PAD.

(v) Satisfactory progres on mcroeconoic refo progrm. SAL IV Annual Review

iklrd Trancho

(i) Road maintena wonditiona as In previous yers encpt Review in Jun 109tha 6o of works hould be impl_mme by contractors;SaCS financial Wd opegatIng targot me- PAD finacialan operating targoe swt; AI SENE6AL finaial aWoperating targee st; financial and operational planfor ASECNA-S.ngl are and iplemoftation started;satisfactory progress on the maeroeconomic reformprogrm.

a. 1(1) Compilance with Policy Latter-all component.. Nb now contracts under

invertment component to bepproved it Policy Letternet compid with.

for road maintennce In FY9S and FYO-road componont.() AdopTbon of stsfcors tfor Publ- c Wormn Tr.ain C

(OvP "tetor tO IArea omnnt

RAIUI tOOMT- A P

RCFS Ialem. Sbh_M: Acal F"OD-FM - UMs BirAm Sh_s.: Proj ect FS/F194

RtFS 511:s RSli6 W3-AF89 - OKI 8lws9 PrAt1010" Apis-APWW^ I I I o CFALe)

11s/3 i, 1937/8 C .p.3. .6 11188/09 1 0 1 1901/02 190211J 134

Flai _m4 (CFAF *le.) (i 4 (a)Actual ~~=totb rjce

Laod in Lo bae 4.4 M.5 4 71.0 123. 1.45 73 in 793 4421 1Xl

Ceiruetlam and tradct 6375.3 540.8 68139.3 2286.5 4.3 5048 $041 838 "48 T4o7 "lot7

W.3nm stock* 82016.4 40108.0 4483.1 420.1 11.81 4524 45417 478" 4414 49094 404S1

E ,iqel t,o* 3663.7 83.7 4166.1 477.4 12.98 4134 4314 6428 Is 7T0M 7S03

Othor t4..i n. 1113 1462.0 1433.7 33.6 1.33 1wo 1699 2143 3041 ml7 30l

lteS gr lmd la ewms 6n067.1 1030 .0 101700.4 73.6 7.6e It 1 1441183 122107 12*401 148856 144015

Am. I ... tras ch hes 5.0 U 4.0 - 594 S01 641 660 740 30

Act. ree.ea Cmte. 452.1 42e0.8 40.6 0.0 0.06 3278 4000 40U4 4163 430 44111

Ag. pm.00 roSll.I 1063.1 21716.1 21300.0 1001.1 4.01 1 2141 1414 18 26I34 271 18342

Age. dr.on elip. 31.2 58.7 10.8 1M. 5.011 1747 17 327 3m 4119 455

SA ass. A p"lotion o1n.7 330.6 no.7 30.1 5.01S in 1*41 11 1973 2431 Me5

te0l cc_o. caP. 610.7 705.0 72313.6 1741.6 2.3 673 8747 7119 770 76078 1im0

S" t 01. r416.9 6537.7 1277.5 13.6 40.01 7613 11621 9431 1499 0 0

dMonc Ie I e 491.4 117t.1 5.6 -781.1 40.43 448 86 14 10f 126 126

Other fixed *3 61.3 46.2 46.3 0.0 0.15 46 48 46 46 U 46

_t etof _ asch. 8011.3 153.5 3073.3 91.3 4.6 2494 2494 2494 2494 2494 24

my pf 3_3 1113.6 = . 47104.4 7n 7.0 10.13 54511 166 810 682 60 s

51.0 1030.0 1414.0 82.0 10.73 on 0m 10o 109 1141

3a.slwabkse 1740.6 1110.2 SM.0 M5.3 9.45 1on 17 1748 1544 1210 1413

864mm... 3. staff 941.4 60.1 431.1 -115.0 -19.3S 484 387 "I 237 23 244

Prapsid .a_m 787.7 1U.4 82. 131.2 6o.u1 n237t31 8as si 105 3

Cash eelU Sable 445.1 5.1 911.0 31.i o.01 1020 t8 1i1 171 150 m2

4t1*l avows 4167.6 4213.7 406.11 747.5 M7.7 45 sm 4077 1e m29 497

TO57M ssm3 8785.3 4115. 10.7 6648.& 19.0S am107 6 6143 M6 T7i7 70321

capital)rokel"m egeela .? 4M0.5 6121.1 1914.5 41.53 a76 1wi 2133 81 is 27111 27561

Smld1.g 5314.1 61.2 100.7 3 -.56 62.13 1064 104 106ow 10 10414 10406

Pr.wsl.a 735.8 100.0 251.7 067.3 47.33 4671 447 44n2 4472 4472 4472

Pratt of cm peer -11n.3 1914. -13.4 -2101.9 -100.63 m7 463 487 444 144 UO

Ls" "M do ICSS5 .0 16t55.9 1162.0 1463.1 7.0 "174 07 219S4 2646 176 21831

tees t¢2C9b.N 106 3. 900.1 600.0 13.43 46452 4975 60215 67477 mtU 0968

norm lldellitl_

SegIlnra I110.2 1051.2 1310.9, 52.7 6.0s 720 117 M1 S57 ?74 785

C -r crandte 26.3 674.1 351.7 4217.6 13.110 370 a70 341 173 0 0

A- -1m 1107.4 1543.1 2109.2 53.0 38. 070 3o 046 117 434 72

ASTCers as 4461 51.2 476.0 4706.9 113.3 4. 5431 5431 3021 131 0 0

T Umm 313.8 179.0 671.3 401.7 m." 3o3 "

SeI_ee.smI(Ims) 179.6 1120.0 30.0 14.01 s 371 1130 0 0 0 0

TotI cam limbil ltie 11409.6 10700.2 3126O.8 2561.4 2W. 11 12470 69 199 11 37

TOTAL L8ItLItU 37318.3 41616.3 62160.7 6645. 19.08 09107 1 2 68143 11488 71176 l 325

FOIfICU1. 1l05 3

Ctrreel ratio 0.42 0.39 ,.37 0.u 0.4S 0.609 0.30 2. 1.90

D;wshieu, ret). 0.61 0.56 0.61 0.44 0.42 0.38 0.39 0,40 0.38

(s) proS oovy figure. a.b.ct to sadit jch)f raw prial;-i. mA edine&O-6Apr.-0

e

S Soues and Appte omm Of F a: LtI FTU rU ICs Fuojetsd Fm/FMMS Soes at Appi tlmo dm Foads: W.I1W. A,U-" - S:. Pr4vislou APO"

(ml II .1 CFAF)iiji aus,s 19713 34 U1,59 11/8 6/910 361/92815 1992/ 1gu991

tUrn am m91usE S (*)_ _etna inca _ mllin3. e l Ia j.0

Ca.3 gmsmeatad Ices omati. 1461.66 163.63 43.5 2_stn im gm anu eo*4sS~lm 273 ' -'9 21.90 i50 low It" 462 211O 771~l4i i .|4 40.9 40 t 7 n o o o

- ------- ---- 2MU..6.12 3064.61 25.00 MS2 1631I 7747 am2 l01s 86"N* men OM otiagresa -14.11 en.14 40.64 2g2 13 tie 10 M1 164ba-ashltm 4d.16 181." 174.14 43 7 0 0 0Tnmfor of useS to p qm 1366.40 344 0 1160 16) _d Ss by pwsc Ma.. *.a. S.A. n8 an 19 w 301 act

1fu1 lo* tw s19011.2 6164.48 11019.66 1037 am r22 It21l 24747 676

_dam.. psgI -703M.3 6.67 -1n." a -3 -1o -79 -19 0C_1_sd I. la.d/sraeboom 244.63 497.25 31.4 M 0 nu 0 1451 0

Csintvsstles £ t. euitp. Inc."3 245".49 223.0 36o0 0 t4 0 34356 01a,doA~ la ceilies sIseb 66.10 711.04 5811.21.1e M392-1l, M 660 as9

_ _m s lo .p1 t 1.16 -0.03 47.45 0 1o i'iS 1t1U M67 0_ I_ t.U i t *1.51 14.34 38.3 1449 0 446 M so 01bb top 49W1.62 13.35 413.67 0 n 5486 556 1$ atdsh I crn-II predaed) 13585.17 1410. 1664.0 1314 15 106 I 132 M 0

1. 1 n 56.i n 138117.6 s7lO 414 1m IU1, 3s4 u_atumb 610.3* 11n.n 63.M U7 6" @74 11 11 11 2

6461 gs,s_mS 110.1 1.36 6 Mi 314 It" 156_4 to"

T~3 mesSes 616.U.6 3440.00 164.46 m6o 1U 341 no; 2136 8t10eivdindea be w. Iss 0 a 0 0 0 0LiTameSsp cm tme levrns 806.116 -1015.413 61.61 416 0 0 00

11 q la"t two 3il m FU 03.010 961. 1 . 0l66 61s 1M1 170 21 19

13M LT. sU7I -u5.0 m 3. -1 .6 2 I 0 1022 25 1426

1I)UI 1MM MAUIMP4CM111111

4-Iaevomsi offtim 367.6 -32.6l 5.74 -S 45 -1I) -IU 43 -9

= *maw, -111o.r 373.34 481.5 - 21 0 -s31 -371 -373 0.ecis 50.10 25.63 53.03 -106 -6 672 nfO -665 -412

S.1.pwet,le .3 L.T. dablIarreer 13271.4 -1866.00 1116.19 617 0 -1613 -1611 .3633 0o.t.sb.ft 313.56 -14.03 491.71 22 0 -691 0 0 0eijes3mtI IN toe. 0.00 2.61 60.02 -269 M9 -1180 0 0 0

ash 3.3.3 osr_rn 1162.50 -100.40 11.1 4e14 487r -3i90 -273 -421

stares 46.61 197.22 82.0 -516 4 4 4 1 re,.IvabI.s lN3.07 -13.60 I5." tO 40 -0 -I19 -194 79 a

_1*91e9 to ff 30.05 -34.86 -33S.00 * -97 -157 6 .4 tl xprepsid _pisue. -23.30 .559.31 131.15 -9 82 -236 171 _ 100 .99

sub total pplicatlo .59 .0 493.7 -456 n 425 n -246

OESSS .1. S CES/AMS.CATI5 3467.937 31.61 07.40 -349 48 42m .3931 -2438 -4216

MAII^TtCtt OF >45.01 251.52 SI2t8 -3352 -910 -20 393251 USIO OS OF VtE (395/65) 471.01 7.0 1.60 1020 22 3o06 1ti 30 I06u

RM-IPa GP SIJ9A

RAIWA GWUW- CMPDAUW PI3301A1

NfS lao. Statiamm AU F8-It; SCS l1cs_ SIatm..tt Pv.jaotgd Fm-98llCFS C _pS. d'EbpieItctI.: ROIinA 5WAF89 - I1Ch CapS. d4 ploltatlon: P4,tl*lono AFS-M(1 I I low CFAF)

1M/ms imjs1 115/3 mwp.sf.p.111t.g.9l 1US1 ISjIO 110191 1992 1920 si i35 _u5Iag r.ttF(CF Ole.) (la ) (a)

_maumpee " beggga _ 75.6 M. W.5 16.80 4.13 I8is is"9 1503 5 is62 1748f1rel e umm.ro os p 518.30 5018.10 46.03 457.41 -S.I o1n 501 0s all 6m 722f 148 06ap _ave 13.00 m1 .o 2847.n 128.n 5 20 245n m4 1y 2W6 8142ulesi laum j 807.60D 2.50 to1.60 -280.D0 -4.n3 2 28 28 go am4 t 19SF0ItS'a m:6175.10 18.00 165.00 0.0 0.63 "2 5 Bel lei set u1lb*ss 0*moim 03-.16 230.66 201.11 -69.10 -10.63 ISO 168 le 374 282 192_twon f.m agsralm 181.44 so.o 3111.1 _ g 4.53 _89 9 0962 13597 12272 129

3.6w e I 4853.18 41.65 4487.05 07.40 2.05 414 4 4018 4717 46 487oe a _ 6. _wIiin 1".06 fe31 2722.85 52.141 10.6n 111111 alas am52 a"u no 2uunbevies. _s 351.64 3W.4 U74.14 63.08 2S.= 114 39 401 42£ 410 45hShsr 6 M35.1 1111.10 4163.615 871.70 -9.8 M0N 312 824 887 1s5 3ln_aust ben 1eo13.35 15s." 111.011 -4.5 -8.6 M in t0 1, 141 14 6 OFlowi gassl creli. 153.17 1420.6 115601.0 4338.90 80.18 13114 &MI 1os3 nIII 01.6.1 mesSin mpmi.s 174.18 9t1l 61411.01 140.49 18.41 am 3U 19 741 ?M5 t 1I3 70cum 16II 357174 165.6 U15O.1511 2013.5 480.41 4811 1766gINS1 a no 418 4137tElob _m cl pmIatBm 1182.3 1189.83 1747.67 510.81 49.186,u , 21ts8 2441 W" m me8Pmlgle -1.5 2.21 -1t.05 812 o0 0 0 0Tout spute I. 6184 78.84 738 72.0t. 10.1 0810 0m Gm 1o0 11314 llU 110Kt W51121-DIEVRIN 8o0.8o 0 2513.7o in.6 -1m.2 40.0 to 5 106 st02 9 29 1069

.mbermI 619.18 713.31 637.21 -32.10 -4.3 4634 1078ton to67 11M 21-k_w ma i _. r s:coe_nm 35.3 135.00 Md.o0 -80.00 -10.1 no M2 2M M45 1tomm op l raes 1614 1. 2471.2."8 410.13 £8.61 7801 n2 210 2M in I6so .w_ _ps.m 427.1 I129. M0.65 1298o.131 1081. 41 43 a 0 0 0 0_ _ aguw. mass. 387.0510 1 1 .14 0.1to 402.15 -61.63 t273 457 448 448 440 482Ft ICII -111.80 1914.6 -1.87 -20ol.10 -101.11 21? 4* 4*t7 44 144 3

1seg c 0.94 0.89 0.7? - - 0.7 0.72 0.63 0.61 0.65 0.67Oper"14 rte 0.87 0.51 0.16 - - 0." 0.93 0.90 0.90 0.92 0.n2am S.Wic. roil a.*. 1.87 1.47 1.75 I." 1.80 1.6,7 1.40 1.42 a tIw *.e _ emb mps 0.61 0." 01 0.60 0.59 0.5- 0.6 1 0.306 0.66 * x

(Ptl.eya faipe, subjnct to emetIehIffmrs. Wew inm m aelts@2.

05*c-60

900 90-0 1O- n-o tO-O 90O- n-o n10 600 31 6 t'O °" tldwt0 910V tvo VI*0 so0 n 0 so 3l0 o *o 3-o olI £tlsb/we

*31 g1 631 31~~~881 so's 33 Bill colt sel1 al1 014069~j6~onst to l " Ot n" 0921 nI ",t u-tSgv Abl-t OULMo 'Wos J sAMN't Oa am 331 si * Om 0 l 11 63 "low t1 1,0t" ,.'4 a.hI.I*to-m Ig16

MG **@ GO$ tsoo e o ts m t1101 als 0.8tus "N O 33*i 'aq Al

*39 on go9 an 3I9 O t 333 WI* 10133 ",g1t wOs * 1 "S

316 335 331tt 1t t SI gm Om ,16- 4,1131 01,@16S 301 *ja m Jolt h

*46 3911 3911 3311 3331 3331 3331 336 @33331 331333 135351~~~~~~~~~~"MF $1110FOL414

teatRee t*10 WmB am "Mll i-owm Tom &*.am 1 - U WOn

*0 °3 611 09 33a w1uo 3 n 3in on"309s p.3 33 3 311,13 13'31WASS"3 3 $41"AS

an8 910 we3 33 13 Om1 an3 Si," 136,113 033313 33,03t SJOP410 jam

to Z gOU t tt _t too lw' ot ' a",t Ula alie "1rpe

l101st 0tat o1 93 gm gm *M W,- V93311 311t *l36s3wI

otoe tot sit VAt on at Ott strn Si,"t all" nZlds Sao" t

I 41"0

331 131 3*s 9*1 m o on1 3*t U31 "13 0319,A00 103 un 6,0 t 0 tt 003t i ttL1 333 139 313 19- 113 4903 380333 6.030. ut

o " * 0 0 0 0339 t 331- "'33 9t90 _ 935113333 UPS 3t1 a33m "In van *1 1 et *3talent ",33181 333131 U11, 41 AM163 t103 mU 19t 333 et Otl n933 n- 983 p33t tp*9ta1 W 00*31 wmdWP _pssesa P"Alo1s 0911 "a1 M33 $03* Got an9 111It g*9919 61,933 W*3*st 631663 *333 '

Om VI "i U uan s tt ot a' # lUlm 9180 Swu gwoo * nl *-di* a pj

Sint 639t 363 363 31tt 003111 "31 n w 633016 g,up 003311 33 soa.*3_aO0 O 331 33t1t Sol 331 3o1 1 t310 t'6U I -l -1t1*t61331 08*91 seo11 MO o3" *81311 3sew WI" 3*0t3 99*1 3903 o1ts MOt t1Z19t nuntot int tot twt a" ult t- m Sn0 nol OCt S o-ta ote _Atw _O1t1 3931 UPS a91 t * 3n 313 O I 33 4 t ",V1t u,1191 m t lowon u-ts_t

Mst MVt anl gmt "Vs utt ns SAI oG 's o ie tt'4" U- t - 14 " et°0393 =9g 3393 S9 333 01 1l a," 3- 3 at33 not 39n3 33l1:4 n di3 V-01e"3

Ot"# tUt OtU n,t tt ua tttt S ~~~~~~~~~~~Of towwUa 00nmNI* - .Oe~~~~~~~~~~~~~tm ofa ow t VS~ Isit t b tt sot UtU S_t

~~~~~~O - ^ 6.191 ... - - - 0._v -*"II--

,3d1ww(j0 401W - 1MR&

I'Mamul 2-an -11115SME TOMOMS

E ~ ~ ~ ~~~t 30 I Xv

A3 * 13 3 11

aI~~~~ ~ ~ ~ ~~~~ 0*63 - .-

-75 - Annex IV

Page 2 of 3

a OF -Ham

PRVRANSOR SICTEMIRSTENIJYETMN PRORwRae~~ ft;FQl USE D T ANg -

Pto Cow"w - COMPOSANE PSORME

SONAPAI Sources and Appitcattons of FuPds Actual FPS?4Ps Projocted FY89/FPYOSOMAPAD Source et. Appliestloeos dc Foodt R4.l116 AF97-AFS1 - SCFS: Pr6eolone AF1-AF95

(* Il lI on CFAF)

loom &wsi 1uini uwm ammft num &minim IMsu ,i,

-omomomm annct.ai oww ProjecteCOO5 #rM, qieretioae 51519.791 SW63.6 3000.90 305.14 SEc l.O7 5211.1111 550.57 559775 117.06

SlOB sea, no cub lo_ -16I.o -1151.1 -157.1 -101.10 -15.51 -510.38 -175.00 -162.02esorsela 111.011 16s6.74 172 410.02 1024. 1 0 .00 34.00 94.00

lareag of caplot 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00mm uprti1"sg 1N41 1ow.5 4.1s m1e1. .io 6.0 "2 M6." 150.4 as5."Sea oveeatin eupsadltftge 47.41 46.140 -070.5* -4001.43 .1011.47 -1213.43 47.W .7411.1 .01,.65A ,dJuag.ste,diveetturee 170 35.63 0.56 1M6." 0.00 0.00 0.00 0.00 0.00

Trafrof sur i tprayOn50." 1250.15 916.110 no186.1, 4511.51 15111-1.0161.00-G 500.0 0.00TOTAL L.T.U 51.09 U11 S.1 3.01 501.0 446.61 6763.1 1100.6 J56.5" 9167.14

LOW1 TE ~C111TIN"fOevlasst *"meaus 1.7.U8 577.01 45.40 45.00 4".30 U111.0 a0.0o0 0.00 o0.00.frugOractre 413.44 "6.06 45U.U5 63.U 53.64 57M.13 3401.00 100.00 0.00

OffIce oguigm.a for"Iturn, 4.31111 60."5 551.0 427.06 M.4" 60100 60.00 50.00 60.00Trapest eeulp,t 175.3 61.15o. 1.oo 011.21 511.1 10. 0.00 0.00 0.00Other fiSnd e6 409.00 111.19 164.0 11.50 16.O40 91.60 50.00 0.00 50.00Ier tn p"rorss 8415.n0 ".172 M.01 451.11 1611.112 1901.0 5.0 0.00 0.00

TOMAL 4M.13 01772.5 1236." 1n.7 56.r 6605.01 3031.0O M8.00 150.00isteret 410.0 59.10 31.411 617.41 6tlO 11.W m.1 67.s1 6.7n04" twayo 0 t 956.61 403.14 94411 33.63 6.46 642..4 1001.41 1111.40 1026.00Toeu 4.5 oo srvce 517.14 u .00 1171.u5 1 1 0.50 1641.64 1760.1 17317.91 105u4.n

.wteste@ "C." 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Oi.sribwtla 0.00 0.C0 0.00 0.00 0.00 0.00 0.00 0.00

OTAL LI.WPUC&T1U5 5110.90 10013 3407.76 571.10 65751.1511 615. 4113311.57 241T.6 154.7

03CUI L.T. W/lCATMIi 140..60 -514._ -5.0 -140." -11.119. 65 011.0 913.41

WtOT Taml Sli lt t |t".s . M t . l 898legroome of suppietwo bl.ace 507.11 68.1W? -93.0 65.11 11111.651 331.4 -15." -51.36 -101.50Iueee of acrus 1101.169 -831.644 140.6 43.01 -17M.311 U.30 1. 14.41 17.5leaern of _Osuerm balsam *43.43 3.515 146. 410.4 40.01 417.4 64.30 .01 *37.1lacr_ e of oter ppabiin 52.64 -111.140 5.11 5.1 3.44 .11, 3.79 5.50 1.13Increase of arreere au LT do"h 101.5 -461.5111 15.10 -1031.11, -100.11 -150.11 0.00 0.00 0.00

TOTAL SI.T.o 111178.57 -1a0.40 21.74 -10.14 476.U -41. 411 11.910 -45.755131 TUI AFPUcAIWe

looun" of Ses. -6.11 U.5 5.11 U o..#10 19.00 4.4 2.10 2.00learoe of roIblw ea 15.94 473.1 433.15 41.43 -13.96 -4&14.06 13.45 9.50 3o.-sIc e of pat_V ld esp. at. 244.51 -163.410 41.01 *.3 1.1 . 40.15 6.15 5.13learosse of otber debtare bali. 40.9.1 65.003 906.00 -65.43 -63.10 41114.6311 41.43 41.5a 45.65

TOTAL S.T.WPLCATIU I5.5 5 i 901- .u -811.17 11170.50 -11,47.50 -1911. &11.111 76.74 1.60

593 85.. soUA/APPLUCAnIU -461.19 40.- 61.61 -850.13 454.64 614.91 07.0r 493.72 -154.65

Uqaldity lacros 1 5.459 =4.6 MM.38 .471 -3. -1774.42 -3.54 1U5.112 777.77Cosb agmits of yeew 5024.53 631.07 MO1.50 M.111 7746.011 4455.5 9711.e 1164.00 41487.19Set !Ns at leow wet 667.07 7Me.50 61231.111 177146.0 443.50 1711.45116gs4.00 147.16 9415.07

0e Serce Rato 4.1 1.64 2.7U 2.16 1.81 1.18 1.U 0 1.I 2.21

Antex IV76 - Pag,e 3 of 3

PM grim - CeSAm PORIA

SONAPAD Sneoa Sttwts:s Act. I FPYwFY#s projected P1YS/P9YsAwA Cecp deuploltatlect: 3t 1.6 AFUO-AFNO - Pr6vieloe 0F9-AF91

(*II Ioan CfAF)

wai0^ 31143. 1^ low "1am U a z

1av*.. on ships . 6.8 340 0.5 10131 1tu1 11* 111 1161 1147 it"6PiIagl pict sm828 10.0 1if1674 6.111 11se 11W 11 112n 18 1480 14600o.... 0164 1541.46 2100.= 332.42 4.10 an an 1. 8a5n SW "s40 o~~~~~~~~~~~~~16U4 tin_." U".Is not Ms &M &M u to&* is" #08.1. sad gtteg di... 1861.61 a SI to 116.1 a31 MI M04 1M6 1M6 1M6 169 anV.t.r..I.e8,I.I6l 34861 em 114_1? 8u .U 248.14= -v1.u a6 to If o to 84o n

_)6401103464 61.06 35.8? 336.14 U.4 314 so u.n 8W3 4u * 416 4uu

1.8.1: 6220.66 6668.76O4." 6.n 14.48 18.5 1 1 833 693 660 66 9146

-W# P 0 .70 1M." ins Ms 10111*.s "

m8641.Is VW fuels of.2 66.6 60 M1.16 11. 35 3M 154 %105 0105 L111 1_,snl .a u,.S 80._3 100.6 0.8 -4.16 1 1121 M:"1 18ut1 113 1 8v g0 141:

_n- . ., ':'sam 166.61 4~~~~~ ~~48.11 1.1 .1.1 48 486 41 466 466 620 M

T&W1$ 61.8 U.Oz 11.1" 1U.3 4W 4113 an 434 43m gm 621CNPMs 360116 6406." s136.7 886."8 Is."8 3001 so 81464 182 UP3 an1 8611

ca e c_n. n uus.u z

=vosslablOs 62. Tie." U6." 31.83 14ue lowu am 14 g16mpow_lo.o 0.00 36 16.W .1.3 M6 M 1s us on

sab to8.I M1."? 1410.06 1530.3 3.10 UN1 f1 31 "a6 2gm 1671 I133

365*76u P1106. 3144I.0111 61114.061 681.13 61.711 Om8 FM6 "W6 7?30 170 TM8 "12

36T WSAIIS 3 s. t 118." I111184 g1." 1so.10" u10 M in 6on M M 1486_m

Iote~ ehe'la 81.41 410.67 W.10 "11 a" 687 M n11 1e 07 6u

367 3106.7 Oil *1136. 236148 183.06 1816,40 16.15 481 168 30 60 10 2? M1

.884.6 143.11." 1610.31 1411.11 140.3 M8 s 11 UT o 64? 67t on684e 64)I.g cheeps 1848.10 637.48 o. 11r 811.13 n6 8o as 16 3 M M

M5?T OI l MMOU tMN. 140.01 10.M 166110.1 4.0 U.141 114 48" 18? 3? MTel es bel M-0.6 0.46 0.46 0.10 an 1 M 16 St 1l 11NOT L0.*5 7UI. 6.06 110.1 1UU,.1 4.10 I O 4o 6o 8t U UT 6s3

ftbloSt. sml,6g.

"ISO *tblo 0.43 0.6 0.84 O. O. 0.n7 0.6 0. 0.00 0.e6operatig ralto 0.u8 o 0.n o. 0.v 0.90 0.U 0.69 .61 0.3 0.34La84ur c" falo 0.49 0.42 0.4? 0.60 0.1 0.60 0.49 0.48 0.48 0.48

- 77 -

Page 1 of 7

LES COMPTES FINANCIERS D'AIR SENEGAL

LES COMPTES D'EXPLOITATION

Nistoripue des Recettes et Di2enses d'E12loftation

Depuis son origin. jusqu'& l',exorcce 1982183,1'.xploltation t'AIRSENEGAL a constamment ete deficitaire et ceci malgre la subvention verseo parlVEtat. Ce nWest quo depuis quatre *no quo lo r&sultat d'.oplottation estb;nisficiaire. La tableau ci-dessous fournit une evolution sur dix-huit ansdes recettes (y comupris la subvention) et des depenses d'exploftation.

Annie. I/ Recotte Dponns RSultutt Anadog Rocettes Dinsom Sigu ltats-- (CFAF milI;ono) --- (CFAF mIllIone)

71/72 117,07 147,07 -80,50 IS/S I 124,6 1 1 ,12 45C,0272/78 144,40 167,82 -4$,84 1/62 1 U I6,74 1 481816P -127,4473/74 227,14 267071 -40,5? 20 1 25,5 1 62674 -76,674/746 2276, 865 8 62,26 8864$ 1 4265 1 840,4, 6475/76 407,89 419,17 -11.76 04/6 1 598.6 1 577,65 .10,2076/77 408,42 524,00 -55,0 U/ 1 542,19 1 450,44 .05,7677/76 689,66 09,1i -26,82 00/67 1 608,26 1 496,80 9104,0270/79 605,"9 770,86 -7576 07/63 1 957,07 1 657,4 .10,18lo/s0 924,22 I AA2,60 -76,808019/ 2 O658,5 1 900,75 92,78

Lon comp_o d'AXR SENE@L sent are4t&s au U Juln do e haque anuo.V znrlu opr*vtoIoso pour grand, wisite de CFAF 148,79 .tloaowe, oxcept4ote_lelentcoept btllss an 'hor. *aploteltion' pour I'Un"i 61/62.

Afin do mieus apprehender leur evolution, lee postes recettes etdtp.nses d'oxploitation ont ote convertis on francs constants do 1986/87 a_laide de la serle des prix B ls consoumation (Indices consosmation typeafricain traditionnel) at afin do cadrer avoc l'exercice social de 1lsociotS, on a choisi de faire une moysanue aitbmtique des indlces du moli deju1llot d'une annoe, aU mols do juin de l'annSe suivante.

"es rssultats sont reprisentis par l graphique ci-dossous dontI'analyse permet de constater que 1 B recettes (y comprie la subventioncompensation), et lea doponses d'exploitation, ont des evolutions fortementdtpendantes. Cocl s'explique par 1'9mportance des charges variables au niveoude l'exploitation de l socilto (carburant, redevances, comissions,personnel temporair... ).

On constata quo los dtp*oes qul oat t; sup;rieureo aUK recettes depuisl de0Arr-8g do l socl;t; flehlasont a partir de l'9xercice 1981/1982 pourdevenir interieures aux recettes a partir do 198311984. Elles balssont aupoint d'atteindro on l98S/1986, leur niveau td 1977/1978 (on francsconstants).

1l convient do noter quo Is baisse des charges s'accompagno d'une balosede l'activit, qul est d'ailleurs relativ_ment Importants on 1985/1986. Etl'on constate qu'avec 1a roprise do l'activiti on 1986/1987, lee charges soremottent a ougmenter parall;lem4nt, tout on demeurant inf;iriures auxrevenus, d'oi un rosultat positif.

RECETTES ET DEPENSES DEXPLOITATION EN MF CFA 198722W

21W , ,q�'I'

U***

I�D V

** a* a a*

* a aU* a a1711)

* i* a*a a

a *S* a* a1500

fa**

0U1300

1211, /I

SS1100

I

SF

SU

SI

S1(1)7420

'9

wS400. 1 I I I I I I I £ I I I I I7273747576717s79s98182

N384R586H75R59 AHt41ESI-1SCALI3S

- 79 -

Annex V?ag. 3 of 7

LES BILANS D'AIR SENEGAL

Los tableawx qut suivent resument l'ovolution du bAlan d'AIR SENEGAL sur Iaperiode 1983/84 i 1988189. Il en r-ssort quo los capLtaux propres sontnegatifs d''un montant equivalent, en valour obsolue, ; presqu troli quartsdu capital social (200 MF.CFA). Cotto situation eat l resultat du cumul desd&ficits des exercices anterieurs. Les capitaux permenents sont constituesossentiellement per les dettes a long et moyen terms. Un doublement ducapital social actuel strait un minimum souhaltable dans I& persp-etive d'unrenouvellement des avions nocessitant de forts Investiasemtes. L. montantdes dettes est stables compte tenu dos conditions dont a bon4fiie£ lacompagnie pour l'acquisition de ses apparll. et du re;chelonnmeont do seedettes, lee renooursements d'emprunts ont evolue come suit g

69 MF.CFA en 83/8417 MF.CFA en 841850 MF.CFA en 85/86

Dans le meue temps, les emprunts nouveaux ont eto de 50 MF.CFA en 1985186.

ACTIF t83184 8418S 85/86 £6£8 S7188 88/B

Actif £mobiliso

VALEURS INCORPORELLES 84 191 58 71 56

IMMOBILISATIONS CORPORELLES

Machines 1 305 1 211 1 127 1 328 1 350 1 305Mobilier 14 12 12 18 20 19Materiel de transport 5 5 11 8 12 12Constructions 25 13 13 6 1 -Autres immobilisations 7 6 14 7 63 101

TOTAL IMMOBILISATIONS 1 356 L 334 1 368 1 425 1 517 1 493

Actif cyclique

Stocks 370 377 398 133 175 213Clients 540 670 707 745 810 937Personnel 40 33 53 47 21 36Etat 92 146 164 225 159 203Autres debiteurs 25 50 86 147 130 510Comptes de regularisation 85 71 47 - 90 176

TOTAL ACTIF CYCLIQUE j15S 1 347 1 4SS 217 1 3s2 OTS

Actif liquid,

Banques 10 14 13 16 109 200Caisso 7 1 2 2 2 6

TOTAL ACTIF LIQUIDE 17 1S lS is 111 2ni

TOTAL ACTIF 2 526 2 696 2 838 2 740 3 013 3 774

80 -mx V

Page 3 of 7

LES BILANS D'AIR SENEGAL

Los tableaux qui sutvent rosumont l'volutLon du bilan d'AIR SENEGAL our laporioto 1983184 ; 1988189. I1 an reosert qu. les capttaux propres sontn gatifs d'un iontant oquivalont, On valeur absoluo, a presque trots quartsdu capital social (200 MFPCFA). Cotte situation set Io resultat du cuutl desdeficits des exerelees ant;riours. Les capfttux penmcnento sont constituessesentiollement par leo dottos * long *t moysn tormo. Un doublemeut ducapital social actuol serait un minimum souhaitable dano to prsspective d'unrenouvellement des avions n cessitant de forts lnvestilsoments. Le montantdos dettes eat stablot compto tenu dos ceonditions dont a binefici; lacompagnis pour l'acqulsition de seo appar.ile et du r;echelonnement do sosdettes, les remboursements d'oemprunts ont o¶rAuu commo suit t

69 MF.CFA en 8318417 MF.CFA en 841850 MF.CFA on 85186

Dans la me tompa, les emprunts nouveaux ont ;ti de 50 MF.CFA en i985186.

ACTIF ftt184 SILOS 85186 86187 87_88 !8189

Actif imobilis;

VALEURS INCORPORELLES 84 191 S8 71 56

IM4MOBILISATIONS CORPORELLES

Machines 1 305 1 211 1 127 1 328 1 350 1 305Mobiller 14 12 12 18 20 19Materiel de transport 5 5 11 8 12 12Constructions 25 13 13 6 1 -Autres tumobilisations 7 6 14 7 63 101

TOTAL IMMOBILISATIONS 1 356 1 368 1425 1 .17 1 493

Actif cyclque

Stocks 370 377 398 133 175 213Clients 540 670 707 745 81o 937Personnel 40 33 53 47 21 36Etat 92 146 164 225 1 I 203Autres debiteurs 25 SO 86 147 130 510Comptes de ragularisation 8S 71 47 - 90 176

TOTAL ACTIF CYCLIQUE 1 1S3 1 347 1 455 1 297 1 385 2_075

Actif lUquido

lanques 10 14 13 16 109 200Cais.e 7 1 2 2 2 6

TOTAL ACTIF LIQUIDE 17 1 1S 18 111 206

TOTAL ACTIF 2 526 2 696 2 838 2 740 S 013 774

- 81 -

Auziez VPage 4 of 7

LES BILANS D'AXR SEIEGAL

PASSIF 83/84 fi4185 85186 86187 V 87/8 88/8,

Capitaux permannts

Capital social 200 200 200 200 200 200Report a nouveau .465 -465 -410 -413 -410 -384R"ultat d. l'exercice .1 19 36 43 -38 27 34RiGultats antericur - 19 - 43 - -Reserve legale - 2 3 S 6

OT_AL CAPITAUX PROPRES -246 -210 .167 *20S 17 -143

Subventions d'equipement 57 51 51 6 1 44Provisions pour chargeset pertes 99 138 134 170 309 260

TOTAL SUBVENTIONSt PROVISIONS JL6 8 1 6 310 304

Dettes muoyen etlong term. 1 717 1 700 1 750 1 668 1 621 1 655

TOTAL CAPITAUX PERMANENTS jJ27 1 679 1 761 1639 1 753 1 716

Passef cyclique comptes de tier

Fournisseurs 644 665 685 625 837 1 199Clients 7 2 - - - -Etat 19 6 13 1S 31 17Autres 31 10 19 10 1S 29

TOTAL COMPTE DE TIERS ZQ 683 717 88 1 245

Dettes financitres ; court terne

8anques 54 32 21 97 14 60

Compto de regularisation 146 302 332 354 363 754

TOTAL PASSIF 2127 696,?4 7L

a/ Les r&sultats d'exerclce ont oto Int;gros *ux Capitaux propresconfonmement au nouveau plan comptable.

- 82 -Annex V

Page 5 of 7

COMPTES DE RESULTAT D'AIR SENEGAL

CHARGES B2183 83184 84/85 85/86 86187 87/88 8L889Exploitation

Matiures ConSOmmeeB 342.3 371.4 403.6 376.3 334.9 296.2 283.7Transports consomes 5.2 5.4 5.6 6.0 0.4 6.2 4.7Autres services consommes 210.2 267.5 244.5 225.6 404.3 513.2Conulnissions 295.1 46.5 54.0 63.6 49.8 44.7 53.4

Charges et pertesdivorses 147.7 169.0 206.6 212.0 251.4 288.9 297.0

Frais de personnel 280.0 288.9 335.1 360.7 394.5 429.5 535.0Impots et taxes 3.0 0.7 1.3 10.6 1.9 7.8 12.0

Total 1 073.3 1 092.3 1 273.7 1 273.7 1 258.5 1 477.6 1 699.0

Frais financiers 95.1 64.4 85.3 38.7 43.0 37.9 23.6Dotations auxt

- amortissements 82.8 81.9 117.3 146.0 136.7 156.6 152.4- provisions 77.7 108.1 101.4 - 60.1 185.7 85.7

TOTAL CHARGESDOEXPLOITATION 1 328.9 1 346.S 1 577.7 1 458.4 1 498.3 1 857.8 1 960.7

Horm Exploitation

Charges et portes diverses 51.0 80.7 155.9 238.2 379.6 174.9 242.1

Dotations aux:- amortissements - 45.6 - 0.5 17.0* - -- provisions 13.5 139.4 41.5 93.8 158.7 83.8 -

TOTAL CHARGESHORS EXPLOITATION 64.5 265.7 197.4 332.5 555.3 258.7 24

TOTAL CHARGES 1 393.4 1 612.2 1 775.1 1 790.9 2 053.6 2 116.6 2 202.8

BENEFICE NET -76.0 +18.9 +36.- +42.7 -38.1 +27.5 +34.4

* La Comiss ion de Virification de. Comptes de la Cour Supreme a formiulediverses recomandations portant essentiellement sur les amortissements despices de rechange et les provisions pour grandes visites. En l'absence depr6cisions ils sont regroupos dens la rubrique "hore exploitation".

- 83 -Amex V

Page 6 of 7

COMPTES DE RESULTAT D'AIR SENEGAL

PRODUITS ,82/83 83184 84185 85186 86187 87188 88189Exploitation

Recettes pax,charters, bagages,locationd'appareils 1 156.1 1 317.4 1 448.1 1 413.6 1 539.5 1 570.4 1 770.1

Produits etprofits divers 41.3 26.3 47.9 28.3 39.6 284.8 186.8

Total 1 197.4 1 343.7 1 496.0 1 441.9 1 579.1 1 855.2 1 956.9

Produits financierset dividendes - 1.5 4.6 - - -

TOTAL PRODUITSD#EXPLOITATION 1 197.4 1 345.2 1-500.6 1 441.9 1 S79.1 1 8SS.2 1 956.9

Subvention 53.0 79.9 93.3 100.3 104.2 102.7 96.6

Nors Exploitation

Recettes diverses 38.9 82.6 135.8 127.9 142.5 49.5 48.9Plus value de cessiond'actif - 1. 1.4 0.8 8.9 11.7 -

Reprises sur:- amortissements 27.9 116.3 80.0 0.1 51.3 3.2 134.7- provisions - 6.0 - 162.6 129.6 121.7 -

TOTAL PRODUITSHORS EXPLOITATION 66.8 206.0 217.2 291.4 S3.3 186.1 183.6

TOTAL DES PRODUITS 1 317.2 1 631.1 1I I. 1 1833.6 2-015.6 2 144.0 2237.1

DEFICIT NET -76.0 18.9 36.1 +42.6 -38.1 +27.5 +34.4

Remarquet

Les provisions qui figurent dans le cowpte d'exploitation sontessentiellemnt des provisions pour grmndes visitest 102 MF.CFA en 1983184;101 MF.CFA en 1984185. Four 1985/86, a la diffarence des annees precedentes,par suite d'un changement de mnGthode, les GV out te amortteos apres avoir eteeffectu&es. C'est pourquoi lea provisions sont nulles en 1985186.LaComaission de Verification deS Comptes de la Cour Supreme a reccurianmde ajuste titre, i AIR SENEGAL de rOvenir a la me'thode anterieure. La prise encompte dO ces recommandations slourdit lea dtpen8es d'exploitation de 1985186dO 85 MF.CFA.

^ 84 -Annex V

Pag. 7 of 7

COtYS DEPLOIATION A L UERE O4 O POUR LES DLEtM TYPSSDAVOUTILISES PAR AIR SENEGAL (HS 7-48. T_wvg Otte D)

(EN-PCFA) COUT8 D'EXPLOITATION A L'HEURE DE VOL

ACTIVITS HS TONombre d'heures de vol 1 731 1 816

--- --- -- --- --- -- -- -- --- -

Coats variables

Carburant 140 900 57 338Transport pi;ces avions 1 628 1 615Entretien 53 167 24 072Commissariat 7 086 -Praia de touche. 2 563 261Taxes aeroport Z5 418 10 961Redevances 24 519 7 683Frais PNT 4 611 4 574Frais PNC 1 937 -Frt*is GV(provisions + amortissemonts) 54 745 22 271

TOTAL COUTS VARIABLES _6-574 126 775

Corks directs fixes

Assurances 33 097 6 468Frats financiers 20 480 -Amortiesements matoriel volant 39 306 7 273

TOTAL COUTS DIRECTS FIXES 92 883 13 741

Costs indirects fixes

EntretLen 24 150 20 700PNT 28 487 15 272PNC 4 060 -Handling SO 727 16 158Frais do structure 128 028 40 782

TOTAL COUTS INDIRECTS FIXES 235 450 92 912

COUTS COMPLETS 644 907 236 428

- 85 -

Annex VIPage 1 of t

ASECNA-SenoRsl

1. Financial Performance and Current Position

1. ASECNA budgets are drawn up separately for Article 2 and Article 10operations. The former covers provision, operation, management, andmaintenance of air navigation and communication aids required forinternational air transport, as well as meteorological services and airtraffic control operations, carried out on a total system basis throughoutthe member territories, with cost-share for each country based on communitydecision. The latter covers management, operation, and maintenance ofairports, air navigation and communication equipment not covered byArticle 2. The provision of infrastructure, i.e., construction of runwaysand terminals, as well as their rehabilitation and upgrading are Government'sresponsibility, usually.carried out under Article 12 by ASECNA, who collectspecific dues and surcharges, the proceeds of which are deposited in SpecialAccounts used to amortize related Government debts. Article 2 budaets areapproved by ASECNA Board. User charges generate the bulk of Article 2revenuest in flight dues accrue directly to ASECNA-Counanity, while revenuesfrom other charges are shown under the Article 2 budget of the country wherethey are raised. The statutory budget participation of amber countries,which has remained unchanged for over 10 years and actually represents lessthan 152 of Article 2 revenues, is expected to be phased out completely overthe next five years, so that Article 2 services will be fully covered fromuser charges. The Article 10 budget is approved by both the Minister ofEquipment and ASECNA Director General and must be balanced: if Governmentopposes tariff increases necessary to meet this objective, it has to providea subsidy in the same amount.

2. While some of the services provided by ASECRA are specific toArticle 2 or Article 10, there are a number of cases where the same equipmentand personnel serve the functions of both articles. The joint costs areapportioned between them according to agreed ratios. Table 1 gives thevarious sources of revenues and their respective budgetary allocation. Asshown in Table 2 in 1988 dues for landing and beacons accounted for the bulk(992) of Article 2 revenues, passenger dues for the bulk (601) of Article 10revenues. Landing and passenger dues also contributed most (732) toArticle 12 revenues. Landing fees are distributed between Article 2,Article 10, and Article 12 in the proportions of 24/45, 10145 and 11/45,respectively. Beacon dues are collected under Article 2 in Dakar-Yoff, butunder Artile* 10 in other airports. Passenger dues are divided 80/20 botweenArticle 10 and Article 12; proceeds from a CFAF 1 surcharge per liter of jetfuel are shared 60/40 between Article 10 and Article 12. In recent years,ASECNA-Senegal has attempted to expand the revenue base of commercialactivities to increase Article 10 and Article 12 revenues and begin reducingthe need for Government subsidies.

3. Table 3 summarizes the ASECNA-Senegal (Article 10) financialstatements for FY87 and FY88. After deduction of the self-balancing Special

- 86 -

Annex VIPage 2 of 7

Accounto item, they show expenses rising 102 to CFAF 2.15 billion in 1988,whereas operating revenues remained unchanged at CPA? 2.5 billion. Benefitsdecreased accordingly by nearly 302 to CFAF 386 million, but they aredeceptive since no depreciation is charged to income. ICAO gave a notionalestimate of CFAF 300 million for depreciation in their study of June 1988,whicE suggests that the real benefit may be less than CFAF 100 million, stilla satisfactory result. By end of FY88, retained earnings amounted toCFAF 1.4 billion. But receivables on customers and the Senegalese Governmentadded up to CPA? 2.5 billion, leaving a liquidity gap of about 1.1 billion.Table 3 also shows the status of the Special Accounts and their uses. The1988 cumulative balance of CPA? 1.6 billion also included receivables ofCFAF 806 million. Overall, the liquidity gap of the Senegalese accountswould serm to be about CFAF 300 million, a manageable amount. So far, notreasury advances have had to be made by ASECNA to operations underArticle 10 in Senegal; in the other member countries, such advances have beenmade to a total of more than CFAF 5 billion, most of which cannot berecovered.

2. Tariffs

4. Tariff setting authority for Article 2 activities rests with theBoard of ASECNA who, in the face of continuing difficulties in collectingmember country contributions, have decided to increase user charges over thenext five years sufficiently to cover the costs of an agreed investment andmaintenance program, and obviate the need for member country contributions.This will limit investment and maintenance expenditures to levels necessaryfor safe commercial operations and leave simply politically prestigiousprojects to be financed by the countries desiring them.

5. Tariff setting authority for Article 10 activities rests with eachGovernment, who may decide to subsidise ASECNA rather than raise tariffs tolevels covering the cost of services provided. As shown in Table 1, ASECNA-Senegal has received annual subsidies from Government of CFAF 188 million.However, accounting deficiencies are such that it is not clear what thesesubsidies are compensating, since ASECNA provides a number of r.nn-aeronautical services to Government free of charge, as well as having toprovide services at domestic airport without being allowed to charge thecustomers for their long-term marginal cost. This is particularly true wittrespect to rental rates on airport facilities in Dakar-Yoff, which are notbased on opportunity costs and have remained unchanged since 1985. Theproposed Action Plan will establish sound accounting procedures to allowrevision of the tariff structure based on the cost of services provided.

3. Financial Obiectives

6. ASECNA-Senegal aeronautical services and airport managementactivity, should be run as a fully autonomous, commercially-orientedoperation, with operating revenues covering all operating expenses includingadequate maintenance, provision for losses and renewals and interest chargeson debt. To achieve this, important reforms are necessary both at the

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Annex VIPag2 3 of 7

ASECNA-Community and ASECNA-Senegal level which presuppose cohesion alongagreed goals, priorities and management guidelines, enforceable by ASECNAGeneral Manager, who should be able to select and hire local managers basedon their technical competence.

7. At the Community level, budget and accounting prc'cedures have beeninadequate in many respects. Recording of assets has been haphazard, and arecent inventory carried out in the first semester of 1989 has left manyareas of uncertainty. Furthermore, depreciation hoe been charged only forassets which are ASECNA property; it is, therefore, difficult to measure thefull cost of capital for each function performed. Stores classification isinadequate, and records are not properly kept; an inventory is needed as afirst step toward moderr.ization of stores and purchases management. TheArticle 10 budget is hetarogeneous, partly subjective (based on major inputs)and partly objective (lump sum to operation units); this again hampers theperception of costs, and does not contribute to a cost-effective allocationof resources or to good monitoring of their utilization. The recent ASECNAreorganization plan provides for complete overhaul and computerization offinancial and cost accounting at headquarters level, but the extent to whichthis plan will also benefit the Article 10 activities remains uncertain; itseems that the commercial activities would not be covered in the near future.

8. Billing at ASECNA-Senegal has Iuproved somewhat with the testintroduction in 198511986 of a computerized system. But some issues remainunresolvedt (a) most revenues under the Article 10 budget are derived frompassenger dues; false declaration related to passenger totals, and theirstatus (different rates apply for national or International passengers) arethought to defraud ASECNA of substantial amounts; (b) there is an unnecessaryduplication of data processing for billings by Community Headquarters and itsSenegalese representation; and (c) billing is still done manually for allASECIA-Senegal commercial services (rentals, billing back of utilities) undervery inefficient conditions. Streamlining of procedures is envisaged underthe reorganization plan, but progress has been lagging behind implementationschedules.

9. Revenue collection remains the most critical issue. While at theCommunity level, th. gap between total invoicing and arrears has begun tonarrow in the past year, it has kept growing for Senegal fromCFAF 1.8 billion in 1985 teo CFAk 4.8 billion in 1988--the worst performanceregistered by ASECNA in any country. The recent restructuring plan for AIRAFRIQUE, one of ASECNA-Senegal's largest debtors, will certainly have apositive impact, although it ;a uncertain whether the Article 2 or Article 10budget will get most relief; payments under tho present system are collectedby separate treasurers for each budget, who have to apportion amounts betweenbudgets for payments (such as landing fees) that pertain to both budgets.Establishment of a more efficient interface between Community (Article 2) andnational (Article 10) financial managemerzt is included, in principle, in theASECNA reorganization plan, but the complexity of problems at Article 2 levelas well as fina¢tcial constraints make the timing of Article 10 reformmeasures quite uncertain. It was, therefore, decided at appraisal that the

- 88 -

Annex VIPage 4 of 7

study for an operational and financial Action Plan for the modernization ofASECNA-Senegal management included in the project would fully treat both thecommercial and aeronautical aspects of ASECRA-Senegal management; for thelatter, it would, however, build upon any reforms being implemented orproposed under a common ASECRA framework. Terms of Reference for the studywere agreed at appraisal.

4. Forecast Financial Performance

10. Without the results of the proposed study, it is not possible as yetto develop sound financial forecasts. However, Table 1 shows the proposedFY90 ASECNA budgets for Senegal. They indicate that revenues under theArticle 2 and Article 10 budgets are expected to reach CFAF 3.3 billion,compared to total expenditures of CFAF 3.9 billion. The Article 10 budgetshows a planned surplus of CFAF 228 million, whereas the Article 2 budget,despite a Government contribution of CFAF 332 million, has an apparentdeficit of CFAF 793 million. However, in-flight assistance dues generated inthe Senegalese Flight Information Region (F.I.R.) should amount to at leastCFAF 2 billion. It then appears that the "real' budget for Senegaleseairports is more than balanced overall, producing an expected surplus ofCPAF 1.2 billion or more (assuming that the CFAF 820 million revenue of theSpecial Accounts are committed to future spending). This would seem toindicate that there is some subsidization by Senegal to other ASECNA membercountries.

- 89 -

Annex V-Pago 5 of 7

TABLE 1: ASECNA-SENECAL WUO"ETS FYSS-PYO

------ Art. 1.----- -Art.2--

X ot X ot Art. 21. Operatin aExpensom ls60 1o0w Total 10U Total * 10

ConosuptiensFuI, lubricants 45,534 5$,600 59,858 46.11 46,U83 55.90 86,9S5Electrieity 250,925 255,006 268,000 6.830 120,231 52.83 594,231Water 90,515 2,58 898,86 6.11 41,6008 3.0x 121,800Other 25,475 25,475 23,475 188.83 8.80 23,475

Total 408,249 599,576 411,525 65.6X 215,730 54.21 625,064

External ServiceTransport 80,105 85,686 81,688 41.5X 114,685 5.65 106,486Telooeone, melt 28,606 40,688 40,606 16.11 211,491 65.01 262,091Repre sntai,la S1,6,8 14,5O0 21,967 90.65 1,8O6 6.43 25,467Insurance 2,096 4,206 15,446 190.63 a.8x 16,446Other 5,200 26,414 81,776 84.1X 6,888 16.09 57,776

Total 141,45 172,174 191,389 58.4X 533,676 63.61 525,265

Labor Coe 9034,16 047,70 996,9064 44.X1 1,2508670 55.7X 2,246,774

Operations, mlnt ncn.Major repaire 135,886 70,886 16,886 186.83 8.8 16,686Operations 242,464 264,358 294,500 71.7% 116,541 28.31 410,841Transport 5,686 5,688 4,600 87.3 075 15.83 6,175

Total 583,464 537,56M 509,866 72.5X 117,81 27.53 426,016

Ust Io ated 356680 23,888 5,868 18880.18 0.0 38,006Provislon 1708008 251,686 160,666 186.83 O.OX 156,666Interet 2,60800 58 2,56 108.0 8.8X 2,500Management Fee 16,02 194,80 186.83 8.OX 184,680

MTAL 2,874,074 ,219,653 2,10,068 57.x 1,015,60t 49.4X 5,058,119

Art.2 * 10---------A rt. 10W- -- Art.2- Coaptes SpOol3ux * COapteA

s Of s of X of Sp clovs. Operating Revenues o 19S8 laJjt 1990 Sot l 90 Tot 19 Totel i!Landing due 262,0o 517,845 508,5,50 25.45 6068,04 54.63 20,269 22.61 1,294,77Bowen* & lights 12,00 11,12 7,086 2.63 261,426 07.21 209,414Prkitng (Plane) 58,OGO 5:,O 52,267 198.1 6.6o I2t267Pn_sse rs 1,260,0O 1,868,018 1,580,455 62.23 6.61 "98,8 17.63 1,679,08Freight 40,008 58,006 4,688 64.41 8.81 11,976 1561x 76,646Rental 256,68 226,666 24,90 78.71 6.63 101,932 29.3X 547,65201I surcharge 90,06,08 ,e 18,285 56.45 8.61 72,690 41.63 174,891Parking (Cer) 41,891 180.8 41,091Billing back 132,988 82,666 76,608 49.2X 70,au 5.6.5 156,194Paid by Art.2 6,788 5,700 18.8X 6.SJ 5,7809Subsidy 136,217 136,217 168,217 188.83 C.63 108,217

TOTAL 2,222,217 2,3187,109 2,426,202 56.4X 1,889,720 24.61 619,185 19.0! 4,860,662

S. Surplus to Invest 147,U43 167,059 226,831 Feb-90

-rss: ASEM, oeober 1080

TAKE t 2ASWCA-S BEALt R I mIii62 IN FIB? AND FI

MI. 2 Mt. la SPW1AL ACCOUWTS TOTAL ARM. 2 AM. 10 SPSCIL A"CMS TOTALIILLtO US OF IULLtO I I OF WILLIS HZtL0I2 I S OF UI11 I OF "u1 HN a OF wU10*

5Q - SEOC TMZ IU~ WE I OE U cE m I cL M cmE 3fTm WE 7k cm

L*4ifte 627.70 54.62 59.14 22.905 22.75 22.005 3,7.60 i.2. 4253 262.21 21.90 . 20.7m 1.16472

_urn., ot* 846,66 927.M1 6.10 2.26 0.06 254.96 25.0? 90.746 0.11 2.201 0.06 22.18

Pfttl* 00.45 100W 0.05 62.46 1.26285 72.186 340.7S i2.fts 1,10.40

P606".. 13,S86.44 00.0U1 240-62 2."2 1,74.06 3,6.65 78.65 20.75 1.9."5 1,70S.0

Freel.s S6."9 an 3.32 40 2.31 59.67 60.705 s6.7n 40.465 2.44

0)1., 42.14 00.24 27.61 2.76 6.96 0.22 0.42 0.06 0.22

1SWAMA 1.0t4.66 29.06 1,46.26 51. 706.11 1.6t 3,6.33 52 2.32 6.46 1,765.94 42.00 645.72 I7.2$ 3.2.4.06

2. 1eh a :

WaSu 6.10 1i0 0.06 0.06 6.70 6.42 45.861 0.t A 0.05 6.42 t

Afduad IL Saf 5.64 2.42S 197.66 66.6 24.97 10.21 S22.20 1.10 0.406 202.68 12.605 0.0 0.06 200.68 '0

_taXs. 251.24 "4.2S 1.24 95.65 2o.a0 225.66 59.65t 206.79 52.909 433.64

Wim.llI 1.2? 14.566 6.04 85.466 0.05 0.41 .66 7.Man 7.St 7W.O 0. 9.27

S6I WM.61 2.145 47.26 71."6 104.bl 25.871 63.0 2.12 1.455 526.24 64.565 206.78 2.555 754.2t

T&i LUt 4 ZLM 4mJL Q1L3 tLW

kgsm: A . Oa.1.e 126

v ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~00W

a

-4

TAt AS!O4A - AR- 1l - FIN"tCIL UFSUL FY37 N FY8t

I. 1NtQ9U STAItEEIhT 196? mkd 1NG8 (1 ml eItoo FAFC

Coasu ption 477.2 4"0.? Ailport duosLabour cots* 99 . 978.2 Landing 289.1 269.2

Exteroal services 3"O.9 1l3.0 8eacons, liht. 9.1 8.1Transport 9.60 96.0 P2rking 2. 68.0

Other costo 3.2 1.9 Passonaers 1,387.4 1,362.7

Payment to Art.2 137.3 1265. 69 .0 69.

Subtotal 2,013.3 1,815.2 miscollneous 466.7 631.4

Proviston for bad debt 137.9 t?7.0 Member States subsidies 198.1 201.4Interests 2.2 1.8 Other revenues 43.7 7.8

Special acounts 8t7.8 852.6 Special accounts 670.6 852.6Payment from Art. 2 13.4 13.6

Totl expes_ 1,24.a 2,866.6 Total reveeues 8,387.9 3,372.3

Prei"ous years loe 66.0 47.6 Previous years benefits 79.4 31.5Exceptionl item 4.2 Exceptional revenue 0.0 6.1

iNCOME M80.6 645.8

II. FINIMeIAW JI SM 1987 AD 9 (in million CFAF)

a) Reai. eaei

Carried from prevlos Year: 1,m08.S 812.9Profit of the year: 880.6 546.Allocated to lnuvetme t:

Retained at year *nd: 1,896.0 1,008.5

Roeivables from elients: 2,809.4 1,881.3Subldies owed by Governmet: 96.2 196.8

Casb po.itiow: -1,070.7 -1,668.0

IIIl. REcI6L ACCKM

Reveue l!ocsted: 81. 52.6Rebtnu sici tods -8281.8 -296.96

P nevisio , or ̂t ltanamci -828.4 -214.2Saleec. for the v.~ars 280.5 342.5Cumulative balance: 1,861.0 1,240.4

Soutes: ASECNA, ecember 1989

-4a

- 92 -

Annex VIIPage 1 of 12

DESCRIPTION OF TSAIP INVESThMNT COMPONENT

General

1. To help Senegal reslize its transport sector objectives, theAssociation and some twelve cofinanciers will provide financial assistancefor a five-year program of adjustment, rehabilitation, and maintenance oftransport sector institutions and Infrastructure. This Five-Year Program isa comprehensive program of priority investments, that ful£ill the 12S rate ofreturn criterion and/or are essential for safe operation. It coverst

(a) Roads: strengthening of about 860 km of severely deteriorated pavedroads; periodic maintenance of 1,800 km of paved and 1,300 km ofunpaved roads; routine road maintenance works by fore account andby contractors on about 9,000 km of the priority road network;technical assistance to DTP, DTT and CFPTP; and consultants'services for works supervision and studies;

(b) RailwaXs: intensiv maintenance of 180 km of track; spare parts andequipment for mairzmnance; equipment and works to Improve operatingefficiency; training, and technical assistance to SNCS in the areasof traffic management, supervision of track and rolling stockmaintenance, marketing, finance, and manpower development;

(c) Portst Improvement of road access to the container terminal in thenorthern port sone and rehabilitation of over-aged utilitynetworks; technical assistance for full implementation of theagreed Action Plan; and consultants' services for studies; and

(d) Aviation: runway rehabilitation in Cap Skirring and Zigulachor,renewal of essential navigation equipment at selected airports, andconsultants' services to assist in reorganizing AIR SENEGAL, andimprove ASECNA-Senegal's airport mana; uent performance.

Road Subsector: Protram and Pro1ect

2. The road component (MAP IBRD 20880) Is a Fivo-Year Road SectorProgram (FYRS?) consisting of a road maintenance program managed by DTPI anda modernization program for road transport administration managed by DTT. Itis estimated to cost CFAF 118.1 billion Including physical contingencies andtaxes (US$345 million equivalent), with a foreign exchange component ofCFAF 67.4 billion (US$224.5 million equivalent). In carrying out tho FYRSPGovernment will Implement its strategy to clange the role of DTP from that ofquasi-contractor executing works by force account, to that of planner andsupervisor of works eaecuted by private contractors. This is necessary toenable DTP to cope with the exceptional volume of urgent maintenanco worksnecessary to salvage a third of the existing paved network froa Impendingcollapse.

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Annex VIIPage I of 12

3. The road maintenance program Is estimated at CFAF 116.2 bI'lion(including physical contingencies and taxes) and has five subcomponentss

(a) Road strengthening of 860 km of paved roads at an estimated cost ofCFAF 63 billion (472);

(b) Periodic maintenance of some 2,065 km of paved roads and 1,300 kmof gravel roads at an estimated cost of CFAF 36 billion (311);

(c) Routine maintenance of some 9,000 km of the priority network,estimated at CFAF 23 billion (192), including minor equipment andspare parts acquisition, estimated at CFAF 930 million; and

(d) Technical assistance, consulting services and training, amountingto CFAF 2.2 billion, (2S).

The modernization pro am of road transport administration has twosubcomponents:

(a) Rehabilitation of office facilitle2 (CFAF 54 million); and

(1,) Technscal assistance, consulting services and training for thestrengthening and modernisation of DTT and for the development ofa road-aafety program, estimated at CFAF 1.3 billion (12). Thesubcomponents are described in more detail below.

4. The vaved road strenathnlnat Lro' ^ concerns 860 km (for detailssee Annex VIII) and 27 road sections. Ti have been grouped for biddingpurposes into 12 lots, divided Into ti, * parts. Two lots (Tranche?EDIITALY, 90 km) concern National Road 2 (RN2), where selected sections needstrengthening while others will require *rsurfacing only. Blids have beenawarded and construction will start in early 1990. For Part A (255 km, 12sections, 3 lots), detailed studie baed oti 1982 data are available forabout 218 km. For L-rt B (515 km, 13 sectlons, 6 lots) a diagnostic studydated 1982 is available. To speed up bidding procedures, it was agreedduring appraisal that the European Development Fund (FED) carry out teehnicalstudies and su_mary economic update for Trenches A and B based on terms ofreferonce agreed with IDA and other cofinanciers; theso are avallabl- i§n theProject File. The various donors will subsequently finance the consultingservices for supovision of the civil works contrata related to theirrespective financing. The ton lots have been ranked by econoaic priority,I.e., by ERR for each lot, with a minimum rate of 122 roquired for any roadsection to be included in the project. The lots to be put out for bids wereestablished on the basis of the(1194'followt!Uterias

(a) Goographical, to avoid dispersion of works;

(b) Technical, to ensure consistent methods of works execution; and

- 94 -

Annex VI!Page 3 of 12

(c) Financial, i.e., CFAF 2 billion, or more, to attract internationalcompetition.

The technical norms are those adopted by DTP under earlier projects financedby IDA. Only road width can be modified as required, based on observedlevels of traffic. Road width characteristics were confirmed atnezotiations.

5. The periodic maintenance program for some 1,800 km of paved roadsand 1,300 km of gravel roads is indicative except for the first year; andwill be reviewed annually with IDA and other cofinanciers to define the nextyear program. The selection criteria for each section will be based on aminimum ERR of 122 and follow a methodology aareed at negotiations. Lotswill be established in terms of the geographical, technical, and financialconsiderations described in para 4; if at all possible, lots should be ofCFAF 300 million or more for paved roads, and CFAF 100 million or more forgravel roads. Technical norms will be those adopted by DTP for these typesof work (single surface treatment, double surface treatment, cement-asphalt,laterit. regravelling; the use of sand-asphalt should be developed).

6. The routine maintenance roagram will carried out according to anagreed routine maintenance Action Plan which details cost estimates andphysical objectives for routine maintenance of some 9,000 km annually. Theprograu will be reviewed and discussed each year with IDA. At January 1990prices, the base cost including physical contingencies and taxes of theroutine maintenance program is estimated at CFAF 5.8 billion for FY90,CPA? 4.4 billion for FY91, PY92 and FY93, and CPAF 37. billion thereafter.These minimum estimates were confirmed at negotiatil..s; they can be revisedupward annually. If, for any reason, a downward modification of the routinemaintenance program were unavoidable, the following priorities would beobserveds paved road maintenance takes precedence over unpaved roadmsaintenance; for both, the highest priority is given to the most heavilytrafficked sections. Technically, first priority will be given to asphaltpothole repsais and patching on paved roads in excellent and good condition,and to cleaning the drainage system, etc. on all roads; next to lateritepothole repairs on paved roads in poor sad very poor condition, nextregravelling of shoulders, and light and heavy grading of gravel roads.Horizontal signalization of paved roads and spot regravelling of unpavedroads are a lower priority. These priorities were confirmed at negotiations.Priority criteria will be reviewed periodically by BEM based on the analysesof BGR and discussed with IDA.

7. The proportion of routine maintenance woks to be carried out bycontractors in successive years has been agreed. A coherent classificationand accreditation system of contractors will be developed, and a series ofstandard contracts, based on those devoloped during project preparation, willbe tested. Supervision of routine maintenance works will be carried out bythe SRTPs under BERM overview; the latter will be r,4pported by technicalassistance. The organization of the supervision of maiAtenance works waseareed at neatltions.

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Annex VIIPage 4 of 12

8 Technical assistance and training will be oriented in a new wayunder the program. Technical assistance (347 person-months) will be requiredto:

(a) assist the Project Coordinator in developing and implementing aid-coordination and project monitoring procedures;

(b) assist DTP in the establishment of the Road Management Unit; and

(c) assist BERM in its transformation from executing to planning andsupervising agency. Outline technical assistance tasks weredefined; detailed terms-of-reference are available in the ProjectFile. The program also includes an important training componentfor DTP personnel. This will be centered on network conditionsurveys, programming of works, contract management, and supervisionof works by small contractors. Some training for small contractorswill also be provided by CFPTP.

9. Rehabilitation of DTT office facilities will provide the requisiteapace to organize itself more effectively for the -asks involving contactwith the public (car registration, issuing of licenses, etc.), and forimproved data collection and analysis of basic road transport statistics.Although a minor item, its rapid implementation is an essential prerequisiteto revitalizing DTT operations. Some rehabilitt ion of CPTP office andclassroom facilities will also be required to permit trainfng operations tobe launched and carried out effectively.

10. Technical assistance and consultinx services to DTT (174 person-months) will be focussed on two broad problem areass pereonnel manazement andinformation manakement. Preparation studies identified urgent personnelrecruitment needs to bring the atrophied DTT staff back to the levelsrequired to respond to their information and policy guidance mandate.Technical assistance will, thus, be provided to DTT for recruitment andtraining of staff at headquarters and in the regional services. Concerninginformation management, the project will support the computerization of thelarge volume 'bread and butter" operations such as vehicle registration,transporter licenses, etc., as well as development of regular statisticalinformation on road transport. Besides developing data on vehicle fleet sizeand characteristics, particular emphasis will be put on building up a roadaccident data base. This will provide the foundation for an aggressive roadsafety campaign to reduce the presently very high--and increasing, toll ofroad accident victims. Agreement was reached at nexotiations on theessential DTT positions to be filled by March 1, 1991, and on terms ofreference for the technical assistance.

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Annex VIPage S of 12

11. The most important institutional change the project seeks to achievein the road subsector is regular and adequate financing for the correctmaintenance of existing road infrastructure. Through the adIustment yortionof the Credit which is to be released In three annual tranches ofUS$6. 5 million equivalent, IDA will assist Government to introduce the ;licychanges required to bring budgetary road maintenance allocations up from the1987188 levels of CFAF 2.5-3 billion p.s. to the extraordinarily high levelsof CFA? 6-8 billion p.a., required over the next four years when the bulk ofthe priority salvage program is carried out.

12. More technical institutional changes mostly concern the transfer ofworks execution from force account to private contractors and will besupported under the investment gortion of the Credit mainly through technicalassistance and training to the public works administration, but also tomedium and small contractors. IDA participation in the FYRSP will cover ashare of US$40.1 million or just under 10% and will finance tha followingcomponents:

(a) Pavement strengthening works on about 100 km;

(b) Paved road resurfacing works on about 250 km;

(c) Regravelling works by contractors on abott 200 km;

(d) Consulting services for:

(i) supervision of pavement strengthening;

(ii) technical assistance to DTP to establish BGR; technicalassistance to BER to introduce periodic and routinemaintenance management procedures; and

(iii) tech scal assistance to DTT for modernizing road transportadministration and improving road safety;

(e) Technical assistance to the Public Works Training Center (CPTP) andconsulting services for development of training coursos; and

(f) Purchase of light vehicles, measuring equipment for trafficcounting and supervision of road maintenance works, computing andoffice equipment for DTP and DTT, and training aids and spare partsfor rehabilitation of training brigade equipment for CPTP.

Railway Subsector: Proarem and Project

13. This component covers the full range of investments needed toachieve MINEQ objectives in the railway subsector over the fout-year period1990-93. The investment program is designed to:

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Annex VIIPage 6 of 12

(a) maintain railway capacity at a level adequate to carry the forecasttraffic efficiently;

(b) enable the railway to meet the annual efficiency targets agreedupon for the year periodt and

(c) support the management reforms through appropriate training andtechnical assistance.

The entire Four-Year Investment Program is estimated to cost aboutCFAF 21,430 million (US$71.4 million equivalent) including physicalcontingencies end taxes. Foreign costs represent CFAF 11,485 million; localcosts account for CFAF 5,350 million. IDA financing representsCFAF 2,021 million equivalent or about one eighth of the total program. (Fordetails of the financing plan, see Annex VIII).

14. In the past, investment plans were heavily oriented towards newrailway equipment; by contrast, this program concentrates on intensive trackmaintenance, overhaul of locomotives and rolling stock, gad selected worksneeded to achieve higher operating efficiency. Institution building isetaphasized through training and technical assistance, both of them sharplyfocussed on areas of identified weaknesses. Accordingly, the Four-YearRailway Investment Program covers six maid groups of investments: (a) trackrehabilitation; (b) signalling and telecommunications; (c) workshopfacilities, machinery, and spare parts; (d) operation facilitation; (e)general services and training facilities; and (f) technical assistance andtraining.

15. Track rehabilitations The main components of this group include:

(a) track renewal on Thias-Tivaouane (22 km) section, using new railsfrom the Canadian grant to improve operation on this link whichcarries about 1.8 million tpy of phosphates;

(b) completion of track renewal on 90 km between PK 271 andTambacounda, and repair of the remaining 180 km of main line trackfrom Tambacounds to Kidira. This involves replacing 25 kg raiidating from the turn of the century with 36 kg rail from theCanadian grant and from those released under (a) above on about90 km. Existing sleepers will be rehabilitated using a reshapingmachine to be procured under the project. Tamping and ballast-shaping machines acquired for carrying out these works will also besuitable for later track maintenance. Ballast will be piocuredlocally and distributed by SNCS ballast wagons. The works will becarried out by an Italian contractor under Italian fitra4cing;

(c) track renewal (including poirnts, turn outs, and signalling overabout 1.5 km) of the 2 main tracks of the Dakar passenger stationoutlet, now heavily trafficked since the starting ot the Dakarsuburban commuter service in December 1988 (38 traint per day).

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#Anex VIIPage 7 of 12

16. Sitnallint and Telecommunications: Besides the renewal of thesignalling system of the 2 main tracks of the Dakar passenger station 'para15 (c) abovs), the major components of this group ares

(a) the replacement of the traditional overhead coTnmication line bya multi-pair cable on the vital Thies-Tivavouane section In orderto improve communication reliability and complete the alreadycabled system of the Dakar-Thias section;

(b) the installation of a ground-train radio link system on the Thies-Tambacounda section to provide better traffic control and safetyfor the long-distance train operation; and

(c) a maintenance contract for the whole signalling andtelecommunication system of SNCS to be awarded to a specializedcompany.

17. Workshop. Machinery and Spare Parts: Based on the manufacturer'sschedule, heavy maintenance and overhaul of BB 1600 and GM 2200 locos falldue during this program period. These major overhauls need a larger thannormal input of spare parts for which SFCS lacks financial resources.Consequently, the project will supplement spare parts provision for theoverhaul p-igram. Technical supervision and shop-floor guidance will beprovided either by traditional expatriate assistance or by specialized firmsunder maintenance contracts. Also, in order to improve MTTR (Mean Time txRepair) of rolling stock, and reduce dismantling operations and unproductivemovements of locos and wagons, the project will finance an under-floor wheelreshaping lathe, as well as limited rehabilitation of the Dakar depot now incharge of the maintenance of the 5 locos permanently devoted to the urbancomiter serv.a. A one 100-ton rail-crane will be purchased under theproject to provide the capacity for speedy clearing of the line in case ofmajor derailments on the 950 km network. Finally, 25 second-hand passengercars will be purchased from SNCF and rehabilitated for replacement ofexisting passenger cars, repair of which is uneconomic.

18. Operation Facilitation: This group consists of four separate worksall located on the Dakar-Thies section which is expected to reduce the wagonturn-around time by shout 4 days and avoid unproductive movements oflocomotives in the Dakar-Bel Air area; its detailed evaluation will becarried out by the cofinancing agency.

(a) Construction of a loop in the Bel Air marshalling yard will speedup the marshalling operations and reduce the need for shuntinglocos, while construction of a service station will reluceunproductive movements of locomotives presently obliged to returnto the Dakar depot for refuelling and technical inspection.

(b) The creation of marshalling facilities in Thies will allow traincomposition to be performed in Thies, leading to a betterutilization of motive power given the fact that loaded wagons of

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Annex VIIPage 8 of 12

international traffic could be hauled up to Thios, by north-boundmineral trains hauling empty wagons.

(c) Finally, automatic weighing machines to be installed at the southand north outlet of the port complex will prevent overloading ofwagons and consequential damages and reduce claims for allegedshortages and disputes with customs over inadequate customsdeclarations.

19. General Services and Training Facilities: Investments in this groupcover computers, furniture, tools, and some dSlactic equipment for thetraining center, the accounting and the procurement departments.

20. Technical Assistance and Trainina: This group includes two segmentsof technical assistance$

(a) A training support segment to update the course lecture notes inthe technical areas and train the Senegalese trainers; and

(b) A management support segment to provide support to the newmanagement in certain key areas, in particular marketing, cost-accounting and information services. In addition, this groupincludes the cost of some scholarships and hursaries for managementlevel staff to attend short-term management courses and seminars.

Port Subsector: Program and Pro1ect

21. This component covers the full range of investments required overthe next three years to improve road and rail access to the new containerterminal, keep existing infrastructure in efficient working condition, renewselected equipment, and ensure the technical assistance needed for fullimplementation of the Action Plan. It also finances studies defining themedium- and long-term role of Dakar and secondary ports. Depending on theresults of an ongoing DANIDA financed study of grain-import handlingfacilities (Pier IV), a project for their improvement may be included in theinvestment program in later years. The cost of the overall program for theport subsector is estimated at CFAF 10,822 million (US$36.1 millionequivalent) inclding physical contingencies and taxes, with a foreignexchange component of CPA? 4,972 million or 46S. The civil works, equipmentrenewal, technical assistance and studies subcomponents ae described in moredetail below; IDA participation in port subsector financing is limited topart of the technical assistance component in support of completing thefinancial and operational reforms of PAD.

22. The civil works component is estimated at CFAF 7,898 million andcovers three subcomponents, to be appraised in detail by the cofinancingagencies:

(a) Improvement of road access to the new container terminal. Heavytruck traffic to and from the container terminal presently feds

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Annex VI1Page 9 of 12

directly into already heavily congested urban center roads. Thiscongestion is worsening with the steady development of containertraffic. New access will, therefore, be provided to the east ofthe northern breakwater, outside the existing port boundaries.Fill surfaces will provide additional space for storage of emptycontainers and new parking areas for trucks and container trailers.Rail access will also be modified to better serve containertraffic;

(b) Minor rehabilitation works of aprons and roads within the portrequired to facilitate storage and proper traffic flow within theport area; and

(c) Major rehabilitation of the aging utility networks of the port(water, electricity supply, telecoumunications).

23. E@uipment renewal and maintenance covers floating equipment (2 pilotlaunches end 1 berthing launch), service-vehicles; fire detection andfighting equipment; and some tools and spare parts, for a total amount ofCFAF 1,678 million.

24. Technical Assistance and Trainint will continue and complementtechnical assistance provided under the Dakar Container Port Project whichestablished and began Implementation of an Action Plan to Improve PADfinancial and operational management. The project focusses on monitoring andImplementation of remaining changes under the Action Plan and compliance withthe operational objectives of the 1990 Contrat-Plan between PAD andGovernment. A total of 90 p-m of technical assistance will be provided toPAD fori

(a) preparation of a long-term development plan for data processingsystems including provision of computer equipment and specializedprograms;

(b) reorganization of PAD maintenance activities;

(c) establisbment of a rehabilitation program for buildings, civilworks, and equipment; and

(d) improvement of PAD manpower planning and dovelopment. Trainingwould be provided to PAD senior management as required. Also,technical assistance would be provided to the customsadministration to help streamline documentation and procedures.

The estimated cost of this component is CFAF 950 million.

25. Studies: The long-term development of port facilities requires aplanning guide. To this effect, FAC is financing a master plan study of theporct of Dakar. The Association will review Its findings and agree on thefuture strategy for development with PAD. Concerning the secondary ports of

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Annex VIIPage 10 of 12

St. Louis, Kaolack and Ziguinchor, there is a need to assess their futurerole before embarking upon new investments or rehabilitation. The projectfinances a study of the role and options for the secondary ports. It villdeteuiine the economic fossibility of investments needed to keep themoperational and, if so, recommend the appropriate form of their futureadministration. The proposed studies are estimated to cost CFAF 405 million.

Civil Aviation Subsector: Program and Prolect

26. The civil aviation sub-sector program addresses the need forinstitutional reform, as well as meeting the most urgent requirements toassure reasonably safe operations. The condition of the domestic airportsystem has deteriorated due to lack of proper maintenance occasioned byinadequate funding. The national domestic airline, AIR SENEGAL, hasinitiated a program to achieve financial autonomy through Improved marketingof its services and strict control of costs and needs support in developingand implementing an operational and financial Action Plan. The cost of theprogram for the civil aviation subsector is estimated at CFAF 5,770 million(US$19.2 million equivalent) including physical contingencies and taxes, witha foreign exchange component of CFAF 3,590 million (622).

27. To meet immediate operational infrastructure requiroments, theproject includes remedial civil works and provision or replacement ofessential equipment, as detailed below:

(a) Lengthening (to 1,600 m), widening (to 23 a) and strengthening therunway, and related works at the retional airport of CaD Skirrina,where existing characteristies are no longer suitablo to presenttraffic. The condition of the paved areas has become dangerous andcould constitute a threat to the area's growing tourist industry;

(b) Lengthening and strengthening the aircraft manocuvering areas atthe retional airport of Ziiuinchor and related civil works. Thepaved areas have been poorly maintained for many years due to alack of funding. The runway Is also too short for the aircrafttypes utilizing the airport. The project will Include repairing,strengthening, and lengthening the runway by 200 m to 1,545 m;rehabilitating and strengthening the apron and taxiway, andimproving the runway drainage system; and

(c) Adequate separation of high performance jets and smaller, slowerprivate and business class of aircraft at Dakar-Yoff Internationalairport is necessary for the safety of aircraft operations and tominimixe costly delays. The project provides for therehabilitation of runway 04-22 by repairing, levelling, andoverlaying the existing runway for the use of smaller aircraft.

28. To provide officient and safe operations, the following equipmentneeds to be renewed:

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Annex VIIPage 11 of 12

(a) The arrivals hall at Dakar-Yoff airport is inadequate forprocessing incoming passengers in a satisfactory and expeditiousmanner. The Government has taken steps to incrase the size andarrangement of the facility to improve the level of service. Theproject includes the provision and installation of new bagagehandlina equipment to replace the existing worn out machinery;

(b) The provision of fire-fighting vehicles and material for thedomestic airports is included in the project to asaure a basiclevel of protection to passengers in the event of on-airport fires.

(c) Suitable, reliable electronic aids to navigation and cownunicationseouipment are vital to the safe and efficient conduct of airoperations. This equipment has a limited life in the Africanenvironment, compounded by poor availability of spare parts forolder equipment generally and lack of funds to procure spare partswhen they are available. Replacement of equipment must beprogrammed on a regular basis. The project, therefore, includesprocurement of High Frequency-Single Side Band (HF-SSB) and VeryHigh Frequency (VHF) equipment for point-to-point and air-groundcommunications In addition, procurement of electronic navigationaids, such as Non-Directional Beacons (NDB) and Very High FrequencyOmni Range (VOR) equipment, is also included in the project; and

(d) The provision of adequate and reliable electrical, and emergencystand-by, power is necessary for the continuous operation ofcommunication and navigation facilities to meet air operationalrequirements. The project includes provision or replacement ofelectricity teneratina eauivment required by, and suitable to theactivity of, individual airports.

29. To form the basis of a comprehensive domestic air transport plan,the project includes:

(a) a study to analyze and make recommendations with respect torealistic market expectations for AIR SENEGAL and the optimm size,type, procurement, and operational regime of the aircraft fleetmost suitable to these markets together with an aggressivemarketing program. An evaluation will also be made of AIRSENEGAL's financial structure to arrive at recommendations for asuitable plan of action with particular attention tocapitalization, transfer payments, treatment of debt, and budgetpreparation. Some technical assistance will be provided to assistin implementation of the plan; and

(b) to complement the AIR SENECAL evaluation, a study to examineairport management and make recommendations regarding the ASECNASenegal's financial, budgeting and mamagement structure withemphasis on cost center financial reporting and management, budgetpreparation and evaluation by cost-benefit analysis, staffing

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Annex VIIPage 12 of 12

levels, and cost analysis. Particular attention will be given tofacility planning with respect to capital, maintenance andreplacement cost financing requirements against cost recovery andamortization. Technical assistance will be provided to establishthe financil accounting and reporting systems required and forpreparation, analysis and evaluation of cost center and systembudgets. Specific study will be made f the type and level of feesand charges for all services and facilities enjoyed by airportusers, the method of application, and the recovery of delinquentaccounts. The objective is to develop, operate and maintain thefacilities and amenities required to meet AIR SENEGAL's operatingrequirements on the domestic routes at a sound, agreed upon,consistent and cost-effective level of service. The main goal willbe to have a financing plan wholly compatible with Governmentpolicy, AIR SENEGAL's competitive position and a financiallyhealthy and efficient ASECNA operation. Detailed terms ofreference of the studies have been agreed at appraisal.

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S E N E G A L T k M A U R I T A Nw I A MAURITANIA MAU

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