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Implementation Completion Report (ICR) Review - Port Sector Project

1. Project Data:   
Project ID:
Project Name:
Port Sector Project
Ports & Waterways, Transportation
L/C Number:
L3283; L3284
Partners Involved:
African Development Bank
Prepared By:
Hernan Levy, OEDST
Reviewed By:
Patrick Grasso, OEDPK
Group Manager:
Gregory Ingram
Date Posted:

2. Project Objectives, Financing, Costs, and Components:

Objectives i) Improve operational performance of Morocco's ports

ii) improve cost recovery and strengthen economic viability
iii) improve port planning and coordination, particularly as regards promotion of foreign trade
Components a) physical investments at the port of Casablanca (containers), Tangiers (roll-on roll-off), Jorf Lasfar
(coal) and Agadir (grain handling)
b) improvements in transit cargo documentation and procedures
c) preparation of investment program for port terminals under the Office for Port Management
(ODEP) and for breakwaters, dredging, harbor master functions under the Ports Directorate (DP)
d) institutional development for ODEP and for DP
e) consulting services relating to dredging, information systems, cost accounting, port master plan
f) training
Costs $282.0 million at appraisal; $166.3 million actual
Financing IBRD: $112.5 million (two loans, one to the government and one to ODEP totaled US$132.0 million.
$19.5 million were canceled). Government and port agency: $53.8 million. The two IBRD loans were
approved in FY91 and closed on June 30, 1998, 2 years behind schedule. (Cofinancing by the
AfDB was expected to be US$5.9 million. The ICR does not report the actual amount)

3. Achievement of Relevant Objectives:

The physical investments at the ports were completed on time and below cost, and are fully operational, although rehabilitation at Tangier under the DP was sharply reduced and is now being completed under a project financed by the European Investment Bank (EIB). Container tonnage in Casablanca increased by more than 50 percent between 1990 and 1997, reaching 1.4 tons that year. At the same time, container handling performance increased dramatically from a low 130 boxes per ship per day in 1989 to 396 in 1998. The new ODEP facility (ro-ro) at Tangiers has allowed more than doubling the international truck traffic (TIR) during the 8-year period, reaching over 1.2 million tons in 1997. The ICR's economic analysis is limited to the Casablanca container terminal, the project's largest investment. Its economic return is estimated at 18 percent versus 19 percent at appraisal. At appraisal, the return on the whole investment program was about 25 percent.
Cost recovery was substantially increased. The National Port Master plan was updated, and several environmental studies were carried out, including a study of sediment dumping sites. ODEP is gradually increasing the role of the private sector in its operations. The Jorf Lasfar coal facility has been concessioned to private operators and its equipment sold.

4. Significant Outcomes/Impacts:

The biggest achievement has been the improvement in ODEP's financial performance. Thanks to increases in tariffs, higher traffic and overall better management, during 1990 -1997 : operating income grew more than 4-fold (to DH 400 million); the working ratio improved from 63% to 56%; the operating ratio from 90% to 76%; and, the rate of return on net fixed assets increased from 3.74% to 13.35%. As a result, ODEP no longer receives government subsidies.

5. Significant Shortcomings (include non-compliance with safeguard features):

Trade facilitation objectives were not met, as ODEP is yet to set up an electronic data interchange (EDI) and get port users, ship owners and freight forwarders to connect to this network.
A system (called VTS) to improve security of navigation through Gibraltar Straits, despite a two-year extension, was not completed due to weak management by the Directorate of Merchant Marine (DMM), procurement problems and bad weather that hampered installation of an antenna.

6. Ratings:ICROED ReviewReason for Disagreement/Comments
Institutional Dev.:
Bank Performance:
Highly SatisfactorySatisfactory
    The project's performance indicators were poor, and, as a result, it is almost impossible to judge the extent to which improvement in operational performance, a key project objective, was achieved.
Borrower Perf.:
Highly SatisfactorySatisfactory
    Similar comment applies. Further, two components were not completed, and the project was closed two years behind schedule.
Quality of ICR:

7. Lessons of Broad Applicablity:

- A parastatal port agency (ODEP), having a strong involvement of users in its Board of Directors can achieve major improvements in its managerial and financial performance, and such presence substantially enhances the political
feasibility of tariff increases.
- As noted in the ICR, trade facilitation is a complex matter that requires for reforms to be successful full ownership
and endorsement of objectives and means by key players (finance ministry, customs, and private sector) early
during project preparation.

8. Audit Recommended?  Yes

          Why?  The significant improvement in financial performance and the privatization process are of interest beyond the project itself.

9. Comments on Quality of ICR:

The ICR is barely satisfactory. While it covers most aspects well and contains good economic and financial analysis, the report has several shortcomings. The cost table contains no breakdown of actual costs, and it does so only for the allocation of IBRD funding. This prevents a direct comparison between the SAR and actual results. The ICR does not include an Aide-Memoire of the ICR mission, a standard requirement. The table on performance indicators is sketchy and ambiguous, as it does not show the year to which the indicators apply, nor the individual ports; further, the information is not directly comparable with that of the SAR.

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