Kingdom of Morocco: Appraisal of Bay of Agadir...

Report No. 918a-MOR

Kingdom of Morocco: Appraisal ofthe Bay of Agadir Tourism Project

FILE COPYJanuary 21, 1976

Tourism Projects Department

Not for Public Use

Document of the World Bank

This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its contents may nototherwise be disclosed without Workl Bank authorization.

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KINGDOM OF MOROCCO

BAY OF AGADIR TOURISM PROJECT

CURRENCY EQUIVALENTS

Currency Unit: Dirham (DH)US$1.00 = Dg 3.80US$.26 =:DH 1.00

WEIGHTS AND MEASURES EQUIVALENTS

1 millimeter (mm) = 0.04 inches (in)1 meter (m) = 3.28 feet (ft) 21 square meter (m2) : 10.76 square feet (ft )1 kilometer (km) = 0.62 miles (mi)1 hectare (ha) = 2.47 actes

ABBREVIATIONS AND ACRONYMS

BCEOM Bureau Central d'Etudes pour les Equipements d'Outre MerCIH E = Crédit Immobilier et HôtelierDUHE = Dé'lgation a l'Urbanisme, l'Habitat et l'EnvironnementMUHTE = Ministère de l'Urbanisme, de l'Habitat, du Tourisme et de

1'EnvironnementONE = Office National de l'ElectricitéONEP = Office National de l'Eau PotableONMT = Office National Marocain du TourismePTT = Ministère des Postes, Téléphone et TélégrapheRAPC = Régie d'Acconnage du Port de CasablancaSOMET = Sociéte Maroc-EtudesSONABA = Société Nationale d'Amdnagement de la Baie d'AgadirSTB = Secteur Touristique et BalnéaireTP = Ministère des Travaux Publics et des CommunicationsUAT = Unite d'Amé'nagement Touristique

FISCAL YEAR

January l to December 31

FOR OFFICIAL USE ONLY

KINGDOM OF MOROCCO


TABLE OF CONTENTSPage No.

SUMMARY ............ -ii

I. INTRODUCTION .................................. 1

II. THE TOURISM SECTOR . . ..... .....

III. THE PROJECT....... . 4

A. Project Background. 4B. Physical Planning and

Environmental Aspects le.......le... 5C. Project Description. 7D. Implementation . .. ............ 10

E. Cost Estimates ........... 13F. Financing and Lending

Arrangements. 0.. ........- §-§. 14G. Procurement ...... . 15H. Disbursement . .16

IV. JUSTIFICATION ........... ....................... 16

A. Superstructure Development ............. ... 16B. The Market ................................ 18C. Financial Aspects ...... ................... 20D. Economic Justification ................. ... 22

V. AGREEMENTS REACHED AND RECOMMENDATIONS ......... 24

ANNEXES

I. Statistical Appendix to the SectorII. Project Description and Cost EstimatesIII. Unité d'Aménagement Touristique (UAT)

IV. Regional InfrastructureV. Société Nationale d'Aménagement de la Baie d'Agadir (SONABA)

VI. Market JustificationVII. Accommodation Facilities - Financial AnalysisVIII. Economic Justification of the UAT Investment

CHARTS1. Schedule of Implementation, Expenditure and Disbursement2. Initial Implementation Schedule

MAPSIBRD 11657RIBRD 11658

This report is based on the findings of an appraisal mission consisting ofMessrs. Bauer, Benbrahim, Brizzi, Christie, and Carrère and Fougère (consultants).

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

KINGDOM OF MOROCCO


SUMMARY

i. This report appraises a project to provide infrastructure andcommon facilities for a new tourism development in Agadir on the Atlanticcoast of Morocco. The infrastructure would consist of streets, water supplyand sewerage systems, electric power and telecommunications. The commonfacilities would include shopping and recreational centers. These workswould support the development of 7,000 hotel beds and 2,600 housing unitsthat would be built by private investors between 1979 and 1987. The projectwould also include three components outside the immediate resort area: theconstruction of the Ait Melloul bypass, the upgrading of tourism road CT 7002and the replacement of the pumps for unloading fish in Agadir harbor. Thesemeasures would enhance Agadir's tourism assets and alleviate some of thecity's problems caused by its rapid growth followin2 the 1960 eerthquake.

ii. Morocco's multifaceted attractions have supported a rapid growth ofthe tourism sector. Foreign visitors who numbered 469,000 in 1968 attainedthe 1,052,000 mark in 1974. Growth of visitor traffic would have been evenfaster but for the shortage of improved land which constrained hotel construc-tion in Agadir and Marrakesh, the top-ranking areas of Morocco for investorsand tourists alike.

iii. The UNDP-financed studies by consultants which served as a basis forappraisal are well-conceived. They recommend an original concept for develop-ment of the project area, which would mix 7,000 tourist beds with 2,600 housingunits. This approach would balance the need for expansion of tourism activitieswith that of alleviating Agadir's acute shortage of housing. The incrementalinvestment in infrastructure required for the housing component is justified asproviding an additional benefit from the tourism project at a marginal cost.Further, the co-existence within the same urban context of foreign tourists andlocal residents would avoid the creation of a tourist ghetto, generate greater"?animation" in the resort, and give Agadir's residents access to entertainmentand sports facilities while providing them with opportunities for socially valuableinterchange with tourists.

iv. The project is estimated to cost about US$44 million, includingcontingencies. The proposed loan of US$21 million would cover the foreignexchange component of the project. The balance of the funds required tofinance the project and any cost overruns would be provided by the Government.

v. Major civil works and equipment would be awarded under internationalcompetitive bidding in accordance with Bank guidelines. A contract for tele-communications equipment, however, for an estimated US$600,000 (or 1.47. ofthe project cost) would be negotiated directly to ensure compatibility withsimilar equipment in operation in Agadir. In evaluating international bidsfor equipment contracts, domestic manufacturers of equipment and furniturewould be allowed a preferential margin of 15% of the CIF price of competingimports or the prevailing level of customs duties, whichever is lower.

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vi. The tourism works would be implemented by a Government-controlleddevelopment corporation, the Société Nationale d'Aménagement de la Baied'Agadir (SONABA), in close cooperation with specialized Government agencies.At the operational stage, SONABA would lease or sell the land and the commonresort facilities and turn over the income-producing infrastructure to thespecialized agencies. Charges and leases would be adequate to ensure asatisfactory financial return on the overall investment. The regional com-ponents would be implemented by the Ministry of Public Works.

vii. Since 1970 there has been a threefold increase in Agadir's accom-modation capacity and a fivefold increase in bednights. Room occupanciescurrently average 95%. Numerous investors have expressed interest in buildinghotel and housing units in the project area. SONABA would earn a 9.2% discountedfinancial rate of return on its operations. The economic rate of return isestimated at 17.4%. When fully operational in 1989, the project will employabout 4,400 workers in hotels and other tourism facilities. Indirect employmentgenerated in construction, handicrafts, agriculture and other services islikely to account for 7,200 additional jobs. Net annual foreign exchange earnings areestimated to amount to about US$37 million in 1989. The project would yielda small net budgetary surplus to the Government of US$0.5 million in 1981rising to US$5.9 million in 1989.

viii. The project is suitable for a Bank loan of US$21 million equivalentto the Government for a term of 20 years including a grace period of 5 years.

MOROCCO


I. INTRODUCTION

1.01 In 1971 the Moroccan Government requested Bank assistance to financeinfrastructure for the development of tourism in either Tangiers or Agadir.Following consultation between the Moroccan authorities and the Bank, it wasdecided to concentrate efforts on the Agadir area, where a lack of improvedland for hotels was constraining the development of tourism.

1.02 In July 1973, with the assistance of a UNDP grant for which theBank was executing agency, the Government retained consultants to identifysuitable areas for the first phase of tourism development around the Bay ofAgadir and to carry out the necessary feasibility studies. 1/ The projectproposal emerging from these studies was submitted to the Bank for consider-ation in the spring of 1975. The pr9ject was appraised in June 1975 by amission consisting of Messrs. Bauer9 Benbrahim, Brizzi and Christie, assistedby Messrs. Carrere and Fougère (consultants).

1,03 The Bank has financed hotel construction in Morocco since 1970through two lines of credit to Crédit Immobilier et H&telier (CIH). 2/ Thiswould be the first Bank loarn for tourism infrastructure in Morocco.

II. THE TOURISM SECTOR

2.01 Situated within easy reach by car from European tourist-generatingcountries, Morocco's outstanding tourism resources include the attractivebeaches along its extensive Mediterranean and Atlantic coasts; the archi-tectural treasures in its Imperial cities of Fez, Rabat, Meknes and Marrakesh;and the exotic atmosphere of its pre-Saharan oases, within view of the snow-capped Atlas range. Notwithstanding the Moroccan Government's efforts inrecent years, this multifaceted tourism potential is still largely untapped.

2.02 The country's hotel capacity doubled from 20,500 beds in 1968 to41,000 beds in 1974. About two-thirds of this additional capacity was builtby private investors, most of them Moroccan. The remainder was built by theGovernment either directly or through public agencies such as the NationalRailway Company, Royal Air Maroc and subsidiaries of Government-owned banks.Hotel financing is provided by CIH, a Government-controlled lending institutionwhich extends loans with a maximum maturity of 20 years, including a 5-yeargrace period.

1/ The consultants were the French firm Bureau Central d'Etudes pour lesEquipements d'Outre Mer (BCEOM) and their Moroccan associate, SociétéMaroc-Etudes (SOMET).

2/ Loans 704-MOR and 848-MOR.

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2.03 Morocco's accommodations are concentrated in the Imperial citiesand Casablanca (43%), the Mediterranean coast (35%) and Agadir (12%)(Annex 1, Table 1). They are generally of a high standard, with luxuryestablishments accounting for more than 40% of the total. Foreigners manageand operate about 30% of Moroccan hotels.

2.04 Occupancies vary greatly according to hotel locations. In majorcities like Casablanca and Rabat, where visitors are predominantly business-motivated, annual bed occupancies average around 60%. Even higher levels areattained in Agadir and Marrakesh, the country's southernmost tourism resorts.Bed occupancies in Tangiers on the other hand follow the general seasonalpattern of other exclusively beach-based Mediterranean tourism centers, i.e.,averaging 30%-35% over the course of the year.

2.05 The 1973-77 Five-Year Plan calls for the construction of 55,000beds, primarily in three- or four-star hotels, which are favored by broad,middle-income segments of the international tourism market. Despite a recentoverhaul of the incentives system (para. 2.11), this target is unlikely to bemet. Between 1968 and 1972, 4,000 beds per year were added, but over the lastthree years, additional beds averaged only 2,500 per year. The slower growthof hotel capacity is attributable in part to a lack of investor confidencefollowing the 1970-72 political unrest, in part to the increased opportunitiesfor alternative investments offered by Moroccanization policies and in part tothe shortage of improved land for hotel construction in Agadir and Marrakesh,the top-ranking areas of Morocco for investors and tourists alike.

2.06 Outpacing the growth of accommodation capacity, the number of foreignvisitors to Morocco (excluding cruise visitors) increased from 469,000 to1,226,000 between 1968 and 1973, an annual rate of 21%. A 14% decline to1,052,000 in 1974 reflected the impact of the energy crisis and economicdifficulties in Western European countries (Annex I, Table 2). Growth hasresumed in 1975; in the first quarter of this year, foreign visitor arrivalswere 25% greater than in the corresponding quarter of 1974.

2.07 In 1974 Western European countries accounted for one-half of visitorarrivals in Morocco, with France (20%), the U.K. (10%) and Germany (8%) pre-dominating. In the same year, U.S. and Canadian arrivals rose to 19% of thetotal visitor market from a 14% share in 1968 (Annex I, Table 2). About two-thirds of total visitors arrive in Morocco by car. However, due to new airpolicies which encourage charter flights, the proportion of arrivals by airis increasing (Annex I, Table 3).

2.08 With its varied tourism potential Morocco attracts a heterogeneousclientele: this includes culturally-oriented visitors drawn to the Imperialcities, climate-seekers attracted to the dry invigorating air of Agadir andMarrakesh and beach-motivated tourists flocking to the country's Mediter-ranean and Atlantic shores. In keeping with the diversity of its motivations,tourist traffic to Morocco tends to be m.ore evenly distributed over the yearthan does traffic to other Mediterranean countries. Summer arrivals in Moroccoin 1973 accounted for only 40% of the yearly total as compared for instance,to 50% in Spain and 54% in Yugoslavia (Annex I, Table 4).

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2.09 A 1972 survey estimated the average daily expenditures of alltourists to be about DH 65 (US$ 17.1), and that of tourists stayingin hotels at DH 88 (US$23,2). of total tourist expenditures, 36%

were absorbed by accommodations, 12% by entertainment, 7% by local trans-portation and the remaining 45% by purchases of sundries. Gross foreignexchange receipts from tourists more than doubled from 1968 to 1974 reachingDH 1,025 million (about US$270 million), or 21% of the country's total foreignexchange earnings from the export of goods and services. Until phosphateprices were raised in 1973, tourism was Morocco's major export (Annex I, Table 5).Net foreign exchange revenues from tourism are estimated at about 80% of grossreceipts. About 16,000 Moroccans are directly employed in the hotel industry;one-half of these work in five- and four-star hotels. Jobs indirectly attri-butable to the tourist sector are estimated at 60,000 in handicrafts and20,000 in agriculture, the construction industry, transport and other services.

2.10 The tourism directorate of the Ministère de l'Urbanisme, de l'Habitat,du Tourisme et de l'Environnement (MITHTE) administerq the tourism investipsnt incentivessystem, the training of hotel personnel,'general promotion and the constructionof infrastructure.

2.11 The 1973 Investment Code provides the following incentives for hotelinvestors:

(a) ten-year income tax exemptions; other forms of fiscal relief;

(b) interest-free advances of 15% of the investment (land costexcluded) repayable over five years following a five-year graceperiod;

(c) interest rebates on CIH loans, effectively reducing CIH statutoryrate, at present 8.5%, to 4.5%.

Under this incentives system, the financing plan for a typical Moroccan hotelis 30% equity, 55% CIH loan and 15% Government advance. In addition theInvestment Code guarantees to foreign investors repatriation of dividends,profits and proceeds from liquidation.

2.12 The Bank has expressed concern on several occasions that the liberalityof incentives may lead to overinvestment in hotels. Incentives are granted toinvestors in hotel projects which are judged technically by MUHTE and financiallyby CIH. The latter also calculates an ERR on all hotel investments; however,because of the methodology employed and the limitations of data, these calculationsare not fully reliable. The recent mission which appraised the proposed thirdloan to CIH conducted a special field survey aimed at establishing the methodologicaland information bases for improved economic appraisal techniques. Adoption ofthese techniques would be a condition of the proposed loan to CIH as would theGovernment's undertaking to improve the collection and analysis of tourismstatistics. It is expected that these measures may lead to a rationalizationof Morocco's hotel incentives system and reduce the risk of benefits beinggranted to marginally economic hotel projects.

2.13 MUHTE's Professional Training Division is in charge of organizingand supervising hotel training. Training for upper- and middle-echelonpersonnel is basically adequate. High-level training is given at the Tangiers

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Institute. Taken together the five middle-level schools located in Tangiers,Rabat, Fez, Marrakesh and Agadir graduate about 200 middle-echelon cadres.On the other hand, the obsolete training facilities at Ben Guerir, which havea maximum annual output of 500, are inadequate to meet the increased needfor training of lower-level hotel personnel. This situation should improvewith the implementation of the third Education Project, which, in addition tothe construction of a new middle-level school in El Jadida with an annualoutput of 55, would include the construction of four new training centers inBeni Mellal, Nador, Ouarzazate and Casablanca with a total annual output of520 lower-level hotel personnel.

2.14 MUHTE has entrusted tourism promotion to the Office National Marocaindu Tourisme (ONMT) whose budget allocation for this purpose was increasedfrom DH 5.2 million în 1968 to DH 9.9 million in 1974. 1/ ONMT's campaignsare complemented by the publicity of Royal Air Maroc and individual hotels.Although the increase in funds devoted to tourism promotion has not kept pacewith the rise *n tourism receipts (the promotion budget of ONMT representedless than 0.9% of receipts from tourism in 1974 as compared to 1.2% in 1968),Morocco may be considered well-promoted for tourism, particularly on theEuropean market.

2.15 MUHTE's budget for tourism infrastructure 2/ was traditionally er-trustedto the Ministere des Travaux Publics et des Communications TTh). This arrange-

ment permitted MUHTE to tap TP's qualified technical staff; however, it provedadministratively cumbersome and limited MUHTE's control over the use of its ownfunds. In 1967 MUHTE undertook to implement tourism infrastructure throughGovernment-controlled tourism infrastructure development corporations (sociétésd'aménagement) to be created ad hoc for individual projects. This decision waswell-advised; such corporations enjoying the flexible regulations of businesslaw are well-suited for the implementation of tourism schemes which often includea complexity of works and commercial activities. Yet the first of these corpo-rations, the Société Nationale d'Aménagement de la Baie de Tanger, has i±otachieved its objectives. Because of insufficient funding and staffing, it hasleft works uncompleted at Tangiers and investors are not being attracted to thearea. When studies for Agadir began, the Government created a second socie;ted'aménagement, the Société Nationale d'Aménagement de la Baie d'Agadir (SONABA).With adequate financing assured and key personnel already appointed, SONABAhas good prospects for success.

III. THE PROJECT

A. Project Background

3.01 The project would be located in Agadir, administrative and economiccapital of southern Morocco. Situated on the Atlantic coast, a three-hour

1/ ONMT also supervises Morocco's tourism offices abroad and is in charge ofbuilding Government hotels.

2/ The 1973-77 Plan budgeted DH 77 million for tourism infrastructure.

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flight from Paris, Agadir is one of the winter beach resorts closest toEurope. The climate from Novembe to June is mild and dry; temperaturesrange from 190C - 220C, and there are only three to five days of rainmonthly. An unusually wide sandy beach dominated to the north by a ruinedfortress on a barren hill stretches several miles along the Bay. Within atwo-hour drive from Agadir are picturesque mountain villages, pre-Saharanoases with battlemented mud castles and the fertile valley of the SoussRiver guarded by the walled city of Taroudant.

3.02 Agadir is accessible by four main roads (Map 1): coastal roadRP 8 connects the city to Casablanca, the recently completed RP 40 crossesthe Atlas Mountains to the northeast towards Marrakesh; RP 30 leads southand RP 32 runs east through the Souss Valley. 1/ The international airportlocated in the middle of the Agadir urban area has a 2,910-m long runwayfully equipped for night landing that can take most types of aircraft.The existing airport will become an obstacle to the physical growth ofAgadir and the Moroccan authorities are planning to relocate it by 1985 to asite 20 km east in the Souss Valley.

3.03 When planning the reconstruction of Agadir after the catastrophicearthquake of 1960, the authoriti.s decided to base the economic developmentof the region on agriculture, fishing and tourism. The Government developmentplans were successful. The implementation of irrigation and agro-industrialprojects lias boosted agricultural production in the Souss Valley. TodayAgadir is known as one of the most important world centers for sardine fishingand processing. Tourism, which hardly existed before the earthquake, hasboomed; by 1974, 4,000 hotel beds had been built in Agadir, 3,500 of which wereon the Secteur Touristique et BalnéaireQSTB). a beach area between thp harbor andthe Oued Lahouar; in the same year visitor arrivals had attained the 120,000 mark.

3.04 The project area, known as the Unité d'Aménagement Touristique (UAT),is adjacent to the STB. It covers 260 ha of undeveloped hilly land straddlingthe southern limits of Agadir's municipal boundary and facing an open expanseof seashore. Lying close to the town and its infrastructure, the UAT is well-defined by man-made and natural boundaries. To the north, the Oued Lahouardivides the UAT from the STB, where golden dunes covered by eucalyptus treesprovide an impressive landmark. To the south an unspoiled forest of over1,000 ha is maintained by the Ministry of Forests as a natural preserve; tothe east the principal road RP 32 links the UAT with the town and the neigh-boring villages.

B. Physical Planning and Environmental Aspects

3.05 The original plans for the reconstruction of Agadir no longer meetthe needs of the rapidly growing population. Whereas those plans were designedfor a population of 50,000,Agadir's present population is estimated at 70,000and that of Greater Agadir, which includes Agadir,and several towns in thesoutheast, at more than 180,000. To cope with the area's population explosion,the local authorities have begun preparing comprehensive urban developmentstudies. These studies would recommend solutions for the diminishing supply ofurban land for housing which has resulted in the springing up of squatter

1/ Construction of RP 40 was financed under the First Highway Project(Loan 642-MOR and Credit 176-MOR). Upgrading of RP 30 south of Agadiris being carried out under the Second Highway Project (Loan 955-MOR).

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settlements and in the uncoordinated growth of villages around the town.The studies would also provide e coherent framework for ongoing projectssuch as the harbor extension,creation of ore-processing plants, the relocationof the airport and the tourism development of the UAT. The project would in-clude funds to complete the preparation of these urgently required studies(para. 3,29).

3.06 Industrial and harbor activities create serious environmental problems.Under the current method of unloading fish the harbor is polluted with debriswhich is swept to nearby beaches by tides and currents. This problem wouldbe solved under the project by a new unloading method (para. 3.26). Fishmealplants generate foul odors which the wind carries from time to time to variousparts of the city including the hotel sites. The Government has agreed toidentify suitable measures to abate air polluton and to enforce appropriateregulations.

3.07 The proposed extension of the harbor would create new sea currentswhich could eventually erode Agadir's beaches, This problem is being investi-gated by the TP on a scale model of the Bay and the harbor. The Government'sundertaking to inform the Bank, at the time of expanding the harbor, of themeasures to be taken to protect the beach and to implement them as a part ofthe harbor works, will be set forth in a supplemental letter.

3.08 Recent construction in the STB has tended toward increasingly tallerbuildings which jeopardize the visual balance of the beachfront as a whole.To remedy this situation, the preappraisal mission proposed the services ofan architect-planner hired by the Bank Tourism Projects Department to revisethe STB's land-use plan and building regulations (schéma d'améenagement). Theconsultant's work has been completed to the satisfaction of the Bank and thelocal authorities. A condition of loan effectiveness is the enactment of theSTB's revised schéma d'aménagement.

3.09 The UAT is designed to accommodate 7,000 tourist beds. The layout ofthe project area is such that, with only small incremental costs, the necessaryinfrastructure works can be extended to service 2,600 housing units which arealso to be built within the site. Of the 7,000 tourist beds, 5,300 would bechiefly in three-star hotels and 1,700 in housekeeping apartments, a combinationwhich would make Agadir attractive to broad segments of the international tourismmarket.

3.10 The planning concept proposed for the UAT would be a drastic departurefrom the development of the STB which to date has proceeded in a ribbon-fashionalong the beach and has been characterized by segregation of hotels from othertypes of activities. Hotels and housing in the UAT would be mixed and sharecommon facilities for shopping and entertainment. Hotels would be smallerthan those of the STB and would be clustered around common green spaces andoutdoor sports facilities.

3.11 The UAT and the STB would be linked by two roads to be built acrossthe Oued Lahouar and by an urban park on the south bank of the river. Withits sports and entertainment facilities, the park would also be a gatheringplace for tourists. The location of the UAT would allow its development asan independent and self-contained entity; at the same time it would provide

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the Agadir metropolitan area with additional infrastructure and facilities.SONABA and MUHTE are jointly refining the details of the UAT schéema d'amenagement.A condition of loan effectiveness is the enactment of the UAT's schéma d'aménage-ment with provisions satisfactory to the Bank. The Government agreed to consultwith the Bank on any subsequent modification thereto,

3.12 At present 92% of the UAT land is already in the public sector,either national or local, the remaining 8% being in private hands. Of thelatter, only a small portion of a single private lot would be built upon; therest would be used as parkland or buffer zones, Legislation to declare theUAT land of public interest is being prepared which will authorize thenecessary changes in previously designated land uses, the expropriation ofprivate lands and the transfer of public lands to SONABA. A condition of loaneffectiveness is that SONABA obtain interim authorization from the presentlandowners to start with the early stages of implementing the project inadvance of the completion of all formalities for the transfer of land owner-ship.

C. Project Description

3.13 The project would consist of infrastructure and common facilitiesfor the UAT, a regional infrastructure component and studies.

(a) UAT Infrastructure

3.14 The UAT infrastructure would include streets, street lighting, power,sewerage, water supply and telecommunications works. The proposed infrastructurewould be an extension of Agadir's existing infrastructure system.

3.15 The street component would include UAT's primary and secondarystreets, the connection of the UAT with RP 32 and two bridges across theOued Lahouar into the STB (para. 3.11). Pedestrian paths, street lights, park-ing facilities, an esplanade for buses and taxis and a landscaped parking areanear the bridges would be other features of the street component.

3.16 The sewerage system for the UAT would be connected by a rising mainfrom a low point near the mouth of the Oued Lahouar with that of Agadir whichis run at present by the Municipality. The solution recommended by the con-sultants is that of a combined system (i.e., with one main collecting bothdomestic and rainwater). During final design a dual system will be studied.The funds provided for this component would adequately finance either solution.

3.17 The UAT's water would come from the same system that suppliesGreater Agadir, which is run by the state-owned Office National de l'EauPotable (ONEP). Existing water resources, which have recently been expandedby successful underground drilling in the Souss Valley and improvement ofONEP's facilities, are sufficient to meet the region's growing needs up to1982. Further exploration for underground water in the Souss Valley isexpected to provide ONEP with resources adequate until 1990. The proposeddam on the Oued Issen east of Agadir would be an additional source of supplyin the longer run. The UAT water distribution system would connect with a400-mm main which ONEP recently installed up to the UAT boundary and whichis large enough to meet UAT water requirements.

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3.18 Agadir's electrical system is part of the national network whichis run by the state-owned Office National de l'Electricite (ONE). The powercomponent of the project would include a 2-km overhead supply line fromONE's main transformer, a substation and underground distribution lines.

3.19 Telephone and telex services in Morocco are provided by theMinistere des Postes, Télephone et Télégraphe (PTT). Agadirts 2,000-linetelephone exchange is being doubled to absorb the demand backlog and meetexpected requirements (excluding those of the UAT). The project would providefor an additional 1,000 telephone lines designed specifically for the UAT,and for the corresponding underground telephone and telex cable connections.The telex exchange is not yet saturated and, accordingly, will not be extendedunder the project.

3.20 The infrastructure component would also feature landscaping of themajor open spaces around the UAT near the hotel clusters and common facilities.The RP 32 access, the south bank of the Oued Lahouar and beach parking wouldbe laid out as urban parks.

(b) UAT Common Facilities

3.21 The project would provide financing for a core of common facilitiesfor shopping,); entertainment and sports which would make the UAT attractive toinvestors and visitors alike. One shopping area near the UAT entrance fromRP 32 and another near the hotel clusters would accommodate shops, offices,a handicrafts center as well as entertainment facilities. The sports facil-ities would be grouped in four landscaped areas near the hotels, a multi-purpose recreation area and a beach center. Buildings would also be providedfor the storage of municipal maintenance and garbage collection equipment.

3.22 The UAT infrastructure and common facilities investments are reviewedin greater detail in Annex III.

Regional Infrastructure

3.23 The regional infrastructure component would include the Ait Melloulbypass, upgrading of the secondary road CT 7002 and replacement of the pumpsfor unloading fish in Agadir harbor; its implementation would enhance thearea's tourism potential and foster the urban development of Greater Agadir.

(a) Ait Melloul Bypass

3.24 Located 13 km southeast of Agadir at the outer edge of the GreaterAgadir urban area, the town of Ait Melloul (pop. 8,500) is a major crossroads:heavy traffic originating in the southeast converges there before being channeledon RP 32 through the urban sprawl to Agadir's harbor (Map 1). The proposedbypass would be 8.4 km long with a new bridge over the Souss River and wouldcomplete a belt road around Agadir.

(b) Upgrading the Secondary Road CT 7002

3.25 This road extends for 56 km and connects several villages in thepicturesque Imouzzer Valley (pop. about 20,000). One of the most attractivesites in the region, the valley is already visited by several thousand tourists

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annually and regular bus trips there are scheduled by tour operators. Althoughentirely asphalted, the road is unsafe because of falling rocks, sharp curvesand the absence of guardrails. The project would provide a lump sum forlocalized improvements to increase road safety (toe walls, widening of danger-ous bends) and for small tourist facilities (parking areas, lookouts) as wellas funds for studies for the road link between the Imouzzer Valley and highwayRP 40.

(c) Replacement of the Fish Pumps

3.26 As stated above (para. 3.06), the harbor is polluted by effluentfrom the primitive water pumps used to unload fish for the fishmeal plantsof Agadir and Anza. The pumps discharge residual fish blood, heads and scaleswhich contaminate nearby beaches as they are swept out of the inner harbor bythe tides. The project provides for replacement of existing pumps by a pneumaticunloading system which would limit pollution while increasing unloading capacity.This system is also expected to reduce the fish odor to some extent.

3.27 The regional infrastructure component is reviewed in greater detailin Annex IV.

Project Administration, Technical Assistance and Studies

3.28 The project also provides funds for project administration, pro-fessional services, technical assistance and three studies. Funds earmarkedfor project administration are relatively large since the Project Unit wouldbe in charge of drawing up the detailed land-use plans as well as of super-vising the construction of the streets, street lighting, sewerage and commonfacilities.

3.29 The technical assistance would enable the Agadir Délégation àl'Urbanisme, l'Habitat et l'Environnement (DUHE) to complete its planningstudies (para. 3.05). The Government's undertaking to submit the terms ofreference and a work plan for these studies for Bank approval by June 1976and to complete them by January 1978 will be set forth in a supplementalletter.

3.30 The first study included in the project would seek ways to preservearchitectural and environmental values, while improving housing conditions,in the Agadir region, particularly in the Imouzzer Valley (para. 3.25). itis expected to provide preservation guidelines and regulations applicable toother rural areas in Morocco, where traditional settlements are threatened bythe opening of roads and inappropriate use of modern construction materials.The project funds would meet the cost of about four man-years of the necessaryexpatriate expertise. The Government's undertaking to submit the terms ofreference of the study to the Bank for approval by July 1976 will be setforth in a supplemental letter.

3.31 The second study would cover the technical, financial, economic andorganizational aspects of the Greater Agadir sewerage system. The Government'sundertaking to submit for Bank approval, terms of reference for this study byJuly 1976, will be set forth in a supplemental letter. The Government agreed

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to use its best efforts to dispose of Agadir's sewage in order to avoid seapollution. The objective of the third study would be to prepare a subsequenttourism project in Morocco.

D. Implementation

(a) UAT Execution

3.32 SONABA would have primary responsibility for implementing the worksfor UAT. It would own the land, conduct the detailed planning studies, super-vise final engineering work and coordinate the implementation of all UAT com-ponents. SONABA wQuld advertise requests for tenders, evaluate bids, enterinto contracts and supervise all work. SONABA would contract with ONEP, ONEand PTT for the design and construction of UAT's water, electric power andtelecommunications components respectively. In implementing the seweragecomponent, SONABA would work closely with the Municipality of Agadir whichruns the existing sewerage system and the Province of Agadir which is incharge of the Greater Agadir Sewerage Study.

3.33 Until the UNDP study was completed (para. 1.02) SONABA operatedwith a skeleton staff. It has subsequently established a Project Unit andengaged a technical director and a chief urban planner. Should their positionsbecome vacant, SONABA has agreed to exchange views with the Bank on proposalsto fill them. Similarly, SONABA would inform the Bank of any proposal toreplace the General Manager. In addition, SONABA agreed to review the criticalpath network for the execution of all works every six months in consultationwith the Bank.

3.34 Coordination between SONABA and other Government agencies would beensured by:

(i) SONABA's Board of Directors which includes representatives of allministries involved in project implementation;

(ii) an ad hoc interministerial commission on the Bay of Agadir tourismdevelopment chaired by the Minister of Tourism and including re-presentatives of various ministries and agencies;

(iii) a Comité Technique Local Consultatif chaired by the Governor ofAgadir and grouping SONABA's management and local representativesof various agencies; and

(iv) interagency agreements between SONABA on the one hand and ONEP,ONE and PTT on the other, defining the agencies' respectivefinancial and technical responsibilities in the construction ofthe water, electricity and telecommunications components. Acondition of loan effectiveness would be the signing of agreements,satisfactory to the Bank, between SONABA and all the agenciesconcerned.

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(b) UAT Operations

3.35 SONABA would retain ownership of the unsold common facilities andland. Its operational tasks would include-

(i) defining and applying policies for the lease and sale of hoteland housing sites as well as for the lease or sale of its owncommon facilities,

(ii) attracting investors;

(iii) cooperating with investors, their architects and the Municipalityin order to preserve the urban plan and the architectural conceptadopted for the UAT. During appraisal the Municipality gave SONABAwritten assurances that it would grant building permits for theUAT only after prior approval by SONABA's technical services;

(iv) operating common facilities until they are leased or sold; and

(v) co-sponsoring with prospective hotel operators a committee whichwould be in charge of UAT's "animation." SONABA agreed to prepareand discuss with the Bank within 4 years of loan signing a programto stimulate social activities within the UAT and a schedule forits implementation.

SONABA's personnel structure would be modified as required to ensure a smoothtransition from the implemention to the operational stage. SONABA's under-taking to consult with the Bank on any changes in its organization is recordedin the Agreed Minutes of Negotiation. The organization of SONABA is reviewedin detail in Annex V.

3.36 Once implemented, the electricity, water and telecommunicationscomponents would be transferred to ONE, ONEP and PTT respectively. Theseagencies are well-equipped to operate and maintain such facilities. Atpresent a small portion of the UAT is situated outside Agadir's municipalboundary. The Government has agreed to extend before January 1, 1980 (wheninfrasturcture works are expected to be completed), Agadir's municipal juris-diction to include the whole UAT. The Municipality will thus be in a positionto own, operate and maintain the streets, parking areas, bus esplanade, sewer-age system and public parks in the UAT. It will also be made responsiblefor handling solid waste disposal, street cleaning and fire fighting in theUAT. Municipal services are well staffed and should perform these taskssatisfactorily.

The Regional Components

3,37 The TP would be in charge of constructing the Ait Melloul bypass,upgrading CT 7002 and undertaking the studies for the road linking Imouzzer toRP 40. It would supervise the final engineering studies, advertise requestsfor tenders, evaluate bids, enter into contracts and supervise implementation.The TP has already carried out two earlier road projects with the Bank (Loan 642-MOR

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and Loan 955-MOR). The Régie d'Acconnage. du Port de Casablanca (RAPC) which isresponsible within the TP for loading and unloading ships in Moroccan harbors,including Agadir, will supervise the installation of the new fish pumps andoperate them.

3.38 The following table lists the various agencies involved in thefinancing,.construction, ownership, maintenance and operation of the projectcomponents:

Table No. 1

Responsibility Ownership,for Construction Maintenance,

Project Component Financing or Implementation Operation

1. UAT

Land SONABA

Roads, Parking,Street Lighting,Sewerage, Public MunicipalityParks SONABA SONABA of Agadir

Water Supply SONABA SONABA/ONEP ONEP

Electricity SONABA SONABA/ONE ONE

Telecommunications SONABA SONABA/PTT PTT

UAT Common Facilities, 1/Private Parks SONABA SONABA SONABA

2. Regional Components

Ait Melloul Bypass TP TP TP

Upgrading CT 7002 TP TP TP

Fish Pumps TP RAPC RAPC

3. Technical Assistance and Studies

Agadir Urban Study MUHTE DUHE

Preservation ofrural sites MUHTE DUHE

Greater Agadir Local LocalSewerage Authorities Authorities

Second Tourism Project MUHTE MUHTE

I/ Until sold to private investors.

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E. Cost Estimates

3,39 The detailed cost estimates and the foreign exchange components of theproject are given in Annex II and are summarized in the table below:

Table No. 2

Project Cost by Category of Expenditure

Dirhams '000 US$'000Code Component Local Foreign Total Local Foreign Total

0. UAT Land Acquisition 8,200 - 8,200 2,158 - 2,158

1. UAT Infrastructure 25,673 25,672 51,345 6,756 6,755 13,512

a. Civil works 1933i3 16,776 36,129 5,093 4,415 9,508b. Equipment 3,252 7,955 11,207 856 2,093 2,949c. Professional services 3,068 941 4,009 807 247 1,055

2. Common Facilities 8,874 10,382 19,256 2,335 2,732 5,066

a. Civil works 6,168 6,137 12,305 1,623 1,615 3,238b. Equipment 2,056 3,978 6,034 541 1,047 1,587c. Professional services 650 267 917 171 70 241

3. Regional Infrastructure 8,247 7,865 16,112 2,170 2,069 4,239

a, Civil works 7,204 6,596 13,800 1,896 1,736 3,632b. Equipment 27 478 505 7 125 132c. Professional services 1,016 791 1,807 267 208 475

4. Project Administration 4,492 1,877 6,369 1,182 494 1,676

5. Technical Assistance& Studies 2,23 2,152 4,390 589 566 1,155

BASE LINE COST 57,724 47,948 105,672 15,190 12,616 27,806

Contingencies 2-9.757 31.836 61.593 7,830 8,378 16.208

Physical increases 3,867 4,354 8,221 1,017 1,146 2,163Price increases 25,890 27,482 53,372 6,813 7,232 14,045

TOTAL PROJECT COST 87,481 792784 I67,265 23,020 20,994 44,014

(in rounded figures) (87,030) (80,000) (167,000) (23,000) (21,000) (44,000)

Note: DH-US$ do not exactly correspond in this table due to rounding.

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3.40 The base line cost of Table No. 2 is derived from BCEOM-SOMET costestimates (adjusted to account for price changes since December 1974) asrevised by the appraisal mission, Unit prices were checked with those inthe latest tenders by the various agencies. An average increase of 10%has been allowed to cover physical contingencies for civil works and equip-ment. This amount is reasonable since most of the cost estimates are basedon advanced engineering data. Taking into account the recent evolution ofprices in Morocco and the likely impact of worldwide inflation on internationalmaterials, labor and equipment costs, provision has been made for a 10.5% to13.5% price increase per year for civil works and 10% to 12% for equipment,resulting in a price contingency of 50.3% of the base line cost. The overallcontingency provision amounts to 58.3% of base line costs and brings the totalproject cost, excluding interest during construction, to US$44 million.

3.41 Most building materials needed for project implementation are pro-duced locally whereas most of the equipment would have to be imported. Theforeign exchange component of the total project is estimated at 48% or US$21million. The local currency component, US$23 million, includes taxes equiva-lent to about 22% of total project costs.

F. Financing and Lending Arrangements

3.42 The proposed loan of US$21 million would cover the estimated foreignexchange component of the project. The loan would include US$120,000 of retro-active financing to cover the cost of the Project Unit's expatriate staff afterAugust 1, 1975, and the cost of the detailed planning and engineering studieswhich are expected to be undertaken before loan signing.

3.43 The proposed loan would be made to the Moroccan Government. Theportion of the funds needed for the UAT infrastructure, common facilities andproject administration would be on-lent to SONABA on the same terms as theBank loan. The remainder of the UAT financing would be provided by:

(i) an increase in SONABA's equity to DH 20 million;

(ii) a government loan of DH 34.6 million on the same terms and con-ditions as the Bank loan; and

(iii) a subordinated treasury advance of DH 30.0 million_bearing_6%interest. The interest on the advance would be subordinate tointerest and principal payments by SONABA of its senior debt (Governmentloan and proceeds of Bank loan). Reimbursement of the advance'sprincipal would begin only after reimbursement of all the seniordebt.

The Government's undertaking to pay in the equity and disburse the Treasuryadvance before March 1978 will be set forth in a supplemental letter. Conditionsof loan effectiveness are the conclusion of a subsidiary loan agreement betweenthe Government and SONABA, the increase of SONABA's authorized capital toDH 20 million and t:he subscription of DH 4,9 million.

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3,44 The financing plan for the project is as follows:

Table No. 3

Govt. ProceedsSONABA Loan to Treasury of IBRD Govt.Equity SONABA Advance Loans Funds Total

(US$ million)

UAT investment 5.3 9.1 7.9 17.0 - 39.3

Regional componentsand studies - - - 4.0 4.6 8.6

Total (including 5.3 9.1 7.9 21.0 4.6 47.9interest duringconstruction a/)

(DH million)

UAT investment 20.0 34.6 30.0 64.6 - 149.2

Regional componentsand studies - - - 15.2 17.5 32.7

Total (including 20.0 34.6 30.0 79.8 17.5 181.9interest duringconstruction a/)

a/ Not included in Table No. 2 above

G. Procurement

3.45 Civil works contracts would be tendered under international competitivebidding according to the Bank's guidelines. In order to permit smaller localcontractors to tender for work of a size within their capabilities and also toattract foreign bidders, contracts for civil works would be tendered individuallyand combined into bidding groups at the bidder's option. Equipment would beprocured after international competitive bidding in accordance with Bankguidelines except for purchases not exceeding US$70,000 equivalent for which pro-curement will be in accordance with normal local procedures for competitivebidding, which are acceptable to the Bank, provided that such purchases donot exceed an aggregate of US$500,000. A 15% preference margin, or the pre-vailing customs duty, whichever is lower, would be extended to local manufactur-ers in the evaluation of bids for equipment. Telecommunication equipmentprocured under the project would have to be compatible with that presently-used in Agadir. It is therefore proposed that PTT negotiate the purchase withmanufacturers of this equipment. Prices so negotiated would be subject toBank approval. The amount involved would be US$600,000, or 1.4% of the totalcost of the project.

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H. Disbursement

3,46 The proposed loan of US$21 million would be disbursed to meet:

(i) 47% of total expenditures for civil works;

(ii) 100% of the foreign cost of imported goods or of the ex-factory cost of locally produced goods procured throughinternational competitive bidding and 60% of other locallyprocured items;

(iii) 34% of the total expenditures for professional services,project administration and technical assistance,.

IV. JUSTIFICATION

A. Superstructure Development

4.01 As stated above (para, 3.09) the project would provide improvedland for both hotel and housing developments, enabling a multipurpose use ofthe UAT (the<'last undeveloped area conveniently located near Agadir). Theproposed "mixed" approach was suggested by the project sitets location inthe middle of the fast growing Greater Agadir area and by the fact that onlysmall incremental investment was involved in providing also the infrastructurerequired by the housing component. This approach would balance the need forexpansion of tourism activities, one of the region's major sources of income,with that of alleviating the acute shortage of housing, the town's mostcrucially felt problem. It relies on the concept that tourism and urbanactivities far from being antithetic can be mutually beneficial. Coexistenceof hotels and housing units in the UAT will avoid creation of a tourism ghetto,generate a lively atmosphere and give Agadir's residents access to entertain-ment and sports facilities while providing them with an opportunity for sociallyvaluable interchange with tourists.

4.02 The accommodation buildup of hotels in the UAT and in the remainderof Agadir (mainly STB) would be as follows:

Table No. 4

Hotel Capacity in the UAT and in Agadir as a Whole(number of beds)

STB and OtherUAT Sites in Town Total Agadir

1975 4,000 4,0001980 1,000 7,500 8,5001985 6,000 9,500 15,5001988 7,000 11,000 18,000

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Sponsored by local investors, the UAT's hotels would mostly be small, three-star establishments catering to mass tourism. In a sense, they would complementthe hotels in the STB which are large, multistory establishments in deluxecategories.

4.03 Investors r interest in Agadir is strong. The Investment Divisionof MUHTE has on file requests from local and foreign investors for the con-struction of 26,000 hotel beds. These projects are in various stages ofpreparation. Since the UAT project has become known in the financial com-munity, SONABA has received numerous requests for hotel sites in the UAT

4.04 Until recently land in the STB was sold at subsidized prices. TheGovernment has directed the Governor of Agadir - who is in charge of adminis-tering the STB land - to ensure that henceforth STB land prices are allowedto be determined by market forces, as will be the case at the UAT.

4.05 The sale and lease of UAT land would be regulated by a cahier descharges (conditions of sale or leas3) which would reflect the main provisionsof UAT's schéma d'aménagement. Adoption by SONABA's Board of a cahier descharges with provisions agreeable to the Bank is a condition of loan effective-ness. Since- the main purpose of the cahier des charges is to ensure that theenvironment in which they invest will not be downgraded, it is expected thatinvestors would readily accept its provisions.

4.06 Hotel investors in Agadir should be able to rely on adequate supplyof trained hotel personnel. At present the Agadir hotel school trains onlymiddle-level staff; its output is expected to be sufficient for the needs ofthe proposed hotel development in Agadir. The current system of traininglower-level staff on the job has not proven satisfactory, however, andinadequate service is among the visitors' chief complaints. With the expectedincrease in capacity the need for trained personnel at the lower level willbecome more acute and reach 200 per annum. This need will be partially ful-filled by graduates of the proposed new schools (para. 2.13). To supplementtheir output, the Moroccan Government has agreed to make more efficientuse of the existing facilities in Agadir and to train there some 100 lover-level people per annum.

4.07 A promotion campaign would be launched to advertise investmentopportunities in the UAT to national and international investors. Part ofthis campaign would consist of programs to assist investors in their negotiat-ions with both local and national authorities (e.g., Municipality, MUHTE, CIH),and to promote common activities (e.g., reservations, food supply) among smallhotel owners. SONABA agreed to prepare and discuss with the Bank within 2years of loan signing, a timetable of steps to be taken to implement theproposed promotion campaign.

4.08 Despite the UAT's attractiveness and SONABA's promotional efforts,the risk remains that private hotel investment might not be forthcoming. Toguarantee completion of the project after the infrastructure investment has

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been made, the Moroccan Government would undertake to build, if the privatesector does not, sufficient hotel beds to attain acceptable rates of returnon infrastructure outlays. It has been calculated that the construction of4,200 beds (60% of the scheduled total) would secure an economic rate ofreturn of 13%, which is considered acceptable for Morocco. The Governmentagreed to ensure that this minimum number of beds is in operation in 1988provided the Government and the Bank agree that a potential market for thesebeds exists. In the event of government involvement in hotel investmentand operation, these functions would be performed by designated specializedagencies and not by SONABA.

4.09 The UAT housing program, designed primarily for the middle- andupper-income segments of Agadir's population, would accommodate 13,000people or about 7% of the Agadir urban area's present population. Some 30%of the units would be built and owned directly by prospective dwellers,whereas the remainder would be built by investors who would then rent themeither to residents or tourists. By increasing the supply of developed land,the implementation of the UAT Project is expected to alleviate the overallshortage of developed land for housing in the area. The housing componentinvolves no subsidies, direct or indirect, nor does it preempt water, elec-tricity or sewerage capacity needed for lower income housing elsewhere inthe area. All in all, it represents an additional benefit from the project,gained at a small incremental cost.

B. The Market

4.10 International arrivals in Agadir soared from 46,000 in 1970 to119,000 in 1974, an average annual rate of increase of 20%. This compareswith a 15% rate of growth in traffic to the country as a whole. In 1974over 90% of visitors to Agadir came by plane (versus 36% for all of Morocco),80% on inclusive tours marketed by operators. The growth in traffic wasaccompanied by a rise in the average length of stay from three days in 1970to 11 days in 1974.

4.11 In the initial stage of its development, Agadir was mainly anelite destination for French winter tourists. Over the years, however, itdiversified its market geographically, also attracted less affluent visitorsand established itself as a year-round destination. The share of Frenchvisitors decreased from 59% in 1970 to 41% in 1974, in favor of other WesternEuropean visitors such as Germans and Swiss, who account presently for 14%and 11% of the total market. With the rise in income in Morocco, domestictourism also expanded. Nationals mostly from Rabat and Casablanca arrivefor extended weekends during spring and summer and presently account for 20%of total arrivals and 8% of bednights. Traffic to Agadir is evenly distributedthroughout the year with slight drops in January, June and October.

4.12 A field survey conducted by the mission shows that while there wasa threefold increase in hotel capacity since 1970 there was a fivefold increasein bednights. As a result of growing pressure of demand on supply, bed androom occupancy rates doubled, reaching 75% and 95% respectively, in the firsteight months of 1975.

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Table No. 5a/

Accommodation and Demand Buildup in Agadir(1970-1975)

b/1970 1971 1972 1973 1974 (1975)

Beds 740 1,540 2,242 2,684 2,806 (2,928)Bednights 165,972 256,488 443,646 597,447 690,813 (531,779)Bed occupar!cy 38% 46% 54% 66% 67% (75%)Room occupancy 47% 57% 68% 76% 84% (95%)

a/ Data pertain to the major hotels. The remaining capacity includes smallhotels (less than 40 beds) that enjoy even higher occupancies since theycater more extensively to local clientele.

b/ First eight months.

The high yearly rates of utilization of hotel capacity point to sizeablevolumes of frustrated demand - foreign and domestic alike. Tht is confirmedby the high rate of hotel refusals to book individual tourists1' or to satisfytour operators' requests for block space. 2/

4.13 With substantial expansion of accommodation capacity, hotel occu-pancies in Agadir are expected to decline from the current congested levelsto more normal levels. A drop in room occupancy rates from 95% to 75%(corresponding to a drop in bed occupancy from 75% to 60%) would still ensurethat Agadir's accommodations earn adequate financial returns (para. 4.20).At these target occupancy levels, hotels to be built in Agadir under theschedule detailed in paragraph 4.02 would require 3.9 million bednightsannually by 1988. Since realized demand is estimated to be one million bed-nights in 1975, and current frustrated or turnaway demand is estimated toamount to another 200,000 bednights (20% of realized), "new" demand to beattracted to Agadir in the period considered would total 2.7 million bednights.This implies an annual growth rate of about 9.5%, which appels reasonablein the conteit of: (i) past development trends, i e., 14.57%' annual growthrate for Morocco in the period 1968-1974, and 37%/47 for Agadir between 1970and 1974; (ii) projections contained in a study of the Mediterranean tourismmarket recently completed by consultants5i which predict annual growth ratesof foreign tourism to the Mediterranean region, to the Maghreb countries andto Morocco of 5%, 13% and 10.5% respectively, over the next decade; and (iii)likely expansion of domestic visitor flows to Agadir, parallel with this

1/ During the peak months of the 1974/75 winter season and in August 1975,numerous Agadir-bound tourists had to be diverted to Taroudant, 100 kmfrom Agadir.

2/ Tour operators who have tried without success to include Agadir in theirmarketing programs include Touropa, American Express, Meditours andNeckermann.

3/ Arrivals of foreign tourists.4/ Bednights.5/ Financed by 10 Bank-associated DFC's in Mediterranean countries,with

the Bank as executing agency.

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destination's expected shift towards a broader category-mix of accommodationsand with rising personal incomes of Moroccan nationals. The market for theUAT accommodation is reviewed in more detail in Annex VI.

4.14 The current population of the Agadir metropolitan area is estimatedat 180,000. By 1984 it is expected to increase by 230,000 inhabitants, creat-ing a need for 45,000 additional housing units (not counting those needed by fam-ilies presently living in overcrowded and substandard dwellings). Therequirement of middle- and upper-income housing is estimated at 20% of overallhousing demand. The housing program supported by the project, which is directedto satisfy less than one-third of this demand, should find a ready market,especially since the UAT housing units would have particular appeal foremployees of the UAT hotels and common facilities.

C. Financial Aspects

4.15 SONABA's financial policies would be:

(a) to recover its investment costs, including those for the water/sewerage and power utilities that would be transferred at nocost to ONE and ONEP;

(b) to earn a satisfactory rate of return on these investments;

(c) to maintain adequate debt service coverage; and

(d) to establish prices which would ensure attainment of theseobjectives and still be acceptable to investors; these priceswould include sale prices of improved land and properties,ground and property rentals, and service charges for the useof common facilities to be calculated on a per hotel room basis.

SONABA agreed on these financial objectives. This will lead to land pricesthat are in line with prevailing market prices.

4.16 The achievement of these objectives appears feasible. Pro formafinancial projections reflecting a set of market-based assumptionsi/ as to

1/ The main assumptions are: average sale price for land, DH 97 (US$25.5)per square meter; annual ground rent, DH 800 (US$210) per room; propertyleases, DH 15-20 (US$4-US$5) per square meter per month; markup on pro-perty sales 50%, annual service charge of DH 1,000 (US$263) per room. Thefollowing table compares projected land prices on the UAT, calculated tocover all investment costs and to earn a satisfactory return to SONABAwith existing prices in the city of Agadir (where land is developed andsold by the local authorities and where Çovernment has kept land priceslow in order to foster the city's reconstruction) and elsewhere in themetropolitan area (where land is developed by private investors).

Type of Construction UAT City of Agadir Metropolitan AreaDH/m

Hotels 70 13 -Low density 120 20-30 40-100Middle density 150 40-50 100-200High density 170 80 100-300

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timing of land and property sales and leases, level of land and propertyprices and rentals, and of service charges show that SONABA would earn a9.2% discounted financial rate of return on its operation and a rate ofreturn of 10% on net assets by the sixth year of operation. The pro-jections also show that the debt service ratio would be 1.4 over the firstfive years and would increase thereafter to 1.8 in current terms. Dependingon the ratio of land sales to land leases SONABA might accumulate excess cash.It would have then to decide what use to make of these funds. SONABA hasalready agreed to prepay the proceeds of the Bank loan to the extent thatin any one year the ratio of land sold in the UAT to the total land intendedfor sale or rent exceeds the ratio of repayments by SONABA of the Bank loanrelent to it to the total amount of such loan. Such prepayments would be about50% of the Bank loan to SONABA over the period 1983-89 if land were sold atthe pace assumed during appraisal. SONABA's financial situation is reviewedin detail in Annex V.

4.17 SONABA agreed:

(a) to prepare a statement of its proposed financial policies accept-able to the Bank, within a year of loan signing. The policystatement would detail the financial objectives set forth inparagraph 4.15 and include the methodology for calculation allsale prices and rents and procedures for their implementation;

(b) to establish within a year of loan signing a system of commercialaccounts to be maintained by an accounting department suitablystaffed;

(c) to have the accounts audited annually by independent auditorsacceptable to the Bank;

(d) to submit audited financial accounts to the Bank within fourmonths after the close of each fiscal year; and

(e) in order to safeguard its financial position, not to incuruntil 1986 any debt without the Bank's prior approval, otherthan that incurred to finance the present project.

4.18 ONE, ONEP and PTT would charge the UAT users their standard ratesfor commercial and domestic consumers. Existing power and water rates inMorocco are now being reviewed under covenants to the First Power Project(Loan 936-MOR) and the Casablanca Water Supply Project (Loan 850-MOR). Thesestudies are expected to recommend a revised national tariff structure thatwill ensure charges equal to the economic cost of the service provided. Thesewerage rates would be examined under the proposed study of the GreaterAgadir sewerage system (para, 3.31) in order to recommend tariffs that willcover the full economic cost of service.

4.19 RAPC would operate the new fish pumps and would be expected tocharge users (fishmeal plants and boat owners) tariffs covering operatingand maintenance expenses as well as depreciation and financial charges.

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Projected rates ensuring a 10% return on the total investment would beDH 6,0 (US$1.6) per ton of unloaded fish as compared to present costs ofDH 5.3 (US$1.4) per ton, This extra cost would not affect the competitive-ness of Agadirts fishmeal plants since it would be compensated by savingsresulting from a reduction in fish wasted that would be made possible bythe adoption of the new unloading method. The Government's undertakin2 tocause RAPC to discuss with the Bank the proposed tariff structure for the useof the pumps is recorded in the Agreed Minutes of Negotiation.

4.20 Bed occupancy for individual hotels and housekeeping apartmentshas been projected at 50% in the first year of operation rising to 60% in thethird year. Given the buildup of accommodation facilities from 1,000 bedsin the first year of project operation to 7,000 by the seventh year, thecomposite occupancy curve would thus rise slowly from 50% in the first yearto 60% in the ninth year of operation. Average daily guest èxpenditureshave been projected at DH 63 (US$16.6) in hotels. These assumptions resultin a gross operating profit (30% of total sales) adequate to cover financialcharges. The hotels would have an overall internal rate of return of 9.5%.Housekeeping apartments would enjoy a GOP of 60% of sales and the rate ofreturn on acco=modation investment including apartments would equal 11.6%.The financial analysis of hotels and apartments is detailed in Annex VII.

D. Economic Justification

4.21 For the purpose of the economic analysis the project is split intotwo components which are justified separately: the UAT-related works andthe Ait Melloul bypass. Since the work on CT 7002 and the replacement ofthe fish pumps will chiefly benefit tourism, they are justified within theUAT investment.

Economic Justification of the UAT Works

4.22 The gross benefits of the project to the economy would be theexpenditures of tourists attracted to the UAT's hotels and housekeepingapartments. Average daily expenditure per visitor has been estimated atDH 104.5 (US$27.50), broken down as follows: food and accommodation 61%,shopping 24%, sports and entertainment 10% and miscellaneous 5%. The onlybenefits from the proposed housing program which have been included arethe yields from the sale of land. Benefits accruing to Royal Air Marocfrom the transport of UAT visitors have not been taken into account inrates of return computations. Also excluded are the benefits resultingfrom developing the UAT within a carefully planned framework ensuring thebalanced growth of tourism and urban activities and allowing the efficientuse of land and infrastructure. In view of Agadir's relatively even demandover the year, large overhang of frustrated demand and favorable marketprojects, most of the UAT's expenditure will be incremental. The non-incremental expenditure has been estimated to be a quarter of the UAT'stotal net benefits.

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4.23 The capital costs associated with the project amount to DH 314.9million (US$82.9 million) of which the UAT's infrastructure, CT 7002 andthe fish pumps represent 21%, the hotels, the housekeeping apartments andcommon facilities 77% and the tourism facilities outside the UAT (e.g.,taxis, shops) 2%. The use of UAT land has been valued at the revenuesforegone in agriculture. Operating expenses of hotels, apartments, andcommon facilities have been estimated on the basis of the actual experienceof similar £acilities in Agadir.

4.24 With an estimated economic life of the project of 30 years, theeconomic rate of return on the investment in the UAT tourism development(i.e., all project investment apart from the Ait Melloul bypass) would be17.4%. The sensitivity of the rate of return to changes in key variablesis shown in Table 6.

Table No. 6

Sensitivity Tests

Sensitivity Testing Resultant Rate of Return/0

Best estimate 17.4Investment cost +20% 14.6Benefits a/ +25% 21.1

+10% 18.9-10% 15.8

Two-year delay in opening hotels 13.45% shadow pricing of foreign exchange 18.0

a/ Changes in benefits reflect variations in occupancy rates, average dailyexpenditures and operating costs.

4.25 The proposed project is expected to increase net foreign exchangereceipts by about DH 8.7 million (US$42.3 million) per year in 1981 andby DH 140 million (US$37 million) in 1989 and annually afterwards. Netannual budgetary receipts from taxes levied on tourism activities in theUAT would rise from DH 2.1 million (US$ 0.5 million) in 1981 to DH 22.4million (US$5.9 million) in 1989. Taking into account the net budgetaryreceipts and the net operating income of SONABA, the internal rate ofreturn to the Government on its investment in the UAT is 20.5%. Directemployment in hotels and tourism facilities to be built in the UAT wouldamount to 4,400 jobs. Indirect employment generated in construction,handicrafts, agriculture and other services is likely to account for 7,200additional jobs.

- 24 -

4,26 The following table indicates the distribution of benefitsdirectly generated by the UAT developmente

Table No. 7

Share of Investments Share of Benefits (1989)

SONABA operations 20 9Hotel and apartment operations 70 37Other tourism facilities a/ 10 30

Total 100 76

a/ Includes common facilities in resort area plus other facilities outsidesuch as handicrafts shops, taxis, buses, etc,

The remaining share of the benefits is associated with taxes. The economicrate of return on the overall project reflects comparatively low returns onthe infrastructure and hotel investments and high returns from other-than-hotel operatihohs, requiring minimal investments, and taxes, The economicjustification of the UAT works is analyzed in detail in Annex VIII.

Economic Justification of the Ait Melloul. Bypass

4,27 Since the level of tourism-related traffic on the Ait Melloulbypass would be quite small as compared with commercial and other traffic,the bypass evaluation has been carried out on the basis of benefits accruingto road users in terms of vehicle operating costs and time savings. Assuminga 20-year economic life for the bypass, the internal rate of return on theinvestment would be 27.7%. The sensitivity of the rate of return to vari-ations in investment costs and benefits is given below:

Assumption Resulting Rate of Return

Investment cost +15% 23.0Benefits +25% 32.4

-25% 22.4

V. AGREEMENTS REACHED AND RECOMMENDATIONS

5.01 During negotiations the Government agreed:

(a) to take suitable measures to abate air pollùition (para. 3.06),to protect the beach (para. 3.07), and to reduce sea pollution(para. 3.31);

(b) to consult with the Bank on any subsequent modification of theUAT's schéma d'am'énagement (para. 3.11);

- 25 -

(c) to carry out, on the basis of terms of reference to be agreedwith the Bank, studies for the planning of Agadir (para. 3.29),for the preservation of rural sites (para. 3.30) and for theGreater Agadir sewage system (para. 3.31);

(d) to extend before January 1, 1980, Agadir's municipal jurisdictionto include the whole UAT (para. 3.36);

(e) to pay an additional equity and provide a treasury advance toSONABA and to finance any cost overrun (para. 3.43);

(f) to organize a training program using the existing hotel schoolfor an annual output of 100 lower-level personnel (para. 4.06);

(g) to ensure that a minimum of 4,200 beds is in operation in 1988,provided the Government and the Bank agree that a patentialmarket for these beds exists (para. 4.08).

5.02 During negotiations SONABA agreed:

(a) to consult with the Bank on any proposed changes in key personnel(para. 3.33);

(b) to review the critical path network every six months in consul-tation with the Bank (para. 3.33);

(c) to discuss with the Bank within two years of loan signing a time-table for the investment promotion campaign (para. 4.07) andwithin four years of loan signing a program to stimulate socialactivities within the UAT (para. 3.35);

(d) to prepay the proceeds of the Bank loan to the extent thatin any one year the ratio of land sold in the UAT to the totalland intended for sale or rent exceeds the ratio of repaymentsby SONABA of the Bank loan relent to it to the total amount ofsuch loan;

(e) to prepare within one year of loan signing a statement of itsproposed financial policies acceptable to the Bank (para. 4.17),consonant to its agreed financial objectives (para. 4.15);

(f) to establish a system of commercial accounts to be maintained byan accounting department adequately staffed and to submitaccounts audited annually by independent auditors acceptableto the Bank (para. 4.17);

(k) not to incur before 1986 any additional debt without the Bank'sprior approval (para. 4.17).

- 26 -

5,03 Conditions of loan effectiveness are,

(a) the enactment of the STB's schéma d'amenagement (para. 3.08);

(b) the enactment of the UAT's schéma d'amenagement with provisionssatisfactory to the Bank (para. 3.11);

(c) that all steps have been taken to permit SONABA to begin carry-ing out the project works on the UAT (para. 3.12);

(d) the signing of interagency agreements (para. 3.34);

(e) the conclusion of a subsidiary loan agreement between theGovernment and SONABA (para. 3.42);

(f) the increase of SONABA's authorized capital to DH 20 millionand the paying in of DH 4.9 million (para. 3.42);

(g) the adoption by SONABA's Board of a cahier des charges withprovisions agreeable to the Bank (para. 4.05).

5.04 Subject to the conditions of effectiveness described above, theproject is suitable for a Bank loan of US$21 million to the Kingdom ofMorocco. An appropriate term for the loan is 20 years including 5 years'grace.

ANNEX I

MOROCCO


Statistical Appendix to the Sector

Index

Table 1 Accommodation Capacity 12-31-74

Table 2 Evolution of International Arrivals (1968-1974)

Table 3 Arrivals by Means of Entry (1968-1974)

Table 4 Seasonality of Arrivals (1972-1974)

Table 5 Main Commodity Exports (1968-1974)

MOROCCO

B3Y OF AGADIR TOURISM PROJACT

AÂcoiuodation Capacity 12-31-74

3-Star5,-3!ar % 4-Star h V^o tlon Villaes 1-Star otal

No0. S B o N.o Beds No. ofa d . or of!edg Io. of No. of o of Bds geProvince Hotels B*d5 in Province Hotels Beds in Province Hotels Beds in Province HotOle Beds in ProDin9c Motels Beds in Provinoe Hotà» f in Province

Agadir 3 838 16.4 6 1,716 33.6 l1 1,702 33.3 12 549 10.7 10 298 5,8 44 5,103 12.5Ai Hoceima 3 546 29.3 1 1,200 64.3 4 120 6.4 8 1,866 4.6Boni Mellal 1 105 28.3 1 162 43,7 2 48 12.9 1 56 15.1 5 371 0.9Casablanca 3 1,192 22.1 il 1,573 29.1 15 1,460 27.0 12 823 15.2 6 353 6.6 47 5,1401 13.2El Jadida 1 65 24.3 1 60 22.5 5 142 53.2 7 267 0.6Fez 3 1,106 44.9 3 383 15.5 3 - 347 14.1 8 378 15.3 5 250 10,2 22 2,464 6.oKenitra 1 144 27.3 3 185 35.1 3 198 37.6 7 527 1.3Khourigba 2 107 100.0 2 107 0.3Ksar Es Souk 2 255 74.8 1 53 15.5 1 33 9.7 4 341 0.8.Marrakech 3 1,415 30.4 4 764 16.4 12 1,827 39.2 9 467 10.0 5 187 4.0 33 4,660 I1.4Meknes 1 260 11.4 1 22 1.0 8 1,094 47.9 8 679 29.7 5 230 10.0 23 2,285 5.6Nador 1 192 100.0 1 192 0.5Ouarzazate 5 856 66.5 2 400 31.0 1 32 2.5 8 1,288 3.2Oujda 2 157 59.0 3 109 41.0 5 266 o.6Rabat 2 868 31.6 4 546 19.9 8 665 24.2 7 425 15.5 4 245 8.8 25 2,749 6.7Safi 1 140 43.5 1 68 21.1 1 40 12.4 1 74 23.0 4 322 0.8Tangier 5 1,602 22.6 10 2,628 37.1 il 1,445 20.4 9 794 11.2 10 606 8.6 45 7,075 17.4Tar 1 80 53.3 2 70 46.7 3 150 0.4Tetouan - - 3 352 6.6 10 4,510 85.1 2 205 3.9 7 231 4.4 22 5,298 13.0

Total 20 7,281 17.9 59 10,287 25.4 90 15,355 37.6 75 4,698 11.5 71 3,111 7.6 315 40,732 100.0

Source: Ministry o! Tourism im

August 1975

fOROCCO

BAY OF ÂQADIR TOURISM PROJECT

Evolution of International Arrivals (1968-1974)

National:,ty 1968 1969 1970 1971 1972 Number

French 119,131 148,986 173,795 188,173 ( 210,626 265,989 216,422 20.57

us 56,411 94,125 117,796 136,744 195,680 185,983 173,217 16.46

Spanioh 36,869 36,229 41,877 42,766 76,104 175,793 70,184 6.67

British 64,445 79,721 84,396 80,886 107,643 134,651 107,839 10.25

Algerian 28,396 46,151 60,232 66,613 91,510 105,373 147,956 14.06

German 34,724 38,551 55,405 70,703 75,144 90,440 82,157 7.80

Belgian 16,812 21,190 21,585 21,775 25,6o7 36,837 24,149 2.29

Dutch 16,143 23,227 25,449 24,481 29,100 36,173 33,360 3.17

Scandinavian 26,444 31,599 29,909 20,741 32,416 32,747 29,392 2.79

Canadian 9,306 15,198 17,083 20,712 28,848 31,251 26,539 2.52

Italian 14,141 17,597 18,554 17,916 25,o68 25,507 26,954 2.56

Swiss 10,911 15,431 9,792 12,690 19,484 24,533 21,256 2.02

Other 35,659 38,584 45,119 53,051 71,381 80,317 92,593 8.80

Total 469,492 606,589 700,992 757,256 987,611 1,225,594 1,052,018 1oeD.o

Cruisers 106,880 95,361 105,511 91,376 131,183 147,165 133,364

Grand Total 576,372 701,950 806,503 848,632 1,118,794 1,376,759 1,185,382

17 OfficiaI statistics include Moroccan visitors from abroad. These have been deleted froin this table.

Source: Ministry of Tourism

August 1975

MNEN ITable 3

MOROCCO


Arrivals by Means of Entry I968-1974)(Percentages)

1968 1969 1970 1971 1972 1973 1974

Air 34.12 34.64 31.14 37.06 33.16 32.39 35.61

Sea 41.35 36.98 39.89 32.26 33.67 28.59 33.39

Land 24.53 28.38 28.97 30.68 33.17 39.02 31.00

Total 100.00 100.00 100.00 100.00 100l 00 100.00 100.00


August 1975

ANNEX ITable 4

MOROCCO


Seasonality of Arrivals (1972-1974)(Percentages)

1972 1973 1974

January 4.87 4.65 4.38

February 4.72 4.00 4.31

March 7.59 5.52 6.23

April 7.92 7.76 7.23

May 6.78 7.03 6.20

June 7.08 8.70 6.71

July 13e94 15.87 14.66

August 16.22 17.57 18.10

September 10.49 11.99 10.19

October 7.96 6.17 7.64

November 6.10 4.42 5.87

December 6.33 6.32 8.48

Total 100.00 100.00 100.00


August 1975

ANNEX ITable 5

MOROCCO


Main Commodity Exports (1968-1974)(DH millions)

1968 1969 1970 1971 1972 1973 1974

Phosphate 544 551 572 588 673 788 4,o75

Citrus fruit 420 389 357 389 429 494 388

Tomatoes 144 146 180 163 179 230 183

Legumes and pulses 94 94 132 89 138 181 158

Canned fish 130 124 127 148 134 190 244

Canned fruitand vegetables 51 65 56 88 113 132 165

Vlive oil 7 91 16 21 111 101 147

Tourism 450 614 682 760 893 1,005 1,025

7ource: Office des Changes

August 1975

ANNEX 1IPage 1

MOROCCO


Project Description and Cost Estimates

The project consists of the following elements to be executed by the agenciesindicated:

1. SONABA

(a) provision of infrastructure facilities for the UAT area including:

(i) a street system within the UAT, an access road to RP 32 anda bridge and a ford across the Oued Lahouar;

(ii) a water distribution system linked with ONEP's existing network;

(14J) a power distribution system linked with ONE's existing networkthrough a 2-km overhead line;

(iv) a sewerage network linked with Agadir's existing system;

(v) a telecommunications system including a 1,000-line extensionof Agadir's telephone exchange;

(vi) landscaping of the major open spaces (e.g., RP 32 access,south bank of the Oued Lahouar and beach parking).

(b) provision of common facilities for the UAT incllidi-ngs

(i) two shopping areas consisting of shops, offices, restaurants,bars, a cinema, an open-air theater, a hammam and a handicraftscenter;

(ii) sports facilities consisting of tennis courts, swimming pools;a multipurpose recreation area and a beach center.

(c) provision of technical and financial advisers during the constructionperiod.

2. Ministry of Public Works

(a) construction of a bypass road about 8 km long to the east of AitMelloul, including a new bridge over the Souss River;

(b) localized improvements to CT 7002 between Agadir and Imouzzer Idaou Tanane and study of the road between Imouzzer Ida ou Tanane andRP 40;

(c) replacement of the fish pumps in Agadir harbor.

ANNEX IIPage 2

3. Ministry of Urban Development, Housing, Tourism and Environment

(a) technical assistance for a study of the preservation of ruralsites in Immouzer Valley;

(b) technical assistance for the completion of Agadir's physicalplanning studies;

(c) technical assistance for the preparation of a Second Tourism Project.

4. Local Authorities

technical assistance for the study of the Greater Agadir sewerage system.

ANNEX IIPage 3

Statistical Appendix

1. General Cost Estimates

Table 1 Breakdown of Project Cost by ComponentsTable 2 Breakdown of Project Cost by Components and by YearsTable 3 Contingencies AllowancesTable 4 Schedule of Expenditures by Project Components - Quarterly

2. Detailed Cost Estimates

(a) UAT Infrastructure

Table 6 Streets and Parking; Street LightingTable 7 Sewerage; Water SupplyTable 8 Power Supply; TelecommunicationsTable 9 Landscaping

(b) Common Facilities

Table 10 Shopping CentersTable Il Sports and Beach Facilities; Maintenance Facilities

(c) Regional Infrastructure

Table 12 Ait Melloul Bypass; Upgrading CT 7002Table 13 Replacement of Fish Pumps

(d) Project Administration

Table 14

(e) Technical Assistance and Studies

Table 14

TABLE 1

MOROCCO : BAY OF AGADIR TOURISM PROJECT

Breakdown of Project Cost by Components

(DH '000)

ForeignCivil Physical Price Professional Total Cost _ Exchange Component

Code Component Works Eauipment Increase. Increase Services DH '000 US$ '000 DH '000 US$ '000

1. UAT Infrastructure 36,129 11.207 4.918 28,878 4,009 85.141 22.404 42.793 11.260

1 Streets and parking 18,494 - 1,849 10,870 1,155 32,368 8,518 15,630 4,1132. Street lighting 324 2,290 261 1,601 130 4,606 1,212 2,590 6813 Sewerage 5,497 548 605 3,469 302 10,421 2,742 5,398 1,4214 Water supply 2,236 117 235 1,525 471 4,584 1,206 2,275 5985 Power supply 3,023 5,279 830 5,350 .1,660 16,142 4,248 8,404 2,2116 Telecommunications 1,003 2,705 556 2,430 - 6,694 1,761 4,925 1,2967 Landscaping 5,552 268 582 3,633 291 10,326 2,717 3,571 940

2. Common Facilities 12,305 6.034 1.833 14.084 917 35.173 9.255 19.019 5.005

1 Shopping centers 9,113 3,762 1,287 9,701 644 24,507 6,449 12,854 3,3832 Sports & beach facilities 2,766 1,636 440 3,386 220 8,448 2,223 4,690 1,2343 Maintehance facilities 426 636 106 997 53 2,218 583 1,475 388

3. Regional Infrastructure 13.800 505 1.470 7.476 1. 807 25,058 6.594 12,232 3,218

1 Ait Melloul bypass 10,160 - 1,016 5,306 1,188 17,670 4,650 8,210 2,1602 Upgrading of CT 7002 3,300 50 335 1,764 552 6,001 1,579 3,037 7993 Replacement of fish pumps 340 455 119 406 67 1,387 365 985 259

4. Proiect Administration - - - 1.168 6.369 7,537 1.983 2,157 568

5. Technical Assistanceand Studies - - - 626 4.390 5.016 1.320 2,443 643

TOTAL PROJECT COST 62,234 17.746 ,221 52,232 17,492 157,925 41,556 78,644 20,694 >

-~~~~~~~~~~~~~~~~~~~~~~Q e

JS H

August 1975

TABLE 2

MOROCCO BAY OF AGADIR TOURISM PROJECT

Breakdown of Project Cost by Cosmonents and by Yeare

(DR '000)

YEAR I YEAR 2 YEAR 3 YEAR 4 YEAR 5

Foreign Foreign Foreign Foreign Foreign Foreign

Total Exchange Total Exchange Total Exchange Total Exchange Total Exchange Total Exchange

Code Component Cost Component Cost Component Cost Component Cost Component Cost Component Cost Component

1. UAT Infirastructuft 85,141 42,793 1.831 534 13,481 6,588 31,473 15.774 25.871 13_311 12,485 6,586

1 Streets and parking 32,368 15,630 854 256 5,813 2,702 12,295 6,054 9,008 4,458 4,398 2,160

2 Street lighting 4,606 2,590 103 31 508 265 1,464 842 1,572 902 959 550

3 Sewerage 10,421 5,398 233 70 1,853 893 4,007 2,131 3,501 1,884 827 420

4 Water supply 4,584 2,275 90 13 949 450 1,722 877 1,403 723 420 212

5 Power supply 16,142 8,404 319 48 3,095 1,673 6,377 3,478 4,407 2,297 1,944 908

6 Telecommunications 6,694 4,925 - - 550 351 1,581 1,014 2,327 1,795 2,236 1,765

7 Landscaping 10,326 3,571 232 116 713 254 4,027 1,378 3,653 1,252 1,701 671

2. Common Facilities 35.173 19,019 - - 743 216 5.136 2,574 13,321 7.228 15,973 9.001

1 Shopping canters 24,507 12,854 - 553 159 4,167 2,061 9,406 5,052 10,381 5,582

2 Sports & beach facilities 8,448 4,690 - - 190 57 869 483 3,512 1,972 3,877 2,178

3 Maintenance facilities 2,218 1,475 - _- - 100 30 403 204 1,715 1,241

3. Regional Infrastructure 25L058 12,232 1.138 6007.907 2 .8Oh il1 5.528 6.863 3.203 - -

1 Ait Melloul bypass 17,670 8,210 660 299 4,263 1,980 6,778 3,171 5,969 2,760

2 Upgrading of CT 7002 6,001 3,037 430 278 1,136 553 3,541 1,763 894 443

3 Replacement of ftsh pumps 1,387 985 48 30 508 361 831 594 - - - -

4. Project Administration 7,537 2,157 1,427 687 1,633 539 1.588 453 1,394 230 1,495 248

5. Technical Assistanceand Studies 5 016 2.443 1,572 799 2,344 1.201 725 331 375 112 - -

TOTAL PROJECT COST 157,925 78,644 5,968 2,627 24,108 11,438 50.072 24.660 47.824 24 084 29.953 15.835

(US$1 '000)

1. UAT Infrastructure 22404 11,260 481 140 3,549 1,733 8,282 4.151 6.807 3.501 3.285 1.73S

1 Streets and parking 8,518 4,113 225 67 1,530 711 3,236 1,593 2,370 1,173 1,157 56Y

- 2 Street lighting 1,212 681 27 8 134 70 385 221 414 237 252 145

3 Sewerage 2,742 1,421 61 18 488 235 1,054 561 921 496 218 111

4 Water supply 1,206 598 23 3 250 118 453 231 369 190 111 56

5 Power supply 4,248 2,211 84 13 814 440 1,678 915 1,160 604 512 239

6 Telecommunications 1,761 1,296 - - 145 92 416 267 612 472 588 465

7 Landscaping 2,717 940 61 31 188 67 1,060 363 961 329 447 150

2. Common Facilictes 9,255 5.005 _ - 195 57 1,352 677 3.505 1 902 4.203 2.369

1 Shopping centers 6,449 3,383 - - 145 42 1,097 542 2,475 1,330 2,732 1,469

2 Sports & beach facilities 2,223 1,234 - - 50 15 229 127 924 519 1,020 573

3 Maintenance facilities 583 388 - - - - 26 8 106 53 451 327

3. Regional Infrastructure 6,594 3.218 300 160 1.555 762 2, 933 1 1sh, l842

1 Ait Melloul bypass 4,650 2,160 174 79 1,122 521 1,7 8 3

834 1,571 726

2 Upgrading of CT 7002 1,579 799 113 73 299 146 932 464 235 116

3 Replacement of fish pumps 365 259 13 8 134 95 218 156 - - -

4. Proiect Administration 1v983 568 375 181 430 142 418 119 367 61 393 65 f g

5. Technical Assistanceand Studies 1 320 643 414 210 617 316 191 87 98 30 -

TOTAL PROJECT COST 41,556 20,694 1,570 691 6,346- 3,010 13,176 6,488 12,583 633 7.881 4,163

Auguat 1975

TABLF 3

MOROCCO: BAY OF AGADIR TOURISM PROJECT

Contingencies Allawances

(US$ '000)

Civil Works Equipment Professional Services Total CostLocal Foreign Total Local Foreign Total Local Foreign Total Local Foreign total

Total Project CostExcluding Contingencies (a) 8,612 7,766 16,378 1,404 3,264 4,668 3,016 1,585 4,602 13,032 12,616 25,648.Percentage of Total 53'/, 47% 100% 30% 70% 100% 65% 35% 100% 51% 49% 100%

Contingenciesa) Physical Increase

Percentage of (a) 10% 10% 10% 10% 11% 11% 8% 9% 8%

Amount 872 783 1,655 146 362 508 - - - 1,017 1,146 2,163

b) Price IncreasePercentage of (a) 59% 58% 58% 59% 63% 62% 30% 22% 28% 52% - 55% 54%

Amount 5,066 4,519 9,585 824 2,055 2,879 923 358 1,281 6,813 6,932 13,745

c) Total CostPercentage of (a) 69% 68% 68% 69% 74% 72% 30% 22% 28% 60% 64% 62%

Amount 5,938 5,302 11,240 970 2,417 3,387 923 358 1,281 7,830 8,078 15,908

Percentage of Total 53% 47% 100% 29% 71% 100% 72% 28% 100% 49% 51% 100%

Total Cost IncludingContingeacies 14,550 13,068 27,618 2,374 5,681 8,055 3,939 1,943 5,883 20,862 20,694 41,556

Percentage of Total 53% 47% 100% 29% 71% 100% 67% 33% 100% 50% 50% 100%

4/ Professional Services include Project Administration, Technical Assistance and Studies Components.

August 1975

TABLE 4

MOROCCO : AY 0F AGADIIR TOURISM PROJECT

Sched,ale .f Ex enditure. by Pro)ect Comaponeota -Q..rterlv

(US$ '000)

Code rroje!otSeto Q 1j 2 Q 4QQ Q 9 6 Qf 7 i Q~ 9j Q 10 Il 12 013 <114 <115 0 16 017 Q 18 019 Q20 rTOT

1. LAÂT 3.1,frastn,ctsre 100 127 127 127 400 750 1,050 1,349 1,682 2,000 2,300 2,300 2,100 1.800 1.550 1.357 1,100 900 700 585 22,404

Total YTear 1 - - 481 - - - - - - - - - - - - - -

Toctal Nea IlI - 3,549- -- -- - - -

Total Y ear HIi- - - - - 8.282 - - - - - -

Total-Ye.r IV - - - - - - - - - - -- 6,807 - - -

T.t.]-Year V - - - - - -- --- - - 3 85 -

Total-(ceeltve 4.1 - - 4 030 1-2.312 19.119 22,404

2. ~ù~ Facilities - 45 50 50 50 200 280 370 502 650 800 950 1.105 1,103 1,100 1,000 1.000 9.255

Total-'Yearî - - - - - - - - - - - - - - -

Total Year Il- - - - - 195 - - - -- - -- -

Total -Year 111 - - - - - - - 1.352 - - - - - - - -

Total1 Year IV- - - - - - - - - - 3,505 --- -

Total-Year V - - - - - - - - - -- 4.203 -

Total1 (aoccaalative) - - - - - 195- 1,547 - 5,052 - - 9,255 -

3.1 Ai MLloo Byas36 46 46 46 217 217 344 344 420 420 471. 472 396 395 390 390 - - - - 4,650

Total Y ear I - - - 174 - - - 1,122 - - - - - - - - - - - -

Total-Year Il - --- - - -

Total Y ear 1I -- - - 1,783 - - - - - -

Total -Year IV - - - - - - - - - - 1,571 - --

Total Y ear V --- - - - - - - - - - - - -

Total -(acc.-zlative> - - - 174 - - - 1,296 - - - 3,079465

3.2 Upgrading of CT 7002 23 30 30 30 50 50 99 100 233 233 233 233 135 100 - - - 1.579

Total -Year I - 113 - - - - - - -

Total-Year Il - 299 - -

Total-YearII - - - - - 732 - - - - - - - -

Total-Year IV - - - - -- - - 215 - - -

Total-Year V - -- - - - - - - - - - - - -

Total -(accusslative) - - 113 - - - 412 - - 1,344 - î,7T - -

3.3 Replaceient of Fish PuIpsO - - 5 8 27 27 40 40 55 55 54 54 -- - -365

T.t.1-Yearî - - 13 - - - - - - - - - - - - - -

T.tal-Year II- - - - - 134 - - - - - - - - - -

Total-Yearlî - - - - - - 218 - - - - - - - -

T.tal-Ye- IV - - - - - - - - - - - - -- - -

Total Y ear V --- - - - - - - -- -- -

Total -(accoeolat ive) - 13 - - - 147 - - 365 - - - --

4 Tota9l94 94 94 10 107 107 10 104 104 10 - 1-9 92 92 98 98 98 98 1

4 TPret1 Yearto 93 94 94 374 10 10 10 10 10 10 0 10 91 92 92 92 98 9 98 98 1,8

Total Year Il -~ - - - - -430 - -- - - - - -- -

Tot.1 YearlI - - - - - - 418 - - - - - - -

Tot.1-Yeart IV - - - - - - 367 - - -

Total Yeari V - - -- __193 - - -

Total ....css,uative) T 7 5 - - - 805 - -1,223 - - - 1,590 - 1.983 -

5. TecoclAsitne&Itudies 57 57 150 150 150 150 158 159 48 48 48 47 24 24 25 25 - - - - 1.320

Tot.1-Ye.r 1 - - - 414 -- - - - - - - - - - - -

Tot.1-Ye.r II l 617 -- - - - - - - - - - -

Tot.1-YearlI - - - - - - 191 - - - - - - - -

Total Y- IorV - - - - - - - - - - - - -- 98 - - - -

Tot.1lY-Te V

Total (acconalative) - - - -41î4 - - - 1.031 - 1,2322 - - 1.320 - - - -

TOTAL PROJECT COlT 309 354 452 455 996 1,351 1,848 2,151 2,742 3,140 3,580 3,714 3,396 3,211 3.007 2,969 2,301 2,098 2,798 1,684 41,556

Tota1-Yearcl - - - 1,570 - - - - - - - - - - - - - - -

Tot.1-Ye.r Il 6,346 -- - - - - - - -- -

Total -Ye.r III - - - --- 13.176 - - - - - - - -

Tot.1-Year IV - - - - - - - - - - -- 12.583 - -- -

Total-Ye.r V - - - - - - 7 881 -

Total -(...ooulative) - - - 1,570 - -7,916 - 21,091 33,675 - - - 4t

Aug..t 1975 41

ANNEX IIPage 8

TABLE 5

MOROCCO : BAY OF AGADIR TOURISI PROJECT

Forecast of IBRD Disbursement

(US$ '000)

DisbursementsImplementation Quarter Quarterly % Cumulative _ Quarterly %

First Year Qi - - 21,000 100.0

Q2 134 0.6 134 0.6 20,866 99.4Q3 151 0.7 285 1.3 20,715 98.6

Q4 201 1.0 486 2.3 20,514 97.7

Second Year Q5 205 1.0 691 3.3 20,309 96.7Q6 464 2.2 1,155 5.5 19,845 74.5Q7 638 3.1 1,793 8.6 19,207 91.5Q8 880 4.2 2,673 12.8 18,327 87.3

Third Year Q9 1,028 4.9 3,699 17.7 17,299 82.4Q10 1,347 6.4 5,046 24.1 15,952 76.0Qîl 1,547 7.4 6,595 31.5 14,405 68.6Q12 1,764 8.4 8,359 39.9 12,641 60.2

Fourth .Year Q13 1,831 8.7 10,190 48.6 10,810 51.5Q14 1,704 8.1 11,894 56.7 9.106 43.4Q15 1,612 7.7 13,506 64.4 7,494 35.7Q16 1,516 7.2 15,022 71.6 5,978 28.5

Fifth Year Q17 1,503 7.1 16,525 78.7 4,475 21.3Q18 1,219 5.8 17,744 84.5 3,256 15.5Q19 1,110 5.3 18,854 89.8 2,146 10.2Q20 950 4.5 19,804 94.3 1,196 5.7

Sixth Year Q21 1,196 5.7 21,000 100.0 - -

TOTAL 21,000 100.0

August 1975

TABLE 6

MOROCCO Z3AY OF AGADIR TOURISM PROJECT

Cost Estimates UAT Infrastructure

(DH'OOO) Exchange Rate: US$1 - DlR 3.80

A. TOTAL COST FOREIGN EXCHANGE COMPONENT YEAR I YEAR 2 YEAR 3 YEAR 4 YEAR 5

Foreign Foreign Foreign Foreign Foreigncivil Equip- Civil Equip- Total Exchange Total Exchange Total Exchange Total Exchange Total ExchangeWorks ment Total Works ment Total Cost Component Cost Component Coaen t CDonent Cost Component Cost Compon.nt

1. Streets and tarking

1.1 Primary streets 5717 - 5717 2858 - 2858 - - 1715 857 2287 1143 1715 858 -1.2 Secondary streets 7386 - 7386 3694 - 3694 - - 730 369 2954 1478 2216 1109 1478 73S1.3 Parking areas 3041 - 3041 1520 - 1520 - - 304 153 1216 608 912 455 609 3041 4 Pedestrian paths 911 _ 911 365 - 365 - - 91 36 365 146 273 110 182 731.5 RP 32 access 719 - 719 359 - 359 - - 288 144 431 215 - -1.6 Oued Lahouar bridges 720 - 720 324 - 324 - - 288 130 432 194 _- -

Subtotal 18494 - 18494 9120 - 9120 - - 3424 1689 7685 3784 5116 2532 2269 1115

Physical increase 1849 - 1849 911 - 911 - - 342 169 768 378 512 253 227 111Price increase 10317 - 10317 5087 - 5087 - - 1193 588 3842 1892 3380 1673 1902 934

Contingencies subtotal 12166 - 12166 5998 - 5998 - - 1535 757 4610 2270 3892 1926 2129 1045

Soil *tudies - - 268 - - 80 134 40 134 40 - - - - -Design & Supervision - - 1440 - - 432 720 216 720 216

Prof. Serv. subtotal - - 1708 - - 512 854 256 854 256

TOTAL COST (DH'000) 30660 - 32368 15118 - 15630 854 256 5813 2702 12295 6054 9008 4458 4398 2160

TOTAL COST (US$'000) 8068 - 8518 3978 - 4113 225 67 1530 711 3236 1593 2370 1173 1157 569

2. Street Lighting

2.1 Underground cables 142 1264 1406 56 759 815 - - 281 163 562 325 422 245 141 822.2 Str-t lighting ecuipment 182 1026 1208 73 616 689 - - - 362 207 484 275 362 207

Subtotal 324 2290 2614 129 1375 1504 - - 231 163 924 532 906 520 503 289

Physical increase 32 229 261 13 137 150 - - 28 16 92 53 91 52 50 29Price increase 187 1337 1524 75 799 874 - - 95 55 448 257 575 330 406 232

Contingencies subtotal 219 1566 1785 88 936 1024 - - 123 71 540 310 666 382 456 261

Design & Supervision - - 207 - 6 t2 103 31 104 31 - - - - _ e

TOTAL COST (DHI'000) 543 3856 4606 217 2311 2590 103 31 508 265 1464 842 1572 902 959 550

TOTAL COST (US$'000) 143 1315 1212 57 608 681 27 8 134 70 385 221 414 237 252 145

Auguet 1975

TAbLE 7


Cost Estimates: UAT Infrastructure

(DH' 000)Exchange Rate: US$ I = DH 3.80

A. TOTAL COST FOREIGN EXCHANGE COMPONENT YEAR I YEAR 2 YLAR 3 YEA 4 YEAR 5

Foreign Foreign Foreign Foreign ForeignCivil Equip- Civil Equip- Total Exchange Total Exchange Total Exchange Total Exchange Total ExchangeWorks ment Total Works ment Total Cost ComPonent Cost Component- Coset Component Cost Component Coat Component

3. Sewerage

3.1 Primary network 2954 60 3014 1478 49 1527 - - 904 457 1205 612 905 458 - -

3.2 Secondary network 2099 41 2140 1050 33 1083 - - 214 108 857 433 642 325 427 217

3.3 Pumping stations 241 443 684 120 354 474 - - - - 342 237 342 237 - -

3.4 Rising mains 203 4 207 101 3 104 - - - 103 52 104 52

Subtotal 5497 548 6045 2749 439 3188 - - 1118 565 2507 1334 1993 1072 427 217

Physical increase 550 55 605 275 44 319 - - 112 57 251 133 199 107 43 22Price increase 3003 301 3304 1510 241 1751 - - 389 201 1249 664 1309 705 357 181


Design & Supervision - - 467 - - 140 233 70 234 70 - - - - -

TOTAL COST (DN'000) 9050 904 10421 4534 724 5398 233 70 1853 893 4007 2131 3501 1884 827 420

TOTAL COST (USs'000o 2382 238 2742 1193 191 1421 61 18 488 235 1054 561 921 496 218 111

4. Water Supply

4.1 Primary network 1341 70 1411 737 55 792 - - 423 238 565 316 423 238 - -

4.2 Secondary network 895 47 942 492 37 529 - - 94 53 376 211 283 159 189 106

Subtotal 2236 117 2353 1229 92 1321 - - 517 291 941 527 706 397 189 106

Physical increase 223 12 235 123 9 132 - - 52 29 94 S3 70 40 19 10Price increase 1211 60 1271 663 50 713 - - 180 101 469 263 465 261 157 88


Design & Supervision - - 725 - - 109 90 13 200 29 218 34 162 25 55 8

TOTAL COST (DH1'000) 3670 189 4584 2015 151 2275 90 13 949 450 1722 877 1403 723 420 212

TOTAL COST ('JS$'000) 966 50 1206 530 40 598 23 3 250 118 453 231 369 190 111 56

August 1975

TABLE 8

MOROCCO : AY OF AGADIR TOURISM PROJECT

Cost Estimates UAT Infrastructure

(DH'OOO)Exchange Rate: US$ 1 = DH 3.80

A. TOTAL COST FOREIGN EXCHANGE COMPONENT YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Foreign Foreign Foreign Foreign Foreign

Civil Equip- Civil Equip- Total Exchange Total Exchange Total Exchange Total Exchange Total Exehange

Works ment Total Works ment Total Cost Component Cost Component Cost Component Cost Component Cost Component

5. Power Supply

5.1 Trunk supply 25 144 169 il 87 98 - 68 39 101 59

5.2 Substation 317 586 903 158 468 626 - - 361 250 542 376 - -

5.3 MV transmission lines 234 349 583 93 209 302 - - 175 90 233 122 175 90

5.4 Transformers 840 1551 2391 419 1240 1659 - - 718 498 955 663 718 498

5.5 LV distribution lines 1607 2649 4256 643 1590 2233 - - 425 223 1703 893 1277 670 851 447

Subtotal 3023 5279 8302 1324 3594 4918 - - 1747 1100 3534 2113 2170 1258 851 447

Physical increase 302 528 830 132 360 492 - - 175 110 353 211 217 126 85 45

Price increase 1616 2842 4458 702 1909 2611 - - 598 377 1742 1042 1413 821 705 371


Design & Supervision - - 2552 - - 383 319 48 575 86 748 112 607 92 303 45

TOTAL COST (DH000) 4941 8649 16142 2158 5863 8404 319 48 3095 1673 6377 3478 4407 2297 1944 908

TOTAL COST (US$'000) 1300 2276 4248 568 1543 2211 84 13 814 440 1678 915 1160 604 512 239

6. Telecommunications

6.1 Trunk supply 203 304 507 81 244 325 - 203 130 304 195 - -

6.2 Distribution lines 640 970 1610 256 776 1032 - - 162 103 644 413 482 310 322 206

6.3 Telephone exchange extensions 160 1431 1591 64 1288 1352 - - - 675 796 677

Subtotal 1003 2705 3708 401 2308 2709 - - 365 233 948 608 1277 985 1118 883

Physical inerease 150 406 556 60 346 406 - - 55 35 142 91 191 148 168 132

Price inerease 64' 1782 2430 268 1542 1810 - - 130 83 491 315 859 662 950 750


Design & Supervision - - - - - - - - - - - - - -

TOTAL COST (DH'OOO) 1801 4893 6694 729 4196 4925 - - 550 351 1581 1014 2327 1795 2236 1765

TOTAL COST (US$'000) 474 1287 1761 192 1104 1296 - - 145 92 416 267 612 472 588 465

August 1975

TABLE 9


Cost Estimates : UAT Infrastructure

(DHO000)

Exchange Rate: US$ I = DH 3.80

A. TOTAL COST FOREIGN RECHAIGE COMPONEMT YE&R 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5


Civil Equip- Civil Equip- Total Exchange Total Exchange Total Exchange Total Exchange Total ExchangeWorks ment Total Works ment Total Cost Component Cost Component Cost Component Cost Component Cost Component

7. Landscaping

7.1 Internal armas nd gardens 2795 177 2972 839 97 936 _ _ 297 94 1189 374 892 280 594 1887.2 External arsas and gardens 850 35 885 255 19 274 - - 89 28 354 110 265 82 177 547.3 Oued Lahouar arma 549 22 571 164 12 176 - - - - 285 87 286 89 - -

7.4 RP 32 belvedere 568 23 591 171 13 184 - - - - 295 92 296 927.5 Beach parking area 256 il 267 128 6 134 - - - - 133 67 134 67 - -

7.6 Site preparation for build-ing construction 534 - 534 267 - 267 - - 53 27 214 107 160 80 107 53

Subtotal 5552 268 5820 1324 147 1971 - - 439 149 2470 837 2033 690 878 295

Physical incresse 555 27 582 182 15 197 - - 44 15 247 84 203 69 88 29Price increamse 33 153 3460 1083 88 1171 - - 152 51 1233 418 1340 455 735 247


Design & Supervision - - 464 - - 232 232 116 78 39 77 39 77 38 - -

TOTAL COST (DH'O00) 9414 448 10326 3089 250 3571 232 116 713 254 4027 1378 3653 1252 1701 571

TOTAL COST (S$V000) 2477 118 2717 813 66 940 61 31 188 67 1060 363 961 329 447 150

August 1975

TABLE 10

MOROCCO : bAY OF AGADIR TOURISM PROJECT

Cost Estimates : Co-nmon Facilities

Exchange Rate: US$1 - DU 3.80

B. TOTAL COST FOREIGN EXCBANGE COMPONfENT YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5


Civil Equip- Civil Equip- Total Exchange Total Exchange Total Exchange Total Exchange Total Exchange

Works ment Total Works ment Total Cost Comaonent Cost Comoonent Cost Component Cost Component Cost Componmit

1, Shoppinsg Centers

1.1 Services and officebuildings 1233 432 1665 617 260 877 - - - - 332 171 666 353 667 353

1.2 Shopping facilities 6082 2137 8219 3041 1282 4323 - - - - 1644 865 3287 1729 3288 1729

1.3 Restaurant & entertain-ment facilities 888 475 1363 444 285 729 - - - - 273 146 545 291 545 292

1.4 Pandicrafts center 224 159 383 112 102 214 - - - - - - 191 106 192 108

1.5 Cinema 347 313 660 173 200 373 - - - - - - 330 186 330 187

1.6 open-air theater 117 42 159 58 86 144 - - - - - - 79 72 80 72

1.7 Hammam 222 204 426 111 122 233 - - - - _ _ 213 116 213 117

Subtotal 9113 3762 12875 4556 2337 6893 - - - - 2249 1182 5311 2853 5315 2858

Physical increase 911 376 1287 455 234 689 - - - - 225 118 531 285 531 286

Price increase 6694 2545 9239 3274 1680 4954 - - - - 1140 602 3564 1914 4535 2438

Contingencies subtotal 7605 2921 10526 3729 1914 5643 - - - - 1365 720 4095 2199 5066 2724

Design & Supervision - - 1106 - - 318 - - 553 159 553 159 - - - -

TOTAL COST (DR'OOO) 16718 6683 24507 8285 4251 12854 - - 553 159 4167 2061 9406 5052 10381 5582

TOTAL COST (US$'000) 4399 1759 6449 2180 1119 3383 - - 145 42 1097 542 2475 1330 2732 1469

August 1975

TABLE 1l


Cost Estimates: 'Common Facilities

(DH' 000)Exchange Rate: US$ 1 DH 3.80

B. TOTAL COST FOREIGN EKCHANGE COMPONENT YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Foreign Foreign Foreign Foreign ForeignCivil Equip- Civil Equip- Total Exchange Total Exchange Total Exchange Total Exchange Total ExchangeWorks ment Total Works ment Total Cost Component Cost Component Cost Component Cost Component Cost Component

2. Sports & Beach Facilities

2.1 Tennis courts 218 38 256 109 23 132 - - - 52 26 102 53, 102 532.2 Swimming pools 934 927 1861 466 742 1208 - - - - 373 241 744 483 744 4842.3 omnisport areas 72 13 85 22 8 30 - - - - - - 42 15 43 152.4 Stable and riding school 608 260 868 304 142 446 - - - - - - 434 223 434 2232.5 Beach facilities 934 398 1332 466 218 684 - - - - 666 342 666 342

Subtotal 2766 1636 4402 1367 1133 2500 - - - - 425 267 1988 1116 1989 1117

Physical incresse 277 163 440 137 113 250 - - - - 42 26 199 112 199 112Price increase 2101 1124 3225 998 829 .s26 - - - - 211 133 1325 744 1689 949

Contingencies subtotal 2378 1287 3665 1135 942 2076 - - - - 253 159 1524 856 1888 1061

Design & Supervision - - 381 - - 114 - - 190 57 191 57 - - - -

TOTAL COST (DH'OOO) 5144 2923 8448 2501 2075 4690 - - 190 57 869 483 3512 1972 3877 2178

TOTAL COST (US$'000) 1354 769 2223 658 546 1234 - - 50 15 229 127 924 519 1020 573

3. Maintenance Facilities

3.1 Garbage collection build- 213 297 510 107 237 344 - - - - 107 54 403 290ings and equipment

3.2 Street & garden maintenance, 213 339 552 107 271 378 - - - _ 107 54 445 324buildings and equipment ____

Subtotal 426 636 1062 214 508 722 - - - - - - 214 108 848 614

Physical increase 43 63 106 21 51 72 - - - - - - 21 il 85 61Price increase 381 569 950 193 458 651 - - - _ 168 85 782 566

Contingencies subtotal 424 632 1056 214 509 723 - - - _ 189 96 867 627

Design & Supervision - - 100 - - 30 - - - - 100 30 - - - -

TOTAL COST (DH'OOO) 850 1268 2218 428 1017 1475 - _ _ _ 100 30 403 204 1715 1241

TOTAL COST (US$'000) 224 334 583 113 268 388 - - - - 26 8 106 53 451 327

August 1975

TABLE 12


Cent Estimates Regional infrastructure

(DH'DOO) Exchange Ratez US$1 - DR 3.80

TOTAL COST FOREIGN EXCUANCE COMPONENT YEAR 1 YEAR 2 YTEA7 3 YEAR 4 YEAR S

Foreign Foreign Foreign Foreign ForeignCivil Equip- Civil Equip- Total Exchange Total Exchange Total Exchange Total Exchange Total ExchangeWorks oent Total Works ment Total Cost Component Cost Component Coat Component Cost Component Cost Component

1. Ait Melloul Byvass

1.1 Excavation and fll 862 - 862 431 - 431 - _ 431 215 431 216 - -

1.2 Road Construction 3898 - 3898 1949 - 1949 - - 1169 585 1560 779 1169 5e51.3 Oued SOURs Bridge 5400 - 5400 24 - 2 - _ l080 486 21£Q 92 21fiQ 92-

Subtotel 10160 - 10160 4810 - 4810 _ - 2680 1286 4151 1967 3329 1557 _ _

Physîcal increase 1016 - 1016 481 - 481 - 268 128 415 197 333 156Price increase 5186 - 5186 2449 - 2449 - - 930 446 2066 979 2190 1024

Contingencies subtotal 6202 - 6202 2930 - 2930 - _ 1198 574 2481 1176 2523 1180

Studieis ad soil tests - _ 148 - - 118 148 118 - - - - - - _ _

Design - - 804 - - 281 512 181 292 100 - - - - -Supervision - 356 - - 71 - - 93 20 146 28 117 23 - _

Professional servicessubtotal - - 1308 - - 470 660 299 385 120 146 28 117 23 -

TOTAL COST (DH'OOO) 16362 - 17670 7740 - B210 660 299 4263 1980 6778 3171 5969 2760 - -

TOTAL COST (US$'000) 4306 _ 4650 2037 - 2160 174 79 1122 521 1783 834 1571 726 _

2. Upgrading of CT 7002

2.1 Road safety improvements 3000 - 3000 1500 - 1500 - - 500 250 2000 1000 500 2502.2 Parking facilities 200 - 200 100 - 100 - - 100 50 100 50 - -2.3 Landscaping and signals 50 150 50 40 90 - - 75 45 75 45 - - -

Subtotal 3300 50 3350 1650 40 1690 - - 675 345 2175 1095 500 250 - -

Physical increase 330 5 335 165 4 169 - - 67 34 218 110 50 25 - -Price increase 1621 25 1646 810 20 830 - - 234 120 1083 545 329 165 - -

Contingencies subtotal 1951 30 1981 975 24 999 - - 301 154 1301 655 379 190 - -

7tudies _ 285 _ _ 228 285 228 - - - _ _ _Des:?gn - - 285 - 100 145 50 140 50 - - -Supervision - - 100 _ _ 20 - - 20 4 65 13 15 3

Profes sional servicessubttotal s 670 - 348 430 278 160 54 65 13 15 3 - -

TOTAL CO8T (DIlOOO) 5251 80 6001 2625 64 3037 430 278 1136 553 3541 1763 894 443 _ _

TOTAL COST (US$1000) 1382 21 1579 6908 17 799 113 73 299 146 932 464 235 116 _ - .

August 1975

TABLE 13


Cost Estimates: Regional Infrastructure

(DI'000) Exchange Rate: US$1 = DH 3.80

C. TOTAL COST FOREIGN EXCHANGE COMPONENT YEAR I YEAR 2 YEAR 3 YEAZ 4 YEAR 5

Foeign Foreign Foreign Foreign Foreign

Civil Equip- Civil Equip- Total Exchange Tdtal Exchange Total Exchange Total Exchange Total Exchange

Works ment Total Works ment Total Cost Component Cost Component Cost Component Cost Coiponent Cost Couponsut

3. Replacement po Fish Puaaps

3.1 Fish unloading pumps - 370 370 - 370 370 - - 148 148 222 222 -

3.2 Installation of tbepumps 340 85 425 136 68 204 - - 170 82 255 122 -

Subtotal 340 455 795 136 438 574 - - 318 230 477 344 - -

Physical increase 51 68 119 20 66 86 - - 48 34 71 52 - - - -

Price increase 151 202 353 60 193 253 - 113 80 240 173 - - - -

Contingencies subtotal 202 270 472 80 259 339 - - 161 114 311 225 - - - -

Design & Supervision - - 120 - - 72 48 30 29 17 43 25 - - - -

TOTAL COST (DH'OOO) 542 725 1387 216 697 985 48 30 508 361 831 594 - - -

TOTAL COST (US$'000) 143 191 365 57 183 259 13 8 134 95 218 156 - - -

August 1975

TABLE 14


Cost Estimates: Pro1ect Administration

(DH'000) Exchange Rate: US$I 3.80

FOREIGNEXCHANGE

D. TOTAL COST COMPONENT YEAR I YEAR 2 YEAR 3 YEAR 4 YEAR 5


Total Exchange Total Exchange Total Exchange Total Exchange Total Exchange

Cost Component Cost Component Cost Component Cost Component Cost Component

Prolect Administration

1. Technical Personnel 4894 1517 1082 591 1175 412 1047 306 795 104 795 104

2. Administrative Personnel 615 - 123 - 123 - 123 - 123 - 123 -

3. Secretaries & Chauffeurs 260 - 52 - 52 - 52 - 52 - 52 -

4. Office & Transportation 600 360 120 72 120 72 120 72 120 72 120 72

Subtotal 6369 1877 1377 663 1470 484 1342 378 1090 176 1090 176

Price increase 1168 280 50 24 163 55 246 75 304 54 405 72

TOTAL COST (DH'000) 7537 2157 1427 687 1633 539 1588 453 1394 230 1495 248

TOTAL COST (US$'000) 1983 568 375 181 930 142 418 119 367 61 393 65

E. Cost Estimates : Technical Assistance & Studies

Tachnical Assistance &Studies

1. Second Tourism Project 760 456 152 92 304 182 304 182

2. Agadir Severage System 1900 950 950 475 950 475 - -

3. Agadir Urban Development 760 456 250 150 510 306 - - -

4. Environment and ArchitecturalPreservation Unit 970 290 145 44 275 82 275 82 275 82

Subtotal 4390 2152 1497 761 2039 1045 579 264 275 82

Price increase 626 291 75 38 305 156 146 67 100 30 - -

TOTAL COST (DH0'O0) 5016 2443 1572 799 2344 1201 725 331 375 112 - - as

TOTAL COST (US$'000) 1320 643 414 210 617 316 191 87 98 30 - _

ANNEX IIT

Page 1

MOROCCO


Unité d'Aménagement Touristique (UAT)

A. Land-Use Plan and Zoning Regulations

1. The UAT land-use plan indicates three main areas for development:

- a central area of 119 ha for buildings

- a belt area of 90 ha for gardens, sports and beach facilities

- an area of 32.8 ha at the southeastern extremity of the UAT'forfurther expansion of housing.

The central area, designed on a 1:2,000 scale, consists of:

- 16.75 ha for hotels

- 50.25 ha for housing

- 3.90 ha for commercial buildings

- 11.80 ha for social, administrative and cultural buildings

- 36.30 ha for streets, parking areas, gardens and sports facilities.

The main objective of the land-use plan is to create a concentrated developmentthat resembles the physical appearance of traditional Moroccan towns. Buildingdensities range from 350 to 125 beds per ha 1/ in the housing zones and 550to 380 hotel beds in the tourism zones. The maximum building height is twofloors (8 m) for housing and four floors (15 m) for hotels. Map 2 at the endof the report shows the main streets and locates common facilities.The zoning regulations for tourism accommodation and housing are summarizedin the table below:

1/ Net area without public streets, gardens, etc.

ANNEX IIIPage 2

a/Density Max. Build. Floor Area

Zones No.of ha No. of Beds Beds/ha Height (m) Ratio %Tourism Accommodation

Upper-classhotels 2.60 1,000 380 15.0 50-60

Medium classhotels 10.50 4,000- 380 10.5 60-70

Lower-classhotels 0.55 300 550 8.0 60-70

housekeeping 3.10 1,700 550 10.5 50-60apartments

Total 16.75 7,000

Housing

High density 14.85 5,200 350 8.0 75-85

Medium density 25.00 6,500 260 8.0 65-75

Low density 10.40 1,300 125 4.5 35-45

Total 50.25 13,000

a/ Beds per ha of land without public streets.

Areas are set aside for commercial buildings such as shops, banks, travelagencies, restaurants, cafes, cinemas and a handicrafts center. Other areasare planned for social and administrative use including three schools, a healthcenter, a municipal government building, a post office and a police station.The land-use plan is in the process of being finalized as a "schèma d'aménagement."Its enactment with provisions satisfactory to the Bank is a condition of loaneffectiveness. Since this land-use plan determines only the location of theprimary streets and the general land use of the urban sectors, SONABA will have tocomplete detailed plans before final design of the secondary infrastructure.The schedule for the preparation Qf detailed land-use plans and the finalengineering of primary infrastructure is illustrated in the initial implementationschedule (Chart 2).

B. Infrastructure

2. The infrastructure requirements have been studied in conjunction withthe land-use plan. The primary networks have been defined on the basis ofpreliminary engineering studies; the secondary on the basis of standardizedrequirements (e.g., the number of square meters of parking area per inhabitantor tourist). Costs have been estimated within plus or minus 10%. Annex II(Tables 6 to 9) includes detailed cost estimates based on the BCEOM-SOMETpreliminary engineering study adjusted to account for price changes sinceDecember 1974.

3. SONABA would implement directly the streets and street lighting, sewerageand landscaping work. SONABA would employ consultants for final design and

Iu.tEX il!Page 3

and preparation of requests for tender; it would prequalify firms, advertisebids, select contractors and supervise the work (the cost of supervision isthus included under project administration and not professional services).The water, power and telecommunications work would be coordinated bySONABA and implemented by ONE. ONEP and PTT, which would charge SONABA forfinal engineering and supervision. A condition of loan effectiveness wouldbe the signature of agreements between SONABA, ONE, ONEP and PTT. Tlleseagreements would specify inter alia that all procurement under the projectbe carried out in accordance wIth Bank guidelines.

Streets and Parking Areas

4. Access to the UAT will be provided by a diamond crossroad on RP 32and two connections over the Oued Lahouar to the limits of the STB (by abridge and a ford). The Municipality of Agadir will complete these connectionswithin the STB to feed into the existing street system there. The UAT'sprimary street network consists of about 12 km delimiting the different urbansectors. The streets range in width f.-n-"i 12 m with two separate lanes to7.5 m depending on their location ard projected traffic flow. The secondarynetwork consists of 22 km of streets; 15.5 km are 5 m wide and the rest 3-rmwide. All streets will have sidewalks on both sides. Pedestrian paths 2 kmlong through green areas will connect the main service centers. The parkingfacilities, 8 ha in area, provide space for 4,000 vehicles, 2,600 of whichare expected to belong to the resident population (one car per family). Theproject also provides a large plaza for buses.

5. Since SONABA would supervise the implementation of this component thecost of professional services is limited to final design and is equal to 5%of the base line cost plus price contingencies for street design and 8% forbridge design. The foreign exchange component represents:

- 50% of the total cost of streetaand parking areas

- 40% of pedestrian paths

- 45% of bridges

- 30% of professional services.

Street Lighting

6. Street lighting will be provided by underground cables originatingfrom a power substation at the UAT limits. Poles 12 m and 9 m high willbe used to light the primary network, and a simpler system for the secondarynetwork. Professional services for street lighting, as for streets, arelimited to final design and account for 5% of the base line cost plus priceincrease. The foreign exchange component is estimated to make up 40% of civilworks and 60% of equipment.

Sewerage

7. The consultants proposed a combined sewerage system that will collectdomestic sewage and stormwater at a low point near the mouth of the Oued Lahouar.The sewage will be pumped back by a rising maini to a collector bordering RP 32,while rainwater will be discharged into the sea. The capacity of the pumpingstation and the rising main to the RP 32 collector is adequate to handle the

ANNEX IIIPage 4

UAT sewage. If sewage from STB is collected by that system, additional workwould be required. The UAT sewerage network will follow the street system anduse concrete sewers produced locally. The project studied by BCEOM-SOMEThas been expanded to include a supplementary pumping station and main fromthe beach facilities to the UAT main collector.

8. Foreign exchange is estimated to be 50% and 80% respectively of thetotal cost of civil works and equipment. Professional services are limitedto final design since supervision is budgeted to project administration. Finaldesign amounts to 5% of the base line cost plus price increase. Since a dualsystem appears to be technically preferable, the solution proposed by theconsultants will be reconsidered during final design. The funds provided forthe project would adequately finance either solution.

Water Supply

9. The total water consumption of the UAT is estimated at 1.7 millioncubic meters per year with a maximum demand of 115 1/sec. A 400 mm pipe, recentlyinstalled by ONEP just to the limits of the UAT, will meet the water needs ofthe UAT. A loop along RP 32 to the water station of Ben Sergao will be con-structed later by ONEP as part of the general expansion of its facilities inAgadir. This loop will protect the UAT against any interruption of the watersupply and provide additional capacity. The UAT water supply network followsthe road system and will be constructed in asbestos cement pipes producedlocally.

10. The consultants' cost estimates for the primary network have beenrevised on the basis of new estimates by the ONEP office in Agadir. Theestimates for the secondary network have been adjusted only to account forprice increases since December 1974. The foreign exchange component makesup 55% of the total cost of civil works and 80% of equipment. Estimates forprofessional services amount to 20% of the base line cost plus price contin-gencies, the fee usually charged by ONEP.

Landscaping

11. Landscaping and gardens are essential to create an attractive andhomogeneous atmosphere. Landscaping is planned for both internal green spacesand the areas surrounding the UAT. The project includes civil works andequipment for gardens such as irrigation and lighting. The average foreignexchange component makes up 30% of civil works and 55% of equipment. Designand supervision will be mainly by foreign consultants and represent 5% and 3%respectively of the base line cost plus price increase.

Power Supply

12. The estimated need for power amounts to 16,000 kW (13,000 kW forhotel development and 3,000 kW for housing). Power will be provided by a trunkline about 2 km long connecting the UAT with the nearest HV line. An HV/MVsubstation will be built near the UAT. The distribution system will bebased on a primary underground MV network connecting 30 transformers. Thetransformers will feed independent LV underground networks distributingpower along the secondary street network. The cost estimates, revised by thetechnical services of ONE in Casblanca, indicate that the foreign exchange

ANNEX likPage 5

component of civil works is 43% and of equipment 60%. Most of the equipmentis produced locally with imported materials. Professional services includeONE's fee equal to 20% of the cost of construction (base line cost plus pricecontingencies).

Telecommunications

13. Telecommunications in the UAT are estimated to require 400 telephonelines and 30 telex lines. The UAT would be connected with the existingtelephone exchange (2,000 lines) which is in the process of being doubledand would be additionally expanded by 1,000 lines financed under the project.The connection and the internal lines will both be underground. The costestimates for the connection line were prepared by the PTT technical serviceswhich also revised the consultants' estimate for the internal lines. Partof the equipment is produced locally with imported material. The foreignexchange component of civil works is estimated to be 40% and of equipment 60%.To ensure compatibility with the existing network the communications equipmentwould be procured after only limited competition. PTT would not charge for theprofessional services it would provide.

C. Common Facilities

14. The project would provide a core of facilities for shopping, enter-tainment and sports to make the UAT attractive to investors and visitors alike andto ensure architectural homogeneity of the common areas. Detailed cost estimatesare included in Annex II (Tables 10 and 11). SONABA will entrust the finaldesign of these superstructure facilities to consulting architects. SONABA'sstaff will be in charge of project implementation.

Shopping Centers

15. The project includes two clusters of shopping and service facilities,one at the UAT center and the other near the main group of hotels.

List of Facilities and Floor Space

Service and office buildings 2UAT center 1,200 mHotel area 500 m2

Shopping facilities 2UAT center 7,400 m 2Hotel area 1,000 m

Restaurants, bars andentertainment facilities 2

UAT center 800 m2Hotel area 480 m

Cinema 500 seats

Open-air theater 200 seats

Hammam 400 m2

Handicrafts center 375 m2

ANNEX III

The cost estimates include site preparation and are based on the presentcost per square meter for similar construction in Morocco. The cost ofconstructing two paved squares with arcades, fountains and architecturaldecoration is included in the cost estimates of the service and officebuildings and the shopping facilities. The cost estimates of the cinema,the open-air theater, the hammam and the handicrafts center includefurniture and professional equipment Y (e.g., motion picture projector).The foreign exchange component is estimated at 50% of the total cost ofcivil works, 60% of building equipment and 70% of furniture and professionalequipment.

Sports and Beach Facilities

16. The facilities financed under the project would include:

- 6 tennis courts- 4 swimming pools- 1 multipurpose area including a soccer field- 1 riding school including a stable, a riding area and a clubhouse- beach facilities including an enormous swimming pool, a clubhouse,cabanas and a sailing school.

Tennis courts and swimming pools will be grouped in two or three enclosedsports centers2equipped with sanitary facilities. The stable and annexes willhave a 1,000 m covered area, the riding club a 300 m2 floor space and theriding area a 7,500 m2 corral. T§e clubhouse annexed to the beach facilitieswould cover 1,000 m2 with a 200 m restaurant and a 200 m2 nightclub. Thecost estimates are based on the present cost for similar construction. Theforeign exchange component is estimated to make up 50% of the total cost ofcivil works and 55% of equipment. 2/

Maintenance Facilities

17. The maintenance facilities include:

- buildings and equipment for garbage collection- buildings and equipment for road and garden maintenance.

Equipment, including trucks and trailers, amounts to 60% of the total cost.The foreign exchange component is estimated et 50% of the cost ofcivil works and 80% of equipment.

1/ The amounts allocated for this equipment are:Cinema DH 120,000Open-air theater DH 30,000Hammam DH 80,000Handicrafts center DH 60,000

2/ Except for the multipurpose sports area where the foreign exchange componentamounts to 30% of the civil works and for the swimming pools where it amounts to80% of equipment.

ANNEX IVPage 1

MOROCCO

BAY OF AGADIR TOU1,ISM PROJECT


A. Ait Melloul Bypass

Scope of the Project

1. All vehicular traffic flowing into the urban area of Agadir fromthe southeast passes first through the town of Ait Melloul, where three mainregional roads converge. This traffic, which includes many trucks from theagricultural and mining areas of the Souss Valley, has no direct route tothe Agadir beltway serving the harbor, the industrial zone and the easternneighborhoods of the city. The proposed bypass would complete that belt roadthus diverting traffic from the crowded ot-ommercial streets of Ait Mellouland from RP 32, the central road of Agadir which borders both the STB andthe UAT.

Project Description

2. The technical aspects of the bypass construction as well as theinvestment requirements and the economic justification have been consideredin a prefeasibility study by the consultant consortium BCEOM-SOMET.

3. The project would provide for the construction of 8 km of a 7 m-wideroad and a 400 m-long bridge of reinforced concrete across the Souss River.The road would have hard shoulders 3 m wide and its design speed wouldpermit 80 km/hour. Between the junctions with RP 36 and RP 30 the road would bebordered by two bicycle paths each with a 1.5 m width. The total cost ofthe bypass, including professional services and contingencies, amounts toUS$4,650,000. The foreign exchange component would be US$2,160,000, equalto 46% of the total cost. The details of cost estimates are given in Annex Il,Table 12.

4. Physical contingencies represent 10% of the base line cost. Pricecontingencies represent 46% of the base line cost plus physical contingenciesand are estimated on the basis of an 11-12% annual price increase. Constructionof the bypass is scheduled for completion four years after loan signing.The first year would be spent completing the studies and final design. Theproject would be supervised by the Agadir Public Works.

Justification

5. Since the level of tourism-related traffic on the Ait Melloul bypasswould be quite small compared to commercial and other traffic, the economicjustification for the project has been carried out on the basis of benefitsaccruing to all road users in terms of reduced vehicle operating costs andtime savings. The consultants projected use of the bypass on the basis oftraffic counts (Tables 1 and 2). Vehicle operating costs (Table 3), the valueof time and the maintenance costs were determined on the basis of BCEOM's"Etude du Secteur des Transports" updated to 1975. Assuming a 20-year economie

ANNEX IVPage 2

life for the bypass, the internal rate of return would be 27.7%. The sensitivityof the rate of return to variations in investment cost and benefits is given

below:

Sensitivity Test Resulting Rate of Return

Investment cost overrun (15%) 23.0Benefit increase (25%) 32.4Benefit decrease (25%) 22.4

B. Upgrading of CT 7002

Scope of the Project

6. The Imouzzer Valley, one of the most scenic attractions in the vicinity ofAgadir, cuts through the rugged mountains along the north coast of the provincefor nearly 30 km. Palm groves and picturesque villages with traditional mudarchitecture dot the valley. Several thousand tourists visit here annually,many on regularly scheduled bus tours.

7. Although entirely asphalted the road to Imouzzer is unsafe becauseof falling rocks, sharp curves and the absence of guardrails. The projectwould-upgrade the road to meet the needs of additional tourist traffic and

facilitate communications for the 20,000 inhabitants. Since this road couldeasily be connected with the Souss Valley and RP 40 from Marrakesh, thuscompleting the road circuit from Agadir, the project would also provide funds

to study a proposal for such a link.

Project Description

8. CT 7002 is 52.7 km long and has a 4-5 m platform and a 3 m asphaltedcarriage. A recent prefeasibility study by the consultant consortium BCEOM-

SOMET for upgrading the road indicated a required investment of US$3 million,price contingencies excluded. Since much of the work is not needed immediately,the mission proposed to limit the project to what is strictly necessaryfor road security and tourism. As a first step toward complete upgradingof the road the project would provide drainage and earthwork, retaining walls,widening of the most dangerous bends, stop areas to permit bus crossings, as well

as outlooks at the main panoramic spots, parking areas and leveled land fortourism facilities (restaurants, bars).

9. The investments required by the road are given in Annex II, Table 12.They amount to some US$1,600,000 including professional services and contingencies.The foreign exchange component would be US$800,000, equal to 50% of the totalcost. Professional services would include US$75,000 for preliminary studies, 1/US$75,000 for detailed engineering and US$38,000 for supervision. Final designand supervision would be mainly by local consultants. The price contingenciesrepresent 44% of the hase line cost plus physical contingencies and have heencalculated at an annual rate of increase of 11-12%. Implementation would takefour years from loan signing, the first of which would be needed for furtherstudies to finalize the project. The Agadir TP would implement the project.Since this investment would mostly benefit tourism in Agadir, it is justifiedjointly with the UAT.

1/ Including feasibility of the tourism circuit road linking Imouzzer with RP 40.

ANNEX IVPage J

C. Replacement of Fisl: Pumps

10. With an average annual catch of 100,000 tons, Agadir is one of the mostimportant harbors for sardine fishing in the world. The fish is now unloaded byeight pumps which send water into a ship's hold until a ratio of one ton offish to three cubic meters of water is reached; the mixture is then pumped tothe wharf where a coarse mesh sereens out the fish. The water containingblood, heads, scales, etc. is returned to the harbor and swept out by tidesto the nearby beaches. Several alternative solutions for limiting pollutionhave been identified such as:

- treatment of the effluent from existing pumps

- replacement of the pumps with a pneumatic "dry" unloading system orsome other method.

11. The results of recent studies carried out by the Ministry of PublicWorks and by the appraisal mission 1/ recommend the replacement of the existingpumps which are near the end of their useful life. The mission compared severaldry unloading systems (capacity, machinery cost, operating cost) and indicatedthe Norwegian Myreus pumps as the most suitable equipment. The project costestimates (Annex II, Table 13) are based on this equipment because of itshigh performance in relation to capital and operating costs. The purchase priceof six pumps would be some US$160,000. The installation cost would be US$190,000including all local taxes. The foreign exchange component amounts to 100%of the equipment and 48% of the installation costs. Design and supervisionare 15% of the base line cost plus physical increase. Although the Myreuspumps have been assumed as a reference for the cost estimates, this does notexclude normal bidding procedures for procurement, with detailed analysis ofdifferent offers. The project would be executed by the Régie d'Acconnage duPort de Casablanca (RAPC), the agency within the Ministry of Public Works incharge of loading and unloading ships in all Moroccan harbors. Bank financing

would be channeled to the Ministry of Public Works which would also Drovidethe counterpart financing.

12. The pumps would be owned and operated by RAPC which would chargefishmeal plants and boat owners for unloading the fish. RAPC is expectedto charge rates adequately covering operating costs, depreciation andfinancial charges. This would amount to about US$1.6 per ton (in 1975prices), assuming a 10% return to RAPC on its investment. At present thecost of unloading fish is about US$1.4 per ton. It is not expected that RAPCwould encounter difficulties charging an adequate rate since the recommendedsystem would avoid the losses in the fish catch which occur with the presentsystem. 2/ The Government's undertaking to cause RAPC to discuss with the Bankthe proposed tariff structure for the use of the pumps is recorded in theAgreed Minutes of Negotiations.

jj The appraisal mission was joined by Mr. Fougère of the consulting firm CANPLAN,a specialist in unloading fish.

2/ Estimated to 17% of the catch in an FAO study.

TABLE 1

MDROCCO



(Ait Melloul Bypass)

Traffic Previsions on the Existing Ait Melloul Road System(ADT)

Coming Stopping at Transit Traffic to TotalFrom Ait Melloul Harbor/Âna Agad~ir t RP~ ho nTraensihir TTrfric

RP 30 1ol 31DU Rdi 3 620 1,800.

1975 RS 509 540 320 280 110 330 1,040

RP 32 560 410 920 80 780 2.190

Total 1,710 1,040 2,020 240 1,730 5,030

RP 30 960 720 1,290 280 920 3,210

1980 RS 509 830 410 430 140 500 1,480

RP 32 860 610 1 110 1.180 3.250

Total 2,650 1,740 3,070 530 2,600 7,940

RP 30 1,460 940 1,930 360 1,390 4,620

1985 RS 509 1,270 540 650 170 780 2,140

RP 32 880 1.990 160 1.800 4¨830

Total 4,060 2,360 4,570 690 3,970 11,590

TABLE 2

MOROCCO



(Ait Melloul Bypass)

Traffic Previsions on Ait Melloul Bypass(ADT)

Coming Transit Traffic toFrom HarborjAnza Agadir City TOTAL

RP 30 190 440 20 650

1975 RS 509 210 190 80 480

RP 32 L2 780 80 1,170

Total 710 1,410 180 2,300

RP 30 460 720 130 1,310

1980 RS 509 280 300 100 680

RP 32 490 1,150 110 1,750

Total 1,230 2,170 340 3,740

RP 30 650 1,160 180 1,990

1985 RS 509 390 490 130 1,010

RP 32 740 1,790 160 2,690

Total 1,780 3,440 470 5,690

ANNEX IVPage 6

TABLE 3

MOROCCO



(Ait Melloul Bypass)aJ

Vehicle Operating Costs by Type of Vehicle and Type of Road(DH/1000 Ian)

bJ

Type of RoadA B C

Type of vehicle Flat road Hilly Road Mountainous Road

Cars 295 297 331

Trucks A (1.5 - 5 t ) 660 665 688

Trucks B (5 - 12 t ) 868 1015 2215

Trailer trucks ( > 12 t ) 1331 1504 2830

3 Costs are exclusive of taxes and tine value

/ A = slope . 2%, 25% of bends. with R - 400 m.

B = slope 2-4%, 45% of bends with R = 250 m.

c = slope > 4%, 75% of benids with R = 100 m.

ANNEX VPage 1

MOROCCO


Société Nationale d'Aménagement de laBaie d'Agadir (SONABA)

A. Background

1. SONABA was founded July 6, 1973, with the objective of implementingtourism development in the Bay of Agadir 1/. The Moroccan state owns 51% ofSONABA's shares. The other shares belong to the Office National Marocain duTourisme (19.4%), Crédit Immobilier et Hôtelier (10%), Caisse de Depot etGestion (9.5%), Banque Nationale de Développement Economique (9%), Diaffa (0.5%),Maroc Tourist (0.5%) and Société Nationale d'Aménagement de la Baie de Tanger(0.1%). SONABA's Board of Directors is chaired by the Minister of Tourism andincludes four other Government officials (the Governor of Agadir, Vice Chairman;the Secretary General of the Ministry of Public Works; a representative of theMinistry of Urban Development and one from the Ministry of Tourism) and rep-resentatives of each shareholder. SONABA is headed by a Director Generalwho has received full powers from the Minister of Tourism. SONABA has agreedto inform the Bank of any change of personnel in the position of DirectorGegera1,

9. To coordinate the activities of SONABA and other concerned Governmentagencies, two committees have been established at national and local levels(Chart 1). The Interministerial Commission to supervise the development ofthe Bay of Agadir was set up on December 5, 1973, by a letter from the PrimeMinister to the Minister of Tourism. Its membership includes representativesof the:

- Ministry of Urban Development, Housing, Tourism and Environment- Ministry of the Interior- Ministry of Finance- Ministry of Public Works- Secretary of State for Planning- Secretary of State for Economic Affairs

The local committee (Comité Technique Local Consultatif) was created in February1975 and is chaired by the Governor. It includes:

- SONABA's Director General- representatives of the Municipality- representatives of the local agencies (TP, DUHE, ONE, ONEP).

B. Organization for Operation

3. During the project preparatory studies SONABA operated with a skeletonstaff. Since then it has organized three divisions: a Project Unit, a Commer-cial and Financial Division and a Legal and Administrative Division (Chart 1).

1/ SONABA is a commercial enterprise, subject to corporate law. As such it canenter into contracts without going through the procedures used in the Admin-istration. This will ensure the flexibility needed for timely completion of theproject.

ANNEX VPage 2

4. The Project Unit is headed by SONABA's Technical Director 1/, anengineer with experience in similar infrastructure projects. He isresponsible for:

- planning and coordinating all project works- selecting consultants- supervising final studies- preparing tender documents- advertising requests for tender- evaluating bids- procuring equipment and necessary goods- preparing and updating a critical path network for all project works- preparing requests for disbursements- preparing progress reports.

The Project Unit itself will supervise the work on streets, street lighting,sewerage, pedestrian walks, landscaping and common-facilities. It willcoordinate construction of the electricity, water and telecommunications net-works with ONE, ONEP and PTT respectively. Planning and architectural work wouldbe coordinated by the chief planner 1/ who supervised these aspects of theUNDP studies. The detailed planning studies will be carried out by SONABA'sown architectural staff. This staff will work with investors, their architectsand the Municipality of Agadir in order to preserve the urban plan and thearchitectural concept adopted for the UAT. During appraisal the Municipalitygave SONABA written assurances that it would grant building permits for theUAT only after prior approval by SONABA's technical staff.

5. SONABA's second key unit is the Commercial and Financial Division.The commercial staff will be responsible for the campaign to promote thesale or lease of hotel and housing sites as well as SONABA's superstructureproperty. It would also assist investors in hotels and housing in their nego-tiations with the local and national administrations (e.g., CIH, Municipality)and promote common activities (e.g., reservations, food supply) among smallhotel operators. The commercial staff would also sponsor jointly with thehotel owners a Comité de Station to be in charge of the UAT's ".animation."It is expected that the Municipality and hoteliers outside the UAT would partici-pate. SONABA has agreed to prepare and discuss with the Bank (i) within twoyears of loan signing a timetable of all steps to be taken to implement theproposed investment promotion. campaign, and (ii) within four years of loansigning a program for "animating" the UAT and a schedule of its implementation.The finance staff would be in charge of accounting and financial management(para. 13). It would, in particular, define and keep up-to-date policies forthe lease or sale of hotel and housing sites as well as SONABA's superstructurefacilities in accordance with guidelines agreeable to the Bank (para. 12).

6. In addition to these major units, SONABA would have a Legal and Admin-istrative Division. The legal staff will draft the contracts for the designand construction of the electricity, water and telecommunications networkswith ONE, ONEP and PTT respectively. It would also draft the conditions(cahier des charges) for the sale/lease of UAT land and be in charge of preparing

1/ SONABA agreed to consult with the Bank on any change of personnel forthis position.

ANNEX V

Page 3

and supervising sale and loan contr-cts. Conditions of loan effectiveness

are the conclusion of contracts between SONABA and ONE, ONEP and PTT withprovisions satisfactory to the Bank. The administrative staff would be in

charge of personnel and equipment management.

7. SONABA agreed to consult with the Bank on any change in its organ-ization.

C. Financial Projections for SONABA

8. Pro forma statements of income and expense, funds flow and balance

sheets for SONABA's operations are presented in Tables 1-3. These projectionsinclude the UAT infrastructure, the SONABA superstructure and project admin-

istration and are based on the following financial plan (1981 prices):

DH Million US$ Million

Requirements

Land 8.2 2.1Construction 120.1 31.7

Project administration 7.5 2.0

Interest during construction 13.4 3.5Total 149.2 39.3

Sources of Initial Funds

Equity 20.0 5.3Government loan 34.6 9.1Treasury advance 30.0 7.9IBRD 64.6 17.0

Total 149.2 39.3

It has been assumed that about 14% of the investment would be financed by an

increase in SONABAts equity from DH 100,000 to DH 20 million. The Bank loan andthe Government loan have been assumed to be for 20 years, including 5 of grace,at 8.5% interest. The Treasury advance would carry interest of 6% and be amor-tized once the senior debt has been reimbursed. Interest on the advance would besubordinate to interest and principal payments by SONABA of its senior debt.Interest during construction on all three loans has been capitalized and is financedpro rata by the respective loans. 1/

9. It has been assumed that a prepayment clause would be applied if (a) theratio of land sold exceeds the IBRD loan amortization ratio after the second yearof operation, and (b) a debt service coverage ratio, 2/ of 1.1 minimum is main-tained. Portions of the IBRD and Government loans are prepaid from the thirdyear of operation. Debt service ratios are presented before application of the

prepayment clause.

1/ In 1983 SONABA will have accunulated sizable cash if land is sold at a pace equal

to or faster than assumed during appraisal. In the projections, it has beenassumed that SONABA would use this cash to reimburse the Treasury advance in 12equal annual payments.

2/ Defined as net current assets at year end plus estimated cash flow in thefollowing year divided by estimated debt service in that year.

ANNEX VPage 4

10. SONABA will derive revenue from several sources: the sale ofimproved land, the leasing of hotel sites, the sale and leasing of commercialproperties and a service charge for the use of common sports facilities.Estimated revenues are given in the financial assumptions attached. Allrents and sale prices have been based on the recovery of all investment in im-provements plus a reasonable rate of return. It has been assumed that 50% ofthe total sites, shopping centers and other SONABA superstructure would beleased rather than sold. This assumption and the timing of land and propertysales will have considerable bearing on SONABA's financial position. Althoughsubject to unknown factors, these projections provide reasonable estimatesof market conditions prevailing at the time of appraisal.

11. The financial projections indicate that SONABA would achieve a rate ofreturn of 10% of net fixed assets dropping to 4% after all land sales arecompleted. SONABA may pay dividends up to a-.maximum of 6% of its capitalin any one year out of net profits. The projections indicate that dividendpayments could be made. SONABA's DCF financial rate of return is 9.2%.

D. Financial Covenants

12. SONABA's success will depend on its ability to control its revenuethrough pricing policies which realistically reflect market conditiotls.Assurances were received that SONABA would:

(a) prepare a pricing policy acceptable to the Bank. This policystatement would list objectives and give the methodology forcalculating all sale prices and rents and would become part ofSONABA's cahier des charges;

(b) not incur any debt without the Bank's approval until 1986,other than that incurred to finance the present project.

E. Audit

13. SONABA would be required to establish, with the assistance of consultantsacceptable to the Bank, a system of commercial accounts to be maintained byan accounting department suitably staffed. Accounts would be audited annuallyby independent auditors acceptable to the Bank. Audited financial statementswould be submitted to the Bank within four months after the close of eachfiscal year. In addition, since the Government is a major shareholder inSONABA, the accounts would also be audited by the Ministry of Finance.

Table 1

NOROCCO: BAY OF AGADIR TOURISM PROJECTSONABA: Projected Income Statements for Year Ending December 31

(DH millions)

Project Year 1976/79 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989

Revenue (1975 prices)Land sales - 12.3 12.3 9.4 9.4 9.4 9.4 9.4 9.2 _ -Land leases - 0.2 0.4 0.6 0.8 1.1 1.1 1.1 1.1 1.1 1.1Property sales - - - 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.2Property leases - 1.3 1.9 2.2 2.5 2.8 3.2 3.2 3.2 3.2 3.2Service charges - 0-4 0.8 1.1 1.5 2.0 2.5 3.0 3.5 3.5 3.5Total revenue - 14.2 15.4 14.7 15.6 16.7 17.6 18.1 18.4 9.2 9.0

Adjiusted to 1980 level (1.45 of - 20.6 22.4 21.3 22.7 24.2 25.6 26.3 27.0 13.4 13.11975 prices)

Cost of SalesIand and Improvements - 2.2 2.2 2.1 2.1 2.1 2.1 2.1 2.0 - -Property - 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.2Total cost of sales - 22 22 3.5 3.5 3.5 -Y.7 3.5 3.4 1. 2

Operating CostsAdministration - 1.0 1.1 1.1 1.1 1.2 1.3 1.3 1.2 1.1 1.0Maintenance - 1.5 1.5 1.5 1.5 1.5 1.5 1.4 1.3 1.2 1.1Promotion - 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1Total operating costs _ 2.7 =2f Z 77 2'!2 2.9 .2 2.2

Gross Operating Profit (GOP) - 15.7 17.4 15.0 16.4 17.8 19.2 20.0 21.0 9.6 9.7AdJusted for inflation (7% p.a. - 15.7 18.6 17.2 20.1 23.3 26.9 28.0 29.0 13.4 13.5

for 5 yrs)Depreciation and amortization - 6.o 5.8 5.7 5.3 5.1 5.0 4.8 4.7 4.4 4.4Profit before interest - 9.7 12.8 11.5 14.8 18.2 21.9 23.2 24.3 9.0 9.1Interest

IBRD/Government - 8.5 8.2 7.9 6.5 5.0 4.8 4.0 3.2 2.4 1.7Treasury advance - 1.8 1.8 1.8 1.7 1.5 1.4 1.2 1.1 0.9 0.8- 10.3 10.0 9.7 2 -. 2 52 -3 3.3 2.7

Profit before tax - (0.6) 2.8 1.8 6.6 11.7 15.7 18.0 20.0 5.7 6.4Income tax - _ 1.0 0.6 2.3 4.1 5.5 6.3 7.0 2.0 2.2Net profit - -) -T 1.2 TT *. 10.2 11.7 13.0 37

Ratio ot net profit to net fixed assets % - _ 2 1 3 4 10 13 16 4 4Debt ServiceCash generated - 15.7 17.6 16.6 17.8 19.2 21.4 21.7 22.0 11.4 11.3Debt service (senior debt) - 8.5 1U.8 11.8 10.7 8.4 7.6 7.1 5.9 4.9 4.0Debt service (incl. treasury advance) - 10.3 13.6 13.6 14.9 12.4 11.5 10.8 9.5 8.3 7.3Debt service coverage (senior debt) - 1.8 1.4 1.4 1.7 2.3 2.8 3.1 3.7 2.3 2.8Debt service coverage (inel. treasury - 1.5 1.2 1.2 1.2 1.5 1.9 2.0 2.3 1.4 1.5

advance)

OJQ January 1976 X >

Table 2

M_ROCCO: BAY 0F AGADIR TOURISM PROJECTSONABA: Projected Balance Sheets

(DH millions)

Year 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 198 9

AssetsCurrent assets 7.8 15.0 19.3 13.9 17.9 25.0 31.8 40.2 32.7 30.7

Work in Progress 1.8 16.0 52.6 91.9Land (Net) 8.2 8.2 8.2 8.2 7.9 7.6 7.4 7.2 7.1 7.0 6.9 6.8 6.8 6.8

Land Improvements - utility contribution 74.8 72.9 71.0 69.1 67.2 65.2 63.2 61.2 60.2 49.2Depre.i.ation 3.0 5.9 8.7 11.4 14.0 16.5 18.9 21.2 23.4 25.5

Net 71. Z7-R5 67 2 3 7.7 53.2 4.77 4.I3 7 0 OÔ jS6-.8 33.7

Properties for sale 10.9 10.9 9.5 8.1 6.7 5.3 3.9 3.1 3.1 3.1.

Depreciation 0.4 0.8 1.0 1.1 1.3 1.4 1.4 1.5 1.6 .7Net 10.5 10.1 8.5 7.0 *B:3; 3.9 02. 1.6 1 5 1.4

Fixed Assets 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9

Depreciation 1.4 2.8 4.2 5.6 7.0 8.4 9.8 11.2 12.6 14.0

Net 31.5 30.1 27.3 2. 24.5 23.1 21.7 20.3 IB:3iPre-opening expenses 2.5 5.7 11.2 16.6 21.1 21.1 21.1 21.1 21.1 21.1 21.1 21.1 21.1 21.1Amortization 1.1 2.2 3.3 4.4 5.5 6.6 7.7 8.8 9.9 I1.0

Net 20.0 18.9 17. 16.7 S313 3 5 . 123 11.2 10.1

Total Assets 12 27-y 7-2*0 7 ir9. 1 Zi7 1 129.8 125.1 123.6 122.0 122.6 109.3 101.6

Liabilities and CapitalCurrent liabilities

Income tax 1.0 o.6 2.3 4.`. 5.5 6.3 7.0 2.0 2.2Dividends 1.6 1.1 1.6 1.6 1.6 1.6 1.6 1.6 1.6Maturing debt 3.6 3.9 6.7 '.9 5.3 5.6 5.2 5.0 4.8 5.2Prepayment - - 12.4 6.6 6.2 6.9 6.3 5.4 5.7 -

Total current liabilities 3. 6.5 20.8 16.4 17.2 19.6 19.94 19.0 14.1 9.0Long-term Debt, NetIBRD 1.0 5.4 24.3 46.9 62.7 60.1 49.3 42.8 36.9 30.5 24.6 19.5 14.3 12.5

Government 0.4 1.2 6.7 19.7 33.7 32.4 26.6 23.1 20.0 16.4 13.3 10.5 7.7 6.8T: 6.6 91.0 92- 75.9 65.9 6-.9 46.9 37.9 30.0 22.0 19.3

Treasury advance, net 6.1 8.3 20.9 30.0 30.0 30.0 27.5 25.0 22.5 20.0 17.5 15.0 12.5 10.0CapitalEquity 5.0 15.0 20.1 20.1 20.1 20.1 20.1 20.1 20.1 20.1 20.1 20.1 20.1 20.1Retained earnings (0.6) (0.5) (0-5) 2.0 7.6 15.7 25.2 36.5 38.6 41.2

19.5 i9.619.6 22.1 27.-7 35.8 WE73 5 6. 3W 387 61.3Legal reserves - 0.1 0.2 0.4 0.8 1.3 1.9 2.0 2.0 2.0

Total shareholders equity andliabilities 12.5 29.9 72.O 167 179.7 1E2E7 1Z-O 129 125.1 123 122.0 122 109.3 1-.1 2

Net current assets -4 .2 5 (1-5) ( 0.7 5 .4 12.L 21.2 10.6 21.7

Net fixed assets 141.7 133.6 124.7 115.9 107.2 98.6 90.2 82.4 76.6 70.9

Senior Debt/equity plus Treasury advance 65/35 65/35 60/40 56/44 50/50 42/48 34/66 26/74 20/80 18/82

January 1976

Table 3

MOROCCO: BAY OF AGADIR TOURISM PROJECTSONABA: Projected Sources and eplication of FUnds

(DH millions)

Project Year 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989

Sources of FundsSONABA equity 5.0 10.0 5.1IBRD loan 1.0 4.4 18.9 22.6 16.9Goverrnent loan 0.4 0.8 5.5 12.9 16.0Treasury advance 6.1 2.2 12.6 1

Net profit before tax (0.6) 2.8 1.8 6.6 11.7 15.7 18.0 20.0 5.7 6.4Depreciation asL ' . .i. ,ion 6.o 5.8 5.7 5.3 5.1 5.0 4. 8 4.7 4.4 4.4Decrease in assets 2.2 2.2 3.5 3.5 3.5 3.5 3.5 3-4 1.4 1.2

Total sources 12W05- 17.14 i0 10 20o3 12 2. ;i II 12.0

Application of FUndsLand 8.2Capital expenditure 1. 8 14.2 36.6 39.1 28.14?reopening expenses 1.4 1.6 1.7 1.4 1.5Financial charges 1.1 1.6 3.8 4.1 3.0

12=5 r7--.- ZDE- M-75 32.9

Repaynent of LT DebtIBRD 2.3 2.5 2.7 2.2 1.8 2.0 1.8 1.6 1.5Government 1.3 1.4 1.5 1.2 1.0 1.1 0.9 Q.9 Q.8-

Subtotal 3 3.9 I.2 3.41 2.7 2.5 2.3Prepaynent

IBRD - - 8.1 4.4 4.0 4.5 4.1 3.5 3.7Government - - h43 2.2 2.2 2.4 2.2 1.9 2.0

Taxes - 1.0 o.6 2.3 4.1 5.5 6.3 7.0 2.2Dividends _ a 1.6 1.1 1.6 1.6 1.6 1.6 1.6 1.6Treasury advance - - 2.5 2.5 2.5 2.5 2.5 2.5 2.5Change in cash 7.6 23 L. J. L5.) 3.9 .o 627 8.2 ffl$) L(.3)

12. Î::iÉ 2.1 S; 1-40.5 10.8 1l1o 15,4 20.3 2122i 23 -i 11.5 12.0

January 1976

-Ic

ANNEX VPage 8

Assumptions for Financial Projections

1. Land for the construction of hotels, villas and apartments issold at an average of DH 97.4 per square meter and ranges from DH 70 forhotel sites to DH 170 for high-density apartment construction. The pro-jections assume that 80% of this land would be sold.

2. Ground rent has been calculated at DH 400 per bed per year, for20% of-bed capacity.

3. Rents for commercial properties are based on rates of DH 15-20per square meter per month.

4. Properties for sale have been priced at a markup of 50% of cost.

5. Sale prices have been calculated in 1975 prices, inflated to 1980prices by a factor of 1.45 (para. 3.32). Gross operating profits havebeen inflated at 7% per annum for 5 years to give cash flow in current prices.

6. Annual service charges for common facilities have been calculated atan average of DH 500 per bed for the 7,000 hotel and apartment beds to beconstructed within the project area. Charges are based on the recovery ofcapital costs and operating expenses of the sports and beach facilities plusmaintenance of common areas not under municipal jurisdiction.

7. Administrative costs have been estimated at 5% of sales. Maintenancehas been estimated at 2% of capital costs of facilities belonging to SONABA.Promotional expenses have been calculated at DH 100,OOO for ten years.

8. Depreciation has been estimated at an overall average rate of 4%.

9. The utility contribution, representing SONABA's investment in infra-structure, has been capitalized and amortized over a 25-year period with theexception of the portion applicable to land and properties sold which hasbeen written off at the time of sale. Project administration and interestduring construction have been capitalized and written off over 20 years.

BAY OF AGADIR TOURISM PROJECTORGANIZATION OF SONABA

Shareholders

Board of Directors

Interministerial CMiister of therBsmr

Commission C...hairman of the BoardCommission ....... ~(Minister of Tourism) I

(Minister of Tourism).f

Comité Technique 1Local Consultatif ......... Director General

(Governor of Agadir> I

Project Legal and Commercial andt Unit \ | Administration i Financial

t-1t

World Bank-15168(R)C

ANNEX VIPage 1

MOROCCO


Market Justification

1. Tourism assets in Morocco include the Mediterranean coastal regionof Tangiers to the north, the beaches stretching the entire length of thecountry on the Atlantic coast to the west, the Imperial cities of Fez, Rabat,Meknes and Marrakesh in the interior and the varied cultural sites of thesouth. These assets, easily accessible, have long been popular with motorizedtravelers. Recently Morocco's attractions, particularly Agadir and Marrakesh,have been opened up for visitors arriving by air. Agadir offers great scenicbeauty, climatic conditions favorable for year-round beach tourism and a con-venient center for varied excursions to the entire Souss region of southernMorocco. Agadir's combination of tourism assets is unique in Morocco and ararity in the wider Mediterranean context.

Accommodation Development

2. The number of beds of international standards in Agadir will reachabout 4,000 by the end of 1975. Another 4,000 beds are scheduled for completion inthe existing tourism sector (STB) within the next five years. Beyond that, anadditional 3,000 beds are forecast by 1988 (Table 1). This would completethe accommodation scheduled for the- STB according to its revised schèmad'aménagement, The UAT project would provide approximately 7,000 additional bedsduring the period 1980-86. The following table summarizes the projected buildupof hotel capacity in the UAT and in Agadir overall.

Hotel Capacity in Agadir (Number of Beds)

UAT STB and Other Sites in Agadir Total Agadir

1975 4,000 a/ 4,000.1980 1,000 7,500 8,5001981 2,000 8,000 b/ 10,0001982 3,000 8,500 11,5001983 4,000 9,000 13,0001984 5,000 9,500 14,5001985 6,000 10,000 16,0001986 7,000 10,500 17,5001987 7,000 11,000 18,0001988 7,000 11,000 18,000

a/ Capacity including a 480-bed hotel scheduled to open in November 1975.b/ 4,000 beds under construction.

Market Characteristics

3. Agadir's assets began to be tapped on a significant scale only at theturn of the last decade when the number of beds of international standards rp.qhed1,200 and foreign arrivals numbered 46,000. The ensuing expansion of capacityto 3,400 beds in 1974 was followed by an increase in traffic to 119,000 visitors,

ANNEX `VIPage 2

an annual rate of growth of 28%. Commensurate with its unique assets, theshare of traffic to Morocco secured by Agadir almost doubled from 6% in 1970to 11% in 1974 (Table 2). The growth in foreign tourist traffic to Agadirduring this period was accompanied by a rise in average length of stay fromthree to eleven days. Consequently bed occupancy levels in Agadir rose from37% in 1970 to 67% in 1974, reaching 75% during the first eight months of 1975 (Table 3).

4. The high occupancies enjoyed by Agadir's hotels have led to high rates ofrefusals and overbooking. During the peak months of the 1974/75 winter season and inAugust of this year for instance, tourists were sent as far away as Taroudant(100 km from Agadir) for lack of space. More fortunate visitors were accommo-dated over night in hotels still under construction and given meals in the hotelswhere their stay was originally intended.

5. Arrivals are well spread out over the year making Agadir a year-rounddestination. Ninety percent of all foreign visitors arrive by air (compared to 36%for the country overall). Most are on inclusive tours marketed by Europeanoperators, with about half arriving on c :rtered flights and the rest on blockspace contracted from scheduled carri -s. In 1974 about 85% of the visitorscame from Western and northern Europe with France (42%), West Germany (13%) andSwitzerland (11%) the major generating countries. The rate of repeat visitorsamong tourists is high, a noteworthy characteristic for a new destination. Overthe last five years Agadir has diversified its clientele; the share of Frenchhas decreased by over 50% in favor of growth in traffic of Swiss, British andBenelux nationals (Table 4). Domestic traffic accounts for 20% of total arrivalsand 8% of total bednights.

Market Prospects

6. Although Agadir is Morocco s only winter beach destination, its growthprospects are linked to those of the country as a whole. As its capacity isexpanded and internal access improved with the completed road from Marrakesh,Agadir will benefit increasingly from the tourism assets of the rest of thecountry.

7. Future growth of traffic to Agadir will therefore depend on Morocco'soverall growth as well as on its competitiveness with comparable destinationsin neighboring countries and in West Africa and the Canaries. North Africa isa major competitor in summer but not in winter, with the possible exception ofDjerba, Tunisia, which enjoys pleasant .%eather in winter but ?s not as warm asAgadir. West Africa (particularly Senegal and the Ivory Coast) is not a likelycompetitor because of the price disadvantage. The Canaries offer the greatest year-roundcompetition to Agadir. Both offer pleasant, safe beaches and truly summer-likeweather, but Agadir is additionally favored with varied cultural and scenicattractions close by including Marrakesh, Goulimine and the entire Souss region.However, despite a closer proximity to the main European market, Agadir appearsat a slight price disadvantage vis-a-vis the Canaries (Table 5). Only 10% of itspresent capacity is of lower category compared to 30% for the Canaries andtherefore the price of an inclusive tour to Agadir is on average, slightlyhigher. It will be possible to market the accommodation proposed for the UATat prices that will compare favorably with those of the Canaries, and enableAgadir to tap the middle- and lower-income segments of the market.

ANNEX VIPage 3

Market Projections

8. No substantial change is expected in the factors affecting inter-national and domestic demand for Agadir. It is assumed that visitor trafficto Agadir will grow in line with the planned development of the resort'saccommodation capacity.

9. Assuming that the average length of stay of foreign visitors remainsthe same at Il days and assuming that internal tourism's share will increaseto 15% of total bednights in Agadir as incomes in Morocco continue to rise,the number of foreign visitors projected on the basis of an expected occu-pancy rate of 60% would reach 305,000 in 1988. This implies an averageannual growth in foreign visitor traffic to Agadir of 7.5% in the 1975-88period which is both reasonable and conservative in light of the followingconsiderations:

(a) Foreign visitor arrivals in Agadir have increased by 28% annuallyin recent years. If there had been sufficient capacity, particularlyin the lower category, a much higher growth rate in traffic mighthave been expected.

(b) The uniqueness of Agadir's assets in Morocco and the growingpopularity of beach-based winter tourism warrant further increasein Agadir's share of traffic to Morocco. On the assumption thatthe demand for Moroccan travel will double by 1988 from its 1973figure of 1.2 million, the projected foreign arrivals in Agadirwould represent 13% of total Moroccan arrivals. If arrivals inMorocco triple by 1990 1/ (equivalent to a 7% rate of growth,considerably lower than the growth rate of 19% observed between1968 and 1973), the foreign arrivals in Agadir projected abovewould represent only about 8% of all arrivals in Morocco, signifi-cantly lower than the 11% in 1974.

(c) Agadir's market includes a significant proportion of upper-incomevisitors which makes it less vulnerable than other destinationsto a possible reduction in the real growth of disposable income inWestern Europe. This is consistent with past experience thattourist demand is highly income elastic and with the absence ofdisruptions in tourism to Agadir during the 1974 economic difficul-ties. 2/ Agadir also stands to benefit from the expansion of themarket segment vacationing twice a year.

(d) As traditional destinations in Europe become increasingly crowdedand those south of the Mediterranean continue to enjoy a priceadvantage, vacation traffic to Morocco gnd thus Agadir shouldexpand more vigorously.

1/ A recent study of Mediterranean tourism by the Battelle Institute forecast3.6 million arrivals in Morocco by 1985.

2/ In 1974 traffic to Morocco as a whole decreased 14% while traffic to Agadirincreased by 2%.

ANNEX VIPage 4

Marketing

10. The marketing strategy proposed for the UAT development will beaimed at attracting both the upper- and middle-income family markets. TheUAT would be marketed by tour operators and the vehicle will be the packagevacation lasting either one or two weeks. Suggested packages for the UATinclude seven-day and fifteen-day vacations to be marketed through wholesaleand retail travel outlets. A typical eight-day, seven-night package on ahalf-board basis (i.e., room, breakfast and one meal) would cost US$160(1975 prices) excluding air fare and personal expenses. This is competitivewith comparable packages to the Mediterranean and the Canaries and the US$27.50average daily expenditure (1975 prices) also compares favorably withexpenditures recorded in competing destinations (e.g., US$27.40 in Tunisiaand US$24.80 in Spain in 1974).

Table 1

MOROCCO

BAY OF AGADIR TOURISM PROJECTS

Evolution of ARadir's Capacity by Categoro of Accommodation

Under construction

19/ b7 cr 1972 l9/ l973 c/v1975 or c/azmed

a/ / c! / .7

5-Star 2 747 29.9 2 747 24.3 2 747 24.3 2 747 21.1 3 1,227 30.2 - - -

4-Star 2 760 30.4 3 1,170 38.1 3 1,170 38.1 4 1,380 39.2 4 1,380 33.9 4 1,874 46.8

3-Star 4 635 25.5 4 6971' 22.7 4 697 22.7 5 795 22.6 5 795 19.5 - _ _

2 -Star 4 102 4.1 5 206 6.7 5 206 6.7 7 348 9.9 8 416t/ 10.2 8 2,035 50.8

i-star 9 253 10.1 9 253 8.2 9 253 8.2 9 253 7.2 9 253 6.2 1 97 2.4

Total 21 2,497 100 23 3,073 100 23 3,073 100 27 3,523 1oe 29 4,071 100 13 4,oo6 100

a/ Number of hotels

'd

b/ Number of bedsc/ % of total

> c

d/ Includes a 480-bed hotel scheduled to open in November 1975 H

e! Extension of an existing hotel

/ Includes a 68-bed apartment scheduled ta open in December 1975.

Source: Délégation Régionale au Tourisme

ANNIX VIPage 6

Table 2

MOROCCO

BAY 0F AGADIR TOURISM PRBJECT

International Arrivals at A-adir

ARadirAgadir Index Morocco Index Morocco

1970 46,331 100 700,992 100 6.6

1971 65,022 140 757,256 108 8.6

1972 85,217 184 987,611 141 8.6

1973 116,461 251 1,225,784 175 9.5

1974 119,054 257 1,052,000 150 11.3

Source: Délégation Régionale au Tourisme

BAY CF AGADIR TOul1ISM 8100T

8U013UP oF AB00800dAT1ON A8 BSM 0CUP0 OCY D AbADIR /

Jrn=ury 1970 - Ag..et 1975

_ p57o 1971 1972 1973 1971 1715

B.d ,eaito R.d,i.ht8 N.d oe,hW.efhv RMd Caso a sl bednlhteh Bd Bma ,bd c t BeddigOt, bd Beoup.o.,T Bed cwa0itî %edaiîhAs M.d oB.d 0w0it,, r ~ *ah& Brd ooo _bd L.aAk baaah. .M oez

J.,u.ry 170 5,811 39.9 1,540 22,604 h7. 2 ,1h. 31,117 b6.9 2,308 b8,128 67.3 2,718 .2,77$ 50.8 2,928 57,197 63.0

6br,r y 470 6,277 47.7 0.81O 22,689 52.6 2,2Mn 32,168 55.. 2,718 51,719 60.0 2.718 13,189 57.1 2.928 65,398 79.8

86v 170 6,743 46.3 1.5LO 25,162 52.7 2,20. 43.800 6..2 2,716 58,140 69.0 2,718 60,599 71.9 2,928 74,492 82.1

4rl1 830 11,258 17.2 1,.5O 30.150 65.3 2,20. 79,302 59.h 2,710 51,831 63.6 2,718 70,817 86.8 2,928 62,837 71.s

Y m870 10,512 1.2.2 1.5.0 21,01 ....O 2,201 55,222 81,0 2,718 53987 64LI 2,7 18 h7,glh s0.9 2,928 64,982 71.6

830 6,528 25.b 1,651 11,730 25.4 2,201 28,2hO .2.7 2,710 58,266 71.5 2,718 39,431 48.4 2,928 51,155 58.2

hiy 830 9,229 35.9 1,660 20,Q4. J2.9 2,20C 43,707 6..0 2,717 52,997 62.9 2,718 68,628 81.1 2,928 72,669 80o0

A.8ut 830 12.099 47.0 1.5,0 27,373 77.3 2,308 ù.,225 69.8 2,708 68,208 81.0 2,928 86,690 95.5 2,928 83.869 94.5

B.pteée r 830 6,918 27.9 1,510 22,794 19.3 2,309 30,035 50.6 2,718 50,776 62.3 209p8 73,669 83.9 - -

8,t5,e 830 7,9W6 31.1 1,510 13.728 28.8 2,507 71,35. hl.8 2,718 46,276 54.9 2,928 5b.245 61.8 - -

N?ob- , 830 8,070 32.1 1,510 16,985 36.8 2,308 32,603 17.1 2,718 31,037 38.1 2,928 48.256 S-.9 - _ _

13.,8.r 830 10,379 10.3 0,5ho 21,837 15.7 2,70e 39,012 65.6 2,718 26,102 31.0 2,928 52.293 65.3 - -

Te.1 3U-r - 102,350 37.8 256,183 1..6 - .3,676 5,.2 - 597,447 65.8 - 690,813 67.4 - 531,779 74.7

S/ Fr81% O .ai t02D ,ap.aoy.

Table h

MOROCCO

BAY oF AGADIR TfURISM PROJECTS

Distribution of International Arrivals at Agadir 1969-1973

Growth

0rigin N 1970--- 1971 No 1972 X 1273 1274 Index

France 27,501 59.36 36,196 55.67 39,973 46.91 46,234 39.64 50,013 42.00 182

Germany 4,161 8.98 8,599 13.22 10,455 12.27 15,693 13.45 15,344 12.88 369

US - Canada 3,118 6.73 5,054 7.77 5,195 8.44 8,414 7.22 7,588 6,38 243

Benelux 2,440 5.27 3,714 5.71 4,743 5.57 7,939 6.81 6,914 5.82 283

Great Britain 2,075 4.48 2,929 4.51 5,373 6.30 9,976 8.55 8,193 6.88 395

Switzerland 1,800 3.88 3,o46 4.69 S,765 10.28 I2,793 10.97 12,665 10.64 704

Italy 1,694 3.66 2,071 3.19 3,054 3.58 3,948 3.38 4,157 3.4? 245

Scandinavia 1,042 2.25 715 1.10 1,273 1.49 3,431 2.94 6,127 5.15 588

Others 2,500 5.39 2,088 4.14 4,396 5.16 7,023 7.04 80 6.76 32

Total 46,331 100.00 65,022 100.00 85,217 100.00 116,461 100.00 119,054 100.00 257

Sources Délégation Régionale au Tourisme.

ANNEX VITable 5 Page 9

MOROCCO

BAY OF AGADIR TOURISM PROJECT-

Comparison of PackagTurPie (171.

(Indexes)

From: Paris Stuttgart Copenhagen BrussellesA B C A B C A B C A B C

Agadir 100 100 100 100 100 100 100 100 100 100 100 100

Balearij Islands 56 57 56 39 51 29 54 62 74 46 41 48

Canaries 85 52 99 63 64 63 83 50 119 78 39 95

Madeira 132 123 116 88 82 92 96 79 115 84 59 94

Djerba 92 93 92 73 106 44 62 81 55

Rhodes 97 102 91 65 50 81

Malta 85 65 72 59 58 33 68

Cyprus 137 - 83 88 81

Algeria 82 88 79 62 82 44

Senegal 141 138 224

Ivory Coast 137

The Gambia 142 103 183

Thailand 186 248 134

Ceylon 214 90 169 136 204

Kenya 182 97 256

1/ Valid for all 5candinaviaA Price for a one-week packageB Price for additional weekC Difference between A and B, a measure of transport cost

Sources: Jet Tours, Air Tour, Escapade, Horizon 74, Trans 2t6, Trans Tours,Vacances Aériennes, Vingresor, Transair, Trans Europe, Neckermann.

MOROCCO


Accommodation FacilitiesFinancial Analysis

A. Introduction

1. The proposed development and phasing of the accommodation capacity,along with a composite occupancy curve and pro forma statement of income andexpense are given in Table 1. It has been assumed that accommodations willbe opened at a rate of 1,000 beds per year over a seven-year period startingin 1979-80. Hotels are expected to be chiefly three-star category and about25% of bed capacity will be located in housekeeping apartments. Hotels inAgadir presently are predominantly forr- and five-star and the accommodationcapacity proposed under the project TiLL provide a more balanced product linefor Agadir and permit the developme.~t of the high volume market forecast forthe area.

2. the projections have been based on the following estimates andassumptions which take into account the actual experience of hotels in Agadirand other relevant areas in Morocco.

B, Hotels

3. There is no marked seasonality in Agadir and fairly high annualhotel occupancy can be expected. For individual hotels, bed occupancies wereforecast at 50% in the first year rising to 60% in the third year of operation.The resulting overall bed occupancy curve rises from 50% in the first yearof operation to 60% over a 9-10-year period. Most of the clientele is expectedto be group and/or charter (80%) and room occupancies will be only marginallyhigher than bed occupancies.

4. Statements of income and expense in 1975 prices were preparedfollowing the U.S. Uniform System of Accounts for Hotels. Rates based onthe year-round rates currently being obtained in Agadir for rooms and mealswere calculated assuming all guests would stay on a half-board plan(on a per person basis for bed, breakfast and one other meal). Allowanceswere made for a modest number of meals served in addition to the half-beard andbeverage, gift shop and other sales (telephone, laundry) were calculated on aper guestnight basis. The resultant average guestnight expenditure in hotelsis as follows:

DH US$

Room 25 6.58Meals 24 6.32Drinks 12 3.16Other 2 0.54

Total 63 16.58

ANNEX VIIPage 2

It has been assumed that shops in hotels would be rented (1 square meter perguestroom) at a rate of DH 10 per square meter per month.

5. Costs of sales were estimated as ratios to departmental sales. Aratio of 32% was used for food and 30% for beverage sales. The number ofemployees per room average 0.86 in existing hotels. Based on this ratioand applicable wage rates in Morocco, payroll amounts to 19% of total sales,including allowances for housing, meals and transport. The category of "otherdirect expenses" includes cleaning supplies, replacement of linen, china andglassware and agency commissions. The undistributed expense categories werecalculated using ratios based on experience in the area. The provisions ofthe existing incentives package have been applied. Service charges andground rent (Annex V) have been calculated at DH 500 and DH 400 respectivelyper bed per year. Based on these assumptions, the hotels reach a steady grossoperating profit of 31% (adjusted GOP after service charge and ground rentof 26%).

6. The overall financial internal rate of return for the hotelstaken together is 9.9%, assuming that the hotels are managed by the owningcompany. If they were managed by management companies, the rate of return wouldbe about 6% after deduction of management fees, These results are in constant1975 prices and do not include capital gains or the effect of inflation.

7. The DCF rate of returnon the project is considered reasonable andthe accounting ratios show that the hotel can serve its debt comfortably andpay dividends of over 10%.

C. Housekeep ng Apartments

8. It has been assumed that 1,750 of the total 7,000 beds would be in housekeep-ing apartments. Occupancy in the apartments has been projected on thesame basis as for hotels, -that is, an average bed occupancy of 50% rising to60% by the tenth year of the project's operations.

9. Apartments are assumed to generate revenue from -ent,and minor amounts from shop sales. The average ni2htlv rentalfor apartments has been assumed to be DH 25. Operating costs have been based onconsultants' estimates for labor, supplies and operating overhead such as heat,light and power. Service charges have been calculated at DH 500 per bed(Annex V). Based on these assumptions, the apartments reach a gross operatingprofit of 64% (after service charges, 52%).

10. The overall financial internal rate of return for the apartmentsis 15.9%, assuming that they are managed by the owners. Thic ratemay be misleading since direct management is unlikely. However, since it wasnot known whether the apartments would operate as resort condominia, cooperativesor under some other form of management, the results have been shown assumingdirect management.

D. Overall Results

11. The rate of return on the hotels and apartments is sensitive toinvestment cost, occupancy and operating costs. The rates of return resulting

ANNEX VII

Page 3

from variations in the basic assumptions are shown in the table below:

Rates of ReturnHotels Apartments Overali

Best estimates 9.9 15.9 10.9a/

Gross operating profit

(a) +25% 13.3 19.8 14.4(b) -25% 6.0 11.5 6.9(c) Investment cost +10% 8.5 14.4 9.6

a/ Reflecting changes in occupancy, tariffs and operating costs.

E. Single Hotel

12. Income statement and cash flow for a three-star hotel are shown inTable 2 with assumptions listed on the following page. Assuming that theproject benefits from the existing incentives package, internai rates of returnon the project are as follows:

Overall Return Returns to Equity

Direct Management

Best estimate 10.1 21.4Benefits + 25% 13.2 27.1Benefits - 25% 6.6 15.4

Investment cost + 10% 8.9 19.3

Management Contract--

Best estimate 6.5 10.9Benefits + 25% 9.0 14.4Benefits - 25% 3.4 7.0Investment + 10% 5.4 9.6

It is likely that hotels will have management contracts and consequently theright-hand column is the more relevant.

Table 1

MOROCCO: BAY OF AGADIR TOURISI', PROJECT

Summary Statement of Hotel Tncome and Expense

(constant 1975 Dirhams'000's)

Project Year 5 6 7 8 9 10 il 12 13

Accommodation (beds)

Hotels 750 1,500 2,250 3,000 3,750 4,500 5,250 5,250 5,250

Apartments 250 500 750 1,000 1,250 1,500 1,750 1,750 1,750

Total 1,000 2,000 3,000 4,000 5,000 6,000 7,000 7,000 7,000

Composite bed occupancy (%) 50 52 55 56 57 57 58 59 60

Guestnights (000's)

-lotels 137.0 286.9 451.2 615.5 779.7 943.9 1,083.2 1,135.3 1,149.7

Apartmenits 45.5 95.7 150.4 205.1 259.9 314.7 369.4 378.8 383.3

Total 182.5 382.6 601.6 810.6 1,039.6 1,260.6 1,452.6 1,514.1 1,533.0

INCOME STATEMENT

Sales

Rooms 4,563 9,565 15,040 20,514 25,995 31,465 36,315 37,854 38,324

Food and beverage 4,932 10,330 16,242 22,158 28,069 33,979 38,995 40,870 41,381

Other 365 765 1,204 1,641 2,078 2,511 2,905 3,075

Total sales 9,860 20,660 32,486 44,313 56,142 67,955 78,215 81,752 82,780

Departmental expenses:

Cost of sales 1,728 3,618 5,691 7,764 9,832 11,885 13,669 14,320 14,497

Payroll and related expenses 2,192 4,397 6,614 8,831 11,048 13,266 15,485 15,506 15,523

Other direct expenses 925 1,936 3,046 4,155 5,264 6,372 7,321 7,661 7,760

Total departmental expenses 4,845 9,951 15,351 20,750 26,144 31,523 36,475 37,487 37,780

Departmental profit 5,015 10,709 17,135 23,563 29,998 36,432 41,740 44,265 45,000

Undistributed expenses:

Administrative and general 370 774 1,218 1,661 2,105 2,548 2,949 3,067 3,104

Advertising and promotion 408 408 608 831 1,053 1,274 1,475 1,534 1,553

Heat, light and power 385 770 1,154 1,539 1,924 2,309 2,693 2,693 2,693

Repairs and maintenance 633 1,265 1,99 2,530 3,163 3.795 4.428 4,428

Total ondistributed expenses 1,796 3,217 4,977 6,561 8,245 9,926 11,545 11,722 11,778

House profit (loss) 3,219 7,492 12,158 17,002 21,753 26,506 30,195 32,543 33,222

Store rentals 45 90 135 180 225 270 315 315 315

Cross operating profit (loss) 3,264 7,582 12,293 17,182 21,978 26,776 30,510 32,858 33,537 b

Sround rent 150 300 450 600 750 900 1,050 1,050 1,050 OS z

Service charge 500 1 000 1,500 3,000 2,500 3,000 3,500 3,500 3 500

Adjusted gross operating profit 2,614 6,282 10,343 13,582 18,728 22,876 25,960 28,308 28,987 c

August 1975

Table 2

MOROCCO: bAY OF AGADIR TOURISM PROJECT

Typical 100-Room. 3-Star HotelProjected Income Statement and Cash Flow

(constant 1975 Dirhams 000's)

Year 1 2 3 4 5 6 7 8 9 10 il 12

Bed occupancy (7,) 50 55 60 60 60 60 60 60 60 60 60 60Guestnights (000) 36.5 40.2 43.8 43.8 43.8 43.8 43.8 43.8 43.8 43.8 43.8 43.8Modified American Plan 40 40 40 40 40 40 40 40 40 40 40 40

(DH per person)

INCOME STATEMENT

Revenue:

Rooms 912 1,005 1,095 1,095 1,095 1,095 1,095 1,095 1,095 1,095 1,095 1,095Food 876 965 1,051 1,051 1,051 1,051 1,051 1,051 1,051 1,051 1,051 1,051Beverage 438 482 526 526 526 526 526 526 526 526 526 526Other 75 80 88 88 88 88 88 88 88 88 88 88

Total 2,301 2,532 2.760 2,760 2,760 2,760 2,760 2,760 2,760 2,760 2,760 2,760

Coat of sales:

Food 280 309 336 336 336 336 336 336 336 336 336 336Beverage 131 145 158 158 158 158 158 158 158 158 158 158Other 36 40 44 44 44 44 44 44 44 44 44 44

Total 447 494 538 538 538 538 538 538 538 538 538 538

Direct expenses:

Payroll and related expenses 552 552 552 552 552 552 552 552 552 552 552 552Other direct expenses 230 253 276 276 276 276 276 276 276 276 276 276

Total 782 805 828 828 828 828 828 828 828 828 828 828

Undistributed expenses:

Administrative and general 92 101 110 110 110 110 110 110 110 110 110 110Advertising and promotion 55 55 55 55 55 55 55 55 55 55 55 55Heat, light and power 77 80 83 83 83 83 83 83 83 83 83 83Repairs and maintenance 118 128 138 138 138 138 138 138 138 138 138 138

Total 342 364 386 386 386 386 386 386 386 386 386 386

Sales and local taxes 115 127 138 138 138 138 138 138 138 138 138 138Profit before fees and rent 615 742 870 870 870 870 870 870 870 870 870 870Service charges 28 28 28 28 28 28 28 28 28 28 28 28

Gross Operating Profit (GOP): 587 714 842 842 842 842 842 842 842 842 842 842

Interest 149 141 133 124 115 106 97 87 77 66 54 48Depreciation and amortization 300 300 300 300 300 300 300 300 300 300 300 300Income tax - - - - - - - - - - 195 198

Net profit 38 273 409 418 427 436 445 455 445 476 293 296

CASH FLOW

Cash generation 587 714 84e 842 842 842 842 842 842 842 678 678Less: Replacements reserve 90 90 90 90 90 90 90 90 90 90 90 90Grant repayment - - - - - 180 180 180 180 180 - -Gross cash flow 497 624 752 752 752 572 572 572 572 572 588 588Debt service 318 318 318 318 318 318 318 318 318 318 205 205Net cash flow 179 306 434 434 434 254 254 254 254 254 383 383

RATIOS

GOP/Total revenues (%) 26 28 31 31 31 31 31 31 31 31 31 31NP/Total revenues (7) 1 10 14 15 15 16 16 16 16 17 il ilNP/IIitial equity (7) 27, 157. 2370 237% 24" 24°. 25% 25% 25% 267. 167 16%Debt service coverage 1.6 2.0 2.4 2.4 2.4 1.8 1.8 1.8 1.8 1.8 2.9 2.9

November 1975

ANNEX VIIPage 6

Investment Assumptions for A Typical Hotel

Number of rooms 100Classification 3-starInvestment cost per room DH 60,000

Composed of:Land 5%Construction 35%Heavy equipment 25%Light equipment 15%Fees 10%Incorporation fees 5%Working capital 5%

100%

Financial plan

30% equity15% state advance (payable in 10 years with 5 of grace)55% CIH loans 40% at 4.5% interest over 20 years with 3 of grace

15% at 4.5% interest over 10 years, no grace period

Depreciation: 5% of investment per year

Replacements: equal to 30% of initial project cost over project's life

ANNEX VIIIPage 1

MOROCCO


Economic Justification of the UAT Investment

A. Rate of Return Computation

1. Although the proposed tourism component will provide infrastructurein the UAT, it is part of a development program which includes hotels andapartments. Hence its economic evaluation has been made in this largercontext.

2. The gross benefits to the economy resulting from the project wouldcome from the expenditures of tourists attracted to the UAT's hotels and housekeepingapartments. The implementation of the UAT is expected to affect the revenuesof competing accommodation in Agadir and elsewhere in Morocco in two ways.Firstly, a share of UAT visitors, particularly during the slow months (January,June and October-November), could have been accommodated in existing hotels hencea portion of the UAT visitor traffic is not incremental. Secondly, the extensionof capacity in the UAT could induce lower hotel rates in all of Agadir'saccommodations. In view of the favorable market prospects for Agadir and thelarge overhang of frustrated demand, the UAT's effect on prices would belimited. The quantification of these two effects is difficult for lack ofsignificant data. As a proxy measure, a quarter of the UAT's net benefits hasnot been counted as incremental.

3. Some of the services would be paid for directly by the tourists whileothers would be compensated for only indirectly. Accordingly, the costs andrevenues must be carefully analyzed so as to avoid double counting.

4. The expenditures of visitors to the UAT have been estimated on thebasis of tourist expenditures at similar facilities in.Morocco and competingdestinations. Visitors to the hotels, representing about three-quarters ofthe number of visitors to the project area, would spend US$28 per guestnight.Visitors to the apartments would spend US$26 per.guestnight. The breakdownof average daily visitor expenditures according to the facilities used issummarized in the table below.

Breakdown of Expenditures of Visitors to the UAT

Apartments Hotels Total CompositeDH US$ DH US$ DH US$

Accommodation, food andbeverage 58 15.20 66 17.30 64 16.90

Shopping 25 6.60 25 6.60 25 6.60Sports and entertainment 10 2.70 10 2.70 10 2.70Local transportation andother 5 1.30 5 1.30 5 1.30

Total 98 25.80 106 27.90 104 27.50

ANNEX VIIIPage 2

5. On this basis the composite daily expenditure per visitor has beenestimated at about DH 104 (US$27.50) which includes food and accommodationat hotels and apartments, DH 52 (US$13.60); additional expenses for food andbeverage, DH 12 (US$3.30); miscellaneous sales, DH 5 (US$1.30); shopping,DH 25 (US$6.60); sports and entertainment, DH 10 (US$2.70). Hotel revenuesassume an average bed occupancy rate on the whole UAT rising from 50% in 1980to 60% in 1990. The only benefits from the proposed housing program which

have been included are the yields from the sale of land.

6. Although a portion of the net revenues accruing to the Moroccanairline from tourist traffic would be attributable to the project, it hasnot been taken into account in calculating rates of return. Aiso excludedare the benefits resulting from developing the UAT in a planned and coordinatedfashion, ensuring maximum attractiveness to the tourists, integration oftourism in other urban activities, efficient use of infrastructure and thebest use of land.

,Cost Assumptions

7. The relevant costs are the capital and operating costs of the infra-structure provided under the proposed project and of the hotel and relatedsuperstructure facilities to be built in the project areas, plus the estimatedcapital and operating costs of producing the goods and services consumed bythe visitors outside the project area.

8. Investment costs cover the capital cost of constructing the tourism-related works in the UAT, upgrading CT 7002, replacing the fish pumps andconstructing hotels and other superstructure facilities. Accommodation investmentcosts are assumed to average DH 30,000 (US$7,900) per bed for hotels andDH 70,000 (US$18,400) for housekeeping apartments.

9. Economic costs of superstructure operations are derived from theprojected financial accounts of hotels, restaurants and other facilities whichin turn are based on actual accounts of similar establishments in Agadir.Since SONABA is expected to recover the investment in utilities through landsales and leases, the related investment costs do not appear in the utilitiesrate base. The utilities incremental gross operating profit generated byservicing the UAT accommodation has been assumed to cover the

maintenance and replacement expenses on thè UAT's utilities works. Theoperating and maintence costs of nonrevenue-earning infrastructure items(such as streets, street lighting and landscaring) as well as the operatingcosts of solid waste disposal and other municipal services would be paidfor by the Municipality. Since the municipal taxes to be levied on the-UATadequately cover these costs, they have been neglected. Incre-mental revenues from the airport landing fees have been assumed to coverthe incremental costs incurred. The share of Morocco's generic tourismpromotion attributable to the project, estimated at DH 1.9 million per annumfrom 1982 on, has been included in the rate of return computations. Thetraining costs, estimated at DH 416,0OO per annum from 1983 on, have alsobeen taken into account. Investment costs, operating costs and gross revenuesare all calculated in 1974 prices.

ANNEX VIII

Page 3

Gross Operating Profits

10. The gross operating profits projected for the main categories ofvisitor expenditures are shown below for the year 1988, when all the hotels andoperations will be activated.

Average Daily Gross OperatingVisitor Expenditures Profit

DH DH %Accommodation, food andbeverage 64 18.69 29

Shopping 25 9.44 38Sports and entertainment 10 4.03 40Miscellaneous items 5 1.92 38

Total 104 34.08 34

Efficiency Price Consideration

11. Project amounts were further examined to determine the efficiencyprices of land, foreign exchange and labor. The use of the UAT land has beenvalued at the benefits foregone in agriculture. At present, the official exchangerate reflects adequately the value of the Moroccan currency. This situationmay, however, change over the life of the project. Accordingly the rate of returncalculations ignored shadow pricing for foreign exchange except for illustrativepurposes (para. 13). For people in the Souss Valley alternative employment oppor-tunities are provided by emigration to northern Europe. Thus it has not beenfound appropriate to shadow price labor.

Internal Rate of Return

12. Each project facility and piece of equipment will have a differenteconomic life, but taken as a whole, the project is estimated to have aneconomic life of about 30 years. The modest provision for some replacementexpenditures during this period is considered to be offset by the life of themain assets beyond 30 years. The cost benefit streams are detailed in Table 1.With the above assumptions, the internal economic rate of return on the projectwould be 17.4%. The sensitivity of the rate of return to alternative assumptionsregarding costs and benefits is shown below.

13. The rate of return would be sensitive to changes in investment costs,gross operating profits, i/ the timing of hotel development and the assumedshadow rates for wages and foreign exchange. The rates of return resulting fromalternative assumptions for each of these variables are shown in the table below.

Resulting Rate of Return %

Best estimate 17.4Investment costs + 20% 14.6Gross operating profits:

(a) + 10% 21.1(b) + 25% 18.9(c) - 10% 15.8

Two years' delay in opening of hotels 13.45% shadow pricing of foreign exchange 18.0

1/ Changes in GOP projections reflect potential variation in occupancy rates,average daily expenditures and operating costs.

ANNEX VIIIPage 4

B. Balance of Payments Effect

14. The proposed project is expected to increase gross foreign exchangeearnings by about DH 19 million (US$5.0 million) in 1981 when the first hotelsopen and by about DH 160 million (US$42.1 million) per year from 1989 on,when all planned accommodations have become fully operational. This compareswith DH 1,025 million (US$270 million) gross foreign exchange receipts earnedby Morocco from tourism in 1974. Foreign exchange revenues accruing to RoyalAir Maroc from international air travel have been excluded from the estimatedgross foreign exchange earnings.

15. Foreign exchange outflows resulting from the project would includethe import component (about 13%) of operating costs, debt service on the foreignshare of CIH loans, fees to foreign management firms and debt service on theIBRD loan. The total outflow of foreign exchange is estimated to amount toDH 10.3 million (US$2.7 million) in 1981 rising to DH 20.1 million (US$5.3million) in 1989. (This calculation does not take into account the incrementalimports likely to ensue from increased wages for labor employed on the project.)The net foreign exchange earnings generated by the project would amount toabout DH 8.7 million (US$2.3 million) in 1981 and about DH 140 million (US$36.8million) in 1989 and annually thereafter.

C. Employment Effects

16. Assuming a ratio of 0.37 employees per bed, the accommodation in theUAT tourism area would generate 2,600 new jobs by 1989. Additional jobs createdin the restaurants, shops, tour agencies, entertainment and recreationalfacilities would amount to about 1,800. Indirect employment generated in con-struction, handicrafts, agriculture and other services is likely to account for7,200 additional jobs.

D. Budgetary Position of the Government

17. The current expenditures budgeted to the project would include thecost of Government services for vocational training and the share of the Govern-ment's tourism promotion attributable to the UAT tourism development. Theseexpenditures would increase from DH 1.3 million (US$0.4 million) in 1981 toDH 2.3 million (US$0.6 million) by 1989. Budgetary receipts deriving from theproject would comprise taxes collected on room, beverage, food and other salesand income taxes on salaries and profits. Taxes on tourist expenditures wouldincrease from DH 2.6 million (US$0.7 million) in 1981 to DH 20.1 million(US$5.3 million) by 1989. Income tax returns will increase from DH 0.8 million(US$0.2 million) in 1981 to DH 4.6 million (US$1.2 million) in 1989 andDH 17.1 million (US$4.5 million) in 1994. In 1981 the project would have asmall net budgetary surplus of DH 2.1 million (US$0.5 million) rising toDH 22.4 million (US$5.9 million) in 1989 and DH 34.9 million (US$9.2 million)in 1994. Taking into account the net budgetary receipts and the net operatingincome of SONABA, the internal rate of return to Government on the investmentin the UAT is 20.5%.

Table 1

M9ROCCO

fkY O? AGADIR OURIS P6ROJECTS

Coat/ennefit Strasas (DH 0001In constant 1975 prices

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987

1. L.d-h/ 820 820 810 820 820 820 820 820 820 820 820 820

2. UT InveStcamtIstrastraccare

Streeta Bcd parking 683 3,696 6,762 4,502 1,997Streertlighttng 82 330 813 798 442- -----Secerage 186 1,171 2,206 1.754 376-4Watnr sapply 72 615 1,002 750 210Foyer - 1,998 3,708 2,395 991 - - - - - - -Teleccertcmnlcstians 255 336 872 1,174 1,029Lsrd.c.ping 186 449 21236 1,851 773

Tata) 1,464 8,595 17,599 12,224 5,818 - - - - - - -

Caneton FacilitiesA-enity ceres - 442 2,422 4,673 4,676 - - - - - - -Sparts snd beach ftcilitce6 - 152 526 1,750 1,750Oth-r ca-60n facilities- _- 80 188 746 _ _ _ _ _ _

Total - 594 3,028 6,611 7,174 _ - _ _ _

3. OuCsîde Investdentsc/ - - - 3,840 3,040 --

4. Inveantent in Aecpeemdatiîesd/ - - 13,437 26,875 26,875 26,875 26,875 26,875 26,875 13,437

5. I-assntent in Reaianal W-rksFieh panpa 38 316 473 - - - - - - -CT 7002 197 676 1.966 452 - _ _ -_ -

Total 235 992 2,439 452 - - - - - - - -

6. R04rrI.oLetsTraîclcgV - - - 416 584 584 584 416 416 416 416 416Generic paenatia-f/ 272 680 680 680 1,520 1,900 1,900 3,900 1,900 1,900SONARAAs epcrtatingepec.e. - - - - 1,400 1,420 1,400 1,400 1,500 1,500 1,500 1,300

Ttala Caste 2,519 11,001 37,595 52,118 46,391 30,359 31,199 31,411 31,511 18,073 4,636 4,436

Il.- &etî

a«, Gr7r (helsîs aed aparcteants) - - - - 3,264 7,582 12,293 17,182 21,978 26,776 30,510 32,858

2. Taxsi/ 2,070 4,162 6,048 8,655 11,032 13,339 15,344 15,993

3. C0P otsideh/ - - - - 2,782 3,833 9,j72 12.358 15,850 19,219 22,146 23,084

4. E nest it ran laies fe L.nd ardCormon taaii4t±ca - - - - 940 1,880 2,960 4,040 5,120 6,200 7,280 8,360

5. Revenue tract ft C an Facilita leRes _ -- _ 1.300 1.900 2.200 2 500 2 800 2IlM I2JO2 3.200

T.tali Be-fit. - 10,356 21,357 32,673 44,735 56,780 68,734 78,480 83,495

Aditstcd Be-afitriî _ _ - 7,767 16,018 24,505 33,551 42,585 51,550 58,860 62,621

a/ Irveermtnt caste are gi-en net ef taes.b/ Land Inian rrtflcts rever.ese tregene in ceriaelîaral cec/ icaccîcent cec-t atside the UAT Inclades additiînel l1eee r in tearia ftacilitiîes (eKg., tceia, lace., retterante, hop-). The am..nt bas bece linitnd ta DR 6.08 illlian

rince therc le an over-upply ef -aah f-cilitie in AK dir.d/ AcacRteadatla.. caste arc .. sues d at DH 60,000 pet hbtel roon and DH 70,000 pet apartent.e/ Trtnînlg calera ce-t ftr 100 percera par year in 1981 aad 1982 nd fat 75 peaple in 1979 and after 1982,E/ Gesnric promction ce.t amctnts ta 0.5% f receipts.

BerefitaS/ Te- enet af th.-e deraivd trac ddesettc taurîse ialade -lec tac (4%/), beverare tax, patente, handicrafta as weli a- ahler tares in and ataide the UAT.h/i la esc,i-ated et 39% af -ctsîde erpenditares.i Adji jastrd fEr nonincrepentai benetite satircated at 25% cf t.t.l (cc para. 2). Ttala increment-l benefit c-ntian. ta incr .. e.nttil 1997 ahib le the end of the tac

enerceatiop period fer cl hbtela. The.e will reach Dh 69.7 milliac in 1997 darirg thb 'typical" yesr jr 1997.

Decerber 1975

MOROCCO: BAY OFAGADIR TOURISM PROJECTSCHEDULE OF IMPLEMENTATION, EXPENDITURE AND DISBURSEMENT

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6CODE PROJECT COMPONENT …_ _-- _- -_ _

Qi Q2 Q3 Q4 Q5 Q6 07 Q8 09 010 1i1 012 Q13 014 015 C116 017 1 8 Q19 Q20 Q21 022 023 Q24

A. UAT INFRASTRUCTURE

1. Streets & Parking ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Detects Liabilit y PeriodjPrimary Network . .....Secondary Network ..................

2. Street LightingPrimary Network ..................

Secondary Network . ..................3. Sewerage

Primary Network ..................Secondary Network . ..................

4. VVater SupplyPrimary NetworkSecondary Network ..................

5. Power SupplyTrunk Supply and Substation ..................Transmission Lines _ _Distribution Lines .. ................

6. TelecommunicationsTrunk SupplyDistribution Lines ..................

Telephone Exchange Extension_ ..................7. Landscaping

B. COMMON FACILITIES1. Shopping Centers

Commercial Buildings ..... .... ......Handicrafts Center ..... .... ....

Cinema and Open-Air Theater ...... .....

Hammam ............2. Sports and Beach Facilities

Tennis Courts and Swimming Pools ..........Multipurpose Area ..........

Stable and Riding School ..................Beach Facilities ..........

3. Maintenance Facilities ......... .....C. REGIONAL INFRASTRUCTURE

1. Ait Melloul Bypass2. Upgrading of CT70023. Replacement of Fish Pumps

D. PROJECT ADMINISTRATION _ _ _ -

E. TECHNICAL ASSISTANCE AND STUDIES1. Second Tourism Project _ -2. Agadir Sewerage System3. Agadir Urban Development - - -

4. Env. and Arch. Preservation Unit _ _ _ _ _ _

LOAN AGREEMENT SIGNING DATE

EXPENDITURES RATE- 1570 6346 13176 12583 7881

( in 1000 US$ equivalent) 3.8% 15.2% 31.7% 30.3% 19.0%DISBURSEMENT RATE 486 2187 5686 6663 4782 896

( in 1000 US$ equivalent) 2.3% 10.6% 27.5% 32.2% 23.1% 4.3%

1/ Excluding Land Acquisition

July 1975 World Bank - 15166(R)

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IBRD 11657RToCosoblanco

NOVEMBER 1976

O MOROCCO

Bay of Agadir Tourism ProjectThe Project Area

-(J Main roads, existingSecondary roads, existingProject roùds

Future roodf Tamri Project resort site

oCities or towns- ----_ Rivers

Ceîr 4< Airfield

N\ J To Morrakech

Tarbazoute

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IBRD 11658AUGUST 1975

Royal Palace

Secteur Touristique Bainéaire

Future urbon

Development

/ Tourist acili modatiens < X -Sa

/Byo Aoi Tourist comoain andoje ctÂFTurlii faccomodtionss

/BaZoI Agdi Touris co mdainad Presidet ra

Toublict faccommoaties

Urban parks and sport facilities

Naturao vegetation and recreational areas development |Contour lines, 5 meter intervais f - I/nt `

Bridges /

I ~ ~ ~ ~ ~ ~ -- : Ocean MEtE''R`S` ` ` 1Natural Park

C ~~~~~~ME T ERS` O` :I 10,20,300Ç, 40* 0 -'9

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